When Lonnie Corthell and Robert Manz retired from more than 30 years of employment for the Ohio Department of Taxation, they wanted to find a way to maintain their training while making a contribution to the community.
The pair graduated in the same class from Columbian High School and earned accounting degrees at Tiffin University. When they retired, they decided to offer their expertise and knowledge of the Ohio Revised Code to tax-exempt entities.
The Tiffin natives have been spreading the word and making presentations to service clubs and churches to explain their backgrounds and describe the value of a sales and use tax review.
Their project got started when another taxation department retiree related to Corthell and Manz how he checked records from his church and detected taxes being paid on telephone bills.
Manz decided to examine the receipts from his church, Bascom United Methodist.
"This led to some very decent money being refunded, and it continues to save the church money going forward," Manz said. "You fix these telephone bills going forward so they can save that amount of money over the next four years."
After that, he and Corthell began contacting other churches and organizations, offering their services free of charge.
So far, the pair has discovered sales and use taxes mistakenly paid in every case they have handled. A total of $71,000 has been recovered.
Others are waiting for their checks.
Manz said some had assumed they were not paying any sales tax, when in fact, they were entitled to refunds.
"Don't be fooled. You think you're not paying, but these (cases) have proven otherwise." Manz said.
Corthell and Manz examine the organization's records from the past four years, including bank statements and paid bills. They require access to a copy machine and a blank compact disc on which to record the review.
Even adding mailing costs, the expenses are minimal when compared to the refunds, which have ranged from $25 to $16,000.
Their common findings have been taxes improperly paid on phone bills, brokered natural gas and credit cards in the entity's name.
"We did a theater who ended up calling AT&T and found out they were paying for ... a service they didn't need," Corthell said.
"We've done 47 of these reviews. All but one has been paying sales tax on the telephone bill. ...The bills might be three or four sections, depending upon the services - local, long distance, Internet - so the tax can show up that many times. The phone company will not automatically exempt you, because you have to provide them the documentation for your exemption," Manz said.
Tax exempt status is given to 501 (c) 3 entities. These include government subdivisions (state, county, township) and any entity operated by political subdivisions, such as the Seneca County Museum, churches and more.
The men said every client has been pleased to learn refunds are in order, but not every organization is willing to take advantage of a sales tax review.
"When you go into a place and say, 'This is free. Here's what we would like to do,' there's a lot of skepticism," Manz said.
"Like Bob said, you almost have to know somebody within the organization that will open the door for you." Corthell added.
Also, some groups take offense anyone would question their transactions.
Manz said lax record-keeping is not the problem. Other factors play a role, such as part-time employees and volunteers who may not know to check bills for tax charges.
Also, a person must know where to look.
"On the Columbia Gas bills, they bury the tax in a tiny paragraph on the back side in real fine print. If you're not looking real close, you're not going to find it," Corthell said. "It doesn't make any difference to them."
"They're not doing anything wrong. Until you give them the exemption certificates, that tax will be there," Manz added.
On brokered natural gas, the breakdown of charges may be difficult to find on the statement. When changing companies to get a better rate, a charity also must submit a tax exemption form.
Employees using the organization's credit card may not notice sales tax has been added by mistake.
"Churches in particular have people who will purchase something and then be reimbursed by the church. There is no exemption claim with that type of methodology. ... they could get around it by having the church make the purchase," Manz said.
"One lady was doing an exceptional job on everything, but she didn't handle the credit cards," Corthell said.
The sales tax review can take as few as three hours or as many as 160.
Manz estimated recovering an average of $100 for every hour they have spent checking the records.
The pair has assisted groups from Sandusky to Bucyrus and from Ottawa to near Vermilion. They generally try to stay within an hour's drive of Tiffin.
In some cases, Manz and Corthell can complete a review without driving to the location. Sometimes records can be scanned and e-mailed.
Other times, Manz can send an organization instructions to follow for an in-house review.
"We did a church clear over in Hicksville, and never laid eyes on it. A lady sent us a couple examples, we told her where to look and what to look for. She was able to do it," Manz said.
Upon completion of a review, Manz and Corthell submit refund requests and make recommendations to help the entities avoid payment of sales taxes in the future by submitting tax-exempt certificates to the companies they deal with.
"They don't have the time or the in-house expertise and are not aware that the money has been paid," Manz said.
The state charges interest on audit findings but also pays interest on refundable money. Over the four-year period, the interest is about an additional 10 percent of the refundable amount.
The statute of limitations changes each month, so churches and charities need to discover overpayments and file for refunds before the opportunity expires.
Small amounts that accumulate over four years can run up a sizable total.
"You've got to catch this because every month, the oldest month rolls off. That money is unretrievable," Manz explained. "We do ask that, when the organization gets their money, that they let us know."
Once the paperwork is sent in, the refund typically arrives 6-9 months later. The organization may need to make a follow-up call to check the status of its application. Manz pointed out that making corrections also saves money for the state in the form of interest that does not need to be paid on the refunds.
Corthell and Manz have done some research on the website of the Ohio Secretary of State to determine the community's need for their services. Out of 39 churches with Tiffin addresses, they have reviewed six. Of 266 non-profit entities, 14 have been reviewed. In a few cases, a charity was no longer listed as a non-profit because they had not updated their information. Manz and his partner can help with that, as well.
"We would love to do more, especially around this area," Manz said. "We've actually made cold calls. That's a tough way to go."
The work is something they like to do, and they can set their own hours. Unexpected perks have materialized, as well. Manz said they enjoyed exploring an historic church in Birmingham, Ohio, while they were there to do a tax review. At a local university, a student in the accounting department helped them with the review, and gained valuable experience that he could include on his resume.
"It's fun for us. It keeps us in touch with our prior life. And as long as we're able to do some good for the groups, we're all for it," Corthell said.
"We've met a lot of extremely nice people ... people who care," Manz said. "It's really been a win-win all the way around."
Robert Manz can be reached at (419) 927-4490 and Lonnie Corthell's contact information is email@example.com or (419) 618-5259. The partners are willing to do presentations for service clubs, churches and organizations.