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OH - Delivery charges were taxable for part of audit period

A construction contractor was liable for Ohio use tax assessed on delivery charges related to purchases of aggregate and stone for only part of the applicable audit period. For sales occurring between January 1, 1998, through September 5, 2002, the taxpayer presented evidence that showed that its vendor used a computer program to separately account for delivery charges. At that time, there was no requirement that the separate accounting needed to be shown on an actual invoice. The taxpayer remained liable for use tax assessed on delivery charges associated with sales occurring after September 6, 2002, because at this time, the relevant statute required that delivery charges be separately stated on an initial invoice or billing of the vendor. The taxpayer, however, failed to present such evidence. It does not matter that the taxpayer's vendor submitted improperly calculated invoices to the taxpayer, as the Tax Commissioner may collect outstanding sales tax from either the consumer or the vendor.

The imposition of penalties for the period September 6, 2002, to July 31, 2003, was found to be unreasonable because the Tax Commissioner failed to consider the fact that the taxpayer did not participate in the creation of the deficient invoices. The imposition of penalties for that part of the assessment occurring after August 1, 2003, remained valid, however, because from that point forward, the statute deemed all delivery charges to be taxable. TNS, Inc. v. Levin, Ohio Board of Tax Appeals, No. 2006-N-2210, June 22, 2010