RP 2004-01 - Amnesty for Real Property Tax Exemption
Applications Dismissed Pursuant to Cleveland Clinic Found v.
Wilkins, 103 Ohio St.3d 382 (2004), December
2004
The purpose of this information release is to address an
amnesty provision the General Assembly enacted in Sub. H.B.
362. This provision was enacted to address recent decisions
that reversed long-standing procedures used by the Department
of Taxation to proactively assist taxpayers applying for real
property tax exemption by informing them of certain
requirements that must be satisfied so the Tax Commissioner
will have jurisdiction to address exemption requests on their
merits.
In October of this year, both the Ohio Supreme Court (Court)
and the Board of Tax Appeals interpreted the payment
requirements in R.C. § 5713.08(A) and (B) to be
jurisdictional. In other words, if those requirements are not
satisfied at the
time the exemption application is filed with the
County Auditor, the Commissioner cannot consider such
application and must dismiss it. Cleveland Clinic Found. v.
Wilkins, 103 Ohio St.3d 382 (2004); Strongsville Bd. of Educ. v.
Zaino, No. 2002-G-2562 (Ohio B.T.A. Oct. 8, 2004, on
appeal to the Ohio Supreme Court).
The charges on the tax list and duplicate that must be paid
in full, or subject to a valid delinquent tax contract with
the County Treasurer pursuant to R.C. § 323.31(A), at the
time the exemption application is filed are the following:
1. all special assessments, with any interest and penalties
thereon (includes the amount due for the entire tax year,
even if the second-half tax bill has not been issued yet);
2. all taxes, with any penalties and interest thereon, for
the tax year in which the applicant acquired title to the
property and all previous years; and
3. all taxes, penalties, and interest for the tax years
preceding the third year before the year in which the
application is filed (the Commissioner may only remit taxes
for the three years preceding the year of application).
Consequently, the Tax Commissioner must dismiss pending
exemption applications if the proper taxes, assessments,
penalties, and interest were not paid in full or subject to a
valid delinquent tax contract at the time those applications
were filed.
Amnesty Provision
The General Assembly enacted Section 3 of Sub. H.B. No. 362
(HB 362) to mitigate the consequences of the large number of
exemption applications that must be dismissed because of the
decision issued by the Court in Cleveland Clinic Found. The
key provisions of Section 3 of Sub. H.B. 362 are the
following:
Definitions
1. The amnesty provision applies to “qualified property,”
which is real property that qualifies for tax exemption under
any Revised Code section and for which the Tax Commissioner
dismissed an exemption application because of the decision in
Cleveland Clinic
Found.
2. Under the amnesty provision, remission may be granted for
“eligible years,” which are those tax years for which taxes,
penalties, and interest could have been remitted and the
property placed on the tax exempt list under a previously
dismissed exemption application for qualified property. For
example, assume the previous application was filed in 2002
requesting exemption for 2002 and remission for tax years
1999, 2000, and 2001, and the amnesty application is filed in
2005. In this situation, the eligible years are tax years
1999 through 2005. As a result, all taxes, penalties, and
interest for tax years 1998 and earlier (plus special
assessments for all years) must be paid at the time the
amnesty application is filed.
Application
Procedures
1. To qualify for amnesty, the current owner of qualified
property must file an exemption application by July 1, 2005, to
request remission of taxes, penalties, and interest for the
“eligible years”. The owner must attach a copy of the
Commissioner’s final determination that dismissed the
previous application to the amnesty application and have the
County Treasurer complete the certificate contained in the
amnesty application and described in the following paragraph.
Failure to strictly follow these procedures by attaching that
previous final determination or obtaining the Treasurer’s
completed certificate will result in dismissal of the amnesty
application.
2. The County Treasurer’s certificate must include one of the
following:
a. A statement that all taxes, penalties, and interest for
all tax years that are not “eligible years” and
all special assessments charged against the property have
been paid in
full (a delinquent tax contract cannot be used for
purposes of this uncodified provision); or
b. A list of the tax years for which taxes, penalties,
interest, and special assessments remain unpaid.
County Auditor and
County Treasurer Procedures for Payments
If an amnesty application is filed, the County Auditor must
notify the County Treasurer to hold any tax payments for
“eligible years” that were made as a result of the previously
dismissed exemption application in a special fund pending the
Tax Commissioner’s decision on the amnesty application. This
money may not be advanced to any
taxing authority under R.C. § 321.34. After the Commissioner
issues a decision, the Auditor will either refund those
taxes, penalties, and interest if remission is granted and
for which the subdivision has consented to remission, or
distribute the payments to the proper taxing authorities if
remission is denied or the subdivision has withheld consent.
