Rambacher v. Testa , 2014 Ohio 1488 ( 2014 )

[Cite as Rambacher v. Testa, 2014-Ohio-1488.]
IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
LAWRENCE COUNTY
FRANCES L. RAMBACHER, : Case No. 13CA14
Appellant-Appellant, :
v. : DECISION AND
JUDGMENT ENTRY
JOSEPH W. TESTA, :
TAX COMMISSIONER OF OHIO,
: RELEASED: 03/27/14
Appellee-Appellee.
:
APPEARANCES:
Richard F. Bentley, Wolfe & Bentley, L.L.P., Ironton, Ohio, for appellant.
Michael DeWine, Ohio Attorney General, and Melissa W. Baldwin, Assistant Attorney
General, Columbus, Ohio, for appellee.
Harsha, J.
{¶1} Frances L. Rambacher appeals from a decision of the Board of Tax
Appeals (“BTA”) that affirmed the Tax Commissioner of Ohio's assessment of taxes,
interest, and penalties of $1,097.47 against her for taxes due in 2006.
{¶2} Initially, the commissioner argues, this case was rendered moot because
Mrs. Rambacher’s husband cashed a refund check for the overpayment of taxes that
had been improperly credited to his liability. However, there is no evidence that Mrs.
Rambacher cashed the check or had access to or control of these proceeds. And the
mere fact that her husband cashed the check did not affect her liability for her assessed
taxes, so the case is not moot.
{¶3} On the merits of her first, second, and third assignments of error, the
BTA’s determination that the commissioner properly assessed taxes, interest, and
Lawrence App. No. 13CA14 2
penalties to Mrs. Rambacher for her 2006 taxes is neither reasonable nor lawful. The
Ohio Department of Taxation failed to allocate the joint estimated tax payments
submitted by the Rambachers for their 2006 taxes in accordance with their specified
allocation. By not following its own declared procedure, the tax department erroneously
failed to credit Mrs. Rambacher with the payments allocated by her and her husband,
resulting in the department erroneously determining that she owed taxes, interest, and
penalties for the 2006 tax year.
{¶4} Because the BTA’s decision is unreasonable and unlawful, we sustain
Mrs. Rambacher’s first, second, and third assignments of error. We reverse the
decision of the BTA with instructions that Mrs. Rambacher be credited with the amount
of the joint estimated payments the Rambachers allocated to her 2006 income taxes,
resulting in the refund she seeks, with statutory interest. Mrs. Rambacher’s remaining
assignments of error are rendered moot.
I. FACTS
{¶5} For tax year 2006 the Rambachers paid $1,400 in joint estimated income
taxes to the Ohio Department of Taxation. On the payment voucher the Rambachers
requested that the tax department allocate $910 of their payments to Mrs. Rambacher’s
2006 taxes and the remaining $490 to Mr. Rambacher’s 2006 taxes. The Rambachers
later submitted their individual tax returns for 2006 as “married filing separately.”
Consistent with their prior allocation of the joint estimated taxes paid, Mrs. Rambacher’s
return indicated a credit of $38 ($872 in taxes-$910 in taxes paid) to be applied to her
2007 taxes and Mr. Rambacher’s return indicated a credit of $21 ($469 in taxes-$490 in
taxes paid) to be applied to his 2007 taxes.
Lawrence App. No. 13CA14 3
{¶6} The tax department ignored the Rambachers’ requested allocation and
instead credited Mrs. Rambacher with only $10 of the $910 she and her husband
requested be allocated for her taxes. The tax department credited the remaining $900
to Mr. Rambacher, resulting in the issuance to him of a $900 refund check, which he
endorsed and deposited. According to the commissioner, the tax department’s failure to
apply the Rambachers’ tax payments as they instructed was due to its computer
system’s inability to “read” the notations by the Rambachers on their payment vouchers
and tax returns.
{¶7} The commissioner assessed Mrs. Rambacher $1,076.95 in taxes, interest,
and penalties due for 2006. She objected to the assessment because the tax
department had failed to credit her with the full $910 amount in payments that the
Rambachers requested. The commissioner ultimately overruled Mrs. Rambacher’s
objection based on his determination that she “failed to provide any other information in
support of adjustment” and “failed to demonstrate error in the assessment.” The
commissioner affirmed a final assessment of $1,097.47, including $862 in unpaid taxes,
interest, and penalties against Mrs. Rambacher for the 2006 tax year.
