Articles Posted in Supreme Court of Ohio

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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

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The Supreme Court affirmed the decision of the Board of Tax Appeals affirming the decision of the tax commissioner finding that Ohio Rev. Code 5709.911 subordinated a property’s original tax increment financing (TIF) exemption to the public-worship exemption from taxation. The Fairfield Township Board of Trustees filed a complaint against the continued exemption from taxation as a house of public worship, claiming that by granting the property owner the public-worship exemption and by continuing the exemption, the tax commissioner unlawfully relieved the church of its payment obligations as the owner of property subject to a recorded covenant. The covenant in question related to a TIF agreement entered into between the Township and a previous owner of the church property. The tax commissioner rejected the Township’s agreement, and the Board of Tax Appeals affirmed. The Supreme Court affirmed, holding (1) by dictating that TIF exemptions be subordinated to other exemptions, section 5709.911 barred the enforcement of the real covenant with respect to service payments; and (2) the Township lacked standing to raise its constitutional challenge to section 5709.911. View "Fairfield Township Board of Trustees v. Testa" on Justia Law

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At issue was whether the Ohio use tax applied to Lafarge North America, Inc.’s purchases of fuel and repair parts for equipment used to break up and transport solidified slag, a by-product from molten ore during steelmaking, from the “slag mountain," a large slag mass. Whether the tax applied depended on whether the activity was part of Lafarge’s “manufacturing operation” under Ohio Rev. Code 5739.02(B)(42)(g). The Department of Taxation assessed a use tax and penalty against Lafarge for purchases for the equipment at issue. Lafarge challenged the assessment. The tax commissioner determined that the breaking up and transport of slag from the slag mountain preceded Lafarge’s manufacturing operation and that equipment used to move raw materials prior to the start of the manufacturing process was taxable. The Board of Tax Appeals affirmed the tax assessment and penalty. The Supreme Court reversed, holding that Lafarge’s manufacturing operation began once Lafarge cut slag from the mountain and continued as the material was crushed, placed in dump trucks, and transported to a screening plant. View "Lafarge North America, Inc. v. Testa" on Justia Law

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In this real-property-valuation case, the Supreme Court vacated the decision of the Board of Tax Appeals (BTA) finding that the appraisal report presented by the Washington County Board of Revision and Washington County auditor (collectively, the County) constituted the most competent and probative evidence of the value of the subject property for tax year 2013. The BTA relied on the County’s report to value a property owned by Lowe’s Home Centers, Inc./Lowe’s Home Centers, LLC (collectively, Lowe’s), even though Lowe’s presented its own appraisal report. The Supreme Court vacated the BTA’s decision, holding (1) the Court’s decisions in Steak ’N Shake, Inc. v. Warrant County Board of Revision, 48 N.E.3d 535 (Ohio 2015), Rite Aid of Ohio, Inc. v. Washington County Board of Revision, 54 N.E.3d 1177 (Ohio 2016), and Lowe’s Home Centers, Inc. v. Washington County Board of Revision, 49 N.E.3d 1266 (Ohio 2016), provide the proper guideposts for resolving this controversy; and (2) because the BTA had yet to evaluate the evidence in light of the legal standards articulated in these three decisions, the case must be remanded for further proceedings. View "Lowe's Home Centers, Inc. v. Washington County Board of Revision" on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) following the Court’s remand in Navistar I, holding that the BTA acted reasonably and lawfully in upholding the tax commissioner’s reduction of Navistar Inc.’s commercial-activity-tax (CAT) credit to zero. In Navistar I, the Supreme Court concluded that the BTA had ignored the testimony of Navistar’s experts in upholding the commissioner’s reduction of Navistar’s CAT credit to zero, an omission that made the BTA’s decision unreasonable and unlawful. After the BTA again upheld the tax commissioner’s decision, Navistar appealed, objecting to the BTA’s findings and its conclusion. The Supreme Court affirmed, holding that the BTA’s findings were supported by reliable and probative evidence and that the BTA’s conclusion was reasonable and lawful. View "Navistar, 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 tax commissioner’s order of two reductions that decreased Dana Corporation’s amortizable amount against the commercial-activity tax (CAT) to $4,728,051. At issue was the special credit against the CAT set forth at Ohio Rev. Code 5751.53. One factor in calculating the CAT credit was the net operating losses (NOLs) that were incurred by the corporation before the CAT. To take the credit, Dana Corporation was required to file report with the tax commissioner that calculated an amount that would be applied gradually over a period of up to twenty years (amortizable amount) against the CAT. Dana Corporation argued that its amortizable amount was $12,493,003. The tax commissioner ordered two reductions that ultimately decreased the amortizable amount to $4,728,051. On appeal, Dana argued that the second adjustment was not authorized by 5751.53(F). The BTA disagreed. The Supreme Court reversed, holding that the BTA erred in affirming the reduction of the amortizable amount based on cancellation-of-debt income offset of federal NOLs. View "Dana Corp. v. Testa" on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) finding that the “casualty-loss exception” to the general rule prohibiting successive valuation complaints within the same triennium applied in this case. Appellees filed a new valuation complaint for tax year 2013 even though they had already filed a complaint challenging the 2012 valuation of their property. The Board of Revision (BOR) ordered no change in value for 2013. The BTA found that the casualty-loss exception applied because Appellees’ evidence of damage to the property was not “truly considered” in determining the property’s value for 2012 and that the tax-year-2013 complaint was permissible. The Supreme Court affirmed, holding that the BTA acted reasonably and lawfully in determining that the BOR had jurisdiction over Appellees’ tax-year-2013 complaint. View "Glyptis v. Cuyahoga County Board of Revision" on Justia Law

