27th Annual Tuesday & Wednesday, January 23‐24, 2018 Hya� Regency Columbus, Columbus, Ohio Workshop T Ohio Tax Taxpayers Beware! Elimination of the Right to a Direct Appeal to the Ohio Supreme Court from the Ohio Board of Tax Appeals (BTA) Tuesday, January 23, 2018 4:15 p.m. to 5:15 p.m.
Biographical Information David D. Ebersole, Associate, McDonald Hopkins, LLC 250 West St., Suite 550, Columbus, OH 43215 (614) 484-0716 debersole@mcdonaldhopkins.com Dave is an associate attorney in McDonald Hopkins’ Tax and Benefits Group who advises clients on a multitude of tax issues, particularly state and local taxes. As a former Assistant Attorney General for the Ohio Attorney General, Mike DeWine, Dave has defended the Ohio Tax Commissioner in tax litigation before the Ohio Board of Tax Appeals and Ohio courts of appeal, including several cases before the Ohio Supreme Court. He has extensive experience with all types of state and local taxes. These taxes include the income tax, sales and use tax, excise tax, personal and real property tax, and Ohio’s gross receipts tax, the CAT. Dave also advises clients with respect to federal tax matters, including federal tax structuring and analysis for business transactions, federal tax controversies including IRS audits, executive compensation matters, and estate planning. Dave attended The Ohio State University Max M. Fisher College of Business, where he earned his B.S. with honors in Accounting and Finance. He also attended The Ohio State University Moritz College of Law on a full ride merit scholarship and graduated with honors. Bart Hubbard, Esq., Assistant Attorney General Ohio Attorney General's Office 30 E. Broad St., Taxation Section 25th Flr., Columbus, OH 43215-3428 barton.hubbard@ohioattorneygeneral.gov (614) 466-2941 Bart is the Principal Attorney in the Ohio Attorney General’s Taxation Section and has represented the Ohio Tax Commissioner for over twenty-five years. He is a graduate of Penn State (B.S., 1978) and the University of Pittsburgh Law School (J.D., 1981). Daniel W. Fausey, Assistant Section Chief – Taxation Section Office of Ohio Attorney General Mike DeWine 30 E. Broad St., 25th Floor, Columbus, Ohio 43215 614-995-9032 Fax: 866-513-0356 Daniel.Fausey@OhioAttorneyGeneral.gov Daniel Fausey is a 2005 graduate of the Ohio State University Moritz College of Law. Dan was a law clerk for Chief Justice Thomas Moyer and Chief Justice Eric Brown of the Ohio Supreme Court. Dan has worked as an Assistant Attorney General in several sections of the Ohio Attorney General’s Office, including Executive Agencies, Charitable Law, and currently Taxation, where he is the Assistant Section Chief. Dan also has been a Deputy Solicitor for the State Solicitor’s Major Appeals Group. Dan’s practice is mainly litigation, having appeared before more than 30 trial-level courts across the state and several administrative agency hearings. Dan’s practice has a heavy appellate focus: he has appeared before numerous Ohio appellate Courts, the Sixth Circuit Federal Court of Appeals, and has made multiple appearances before the Supreme Court of Ohio. Dan previously served as an Adjunct Professor at Ohio State’s Moritz College of Law, where he taught Appellate Advocacy. In his free time, Dan races mountain bikes and serves as a board member for the non-profit Central Ohio Mountain Biking Organization. Dan lives in Columbus with his wife and three children.
