OPINIONS OF THE SUPREME COURT OF OHIO 

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CCH Computax, Inc., Appellant, v. Tracy, Tax Commr., Appellee. 

[Cite as CCH Computax, Inc. v. Tracy (1993), Ohio 

St.3d .] 

Taxation -- Sales and use taxes -- Services of automatic data 

 processing company that sorts, classifies and rearranges 

 information from professional tax preparers and then 

 mechanically prints tax returns which are sold to the tax 

 preparers are taxable -- R.C. 5739.01(Y), applied -- R.C. 

 5739.01(E)(1) exemption, applied. 

 (No. 92-1453 -- Submitted April 29, 1993 -- Decided 

December 29, 1993.) 

 Appeal from the Board of Tax Appeals, No. 88-D-566. 

 Appellant, CCH Computax, Inc. ("Computax"), conducts its 

business with professional tax preparers, such as lawyers or 

accountants, and does not engage in business directly with tax 

preparers' clients. Computax obtains information from the tax 

preparers, transcribes such information into computer language 

and uses its data processing machine system and programs to 

mechanically sort, classify and rearrange the information. It 

then prepares tax returns and related schedules for tax 

preparers, based upon information supplied by the tax 

preparers' clients, the taxpayers. 

 For the audit period, July 1, 1983 to November 30, 1985, 

the Tax Commissioner levied a use tax assessment of $514,638.81 

against Computax, and the assessment was affirmed upon appeal 

by the Board of Tax Appeals ("BTA"). 

 In its appeal to this court, Computax asserts three 

grounds for reversal of the BTA's decision: (1) Computax does 

not provide taxable automatic data processing or computer 

services pursuant to R.C. 5739.01(B)(3)(c) or (Y), but, 

instead, it furnishes personal or professional services that 

are exempted from sales and use taxes by R.C. 5739.01(B)(5) and 

5741.02(C)(2); (2) the benefit of Computax's personal or 

professional services is "resold in the same form in which it 

is received by the customers," and thus is excepted by R.C. 

5739.01(E); and (3) approximately two-thirds of the returns 

Computax prepares are for individual taxpayers and, 

accordingly, are not taxable because they are not provided for 
use in business by Computax's customers. 

 The cause is now before this court upon an appeal as of 

right. 

 

 Porter, Wright, Morris & Arthur and George M. Hauswirth, 

for appellant. 

 Lee I. Fisher, Attorney General, and Barton A. Hubbard, 

Assistant Attorney General, for appellee. 

 Per Curiam. The decision of the BTA is affirmed in part 

and reversed in part. 

 Although this is a use tax assessment only and not a sales 

tax assessment, by reason of R.C. 5741.02(C)(2) tax liability 

is determinable under sales tax statutes. 

 As to the first issue, set forth supra, the BTA decision 

is neither unreasonable nor unlawful and it is affirmed. The 

relevant statutes, R.C. 5739.01(B)(3)(e) and 5739.01(Y), in 

their several iterations and as pertinent, defined automatic 

data processing and computer services ("ADP services"), taxed 

ADP services, and granted exemption from taxation in certain 

instances. 

 R.C. 5739.01(Y) defined ADP services to mean "processing 

of others' data" and providing "access to computer equipment" 

for the purpose of "processing data or examining or acquiring 

data stored in or accessible to such computer equipment." ADP 

services did not include personal or professional services, 

which were later defined as, inter alia, accounting or legal 

services, or any situation where the service provider receives 

data or information and studies, alters, analyzes, interprets 

or adjusts it. R.C. 5739.01(Y)(2), 140 Ohio Laws, Part I, 

233-234. 

 Therefore, during the audit period, taxable ADP services 

included transactions in which such services are provided for 

use in business when the true object of the transaction is the 

receipt by the consumer of ADP services, rather than the 

receipt of personal or professional services to which ADP 

services are incidental or supplemental. 

 The BTA found that Computax sorts, classifies and 

rearranges information and then mechanically prints tax returns 

and appropriate schedules which are sold to its customers. The 

BTA concluded that Computax provided "[n]o potentially 

consequential professional or personal tax advice or tax return 

preparation services" (emphasis deleted) and that the services 

it furnished were taxable. 

 Based upon the record, and in conformity with our 

responsibility in reviewing BTA decisions, as set forth in SFZ 

Transp., Inc. v. Limbach (1993), 66 Ohio St.3d 602, 613 N.E.2d 

1037, we agree with the BTA that the true object of these 

transactions was ADP services and not professional or personal 

services. 

 Because this appeal deals with the sale of ADP services 

and not tangible personal property, and because the applicable 

statutes define personal or professional services, Emery 

Industries, Inc. v. Limbach (1989), 43 Ohio St.3d 134, 539 

N.E.2d 608, is inapposite. ComTech Sys., Inc. v. Limbach 

(1991), 59 Ohio St.3d 96, 98-99, 570 N.E.2d 1089, 1092. 

 As to the second issue, Computax claims exemption from 
taxes under R.C. 5739.01(E)(1) because the benefit of its 

services is resold in the same form in which it is received by 

the customer. 

 The BTA rejected the contention, stating, "[t]he printed 

materials supplied by Computax to its customers are not resold 

in the same form as received by Computax's customer. * * *" 

The BTA found that Computax's customer (the tax preparer) signs 

the tax return (prepared by Computax), making it 

"significantly" different from the return prepared by Computax 

"as a matter of fact and law." 

 Computax argues that its customers transfer the completed 

tax form received from Computax to their own taxpayer-client, 

billing the client for Computax's services as an expense. 

Thus, Computax contends, the tax form is "resold" to the 

taxpayer in the same form as received. 

 The tax preparer's signature on the return may have 

increased the value of the return, but there is no evidence 

that the state or form of the return was changed. The BTA's 

finding to the contrary is unreasonable. See M.S. Osher, M.D. 

& R.S. Kerstine, M.D., Inc. v. Limbach (1992), 65 Ohio St.3d 

312, 603 N.E.2d 997. 

 We observed earlier that this appeal involves the sale of 

ADP services rather than tangible personal property. The 

proper focus for the BTA in considering this issue was the 

precise language of R.C. 5739.01(E). During the audit period, 

the statute excepted from the definition of "[r]etail sale" 

(thus creating an exemption from sales or use tax) sales "in 

which the purpose of the consumer [the tax preparer] is: 

 "(1) To resell the * * * benefit of the service provided 

in the form in which the same is, or is to be, received by 

him[.]" See 140 Ohio Laws, Part II, 3216. 

 The BTA's failure to properly analyze and apply the 

applicable statute to the actual procedure employed by Computax 

was unreasonable and unlawful. Consequently, this decision of 

the BTA is reversed. 

 As to the third issue, the BTA found: 

 "From the record, it is evident that the automatic data 

processing and computer printout materials which were provided 

by Computax to its tax service provider customers were in fact 

'used in business' by such customers in the process of 

providing tax services to their clients and are subject to Ohio 

use tax * * *." (Emphasis added.) 

 That specific rejection of Computax's claim is neither 

unreasonable nor unlawful and the BTA's decision is affirmed. 

 Decision affirmed in part 

 and reversed in part. 

 Moyer, C.J., A.W. Sweeney, Douglas, Wright, Resnick, F.E. 

Sweeney and Pfeifer, JJ., concur.