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CPA Voice: Tales from the Cincinnati Federal Decision

Written on Sep 1, 2022

A recent ruling from the Ohio Supreme Court could impact sales tax refunds.  

“In Cincinnati Federal Savings & Loan Co. v. McClain, 2022-Ohio-725, issued March 15, 2022, which involved a sales tax refund claim filed by a financial institution, the Ohio Supreme Court held that the Board of Tax Appeals’ analysis of transactions involving a combination of software customization and automatic data processing or electronic information services was erroneous because it did not perform the true-object test required by Ohio Revised Code (“R.C.”) 5739.01(B)(3)(e),” writes Derek Heyman, JD, CPA, in the July/August issue of CPA Voice.  

Heyman writes that Cincinnati Federal Savings & Loan Co. had engaged Fiserv Solutions, Inc. to provide services, including automated processing of banking transactions to maintain Cincinnati Federal’s general ledger and subsidiary account ledgers, which Cincinnati Federal argued was a nontaxable accounting service. Cincinnati Federal paid Ohio sales tax to Fiserv when it was invoiced for services and submitted a refund claim to the Ohio Department of Taxation for services it claimed were not automatic data processing or electronic information services (“ADP/EIS”) but rather personal and professional services, customization of software, and accounting services, which are not subject to tax in Ohio. 

Read the entire article available now in the July/August issue of CPA Voice.    
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