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Just in time for New Year's Eve! Great Lakes Bar Control, a Toledo, Ohio beer tap cleaner, won a major victory in avoiding corporate sales taxes. The ruling will surely be applied to similar companies in the jurisdiction, and that is the plan, according to plaintiff's attorney, who also represents others fighting this tax. That law firm should buy a round of drinks on the house at its next partner outing, at the very least for good mojo.
Ohio state law requires bars to clean their tap lines every two weeks, unclogging and flushing draft lines to keep them free of yeast, sediment and bacteria. The Ohio Department of Taxation claimed this was a taxable janitorial service, and charged Great Lakes Bar Control over $102,000 in sales tax. Great Lakes Bar Control appealed this decision to the Board of Tax Appeals, and had this tax overturned. The Department of Tax then appealed this Board of Tax decision to the Ohio Supreme Court, where they lost by a vote of 6-1.
Associate Justice Pat DeWine, speaking on behalf of the the Ohio Supreme Court, declared that the service Great Lakes Bar Control offered was not janitorial in nature. He believed such services would be more akin to washing, vacuuming, and trash removal. "While that is certainly not an exhaustive list, no one would take the ordinary meaning of janitorial cleaning to include inspecting and flushing beer-tap lines," DeWine wrote for the majority. "Because the beer-line service does not fit the plain meaning of 'cleaning' in the context of providing a 'janitorial service,' Great Lakes can keep the taps flowing sans tax." Cheers to DeWine for keeping tge beer "flowing sans tax."
One would think Great Lakes Bar Control would be thrilled with the $102,000 tax savings. But the company's principal, Mike Cassidy, seemed to take it all in stride. When asked about the ruling, he said he had not read it, and described his company as a mere "minority player" in a large market. "You win, you're happy. You lose, you're not happy," Cassidy said in a brief phone interview.
Juxtapose this to Great Lakes attorney, Steven Dimengo, who also represents other players in this industry as well as others charged taxes under the same code, who called the Department of Taxations original tax charge "ridiculous." "We believe that the ruling extends to other areas that the tax commissioner believes are taxable, and so the ruling has application in many other contexts," Dimengo said in a phone interview. Perhaps the big winner in this game is Dimengo, and not Cassidy.
If you believe that your firm is being charged an unfair tax, contact a local tax attorney. You may be surprised to find that other companies being charged under the same code have successfully fought payment. You may be able to save your company thousands of dollars, potentially much more than your legal fees. If you have any questions as this tax year comes to a close, contact an attorney today.
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