{¶8} Mrs. Rambacher appealed the commissioner’s final determination to the
BTA, claiming that the state failed to give her credit for the $910 estimated tax payment.
She filed a motion for a “finding in full” for her for the 2006 tax year, noting that the tax
department had released a lien on the Rambachers’ real property that had been placed
on their property to collect on the tax assessment. The BTA denied the motion,
construed it to be a waiver of the scheduled hearing, and treated the motion as her
merit brief. When Mrs. Rambacher did not appear for the previously scheduled hearing,
Lawrence App. No. 13CA14 4
the commissioner stood on the record. The BTA affirmed the commissioner’s
determination based on its finding that Mrs. Rambacher “failed to meet her burden of
demonstrating the error in the commissioner’s determination.”
{¶9} Mrs. Rambacher appeals from the BTA’s decision.
II. ASSIGNMENTS OF ERROR
{¶10} Mrs. Rambacher assigns the following errors for our review:
1. THE BOARD OF TAX APPEALS’ END [sic] TO THE PREJUDICE OF
APPELLANT IN DENYING THAT SPOUSES PAYING JOINT
ESTIMATED TAX MAY AGREE HOW TO ALLOCATE THAT AMOUNT
PAID WHEN FILING SEPARATE INCOME TAX RETURNS.
2. THE BOARD OF TAX APPEALS ERRED TO THE PREJUDICE OF
APPELLANT THAT THE APPELLANT FAILED TO PROVIDE
INFORMATION TO DISPUTE THE AMOUNT ASSESSED.
3. THE BOARD OF TAX APPEALS ERRED TO THE PREJUDICE OF
APPELLANT THAT THE APPELLANT FAILS TO PROVIDE
INFORMATION TO DISPUTE HER CONTENTION THAT $910.00 HAD
PREVIOUSLY BEEN PAID.
4. THE BOARD OF TAX APPEALS ERRED TO THE PREJUDICE OF
APPELLANT THAT THE APPELLANT WAS HARMED BY THE LATE
AND UNTIMELY FILING OF THE TRANSCRIPT RECORD IN
VIOLATION OF O.A.C. §5717-1-09(A).
5. THE BOARD OF TAX APPEALS ERRED TO THE PREJUDICE OF
APPELLANT THAT THE BOARD CONSIDERED APPELLANT HAVING
WAIVED THE HEARING BY IT’S DECISION OF JUNE 4, 2013 IN WHICH
THE TRANSCRIPT WAS NOT FILED UNTIL JUNE 19, 2013, WHICH
APPELLANT WAS NOT ABLE TO RESPOND IN VIOLATION OF DUE
PROCESS.
6. THE BOARD OF TAX APPEALS ERRED TO THE PREJUDICE OF
APPELLANT IN THE BOARD NOT CONSIDERING APPELLANT’S
MOTION FOR RECONSIDERATION AND THE ADDITIONAL EVIDENCE
OF THE LIEN RELEASE FILED BY THE OHIO DEPARTMENT OF
TAXATION, AS APPELLANT DID NOT RECEIVE THE TRANSCRIPT
UNTIL AUGUST 9, 2013, DISCOVERNG THAT THE LIEN RELEASE
WAS NOT PART OF THE TRANSCRIPT.
Lawrence App. No. 13CA14 5
III. STANDARD OF REVIEW
{¶11} Under R.C. 5717.04, an appeal from a BTA decision “shall be by appeal
to the supreme court or the court of appeals for the county in which the property is
situate or in which the taxpayer resides.” The court reviews the BTA’s decision to
determine whether it is reasonable and lawful. See Gesler v. Worthington Income Tax
Bd. of Appeals, 138 Ohio St. 3d 76, 2013-Ohio-4986, 3 N.E.3d 1177, ¶ 10; Remy v.
Limbach, 4th Dist. Pickaway Nos. 88 CA 5, 88 CA 6, and 88 CA 7, 1989 WL 100112, *6
(Aug. 24, 1989); R.C. 5717.04 (“If upon hearing and consideration of such record and
evidence the court decides that the decision of the board appealed from is reasonable
and lawful it shall affirm the same, but if the court decides that such decision of the
board is unreasonable or unlawful, the court shall reverse and vacate the decision or
modify it and enter final judgment in accordance with such modification”).
