House bill

Ohio House Bill 126 Update: Governor Changes School Board’s Role in Property Tax Assessment Appeals – Property Taxes

Legislative Services Commission clarifies that sales made more than one year prior to lien date allow school board assessment appeals

On April 21, 2022, Ohio Governor Mike DeWine signed House Bill 126, which will take effect July 19. This bill will change the role of school boards in property valuation appeals and will also, effective its effective date, prohibit “private payment” agreements entered into after the effective date. In the past, private payment agreements were often used to settle property tax disputes.The Commissioner of Legislative Services also clarified that the bill does not limit school boards to sales-based assessment challenges. of the year before the date of the tax lien, but instead requires a sale, which means certain conditions before the date of the tax lien.To understand the effect of the changes made by House Bill 126, it is useful to first recall the current law.

Property tax assessment complaints under current law

Under current law property tax assessment complaints are usually controversies between the landlord – who wants a lower value and therefore a lower tax bill – and the local school board – who wants a higher value. and therefore a higher tax bill. Although theoretically, other landowners and other political subdivisions can also file assessment complaints1, school boards are usually the only political subdivision to file complaints or counter-complaints in these cases, as the bulk of the taxes involved are paid to the school district in which the property is located. The county auditor makes an initial determination of the assessed value of each parcel in the county, which is reflected on a tax invoice that is sent to the owner in late December or January.

The owner or school board may dispute this value by filing an assessment complaint with the County Board of Revision by March 31.2. If the owner files a complaint to reduce the value and the requested change in value is at least $17,500, the school board must be notified of the complaint within 30 days of the deadline for filing appraisal complaints.3. The school board may file a counter-complaint, seeking either to retain the value of the auditor, or to establish a higher value, within 30 days of receipt of the notice of complaint.4. The school board can also file an initial complaint by March 31 to increase the value set by the auditor, and the owner can then file a counter-complaint.5.

Under applicable law, the County Board of Revision retains jurisdiction over such complaints and counter-complaints until they are resolved.6, which can often take a year or more. If either the owner or the school board disagrees with the review board’s decision, either may appeal the board’s decision to the Ohio Board of Tax Appeals.seven. The owner also has the right to appeal, instead, to the local Court of Common Pleas, as long as the appeal to the court is filed before the appeal to the Tax Appeals Board.8. Appeals allow the school board to request additional information about the property that it usually cannot obtain at the board of review level, as the school board can use discovery requests under civil rules and subpoenas to force the disclosure of information on the sale, appraisals, land revenues. information, etc. that could help establish a higher value for the property9.

An Ohio attorney general’s opinion allows school boards and landowners to enter into “private payment” or “direct payment” settlement agreements, under which the landlord makes payment to the school board only in exchange for the school board dismissing a complaint, counter-complaint, or appeal, or agreeing not to file oneten. The result is that the school board receives additional property revenue, but other local governments that receive property taxes do not receive additional property taxes. This is either a break-even point or a slight windfall to the school district, but a net savings to the homeowner relative to the increase in property value as a result of the complaint devaluation.

How Bill 126 would change the appeals process

House Bill 126 will not change the appeals process and owner’s rights – except for the availability of “private payment” agreements – but will significantly change the rights and process of school boards in the process. property tax appeal. First, a school board could not file an original assessment complaint aimed at increasing the value of the property unless both of the following conditions occur:

1) The property was sold in an arm’s length transaction prior to the tax lien date for the year for which the complaint was filed, for a sale price greater than 10% and more than $500,000 (indexed to inflation) at the value set by the county auditor11and

2) The school board passes a resolution authorizing the complaint, after giving seven days notice to the owner of the meeting at which the resolution will be considered12. The complaint form should state that the school board passed the authorization resolution after the required notice13. School boards would retain the right to file counter-complaints, but only if the original complaint was for a change of at least $17,500 in assessed value.14. School boards would no longer receive the mandatory notice of initial complaints — although many can still obtain such notice through public records requests — and must file counter-complaints within 30 days of the initial complaint being filed.15. Note that the filing fee changes would first take effect with the 2022 tax year for taxes payable in 2023 and complaints filed in 202316.