Note: no interest is paid on amounts refunded because of a
real property tax exemption.
Tax Commissioner’s
Actions
Upon receipt of the amnesty application, the Tax Commissioner
will determine whether the applicant and the applicant’s
qualified property meet the qualifications for tax exemption
and those in the uncodified law. After such review, the
Commissioner will take one of three actions.
1. If the property is not now being used for an exempt
purpose, the Commissioner must deny the application. No
amnesty remission is possible unless the property currently
qualifies for exemption.
2. If the qualifications are met for all of the “eligible
years” in addition to the current year, the Commissioner will
direct that the property be placed on the tax exempt list and
that all paid or unpaid taxes, penalties, and interest for
every “eligible year” the property met the qualifications for
exemption be remitted, unless a taxing authority has objected
to the remission of such amounts. See “Subdivision Consent”
below.
3. If the qualifications are met for some of the “eligible
years” requested in addition to the current year, the
Commissioner will direct the county auditor to place the
property on the tax exempt list and remit all paid or unpaid
taxes, penalties, and interest for every year the property
met the qualifications for exemption, unless a taxing
authority has objected to the remission of such amounts, and
will direct the county treasurer to collect all taxes,
penalties, and interest for every year the property did not
meet the qualifications for exemption or for which a taxing
authority objected to the remission.
Subdivision
Consent
The County Auditor may remit taxes, penalties, and interest
for “eligible years” not open under permanent law (i.e., tax
year 2000 and earlier for applications filed in 2004 and tax
years 2001 and earlier for applications filed in 2005) only
with the consent of the taxing authority of the subdivision
or other taxing unit to which such taxes, penalties, and
interest are owed.
By January 15, 2005, the County Auditor must notify
each subdivision or taxing unit in the county of the
enactment of this uncodified provision of law and of the
requirement that the taxing authority must file any objection
to the remission request with the auditor by February 15,
2005. That objection must be in the form of
an ordinance or resolution passed by the taxing authority and
filed on a form prescribed by the Tax Commissioner (see
section titled Revision of Exemption Forms at the
end of this release.) The date of filing will be the date the
resolution is received by the County Auditor’s office. If a
taxing authority does not timely file the resolution or
ordinance with the Auditor, that taxing authority will be
considered to have given consent to the requested remission.
Note that if one taxing authority withholds consent to
amnesty remission, the application can still proceed with
respect to the taxes penalties and interest owed to the
remaining subdivisions. Likewise, a taxing authority may not
withhold its consent only for specific properties.
1. If a taxing authority withholds consent by filing timely
objections with the County Auditor, the applicant must
eventually pay all the outstanding taxes, penalties, and
interest owed to that subdivision or taxing unit, except
for those taxes, penalties, and interest that are included
in the three-year remission period under permanent law in
R.C. § 5713.081(A). For example, assume the previous
application was filed in 2002 requesting exemption for 2002
and remission for tax years 1999, 2000, and 2001, and the
amnesty application is filed in 2005. If a taxing authority
withholds consent, the applicant must eventually pay the
taxes, penalties, and interest owed to that subdivision for
tax years 1999, 2000, and 2001 (tax years 2002-2005 are
covered under permanent law and no consent is need to remit
taxes for those years).
Note: In the example above, the taxes for years 1999-2001
for which consent was not given are not considered to be
unpaid taxes for purposes of establishing the Tax
Commissioner’s jurisdiction to consider the amnesty
application. In other words, the taxes for “eligible years”
do not need to be paid at the time the amnesty application
is filed, regardless of whether or not a subdivision has
withheld its consent.
2. The consent given by a taxing authority under this
uncodified provision does not apply to the year the amnesty
application is filed and to the three-year remission period
under permanent law in R.C. § 5713.081(A). The applicant
retains the right to apply for those years with or without
the consents of the subdivisions or taxing units.
3. The County Auditor must maintain a record of all taxing
authorities that have withheld consent. After the Tax
Commissioner issues a decision for each of the eligible
years for which exemption or remission was requested, the
Auditor will remit or refund the taxes, penalties, and
interest for which consent was given, and distribute to the
appropriate taxing authorities from the special fund
mentioned in item 3 under “Application Procedures” above
the taxes, penalties, and interest for which consent was
withheld. The County Treasurer will proceed to collect the
unpaid taxes, penalties, and interest for which consent was
withheld.
Revision of Exemption Forms
New
DTE Form 23-C, Resolution or Ordinance Withholding
Consent Per Sub. H.B. 362, (125th General Assembly) is hereby
prescribed for immediate use. A copy of this form is
available on the Department of Taxation’s website under the
Services for Local Governments tab.