Justia Tax Law Opinion Summaries

Articles Posted in Supreme Court of Ohio
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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) affirming a tax assessment against Rockies Express Pipeline, LLC (Rockies), holding that Rockies' gross receipts for tax year 2015 from the transportation of natural gas within the state of Ohio were not excluded from taxation under Ohio Rev. Code 5727.33(B)(1) as "receipts derived wholly from interstate business" and that such taxation does not violate the Commerce Clause. Rockies is an interstate pipeline that transports natural gas for others. For tax year 2015, the Ohio Tax Commissioner assessed Rockies on transactions in which natural gas entered and exited Rockies' pipeline within Ohio. Rockies petitioned the tax commissioner for reassessment, arguing that its receipts derived wholly from interstate business and were thus eligible for exclusion under section 5727.33(B)(1). The tax commissioner upheld the assessment. The BTA affirmed. The Supreme Court affirmed, holding (1) Rockies did not meet its burden of showing that its receipts fall under the exclusion in section 5727.33(B)(1) as "receipts derived wholly from interstate business"; and (2) imposing the tax under these circumstances does not violate the Commerce Clause because Rockies has substantial nexus with Ohio based on its physical presence within the State. View "Rockies Express Pipeline, LLC v. McClain" on Justia Law

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The Supreme Court affirmed the determination of the board of tax appeals (BTA) of the 2015 tax year value of an apartment complex located in Franklin County, holding that the BTA's decision was reasonable and lawful. At issue was whether the BTA erred in deciding that the sale price paid for the transfer of ownership of a corporate entity, Palmer House Borrower, LLC (Palmer) should be presumed to constitute the value of the real estate owned by that entity. Palmer further asserted that the BTA improperly admitted and relied upon the submitted evidence of the transfer and sale. The Supreme Court affirmed, holding (1) the BTA reasonably considered the sale and conveyance documentation; (2) the BTA reasonably determined that the transaction was, in substance, a sale of the real estate; (3) the appraisal offered by Palmer was not the only evidence of value; and (4) Palmer did not show that the BTA's decision violated Ohio Const. art. XII, 2. View "Columbus City Schools Board of Education v. Franklin County Board of Revision" on Justia Law

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The Supreme Court affirmed the decision of the board of tax appeals (BTA), holding that Cleveland's taxation of Appellant's employment compensation in 2014 and 2015 was required under municipal law and did not violate Appellant's due process rights, despite the fact that Appellant did not work or live in the city of Cleveland during the tax years at issue. Appellant was employed by the Sherwin-Williams Company from 1980 until she retired in 2009 and moved to Florida. Sherwin-Williams compensated Appellant, in part, with stock options during her employment. Appellant exercised some of those options in 2014 and 2015, and Cleveland collected income tax on their value. Appellant sought refunds from the city based on the fact that she resided in Florida during the tax years at issue. Cleveland Board of Income Tax Review denied the refunds, and the BTA affirmed. The Supreme Court affirmed, holding that Appellant's arguments challenging the taxation failed. View "Willacy v. Cleveland Board of Income Tax Review" on Justia Law

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The Supreme Court denied Appellee's motion to dismiss Appellant's appeal from the decision of the Board of Tax Appeals (BTA) that denied Appellant's claim for property-tax exemption for several parcels of land it owned, holding that Appellant timely perfected its appeal. As support for its motion to dismiss, Appellee argued that because Appellant did not initiate service by certified mail within the thirty-day period prescribed by Ohio Rev. Code 5717.04 for filing its notice of appeal, the Supreme Court must dismiss the appeal for lack of jurisdiction. The Supreme Court rejected Appellee's argument, holding that section 5717.04 does not state a timeline for the certified-mail service of the notice of appeal on the appellees, and it is not disputed that the notice of appeal was properly served on Appellee by certified mail. View "The City of Upper Arlington v. McClain" on Justia Law

