Internatl. Paper Co. v. Testa (Slip Opinion)
150 Ohio St. 3d 348
| Ohio | 2016Background
- International Paper filed an amortizable-amount report for Ohio’s CAT NOL credit in June 2006 claiming $16,957,077.
- The Tax Commissioner audited and ultimately reduced the amortizable amount to $927,513; that final determination was journalized on June 8, 2010 but mailed to International Paper on July 12, 2010.
- R.C. 5751.53(D) gave the Tax Commissioner authority to audit and to "adjust the amortizable amount" or "issue any assessment or final determination" through June 30, 2010.
- International Paper appealed the reduction to the Board of Tax Appeals (BTA), which held the June 30, 2010 deadline required mailing (i.e., issuance) by that date and reinstated International Paper’s original amount.
- The Tax Commissioner appealed to the Ohio Supreme Court arguing (1) a formal final determination was not required to reduce the amortizable amount, (2) if required, the June 30 deadline was directory not mandatory, and (3) if the court reversed, International Paper had forfeited merits review by not filing a protective cross-appeal.
Issues
| Issue | Plaintiff's Argument (International Paper) | Defendant's Argument (Tax Commissioner) | Held |
|---|---|---|---|
| Whether R.C. 5751.53(D) requires a formal final determination to reduce the amortizable amount | Statute requires issuance of an assessment/final determination to effectuate a reduction | Issuing a formal determination is optional; audit completion alone can reduce the amount | Court: A final determination is required to reduce the amortizable amount; taxpayer must be given definitive notice and ability to appeal. |
| Whether the June 30, 2010 deadline is mandatory or directory | Deadline should be mandatory to protect taxpayer’s ability to rely on the amortizable amount | Deadline is directory; late issuance should not void the commissioner’s action | Court: The June 30, 2010 deadline is mandatory. |
| What constitutes “issue” of the final determination under R.C. 5751.53(D) (journalization vs. mailing) | "Issue" means mailing to give taxpayer actual notice (per BTA and dissent) | "Issue" includes journalization; journal entry on June 8 constituted issuance | Court: "Issue" may be ambiguous, but liberally construed for remedial tax statutes it includes journalization; the June 8 journal entry sufficed. |
| Whether International Paper forfeited its right to merits review by not filing a protective cross-appeal | No cross-appeal required because International Paper sought a remand for BTA consideration and BTA had not ruled on the merits | Cross-appeal required to preserve alternative relief if this court reversed BTA | Court: No protective cross-appeal required here; remand ordered for BTA to consider International Paper’s substantive challenge. |
Key Cases Cited
- Navistar, Inc. v. Testa, 143 Ohio St.3d 460 (Ohio 2015) (explaining the purpose of the CAT/NOL credit and treatment of NOLs as deferred-tax assets)
- Carstab Corp. v. Limbach, 40 Ohio St.3d 89 (Ohio 1988) (discussing distinctions among journalization, issuance, and receipt of tax assessments)
- 2200 Carnegie, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 135 Ohio St.3d 284 (Ohio 2012) (directory-vs-mandatory time-limit analysis focusing on procedural core)
- Lenart v. Lindley, 61 Ohio St.2d 110 (Ohio 1980) (cross-appeal doctrine: appellee cannot obtain relief on issues not raised by notice of appeal)