The Ohio Board of Tax Appeals upheld the Tax Commissioner’s disallowance of the “bulk credit” upon a second audit of the same transactions. During an initial audit, the taxpayer had provided purchases throughout the country, and the auditor estimated those purchases with an Ohio ship-to address and then applied a “last resort” bulk credit against the assessment to account for use tax accrued and report on the taxpayer’s use tax returns. At the taxpayer’s request, a re-audit was conducted, with additional information to tie individual transactions. Upon re-audit, the total assessment was reduced, but the bulk credit was disallowed. The Tax Commissioner stated that for the re-audit, the auditor used a more accurate line item audit, and eliminated the need for the estimated bulk credit, since applying the credit would result in double counting of non-taxable transactions.
The Board of Tax Appeals determined that the second method was more accurate, and rejected the taxpayer’s argument that the re-audit did not account for use tax actually paid. However, the Board of Tax Appeals would not address the issue of whether the transactions were taxable, because that issue had not been raised in the appeal. The Board rejected the taxpayer’s argument that it was entitled to a refund based on the original audit. Instead, the Board of Tax Appeals stated that the methodology used in the second method was more accurate, and there was no evidence that the transactions had been double taxed.