The Ohio Board of Tax Appeals recently released a decision finding that a movie theater owner was entitled to a refund of tax collected on movie tickets.
The taxpayer operated a movie theater in Ohio. The taxpayer had also operated theaters in West Virginia. When the taxpayer began operating the theater, it believed that Ohio, like West Virginia, taxed movie ticket admissions. The taxpayer remitted tax from movie ticket sales for a couple years. Tax was not separately stated on charges for tickets. Rather, the taxpayer's accounting software calculated the amount of the ticket sale that constituted sales tax. When the taxpayer found out that Ohio sales tax did not apply to movie ticket admissions in Ohio, it requested a refund. The taxpayer did not change its ticket prices after it stopped remitting tax.
Ohio allows vendors to seek refunds of sales taxes paid in error. The vendor must refund to the consumers the full amount of tax the consumers paid in error. The Tax Commissioner argued that because the taxpayer could not identify all the consumers who purchased movie tickets, the vendor could not get a refund.
The Board ruled that the vendor could get a refund because the consumers had not paid tax. The taxpayer did not separately state a charge for tax and was not eligible to sell items without separately stating a charge for tax. The taxpayer also did not change the ticket prices when it stopped remitting tax. There was no tax paid for the taxpayer to refund to consumers. The taxpayer could therefore get a refund for tax that it paid without showing that it refunded tax to consumers.