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The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) concluding that Taxpayer’s challenge to the taxable value assigned to its property for tax year 2012 was barred because taxpayer waited too long to notify the Board of Revision (BOR) that it wished to pursue a continuing complaint for tax year 2012. Taxpayer did not file a new complaint for the 2012 tax year but, rather, relied upon the continuing-complaint jurisdiction provided for in Ohio Rev. Code 5715.19(D). The Supreme Court held that the time limitation imposed by the BTA was contrary to the plain language of Ohio Rev. Code 5715.19(D) and that, under the statute, the BOR had continuing-complaint jurisdiction to consider Taxpayer’s request for tax year 2012. View "MDM Holdings, Inc. v. Cuyahoga County Board of Revision" on Justia Law

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Notestine, a nonprofit corporation with 26 U.S.C. 501(c)(3) status as a charitable institution, owns the 11-unit residential rental property developed as low-income housing under 12 U.S.C. 1701q. Construction costs were $1.5 million. The federal capital advance was $1.3 million. The “project rental assistance” contract requires tenants to be at least 62 years old and have income under 50 percent of the area median. Rent is tied to tenant income at $407 per month, including utilities, with any overage payable to HUD. Tenants pay up to 30 percent of their adjusted gross income on rent, with HUD subsidizing any difference. Capital Advance Program Use and Regulatory Agreements were recorded on title, in effect at least 40 years from 2013, unless released by HUD. An auditor valued the property at $811,120 for 2013, a Logan County reappraisal year. Notestine sought a reduction, arguing that the building's value was $165,000, based on actual rent and expenses. The Board of Tax Appeals adopted the opinion of Notestine’s appraiser, who valued the property at $75,000. The Supreme Court of Ohio affirmed. Although market rents and expenses constitute a “rule” when valuing low-income government housing generally, that rule is presumptive, not conclusive. In this case, the rents are minimal, and federal subsidization is strictly controlled by HUD-imposed restrictions on the accumulation of surpluses. There is no evidence that any adjustment from contract rent to market rent would eliminate the “affirmative value” of government subsidies. View "Notestine Manor, Inc. v. Logan County Board of Revision" on Justia Law

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The 36-unit North Canton apartment complex went into foreclosure.The lender obtained a judgment of $1,700,000. There were no bids at a sheriff’s sale with a minimum bid of $1,400,000. The receiver marketed the property through a national brojkerage firm, which, in a mass-mailing flyer showed a price of $1,325,000. The marketing materials did not mention the sheriff’s sale. There were 17 inquiries and at least six offers to purchase, ranging from $820,000 to $1,200,000, from LFG. There was no relationship between LFG and the receiver or the former owner. The court approved a sale as “commercially reasonable.” Title transferred to LFG in 2011. LFG sought to reduce the property’s tax-year-2012 valuation from $1,841,300 to $1,200,000. The Board of Education filed a counter-complaint. The board relied on “strong testimony” by LFG and “good evidence” that the property was marketed over time and that the price represented fair market value. The Board of Tax Appeals reinstated the auditor’s valuation. The Supreme Court of Ohio reversed, with the instruction that the $1,200,000 sale price be used as the property’s true value for tax purposes. Under the “forced sale” provision of R.C. 5713.04, a forced sale gives rise to a rebuttable presumption that the sale price is not the true value. In this case, the presumption was rebutted by ncontradicted evidence that the transaction at issue was at arms length. View "North Canton City School District Board of Education v. Stark County Board of Revision" on Justia Law