Ohio tax department steps up audits of tax credits.

• Position: Ohio

Businesses beware. The Ohio Department of Taxation (ODT) is increasing audits of entities erroneously using the manufacturing tax credits. ODT is applying a 45-year-old case [170 Ohio St. 99 (1959); ROBERTS v. BOWERS; 162 N.E.2d 858] as its legal basis for denying the credit to some businesses.

According to ODT, some businesses, such as restaurants, have been attempting to claim a credit available to manufacturers for items such as flooring--a move they are seeing with increasing frequency.

Ultimately decided by the Ohio Supreme Court in a decision that affirmed the finding of both ODT and the Ohio Board of Tax Appeals (BTA), ROBERTS V. BOWERS involved an operator of a restaurant claiming that he was entitled as a manufacturer to a then-50 cent assessment rate for equipment and inventory. ODT claimed that the restauranteur was not a manufacturer as defined for personal property tax purposes in Section 5711.16 of the Ohio Revised Code. Accordingly, the equipment and inventory for which a 50 cent rate of assessment was sought were relisted under the merchandising classification and assessed at 70 cents.

Following an application for review and...