COLUMBUS, Ohio — Ohioans lost the right Friday to appeal disputed tax decisions directly to the state’s high court, a scarcely debated policy change that critics say will have sweeping consequences for businesses, individuals and governments.
The Ohio Supreme Court advocated for and defends the change, arguing it was necessary to lighten its docket of a flood of market-driven property tax disputes and to preserve its role as arbiter of the state’s most significant legal questions.
Administrative Director Mike Buenger said the Supreme Court is intended to deal with categories of cases that are of great statewide public importance or of constitutional magnitude.
“We started looking at these cases because there was concern by the court that many of them presented basic disputes over mathematic valuations and calculations, and often little more than that,” he said. “With limited exception, these cases did not present great questions of statewide importance.”
A court analysis found that only 14 of the 152 appeals of Ohio Board of Tax Appeals decisions the court was compelled to accept in 2014 involved matters of law appropriate for the high court’s attention.
Justices took their concerns to the Ohio Senate, which quietly slipped language into the state budget bill signed in June removing the court’s obligation to accept direct tax appeals — an option since 1939 — and sending them through the appellate courts first.
Business groups pushed back, arguing that sending tax appeals through regional appellate courts would add costs, inconsistency and competitive disadvantages to Ohio’s tax system.
“The impact will be extremely negative. Over time, it will erode the uniformity of the tax code in the state of Ohio,” said Tom Zaino, a Columbus tax attorney and former state tax commissioner under Republican Gov. Bob Taft. “It’s going to be equally bad for government as it is for taxpayers.”
Zaino said his business tax clients often have more than one location and eliminating direct Supreme Court appeals will lead to decisions that are applicable in only one part of the state, to some but not all of a business’ properties or to one competitor but not another.
Some opponents contend the court overreacted to a rare spike in cases to erase a nearly 80-year-old taxpayer right.
The Board of Tax Appeals, which arbitrates local tax disagreements, issued a whopping 8,165 decisions in 2013, which placed such a burden on resources that the board launched an online filing system to handle the load, said executive director Kathleen Crowley.
“The market just wasn’t supporting the valuations that were at one time a particular number and then, years later, not that number,” she said. Total decisions dropped to around 6,500 in 2014, to 4,500 in 2015 and to less than 2,500 last year.
As appeals made their way to the Supreme Court, the same spike surfaced. Court figures show board decisions appealed to the high court rose from 55 in 2013 to 152 in 2014, fell to 106 in 2015 and then to 69 last year.
Opponents who lined up against eliminating direct appeals included the Ohio Chamber of Commerce, the Ohio Society of CPAs, the National Federation of Independent Business, the Manufacturing Policy Alliance and the Ohio Association of Realtors.
Citing fears over cost increases, venue shopping and inconsistency brought on by the change, the groups urged lawmakers to remove the Senate-added language. When that failed, they lobbied Republican Gov. John Kasich to veto it, again without success.
Matthew Chafin, chief legal counsel for the Ohio Department of Taxation, said Ohio was unusual among states to offer a direct appeal to the high court in tax cases and he believes the state judicial system is equipped to address any issues that arise with the switch.
“It’ll work fine for us,” he said. “It may take another couple steps in dealing with appellate courts and trying to get your case in front of the Supreme Court, but I guess I am not of the opinion that the sky is falling over this.”
Buenger notes that a high court review of any decision of the tax appeals board can still be requested, and those involving a legal matter of statewide significance may be taken up at justices’ discretion.
Time will tell whether the system affects Ohio’s tax climate score as set by the Council on State Taxation.
Fred Nicely, the group’s tax counsel, said the national group is watching.
“That could lead to a lot less consistency across the state in terms of how tax issues are addressed,” he said. “And so that is somewhat of a concern. What was really nice was at least when you had the Ohio Supreme Court addressing these cases, you knew that was the law of the land across all of Ohio.”