MacDonald v. Shaker Hts. Bd. of Income Tax Rev. (Slip Opinion)
144 Ohio St. 3d 105
| Ohio | 2015Background
- William E. MacDonald III, a retiring National City executive (retired 12/31/2006), selected a SERP annuity; National City reported the present value ($9,107,014) in box 5 of his W-2 but omitted it from municipal "local wages" box 18.
- RITA assessed Shaker Heights municipal income tax on that present-value amount; the municipal tax board upheld the assessment.
- The MacDonalds appealed to the Board of Tax Appeals (BTA); the BTA ruled the amount qualified as a pension under the Shaker Heights ordinance and was exempt from municipal tax.
- The city appealed to the Tenth District Court of Appeals, which affirmed the BTA on both the merits and the BTA’s use of de novo review; the city then appealed to the Ohio Supreme Court.
- The Ohio Supreme Court accepted jurisdiction only on the procedural question whether the BTA must defer to municipal tax boards (i.e., what standard of review R.C. 5717.011 requires) and declined to decide the substantive tax classification.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review under R.C. 5717.011 for BTA appeals from municipal tax boards | (City) R.C. 5717.011 should be read like R.C. Chapter 2506 appeals to common pleas courts, requiring deferential review to municipal board findings | (MacDonald/BTA) R.C. 5717.011 parallels other BTA appeal statutes and authorizes de novo review of both facts and law | The BTA reviews de novo as to both facts and law under R.C. 5717.011; no deferential standard applies |
| Whether BTA must defer to municipal tax board on legal/factual classification of MacDonald’s SERP amount | (City) The BTA should have given deference and limited new evidence like a common pleas court under R.C. 2506 | (MacDonald/BTA) BTA may hear additional evidence and exercise independent judgment; legal questions are reviewed de novo | BTA properly exercised independent de novo review; hearing additional evidence and reaching independent legal and factual conclusions was authorized |
Key Cases Cited
- Tetlak v. Bratenahl, 92 Ohio St.3d 46 (2001) (discusses presumptive validity of municipal board findings)
- Dudukovich v. Lorain Metro. Housing Auth., 58 Ohio St.2d 202 (1979) (common pleas court must weigh record evidence but should not substitute its judgment for agency expertise)
- Key Servs. Corp. v. Zaino, 95 Ohio St.3d 11 (2002) (BTA hearing is de novo and may investigate and make independent findings)
- Brown v. Levin, 119 Ohio St.3d 335 (2008) (BTA authority to hear additional evidence means what it says)
- Health Care REIT, Inc. v. Cuyahoga Cty. Bd. of Revision, 140 Ohio St.3d 30 (2014) (property-value questions for tax purposes are factual matters primarily for taxing authorities)