Ohio Dept. of Taxation v. Shuster
2017 Ohio 8927
| Ohio Ct. App. | 2017Background
- In 2012 the Ohio Department of Taxation recorded a certificate of judgment against Karen Shuster for unpaid 2003 state income taxes that had become final.
- In February 2017 the Department filed an affidavit and motion to garnish Shuster’s personal earnings and the court issued a garnishment order and notice to her employer.
- Shuster did not request the statutory hearing within five business days under R.C. 2716.06 but instead filed pro se motions to strike and to dismiss, and an objection to ex parte filings.
- The trial court denied Shuster’s motions, concluding it lacked jurisdiction to vacate or modify the underlying tax assessment outside the statutory garnishment/hearing procedure.
- Shuster appealed, arguing (1) that governments may not tax labor, (2) she was entitled to a Seventh Amendment jury trial, and (3) she was never properly served under Civ.R. 4(E). The appeals court affirmed.
Issues
| Issue | Plaintiff's Argument (Dept. of Taxation) | Defendant's Argument (Shuster) | Held |
|---|---|---|---|
| Validity of income tax assessment / court jurisdiction to vacate judgment | Department: followed statutory procedure to reduce the assessment to judgment and to seek garnishment; court limited to statutory garnishment procedures | Shuster: underlying assessment/judgment invalid because income taxation is unconstitutional; seeks dismissal | Court: income taxation valid; trial court lacked authority to vacate underlying judgment outside R.C. 2716 statutory process; affirmed |
| Right to jury trial in garnishment/tax collection | Dept.: garnishment and tax collection are statutory remedies not triable to a jury under Seventh Amendment | Shuster: claims a Seventh Amendment right to jury trial | Court: Seventh Amendment jury right does not apply in state garnishment proceedings; no federal jury right here |
| Sufficiency of service of process | Dept.: followed R.C. 5747.13 and R.C. 2716 procedures, filed required affidavits and praecipe for notice by ordinary mail | Shuster: never properly served under Civ.R. 4(E) | Court: Civ.R.4(E) inapplicable; statutory garnishment notice procedures were followed; service adequate |
| Procedural remedy to challenge tax assessment | Dept.: contest must be pursued through the statutory assessment/appeal procedures, not by motion to dismiss in garnishment | Shuster: sought dismissal via Civ.R.12(B) and to strike | Court: dismissal improper; statutory avenues required; motions denied |
Key Cases Cited
- Abraitis v. Testa, 137 Ohio St.3d 285 (2013) (characterizes tax-protester arguments as meritless and summarizes law permitting income taxation)
- Wickwire v. Reinecke, 275 U.S. 101 (1927) (Seventh Amendment jury right does not extend to federal tax collection proceedings)
- Blackburn v. Commissioner, 681 F.2d 461 (6th Cir. 1982) (compiles authority that tax collection proceedings are not subject to Seventh Amendment jury trial)