Ohio Tax Changes - October 2024
Week Of 09.30.2024
Commercial Activity Tax (CAT): The Ohio Department of Taxation has amended the regulations for highway transportation services.
The changes clarify that even if a person or group has a "bright-line presence" in Ohio, they must exceed the applicable taxable gross receipts threshold to be considered a taxpayer for CAT purposes. This threshold now applies to both combined taxpayer groups and consolidated elected taxpayer groups.
Property Tax: The Ohio Court of Appeals upheld the Warren County Auditor's revaluation of a taxpayer's property.
The taxpayer had purchased the property for $6 million in 2022, and the auditor used this purchase price to revalue the property for the 2022 tax year. The court determined that using market value as the basis for valuation is a well-established practice, citing the Ohio Supreme Court's decision in Meyer v. Cuyahoga Cty. Bd. of Revision.
These changes are effective as of October 7, 2024, for the CAT regulations and September 30, 2024, for the property tax case.
Ohio Cannabis Tax:
- The Ohio Department of Taxation has adopted new rules for the adult-use cannabis tax. These rules, effective September 19, 2024, clarify requirements for licensing, electronic filing and payment, recordkeeping, and other aspects of the tax.
Ohio Property Tax:
- The Ohio Supreme Court ruled that the $1,000 per-acre woodland clearing-cost rate used for purposes of current agricultural use valuation (CAUV) was unreasonable and arbitrary.
- The court found that the tax commissioner did not obtain the necessary data to justify the rate.
- The case was remanded to the tax commissioner to reconsider the clearing-cost rate based on evidence.
Week Of 09.30.2024
Ohio Commercial Activity Tax—Ohio highway transportation services regulation amended.
The Ohio Department of Taxation has amended Ohio Admin. Code § 5703-29-15 (Highway transportation services - bright-line presence and situsing) effective October 7, 2024. Changes clarify that even if a person or group of persons has a bright-line presence, they need to exceed the applicable taxable gross receipts threshold in order to be a taxpayer for purposes of the Commercial Activity Tax (CAT). In addition, the threshold applies to persons who are members of a combined taxpayer group or a consolidated elected taxpayer group (previously, only combined taxpayer group).
Ohio Property Tax—Ohio Court of Appeals upholds county auditor's revaluation.
The Ohio Court of Appeals (court) rejected the taxpayer's appeal of a decision that upheld the Warren County Board of Revision's affirmation of the Warren County Auditor's revaluation of the taxpayer's property. The taxpayer had purchased the property in 2022 in an arm's-length transaction for $6 million, and the Warren County Auditor revalued the property for the 2022 tax year based on that purchase price. The 2022 tax year was an 'interim tax year' for real property tax appraisal purposes in Ohio, with the next countywide reappraisal set for the 2024 tax year. The taxpayer argued that the Warren County Auditor's revaluation of the taxpayer's commercial property based on its purchase price of the property during the interim 2022 tax year was discriminatory and violated the Equal Protection Clause of the 14th Amendment to the United States Constitution and the Ohio Constitution's uniform taxation clause. The court stated that it is well-established that the best method of valuing property is by determining its market value, citing the Ohio Supreme Court's decision in Meyer v. Cuyahoga Cty. Bd. of Revision, 58 Ohio St.2d 328 (1979). The court ultimately upheld the Warren County Auditor's valuation of the taxpayer's property. (Spirit Realty, LP v. Warren Cty. Bd. of Revision, Ohio Ct. App., Dkt. No. CA2024-05-029, 09/30/2024.)
Ohio Cigarette, Alcohol & Miscellaneous Taxes—Ohio adopts adult-use cannabis tax regulations.
The Ohio Department of Taxation adopted rules to clarify the requirements, procedures, and policies concerning the adult-use cannabis tax enacted pursuant to a voter-approved initiated statute. Ohio Admin. Code §§ 5703-43-01 through 5703-43-04 and Ohio Admin. Code §§ 5703-43-06 through 5703-43-12 went into effect on September 19, 2024. In addition to defining terms, the rules explain and provide information on licensing, electronic filing and payment, and recordkeeping requirements. The tax commissioner's authority to review records and administer the tax is also discussed, among other things.
Ohio Property Tax—Ohio Supreme Court rules woodland clearing cost rate was unreasonable and arbitrary.
