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OHIO BOARD OF TAX APPEALS
Kelleys Island Caddy Shack, )
)
Appellant, ) CASE NO. 2000-B-819
)
vs. )
) (EXCISE TAX REFUND)
)
Thomas M. Zaino, )
Tax Commissioner of Ohio, ) DECISION AND ORDER
) Affirmed on Appeal Oct. 2, 2002
Appellee. ) Ohio Supreme Court
APPEARANCES: 96 Ohio St.3d 375, 2002-Ohio-4930
For the Appellant- T. Scott Johnston
Margaret J. Lockhart
Cooper & Walinski
900 Adams Street
Toledo, Ohio 43624
For the Appellee - Betty D. Montgomery
Attorney General of Ohio
By: James Sauer
Assistant Attorney General
State Office Tower-16th Floor
30 East Broad Street
Columbus, Ohio 43266-0410
Entered: May 18, 2001
Mr. Johnson, Ms. Jackson, and Ms. Margulies concur.
Kelleys Island Caddy Shack, Inc. (“appellant”) has perfected an
appeal from a final determination of the tax commissioner in accordance with the
provisions of R.C. 5717.02.
Appellant asserts the tax commissioner erred in denying a refund of
resort area gross receipts excise tax which appellant contends violates Article II,
Section 26 of the Ohio Constitution.
We affirm tax commissioner’s decision because we do not have
jurisdiction to consider this constitutional challenge.
Appellant’s notice of appeal reads, as follows:
“Claimant, Kelleys Island Caddy Shack, Inc. hereby appeals
the Tax Commissioner’s June 22, 2000 denial of its
application for a refund of the resort area gross receipts excise
tax. The Tax Commissioner erred in determining that Kelleys
Island Caddy Shack, Inc. was not entitled to a refund under
Ohio Revised Code [Section] 5739.101-104 based on the
illegality of the tax. The tax assessed and paid by claimant
was an illegal tax because it was based on an unconstitutional
statute. Ohio Revised Code [Section] 5739.101-105 (the
resort area tax statue) violates Article II, Section 26 of the
Ohio Constitution because it is a law of a general nature that
does not operate uniformly throughout the state.
“Tax Commissioner erred in finding that Put-in-Bay Island
Taxing Authority v. Colonial, Inc. (1992), 65 Ohio St.3d
1449 was not applicable or determinative of the
constitutionality of the resort area tax statute. The principles
enunciated in the Put-in-Bay Island case are directly
applicable to the constitutionality of the statute at issue in this
case. The resort area tax statute was targeted toward the same
communities and for the same purposes as the island district
excise tax statute that was declared unconstitutional in the Put-
in-Bay Island case. The resort area tax legislation may have
been drafted using different language than the island district
excise tax, but it has the same intent and effect. It is nothing
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more than special legislation for island municipalities and
townships.
“The resort area excise tax statute is also unconstitutional
because it does not operate uniformly as to ‘all persons and
things in the same condition or category.’ See State v.
Spellmire (1992), 67 Ohio St. 77, 86; Porter v. Hopkins
(1914), 91 Ohio St. 74, 83; City of Cincinnati v. Steinkamp
(1896), 54 Ohio St. 284, 295. The subject of the statute is
vendors and sales. Because the statute applies only to a
limited class of vendors and sales in the state it does not
operate uniformly. The Supreme Court emphasized this aspect
of the island district excise tax statute in declaring that statute
unconstitutional in the Put-in-Bay Island case. The resort area
excise tax statute is no different from the Put-in-Bay Island
statute in terms of its application to a limited class of vendors.
See 65 Ohio St.3d at 452.
“Similarly, like the statute in Put-in-Bay Island, the purpose of
the resort area tax statute is to provide general revenues for a
limited class of township and municipalities. Many
municipalities in the state other than those meeting resort area
criteria have a need for general revenues. The legislature
cannot constitutionally give some municipalities an option to
impose a tax for general revenues that other municipalities are
not also given.
“The resort area tax statute is really no different from
statutes that apply only to cities or counties with a particular
population or with a particular tax duplicate. These types of
statutes, however, have been struck down as unconstitutional
because they did not apply uniformly throughout the state. See
e.g., City of Cincinnati v. Steinkamp (1896), 54 Ohio St. 284
(applied to all cities of the first class and first grade); Hixson v.
Burson (1896), 54 Ohio St. 470 (applied only to counties with
a certain population); Brown v. State ex. rel. Merland (1929),
120 Ohio St. 297 (statute applied only to counties with a city
of the first grade of the first class that have established a public
library); State ex. rel. Wilson v. Lewis (1906), 74 Ohio St. 403
(statue applied only to counties containing cities of a certain
grade and class); Davis v. Wiemeyer, 9 Ohio Law Abs. 686
(Lucas Cty. Ct. of App. 1930) (statute applied to all counties
with a tax duplicate in excess of $300 million). The statutes in
these cases could each in theory have prospectively applied to
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other counties or cities, but they were held unconstitutional
because when enacted they only applied to a select few.
“If the resort area tax statute is valid then the legislature would
not be prohibited from enacting special legislation for other
select groups of political subdivisions with special needs.
Article II, Section 26 of the state constitution prohibits the
legislature from enacting special legislation granting special
privileges or imposing unique burdens on some political
subdivision and not others.
“For all the above reasons, the resort area gross receipts excise
tax statute is unconstitutional and the tax assessed and paid by
Kelley’s Island Caddy Shack, Inc. should be refunded.”