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The Supreme Court denied the writ of mandamus sought by the St. Clair Township Board of Trustees (St. Clair) seeking to compel the City of Hamilton and its officers (Hamilton) to calculate and pay lost tax revenue associated with territory that was annexed to the city before March 27, 2002 but not excluded from the township until 2016, holding that St. Clair was not entitled to relief. On March 27, 2002, S.B. 5 became effective. Under Ohio Rev. Code 709.19(B), as amended by S.B. 5, a municipality was to pay a township for lost tax revenue associated with the municipality’s annexation of territory of any township only when territory had been annexed and excluded as prescribed by Ohio Rev. Code 503.07, with the payments commencing upon exclusion. In 2016, the General Assembly repealed the S.B. 5 version of section 709.19. After the current version of section 709.19 took effect, the city created Hamilton Township, which consisted of the parts of the townships, including St. Clair, that the city annexed before the effective date of S.B. 5. Thereafter, St. Clair sought lost-tax-revenue payments from Hamilton. Hamilton refused to pay. St. Clair sought a writ of mandamus. The Supreme Court denied relief, holding that St. Clear did not establish a clear legal right to the relief requested. View "State ex rel. St. Clair Township Board of Trustees v. Hamilton" on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) affirming the decision of the tax commissioner concluding that Appellant’s purchase of an aircraft and then leasing it to its sole corporate member was taxable, holding that Appellant failed to carry its burden to show that it met the requirements of the sale-for-resale exception. See Ohio Rev. Code 5739.01(E) and 5741.02(C)(2). Appellant purchased the aircraft without paying sales or use tax on it and then leased it to its sole corporate member. The tax commissioner assessed used tax against Appellant for this purchase, thus rejecting Appellant’s argument that the purchase was nontaxable under the definition of “retail sale,” commonly known as the sale-for-resale exception. Specifically, the tax commissioner found that Appellant was not “engaging in business” within the meaning of the exception. The BTA affirmed. The Supreme Court affirmed, holding that the BTA (1) did not misapply the sale-for-resale exception; (2) did not run afoul of due process in disregarding certain portions of Appellant’s brief; and (3) did not err in making certain discovery rulings. View "Pi In The Sky, LLC v. Testa" on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) concluding that because Great Lakes Bar Control’s service of cleaning beer-tap lines was primarily a maintenance service, any cleaning was merely incidental to that maintenance and was therefore not subject to sales tax as a “building maintenance and janitorial service” under Ohio Rev. Code 5739.01(B)(3)(j), holding that the beer-line service did not fit the plain meaning of “cleaning” in the context of providing a “janitorial service.” Great Lakes provided services related to selling, installing, and servicing beer-dispensing systems and provided a beer-line maintenance service to remove buildup of sediment and prevent lines from becoming blocked. The Ohio Department of Taxation determined that the beer-line service involved cleaning of tangible personal property under section 5730.01(II) and was subject to the sales tax. The BTA reversed. The Supreme Court affirmed, holding that the beer-line service did not fit the plain meaning of “cleaning” in the context of providing a “janitorial service.” View "Great Lakes Bar Control, Inc. v. Testa" on Justia Law

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The Supreme Court affirmed the decision of the board of tax appeals (BTA) affirming the tax commissioner’s denial of a charitable-use property-tax exemption for the subject property, holding that the BTA’s factual findings were supported by the record in this case. Chagrin Realty, the property owner, was a nonprofit organization exempt from federal income tax under 26 U.S.C. 501(c)(2). Chagrin leased the property to Community Dialysis Center (CDC), a nonprofit tenant, which operated a hemodialysis facility on the property. The Centers for Dialysis Care, Inc., a for-profit management company, contracted with the CDC and employed the personnel who worked for the CC. Chagrin Realty filed an application for real-property-tax exemption relating to the subject property, but the tax commissioner determined that Chagrin Realty did not satisfy the requirements for exemption under Ohio Rev. Code 5709.12 or 5709.121. The BTA affirmed, thus rejecting Chagrin Realty’s contention that its 501(c)(2) federal tax status and its reliance on vicarious-exemption theories qualified it as a “charitable” institution. The Supreme Court affirmed, holding that the BTA reasonably and lawfully found that Chagrin Realty is not a charitable institution. View "Chagrin Realty, Inc. v. Testa" on Justia Law

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The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) affirming the decision of the tax commissioner, holding that the sale-for-resale exemption of Ohio Rev. Code 5739.01(E) applied to preclude Cincinnati Reds, LLC (the Reds) from having to pay use tax on promotional items it purchased. The tax commissioner denied the Reds’ request to remove the promotional items from the use-tax assessment, concluding that there was no evidence that the promotional items were resold with admission to games. The BTA affirmed, finding that the promotional items were given away for free and that the cost of the promotional items was not included in the ticket price. The Supreme Court reversed, holding (1) consideration is given in exchange for the Reds’ agreement to supply fans with the promotional items, and therefore, the transfer of promotional items to fans constitutes a “sale” under section 5739.01(B)(1); and (2) accordingly, the promotional items were subject to the sale-for-resale exemption of section 5739.01(E). View "Cincinnati Reds, LLC v. Testa" on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) upholding a use-tax assessment on the purchases of natural gas by East Manufacturing Corporation (East) and not granting an exemption under Ohio Rev. Code 5739.011(B)(4), (B)(8), or (C)(5). East manufactures custom aluminum truck trailers. The tax commissioner issued a use-tax assessment for East’s natural gas purchases, exempting only the portion of natural gas used in painting operations. On appeal to the BTA, East argued that the natural gas used to heat the its buildings was exempt because maintaining the temperature at fifty degrees Fahrenheit or higher in the plant’s buildings was essential to its manufacturing process. The BTA affirmed the commissioner’s assessment on the portion of the natural gas that East used to heat its plant and denied East’s claim for exemption in its entirety. The Supreme Court affirmed, holding that the BTA correctly determined that East did not qualify for an exemption for total environmental regulation of a “special and limited area” of the facility, for items used in a manufacturing operation, or for gas used in a manufacturing operation. View "East Manufacturing Corp. v. Testa" on Justia Law