A second change is that when a school board files an original complaint, the board of review must rule on the complaint within one year or it loses jurisdiction over the complaint.17. This change would also come into effect initially for complaints filed for the 2022 tax year.18.

Two other changes would come into effect on the HB 126 effective date of July 19, 202219. First, although the owner retains the right to appeal decisions of the board of review, school boards would no longer have the right to appeal a decision of the board of review unless it concerns the property they own.20. They can retain their right, under Board of Tax Appeals rules and civil rules, to appear in opposition to an appeal by the owner; House Bill 126 does not address this. This will affect many complaints for the 2021 tax year, as few will be decided by the local review board within 90 days of the effective date of the bill. The ban on “private salary” agreements will also come into effect for agreements entered into on or after the July 19 effective date of the bill.21. So, owners who still want to enter into such agreements for pending appeals should negotiate and conclude them quickly.

Key points to remember

With the exception of prohibiting “private payment” agreements, the bill will generally benefit landowners. Homeowners will retain their current rights to seek property tax value reductions, but school boards will have more limited rights to seek higher values. School boards will only be able to file complaints when they can prove an arm’s length sale before the tax lien date for the tax year from information they can obtain without a subpoena or civil discovery. . The school board would have to “win” at the review board or not at all, while the owner could always appeal an unfavorable decision. Before appealing, however, the owner should consider that the school board may retain the right to appear before the Board of Tax Appeals or the Court of Common Pleas to contest an appeal by the owner, and that it would have discovery and subpoena rights if he is a party before the Tax Appeals Commission.

Footnotes

1 ORC 5715.19(A)(1) (before changes made by 2022 HB 126).

2 Identifier.

3 ORC 5715.18(B) (before changes made by 2022 HB 126)

4 Identifier.

5 ORC 5715.19(A)(1) & (B) (before changes made by 2022 HB 126).

6 ORC 5715.19(D).

7 ORC 5717.01 (before changes made by 2022 HB 126).

8 ORC 5717.05.

9 OAC 5717-1-02(B), 5717-1-04(B), 5717-1-12, 5717-1-14.

10 op. Att’y Gen. 2018-011.

11 In an earlier bulletin regarding House Bill 126, we stated, based on statements from the Legislative Services Commission, that a sale that permits a school board assessment complaint must be made in the year preceding the date of the tax lien for the tax year that is the basis for the appeal. See Ohio Legislative Service Commission, Final Fiscal Note and Local Impact Statement (April 12, 2022), p.1; Ohio Legislative Service Commission, Fiscal Note and Local Impact Statement, as recommended by the conference committee (April 6, 2022), p.1; Ohio Legislative Services Commission, Amendment No. AM_134_3041 (Passed by Conference Committee HB 126 on April 6, 2022) Synopsis, p. 12, lines 295 – 96. In an April 21 telephone conversation with this author, the author of the previous tax notes confirmed that the actual text of the enacted law only requires that the sale be prior to the date of the tax lien , and not in the previous year. We expect future analyzes by the Legislative Services Commission to reflect this.

12 ORC 5715.19(A)(6) (as amended by 2022 HB 126).

13 ORC 5715.19(A)(8) (as amended by 2022 HB 126).

14 ORC 5715.19(B) (as amended by 2022 HB 126).

15 Identifier.

16 2022 HB 126, Section 3. (A).

17 ORC 5715.19(C) (as amended by 2022 HB 126).

18 2022 HB 126, Section 3. (A).

19 2022 HB 126, Section 3. (B).

20 ORC 5717.01 (as amended by 2022 HB 126).

21 2022 HB 126, Section 3. (B).

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.