The Ohio Supreme Court reversed the Board of Tax Appeals (BTA) and held that the tax commissioner abused her discretion by unreasonably and arbitrarily adopting a $1,000 per-acre woodland clearing-cost rate used for purposes of current agricultural use valuation (CAUV). The landowners in this case claimed that the $1,000 rate promulgated by the tax commissioner in CAUV tables used by county auditors was too low, and the commissioner ignored evidence proving that the rate should be higher; as a result, their woodlands were overvalued, causing them to pay more property tax than appropriate for the land. The court found that the tax commissioner did not obtain the data required by Ohio Admin. Code § 5703-25-33 in adopting the clearing-cost rate. Accordingly, the court remanded to the tax commissioner for further, evidence-based consideration of an appropriate value for the clearing-cost rate for woodlands. (Adams v. Harris, Ohio S.Ct., Dkt. No. 2023-0733, 09/26/2024.)
Week Of 09.30.2024
Ohio Commercial Activity Tax—Ohio highway transportation services regulation amended.
The Ohio Department of Taxation has amended Ohio Admin. Code § 5703-29-15 (Highway transportation services - bright-line presence and situsing) effective October 7, 2024. Changes clarify that even if a person or group of persons has a bright-line presence, they need to exceed the applicable taxable gross receipts threshold in order to be a taxpayer for purposes of the Commercial Activity Tax (CAT). In addition, the threshold applies to persons who are members of a combined taxpayer group or a consolidated elected taxpayer group (previously, only combined taxpayer group).
Ohio Property Tax—Ohio Court of Appeals upholds county auditor's revaluation.
The Ohio Court of Appeals (court) rejected the taxpayer's appeal of a decision that upheld the Warren County Board of Revision's affirmation of the Warren County Auditor's revaluation of the taxpayer's property. The taxpayer had purchased the property in 2022 in an arm's-length transaction for $6 million, and the Warren County Auditor revalued the property for the 2022 tax year based on that purchase price. The 2022 tax year was an 'interim tax year' for real property tax appraisal purposes in Ohio, with the next countywide reappraisal set for the 2024 tax year. The taxpayer argued that the Warren County Auditor's revaluation of the taxpayer's commercial property based on its purchase price of the property during the interim 2022 tax year was discriminatory and violated the Equal Protection Clause of the 14th Amendment to the United States Constitution and the Ohio Constitution's uniform taxation clause. The court stated that it is well-established that the best method of valuing property is by determining its market value, citing the Ohio Supreme Court's decision in Meyer v. Cuyahoga Cty. Bd. of Revision, 58 Ohio St.2d 328 (1979). The court ultimately upheld the Warren County Auditor's valuation of the taxpayer's property. (Spirit Realty, LP v. Warren Cty. Bd. of Revision, Ohio Ct. App., Dkt. No. CA2024-05-029, 09/30/2024.)
Ohio Cigarette, Alcohol & Miscellaneous Taxes—Ohio adopts adult-use cannabis tax regulations.
The Ohio Department of Taxation adopted rules to clarify the requirements, procedures, and policies concerning the adult-use cannabis tax enacted pursuant to a voter-approved initiated statute. Ohio Admin. Code §§ 5703-43-01 through 5703-43-04 and Ohio Admin. Code §§ 5703-43-06 through 5703-43-12 went into effect on September 19, 2024. In addition to defining terms, the rules explain and provide information on licensing, electronic filing and payment, and recordkeeping requirements. The tax commissioner's authority to review records and administer the tax is also discussed, among other things.
Ohio Property Tax—Ohio Supreme Court rules woodland clearing cost rate was unreasonable and arbitrary.
The Ohio Supreme Court reversed the Board of Tax Appeals (BTA) and held that the tax commissioner abused her discretion by unreasonably and arbitrarily adopting a $1,000 per-acre woodland clearing-cost rate used for purposes of current agricultural use valuation (CAUV). The landowners in this case claimed that the $1,000 rate promulgated by the tax commissioner in CAUV tables used by county auditors was too low, and the commissioner ignored evidence proving that the rate should be higher; as a result, their woodlands were overvalued, causing them to pay more property tax than appropriate for the land. The court found that the tax commissioner did not obtain the data required by Ohio Admin. Code § 5703-25-33 in adopting the clearing-cost rate. Accordingly, the court remanded to the tax commissioner for further, evidence-based consideration of an appropriate value for the clearing-cost rate for woodlands. (Adams v. Harris, Ohio S.Ct., Dkt. No. 2023-0733, 09/26/2024.)