On September 16, 2026, the Ohio Supreme Court sent a sales tax refund claim filed by CheckFree Services, a financial services provider, back to the Board of Tax Appeals (BTA) for further review.[1] While the Court’s decision did not reach the merits of the refund claim, the case offers at least three lessons for other taxpayers making refund claims or litigating any tax matter before the BTA.
Background
At the heart of CheckFree’s refund claim was whether the services that it provides to its customers qualify as taxable “automatic data processing” services, or “ADP.” Specifically, CheckFree offers debit-authorizations services, which allow debit-card users to make ATM withdrawals or to make purchases, and disbursement-authorization services, which enable customers to pay bills. In addition, CheckFree offers related ancillary services, such as fraud detection and system maintenance.
At issue was whether these services qualify as ADP, which is “processing of others’ data, including keypunching or similar data entry services together with verification thereof, or providing access to computer equipment for the purpose of processing data.” Further, ADP does not include “personal and professional services”—i.e., services performed by people.[2]
Lesson #1: Just because a service is computerized does not necessarily mean it is taxable ADP.
The BTA had held that CheckFree’s debit-authorization services were not ADP and therefore not taxable. The Court left this holding in place. But for CheckFree’s other primary service, disbursement authorization, the Court stated that the BTA had issued a short, hard-to-parse analysis that seemed to skip over the question of whether CheckFree was truly “processing” data. The BTA noted that the service was automated and not a personal or professional service performed by a human person, but it gave little additional explanation.
The Court vacated the BTA’s ruling about disbursement services and remanded with instructions for the BTA to first analyze whether the services meets the statute’s affirmative definition of ADP without considering the exclusion for personal/professional services. In other words, even though a service is automated and not performed by humans, it might not be ADP. It is necessary to consider the definition of ADP first before simply looking at the level of human involvement.
Lesson #2: To determine if bundled services are taxable, taxpayers must analyze the true object of each service independently, not just the bundled contract as a whole.
The Court also made clear that CheckFree’s ancillary services need to be evaluated independently to determine whether the true object of each was ADP or something else. The taxpayer had argued that the taxability of its ancillary services should follow the taxability of its core services. The Court rejected this position and instead explained that “when the record fairly supports that some separately invoiced ancillary services may have a taxable purpose and others may not, a board needs to analyze the true object of each” separately stated service.[3] Taxpayers preparing refund claims of their own involving bundled transactions should conduct a similar, granular analysis.
Lesson #3: Taxpayers who appeal refund denials to the BTA should be prepared to litigate issues that the tax commissioner’s final determination failed to address.
The tax commissioner’s final determination did not include the type of granular analysis that the Court requires. This omission occurred because the Court had not made the need for independent review of bundled services explicit until a later decision[4] that was issued after the final determination. As a result, the BTA would have remanded CheckFree’s claim back to the tax commissioner to analyze the ancillary services in the first instance.
However, the Court disagreed with this approach. Rather than having the commissioner first write a new final determination, the Court directed the BTA to decide the taxability of the ancillary services itself on remand. The Court noted that the record at the BTA was well-developed enough to enable the BTA to resolve this issue.
Based on the Court’s opinion, it appears that CheckFree appropriately established a complete and thorough record at the BTA regarding the ancillary services. But the Court’s decision serves as a valuable reminder to other taxpayers seeking refunds. Taxpayers have the burden to prove every element of the refund claim, and they need to be prepared to do so at the BTA—even with respect to details that the tax commissioner may have omitted from a final determination.
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Although the Court did not resolve CheckFree’s refund claims, taxpayers should take note of the practical guidance the Court offered when preparing their own refund claims.
If you have any questions about the Court’s decision or other Ohio sales tax matters, please reach out to Tommy Zaino, John Trippier, or one of our other ZHF professionals.
[1] CheckFree Servs. Corp. v. Harris, Slip Opinion No. 2026-Ohio-3555.
[2] See R.C. 5739.01(B)(3)(e) & (Y)(1)(a), (d).
[3] CheckFree Services, 2026-Ohio-3555, ¶ 31 (citing Cincinnati Fed. S. & L. Co. v. McClain, 2022-Ohio-725).
[4] See Cincinnati Fed., 2022-Ohio-725.