The tax commissioner’s final determination, dated June 22, 2000,
reads, in pertinent part, as follows:
“By a claim filed on April 18, 2000 claimant seeks refund of
resort area gross receipts excise tax in the amount of
$1,465.29. Upon initial review, the claim was disallowed. By
letter dated April 19, 2000, the claimant was notified of the
disallowance. Further, claimant was advised that, if requested,
a hearing would be scheduled to afford the claimant the
opportunity to present additional information in support of the
claim. The claimant responded with a letter expressing
disagreement with the disallowance of the refund. Though the
claimant waived its right to a personal appearance hearing, it
did submit additional information regarding the claim.
“The reason for filing this claim, as stated on the claim form,
is as follows:
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‘This application seeks a refund of taxes
pursuant to Ohio Revised Code [Section]
5739.101-105. A refund of the taxes paid is
due because the statute on which the tax is
based is unconstitutional. The statute, O.R.C.
[Section] 5739.101-105 violates Article II,
Section 26 of the Ohio Constitution because it
is a law of general nature that does not operate
uniformly throughout the state.’
“Further, the claimant submitted, as additional information to
be considered, a reference to Put-In-Bay Isl. Tax v. Colonial,
Inc. (1992), 65 Ohio St. 3d 449. In that case, the Supreme
Court found that R.C. 5739.101 et seq. contravened Section
26, Article II of the Ohio Constitution because it did not
operate in a uniform manner throughout the state. Following
the Court’s ruling, the applicable statutes in Put-In-Bay Isl.
Tax were amended by Am. Sub. H.B. 327. Consequently, in
the present matter, Put-In-Bay Isl. Tax is not determinative
because that decision is only applicable to the statute as it was
written prior to amendment.
5
“Section 5739.104 of the Revised Code provides: ‘The tax
commissioner shall refund to a person subject to a tax under
section 5739.101 of the Revised Code the amount of taxes
paid illegally or erroneously or paid on an illegal or erroneous
assessment. ***’
“The claimant has presented no evidence to show illegal or
erroneous payment or assessment with regard to the tax in
question. Rather, the claimant is challenging the authority of
the 120th General Assembly which enacted Am. Sub. H.B.
327. Section 5739.101 of the Revised Code permits municipal
corporations that meet specified criteria to adopt local resort
area gross receipts excise taxes. The tax commissioner is
charged with administrative responsibility for such taxes.
“The Tax Commissioner’s powers, duties, and functions as
described in R.C. 5703.05, are neither legislative nor judicial,
but are of an administrative nature. The tax laws enacted by
the legislative branch are presumed to be valid, and it is the
duty of the Tax Commissioner to administer such laws. The
Tax Commissioner is without authority to consider a claim
based upon a challenge to legislative authority.
“Therefore it is the order of the Tax Commissioner that the
subject claim must be, and hereby is, denied.”
The parties waived an evidentiary hearing before this Board and, on
February 16, 2001, filed a joint stipulation of facts along with four stipulated
exhibits which were received and admitted by the Board. The stipulation of facts
and exhibits are incorporated by reference herein.
6
In MCI Telecommunications Corp. v. Limbach (1994), 68 Ohio St.3d 195,
the Supreme Court of Ohio addressed our role when a constitutional challenge is
raised:1
“The BTA understood its role to be a receiver of evidence for
constitutional challenges. Accordingly, it did so, giving the
parties wide latitude in presenting the evidence. The BTA
determined no facts on the constitutional questions. The
commissioner, however, in her Proposition of Law No. IV,
contends that the BTA not only receives evidence in this type
of case, but must weigh the evidence and determine the facts
necessary for the court’s review of the constitutional
questions. Since the BTA did not make findings of fact, the
commissioner asserts that we should remand the case for the
BTA to comply.
“In Cleveland Gear Co. v. Limbach (1988), 35 Ohio St.3d 229,
*** paragraph three of the syllabus, we held:
‘The question of whether a tax statute is
unconstitutional when applied to a particular
state of facts must be raised in the notice of
appeal to the Board of Tax Appeals, and the
Board of Tax Appeals must receive evidence
concerning this question if presented, even
though the Board of Tax Appeals may not
declare the statute unconstitutional. (Bd. of
Edn. of South-Western City Schools v. Kinney
[1986], 24 Ohio St.3d 184, *** construed.)’
“We explained the process, 35 Ohio St.3d at 232 ***:
“When a statute is challenged on the basis that it is
unconstitutional in its application, this court needs a record,
and the proponent of the constitutionality of the statute needs
notice and an opportunity to offer testimony supporting his or
her view.
1
Also in accord are Valvoline Instant Oil Change, Inc. v. Tracy (1997), 78
Ohio St.3d 53 and NACCO Industries v. Tracy (June 7, 1996), B.T.A. No. 95-K-
1210, unreported, affirmed on other grounds (1997), 79 Ohio St. 314.
7
“To accommodate this court’s need for extrinsic facts and to
provide a forum where such evidence may be received and all
parties are apprised of the undertaking it is reasonable that the
BTA be that forum. The BTA is statutorily created to receive
evidence in its role as fact finder.’
“Under Cleveland Gear, the BTA need only receive evidence
for us to make the constitutional finding. This is because the
BTA accepts facts but cannot rule on the question. On the
other hand, we can decide the constitutional questions but have
a limited ability to receive evidence. Thus, the BTA receives
evidence at its hearing, but we determine the facts necessary to
resolve the constitutional question.” Id. at 197-198.
(Parallel citations omitted.)
We have received the evidence offered upon this constitutional
question. Thus, we have fulfilled our obligation as laid down by the Supreme
Court in MCI Telecommunications Corp., supra, and Cleveland Gear Co. v.
Limbach (1988), 35 Ohio St.3d 229. The issue presented and the relief requested
is otherwise beyond our jurisdiction.
Accordingly, and for each of the foregoing reasons, the final
determination of the tax commissioner dated June 22, 2000, must be, and the same
is hereby affirmed. ohiosearchkeybta
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