OPINIONS OF THE SUPREME COURT OF OHIO
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Ernst Enterprises, Inc., Appellee, v. Tracy, Tax Commr.,
Appellant.
[Cite as Ernst Enterprises, Inc. v. Tracy (1994), Ohio
St.3d .]
Taxation -- Sales tax -- Failure to file return -- Assessment
of delinquency charge.
(No. 93-114 -- Submitted January 11, 1994 -- Decided March
30, 1994.)
Appeal from the Board of Tax Appeals, Nos. 91-A-194,
91-A-195 and 91-A-196.
Ernst Enterprises, Inc. ("Ernst"), appellee, a supplier of
ready-mix concrete, failed to file several 1988 and 1989 sales
tax returns timely. Ernst ultimately filed these returns. For
this failure, the Tax Commissioner, appellant, charged Ernst an
additional amount equaling ten percent of the sales tax due and
penalized Ernst fifty percent of the total amount due,
including the additional charge.
Ernst appealed to the Board of Tax Appeals ("BTA"), and
the BTA, inter alia, disallowed the penalty on the additional
charge. The BTA found that R.C. 5739.133 provides for a
penalty to be added to every amount assessed under R.C.
5739.13. The BTA ruled that the additional charge was assessed
under R.C. 5739.12, not R.C. 5739.13. Thus, the board found
that no statutory basis existed to assess a fifty-percent
penalty on the ten-percent additional charge.
The cause is now before this court upon an appeal as of
right.
Coolidge, Wall, Womsley & Lombard and Merle F. Wilberding,
for appellee.
Lee I. Fisher, Attorney General, and Thelma Thomas Price,
Assistant Attorney General, for appellant.
Per Curiam.
In Wilson v. Porterfield (1971), 28 Ohio St.2d 176, 57
O.O. 2d 409,
277 N.E. 2d 207, syllabus, we held that the
"forfeiture," at that time $1 per day, to be paid if a vendor
failed to file a sales tax return under R.C. 5739.12, was an
assessment under R.C. 5739.13 to which the penalty, then
fifteen percent, was to be added. We concluded that the
statutes designated the forfeiture as revenue collectible by
assessment and further designated the penalty provision in R.C.
5739.13 as a penalty due on this forfeiture. Moreover, in
Village Music, Inc. v. Collins (1978),
54 Ohio St.2d 179, 8
O.O. 3d 166,
375 N.E. 2d 429, we reiterated that the
commissioner has the authority to assess the delinquency charge
against a vendor and must add the penalty to the delinquency
charge.
At the time Wilson and Village Music were decided, R.C.
5739.12, which provides for filing sales tax returns by
vendors, formerly stated:
"… Any vendor who fails to file a return under this
section and the rules and regulations of the commissioner
shall, for each day he so fails, forfeit and pay into the state
treasury the sum of one dollar, as revenue arising from the tax
imposed by sections 5739.01 to 5739.31, inclusive, of the
Revised Code, and such sum may be collected by assessment in
the manner provided in section 5739.13 of the Revised Code."
132 Ohio Laws, Part I, 2019.
R.C. 5739.13, which provides for, inter alia, the
assessment process, formerly stated in part:
"A penalty of fifteen percent shall be added to the amount
of every assessment made under this section." 132 Ohio Laws,
Part I, 2023.
Am. Sub. S.B. No. 448, 138 Ohio Laws, Part I, 1330
(effective Dec. 19, 1980) amended R.C. 5739.12 to read:
"… Any vendor who fails to file a return under this
section and the rules of the commissioner shall, for each such
return he fails to file within the period prescribed by this
section and the rules of the commissioner, forfeit and pay into
the state treasury an additional charge of fifty dollars or ten
per cent of the tax required to be paid for the reporting
period, whichever is greater, as revenue arising from the tax
imposed by sections 5739.01 to 5739.31 of the Revised Code, and
such sum may be collected by assessment in the manner provided
in section 5739.13 of the Revised Code. …"
The BTA ruled in the instant case, without mentioning
Wilson, that the assessment of additional charges for
delinquent returns is made under R.C. 5739.12 and not R.C.
5739.13. It further ruled that this interpretation disallows
the penalty, now imposed by R.C. 5739.133, reasoning that the
penalty is levied only on assessments under R.C. 5739.13.
Ernst, of course, agrees with this interpretation and maintains
that the new statutory language requires this conclusion.
However, Am. S.B. No. 448 changed only the calculation of
the additional charge; the charge is still designated as
revenue arising from the sales tax and it is still to be
collected by assessment under R.C. 5739.13. Thus, the BTA's
interpretation is not valid under Wilson and Village Music. As
those cases held that the additional charge is assessed under
R.C. 5739.13, the penalty must be imposed on the additional
charge. Consequently, the BTA erred.
Next, the parties dispute the percentage to be charged for
late filing. The commissioner maintains that a delinquent
filing, under the statutes, is the equivalent of not filing
and, thus, he must impose the fifty-percent penalty. Ernst
argues that R.C. 5739.133 prevents a fifty-percent penalty's
being charged on the additional assessment because Ernst
ultimately filed a return, though late, and remitted the tax to
the state.
Sub. H.B. No. 231 deleted the penalty language from R.C.
5739.13 and enacted R.C. 5739.133, which states:
"(A) A penalty shall be added to every amount assessed
under section 5739.13 … of the Revised Code as follows:
"(1) In the case of an assessment against a person who
fails to file a return required by this chapter, fifty per cent
of the amount assessed;
"…
"(3) In the case of all other assessments, fifteen per
cent of the amount assessed. …" 142 Ohio Laws, Part II,
2635, 2913.
R.C. 5739.12 levies the additional charge if the vendor
fails to file a return within the time prescribed by the
section. Thus, R.C. 5739.12 conditions the levy of the
additional charge on timeliness of the return. However, the
penalty imposed by R.C. 5739.133(A)(1) is to be added to the
assessment against a person who fails to file a return required
by the chapter. This latter section does not mention timely
filing and, thus, does not make timeliness a condition.
Consequently, we read R.C. 5739.133(A)(1) to impose the
fifty-percent penalty to assessments where the vendor fails
completely to file a return.
However, under R.C. 5739.133(A)(3), a fifteen-percent
penalty is assessable against the additional charge. If the
commissioner issues an assessment under R.C. 5739.13, and if no
other subdivision of R.C. 5739.133 applies, as happened here,
he must add a fifteen-percent penalty to the assessment.
Accordingly, we reverse the decision of the BTA and remand
this case for imposition of the fifteen-percent penalty against
the additional charge due under R.C. 5739.12 and assessed under
R.C. 5739.13.
Decision reversed
and cause remanded.
Moyer, C.J., A.W. Sweeney, Douglas, Wright, Resnick, F.E.
Sweeney and Pfeifer, JJ., concur.
