ST 1979-01 - Application to Fungible Goods - July 23,
1979
The Ohio Supreme Court in B.F. Goodrich v. Lindley, 58 Ohio
St. 2d 2586, June 13, 1979 states:
"The primary use test does not apply to a sale of fungibles
used for both taxable and non-taxable purposes where such use
is apportionable before or after the sale.
(Richardson-Merrill v. Porterfield, 32 Ohio St. 2d 281,
overruled; Emery Industries v. Kosydar, 43 Ohio St. 2d 34,
modified.)"
B.F. Goodrich filed a refund claim for the tax which they
paid under their direct payment permit on a portion of fuel
oil not used in an exempt manner. The claim for refund was
denied by the Tax Commissioner's Hearing Board but was
granted by the Board of Tax Appeals. The Supreme Court
reversed the decision of the Board of Tax Appeals in the B.F.
Goodrich case. The Supreme Court also overruled their
previous Richardson-Merrill decision and modified their Emery
decision.
In both the Richardson-Merrill and Emery decisions, the court
had extended the primary use concept (previously applied to
non-fungible items only) to the purchases of fungible goods.
The effect was to exempt the entire purchase amount of
fungible goods when the primary use of the goods was in an
exempt manner.
The Court, in overruling their previous decisions (which
determined the taxable status of fungible goods purchased on
the primary use basis), said that the primary use test cannot
be used to permit a consumer, merely by failing to separate
or apportion fungibles used for mixed taxable and non-taxable
purposes, to escape payment of tax clearly contemplated by
the statute when any reasonable means can be used to
apportion the purchases of fungible goods between taxable and
non-taxable purposes.
Although the B.F. Goodrich case involved a direct payment
permit holder, the elimination of the primary use test for
fungible goods is a decision applicable to all consumers. The
taxable portion of fungible goods will be determined and will
be subject to the application of the proper rate of sales or
use taxes.
If you have any questions regarding this matter, you should
call us at 1-888-405-4039.
OHIO RELAY SERVICES FOR
THE HEARING OR SPEECH IMPAIRED
Phone: 1-800-750-0750