A Funny Thing Happened On The Way To Enacting The Budget Bill Eliminating the Taxpayer Right of Appeal to the Ohio Supreme Court Daniel Fausey David Ebersole Barton Hubbard McDonald Hopkins, LLC Ohio Attorney General Ohio Attorney General 1
Overview • History of the Direct Right of Appeal • Amendment In 2017 Budget Bill • New Ohio Rev. Code § 5717.04 • Issues Presented Under New Statute • Public Policy Considerations • Practical Applications 2
Ohio Tax Appeal History • 1910‐1939: Ohio Tax Commission – See, 101 Ohio Laws 399, HB 68; 102 Ohio Laws 224, HB 491 (creating the Tax Commission) • Tax Commission Appeal Rights – 1910‐1916: Decisions Final and Binding • See, Doerfler v. State Tax Comm. , 29 Ohio Dec. 298, 1919 WL 978 (Cuy. Cty. Comm. Pleas) (“star chamber tribunal”) – 1917‐1939: Appeal to Common Pleas Court • See, 107 Ohio Laws 550, 551, SB 227, G.C. § 5611‐2 • See, 116 Ohio Laws 104, 123, HB 42, G.C. § 5611‐2 3
Ohio Tax Appeal History • 1939‐Present: Dept. of Taxation and BTA – See, 118 Ohio Laws 344, 355, SB 159 (repealing the Tax Commission and creating new admin. structure) • Appeal Rights from the BTA – 1939‐1953: Appeal To Ohio Supreme Court Only • G.C. § 5611‐2 – 1953‐2017: Appeal To Ohio Sup. Ct. OR Ct. of Appeals • Former R.C. § 5717.04; 125 Ohio Laws 250, Am. HB 220 – 2017‐Present: Appeal to Ct. of Appeals Only • Current R.C. 5717.04; 132nd G.A., Am. HB 49, 2153‐55 4
Budget Bill Amendment (HB 49) • Amendment to R.C. 5717.04 through Biennial Budget Bill, Am. Sub. HB 49, 132nd GA (2017) • Removes direct right of appeal from BTA decisions to the Ohio Supreme Court • Creates procedure for direct right of appeal to Supreme Court “if the appeal involves a substantial constitutional question or a question of great general or public interest” 5
Budget Bill Timeline • February 8, 2017: Introduced in House • May 2, 2017: Passed the House • May 3, 2017: Introduced in Senate • June 20, 2017: Omnibus Amendment Eliminating Direct Right of Appeal to OSC In R.C. 5717.02 • June 21, 2017: Passed the Senate • June 22, 2017: House and Senate Each Adopt Conference Report • June 30, 2017: Governor Signs Into Law (With Line Item Vetoes) 6
HB 49 Amendment Process • No Legislative Hearings • Amendment to R.C. 5717.04 Added 8 Days Prior to Passage • Attributed To Chief Justice O’Connor • Industry and Private Bar Oppose Amendment 7
Legal Issues With Process • Single Subject Rule (Ohio Const. Art. II, §15D) – “No bill shall contain more than one subject, which shall be clearly expressed in its title.” – See, Simmons‐Harris v. Goff , 86 Ohio St.3d 1 (1999) (enforcing one subject rule in biennial budget bill) • Three Readings Rule (Ohio Const. Art. II, §15C) – “Every bill shall be considered by each house on three different days, unless two‐thirds of the members elected to the house in which it is pending suspend this requirement, and every individual consideration of a bill or action suspending the requirement shall be recorded in the journal of the respective house. * * * ” 8
New. R.C. 5717.04 “The proceeding to obtain a reversal, vacation, or modification of a decision of the board of tax appeals shall be by appeal to the court of appeals for the county in which the property taxed is situated or in which the taxpayer resides. If the taxpayer is a corporation, then the proceeding to obtain such reversal, vacation, or modification shall be by appeal to the court of appeals for the county in which the property taxed is situated, or the county of residence of the agent for service of process, tax notices, or demands, or the county in which the corporation has its principal place of business. In all other instances, the proceeding to obtain such reversal, vacation, or modification shall be by appeal to the court of appeals for Franklin county.” (Underlining added). 9
Legal Issues With Appeal Right • What if taxpayer appeals to the wrong court? – Is a venue defect jurisdictional? Should it be? – See, Am. Rest. & Lunch v. Glander , 147 Ohio St. 147 • Open Issues – What is a corporation’s “principal place of business”? • Reserve Life Ins. v. Bowers , 119 Ohio App. 251 (1st Dist. 1963) – Which rule applies to pass‐through entities? – What does “In all other instances” mean in R.C. 5717.04? See, discussion in the next slide. 10
Where to Appeal? • What does the following language mean? – R.C. 5717.04: “In all other instances, the proceeding to obtain such reversal, vacation, or modification shall be by appeal to the court of appeals for Franklin county.” • Hon. Alba Whiteside: – All tax appeals other than property tax appeals to 10 th Dist. Ct. of Appeals. Stines v. Limbach , 61 Ohio App.3d 461 (10 th Dist. 1988) (discussing “taxpayer” meaning); – See also, Marion v. Marion Income Tax Bd., 2008‐Ohio‐ 2496 (3 rd Dist. 2008); Oakwood Pub. Sch. Lib. v. Budget Comm'n of Mont. Cty. , 1977 WL 200386, (10 th Dist. 1977). 11
Where to Appeal? • Former Justice Paul Herbert (Dissenting): – “In all other instances” means exclusive jurisdiction to the Franklin Cty. Ct. of App. for Budget Comm. appeals with no taxpayer or taxed property. – See, Lucas Cty. Commr’s v. Lucas Cty. Bud. Comm. , 12 Ohio St.2d 47 (1967) (Herbert, J., dissenting); Toledo v. Lucas Cty. Bud. Comm. , 33 Ohio St.2d 62 (1973) (Herbert dissenting) • Compare, Deputy Tax Comm. Addison Dewey: – Contrary to Judge Whiteside’s explanation in Stines , the definition of “taxpayer” in R.C. 5717.04 is not limited to property tax taxpayers. – Dewey, Alternative Methods of Appeal from Decisions of the Ohio Bd. of Tax Appeals , 14 Ohio St. Law. J. 494, 496 (1953) 12
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