2014 Ohio 708
Ohio Ct. App.2014Background
- MacDonald retired from National City in 2006; SERP is a nonqualified deferred compensation plan intended to supplement a qualified plan.
- SERP payments are structured as a joint and survivor annuity and become fixed at retirement; payments begin in 2007 and last for life.
- Box 5 of Form W-2 reported SERP value ($14,566,611) while Box 18 reported municipal wages ($5,459,597); 2006 city tax liability was based on Box 18 unless contested.
- Shaker Heights and its tax administrator treated the SERP as taxable qualifying wages, seeking to tax the present value of future SERP payments.
- The Shaker Heights Board of Review concluded SERP is not a pension and taxable; the BTA reversed, finding SERP is a pension and not subject to municipal tax.
- Appellants challenged the BTA decision, arguing SERP is not a pension and asserting the BTA erred in evidence handling and de novo review; the court affirms the BTA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SERP is a pension exempt from municipal tax. | MacDonald: SERP is a pension. | Shaker Heights: SERP is not a pension. | BTA's pension determination not unreasonable; SERP taxed? No, exempt as pension. |
| Whether BTA properly allowed new evidence and conducted de novo review. | MacDonald: BTA could consider new evidence; de novo review appropriate. | Shaker Heights: BTA exceeded proper scope by new evidence/de novo review. | BTA's evidentiary ruling and review method upheld; no error. |
Key Cases Cited
- Tetlak v. Bratenahl, 132 Ohio St.3d 92 (Ohio, 2012) (deference/burden in municipal income tax appeals; non-de novo review)
- AT&T Communications of Ohio, Inc. v. Lynch, 132 Ohio St.3d 92 (Ohio, 2012) (not de novo review; limits on court review of MBOA findings)
- Gahanna-Jefferson Local School Dist. Bd. of Edn. v. Zaino, 93 Ohio St.3d 231 (Ohio, 2001) (role of BTA; standard of review on appeals)