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Tax Appeal Notice Sufficient if It Includes Objection, Identifies Disputed Action by Commissioner

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2010-1027.  WCI Steel, Inc. v. Testa, Slip Opinion No. 2011-Ohio-3280.
Board of Tax Appeals, No. 2005-V-1565.  Decision reversed, and cause remanded to the Board of Tax Appeals.
O'Connor, C.J., and Pfeifer, Lundberg Stratton, O'Donnell, Lanzinger, Cupp, and McGee Brown, JJ., concur.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2011/2011-Ohio-3280.pdf

Video clip View oral argument video of this case.

(July 7, 2011) By a 7-0 vote, the Supreme Court of Ohio ruled today that the jurisdiction of the State Board of Tax Appeals (BTA) is invoked to review a determination of the value of personal property if the notice of appeal states the appellant’s objection and identifies the treatment the state tax commissioner should have applied.

Based on that analysis, the Supreme Court concluded that the BTA acted unlawfully when it dismissed an appeal from WCI Steel Inc. for lack of jurisdiction, and the Court remanded the case to the BTA to determine WCI’s appeal on the merits.

R.C. 5717.02 requires that when a property owner appeals to the BTA to challenge a determination by the tax commissioner of the taxable value of property, the notice of appeal must include a copy of the tax commissioner’s determination, and must “specify the errors therein complained of ... ”  In this case, the Court was asked to review a ruling in which the BTA dismissed an appeal based on the board’s finding that the notice of appeal filed by the property owner did not identify the alleged error(s) in the tax commissioner’s determination of value with a sufficient degree of specificity to invoke the BTA’s jurisdiction.

In an opinion authored by Justice Robert R. Cupp, the Court also held that: “In an appeal from an assessment in which the tax commissioner has determined the value of personal property, the Board of Tax Appeals is statutorily authorized to receive evidence in addition to that considered by the tax commissioner, and that evidence may include different valuation approaches from those presented to the tax commissioner.”

WCI sought a reduction in the tax valuation of the company’s machinery and equipment for tax years 2001, 2002, and 2003. For 2001 and 2002, WCI’s claim sought refunds of allegedly excess taxes it paid based on the higher valuation of its property.  WCI asserted that economic circumstances greatly reduced the value of its steelmaking equipment. WCI supported its argument with a third-party appraisal of its equipment that set its true value at $30 million, as opposed to the commissioner’s 2002 valuation of the same property at $121 million.

The commissioner denied WCI’s refund claims for 2001 and 2002, and issued a deficiency finding assessing additional property tax against the company for 2003 based on WCI’s undervaluation of its equipment in its 2003 tax return. WCI appealed the commissioner’s valuation to the BTA, which accepted jurisdiction and initiated appeal proceedings. In its pleadings to the BTA, WCI included a new appraisal by a different third-party appraiser who used a different valuation model than the first appraiser had used, but arrived at a similar valuation of the property at issue.

While WCI’s appeal was under review, the Court issued a decision in Ohio Bell Tel. Co. v. Levin and reversed a ruling by the BTA based on a holding that the owner’s notice of appeal had not clearly alleged as error by the commissioner the issue on which the BTA had based its decision, and therefore the BTA had acted without jurisdiction in considering that issue. The BTA asked WCI and the tax commissioner to file supplemental briefs addressing any jurisdictional issues they thought might be raised in this case in light of the Ohio Bell decision.

In his supplemental brief, the commissioner argued that pursuant to Ohio Bell, the BTA did not have jurisdiction to review WCI’s appeal because WCI’s notice of appeal alleged that the commissioner had erred by failing to adopt the valuation methodology proposed by its first appraiser, but all the evidence actually presented to the BTA was based on the second appraiser’s valuation method, which had never been reviewed or rejected by the commissioner. The BTA agreed with the commissioner’s argument, dismissed WCI’s appeal for lack of jurisdiction, and ordered that the commissioner’s determination of value be adopted as final.

WCI exercised its right to appeal the BTA’s decision to the Supreme Court. The Court heard the case during oral argument on March 23.

Justice Cupp distinguished today’s decision from the Ohio Bell case.

We “hold that the different approaches to valuing personal property set forth in Ohio Adm. Code 5703-3-10(B) are not ‘alternate valuation methods’ and accordingly that the notice of appeal need not specify that the applicant will present a different valuation approach to the BTA than it presented in the proceedings before the tax commissioner. The analysis of Ohio Bell is inapplicable to the situation in this case.”

Contacts
Steven A. Dimengo, 330.376.5300, for WCI Steel Inc.

Barton A. Hubbard, 614.466.5967, for the State Tax Commissioner.