Progressive Plastics, Inc. v. Testa
133 Ohio St. 3d 490
| Ohio | 2012Background
- PPI challenged the tax commissioner's amended 2004 and 2005 personal property assessments increasing inventory value.
- The commissioner substituted FIFO for LIFO in valuing PPI's inventory, despite PPI using LIFO on its books.
- The BTA affirmed the amended assessments, and collateral estoppel was invoked to bar PPI's FIFO/LIFO claim.
- The 2004 and 2005 tax-year issues were distinct from 2003, so collateral estoppel did not apply to 2004-2005.
- R.C. 5711.18 presumes book value is true value; R.C. 5711.21 allows substitutions only with specific supporting evidence or rules.
- The Court reversed the BTA's 2004-2005 determination, holding the commissioner could not substitute FIFO for LIFO without a governing rule or taxpayer-specific evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether collateral estoppel bars the claim for 2004-2005. | PPI argues no identity of issues between years; estoppel does not apply. | Commissioner relied on prior-year findings to bar relitigation. | Collateral estoppel does not apply to 2004-2005. |
| Whether the commissioner may substitute FIFO for LIFO absent a rule. | Book value should govern unless taxpayer-specific evidence shows otherwise. | FIFO substitution reflects true value based on general accounting principle. | Commissioner cannot substitute FIFO absent an administrative rule or taxpayer-specific evidence. |
| Whether the substitution was supported by the record as to taxpayer-specific evidence. | LIFO was the agreed accounting method; substitution lacked taxpayer-specific support. | General proposition of FIFO suffices to justify substitution. | No reliance on taxpayer-specific evidence; substitution improper. |
| Whether RC 5711.18 presumes book value and permits departure only with proper findings. | Book value is presumptively true; any departure requires supportive basis. | Departures can be justified by rules or other evidence. | Departure from book value requires rule or taxpayer-specific evidence; improper here. |
| Whether the 2003 decision can govern 2004-2005 valuations under collateral estoppel and related rules. | Prior-year findings should guide current valuations where appropriate. | Earlier record does not control different tax years. | Not controlling; not binding for 2004-2005. |
Key Cases Cited
- PPG Industries, Inc. v. Kosydar, 65 Ohio St.2d 80 (Ohio 1981) (unrebutted taxpayer return values control absent rule or contrary evidence)
- Champion Spark Plug Co. v. Lindley, 6 Ohio St.3d 56 (Ohio 1983) (supports use of actual evidence where available; not a general invitation to replace methods)
- Olmsted Falls Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 122 Ohio St.3d 134 (Ohio 2009) (collateral estoppel limited across years; ultimate tax value not the same issue)
- Youngstown Sheet & Tube Co. v. Kosydar, 44 Ohio St.2d 96 (Ohio 1975) (book value as prima facie true value; no universal substitution rule)
- HealthSouth Corp. v. Testa, 132 Ohio St.3d 55 (Ohio 2012) (commissioner cannot create binding rule without rulemaking)