{¶12} “We will uphold the BTA’s determination of fact if the record contains
reliable and probative evidence supporting its determination.” Gesler at ¶ 10, citing
Satullo v. Wilkins, 111 Ohio St. 3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14. In
addition, we review the BTA’s resolution of a question of law de novo, and we will affirm
its decision only if it correctly applies the law. Gesler at ¶ 10, citing HIN, L.L.C. v.
Cuyahoga Cty. Bd. of Revision, 124 Ohio St. 3d 481, 2010-Ohio-687, 923 N.E.2d 1144,
¶ 13.
IV. LAW AND ANALYSIS
A. Mootness
{¶13} The commissioner initially argues that this appeal should be dismissed as
moot because the Rambachers “cashed the check issued by the Department that
Lawrence App. No. 13CA14 6
represented a refund of the overpaid estimated income taxes, and accordingly,
foreclosed the possibility of obtaining the relief sought.”
{¶14} A “ ‘case is moot when the issues presented are no longer “live” or the
parties lack a legally cognizable interest in the outcome.’ ” Los Angeles Cty. v. Davis,
440 U.S. 625, 631, 99 S. Ct. 1379, 59 L. Ed. 2d 642 (1979), quoting Powell v.
McCormack, 395 U.S. 486, 496, 89 S. Ct. 1944, 23 L. Ed. 2d 491 (1969). “It is not the
duty of the court to answer moot questions, and when pending proceedings * * *, an
event occurs, without the fault of either party, which renders it impossible for the court to
grant any relief, it will dismiss the petition * * *.” Miner v. Witt, 82 Ohio St. 237, 92 N.E.
21 (1910), syllabus; see also Tschantz v. Ferguson, 57 Ohio St. 3d 131, 133, 566
N.E.2d 655 (1991) (“Ohio courts have long exercised judicial restraint in cases which
are not actual controversies. No actual controversy exists where a case has been
rendered moot by an outside event”). “Conversely, if an actual controversy exists
because it is possible for a court to grant the requested relief, the case is not moot, and
a consideration of the merits is warranted.” State ex rel. Gaylor v. Goodenow, 125 Ohio
St.3d 407, 2010-Ohio-1844, 928 N.E.2d 728, ¶ 11; State v. Consilio, 114 Ohio St. 3d
295, 2007-Ohio-4163, 871 N.E.2d 1167, ¶ 7.
{¶15} This case is not moot. Although the tax lien that the tax department
placed on the Rambachers’ property to collect the unpaid taxes, interest, and penalties
has been released, the department has not vacated the tax assessment that Mrs.
Rambacher is challenging in this appeal. Nor did Mrs. Rambacher voluntarily pay the
taxes assessed during the pendency of her appeals. Compare Swetland Co. v. Veatt,
Lawrence App. No. 13CA14 7
139 Ohio St. 6, 22, 37 N.E.2d 601 (1941) (taxpayer’s payment of taxes in full was
voluntary, which rendered moot the matter before the county board of revision).
{¶16} Moreover, there is no evidence in the record or even attached to the
commissioner’s brief on appeal that supports the state’s claim that Mrs. Rambacher
cashed the refund check made out to her husband or that she has any control over the
proceeds of the check that her husband deposited. See Bellamy v. Bellamy, 4th Dist.
Athens No. 10CA45, 2012-Ohio-2780, ¶ 7, citing State ex rel. Cincinnati Enquirer v.
Dupuis, 98 Ohio St. 3d 126, 2002-Ohio-7041, ¶ 8 (appellate court may consider
extrinsic evidence outside the record to determine if case is moot). The check attached
to the commissioner’s brief indicates that he alone endorsed the check. (Aee Brief, Ex.
3) Therefore, there is nothing to support the commissioner’s claim that vacating the tax
assessment against Mrs. Rambacher will unjustly enrich her. Thus we conclude, the
merits of this appeal are properly before us.
B. Failure to Allocate Joint Estimated Tax Payments
{¶17} In Mrs. Rambacher’s first, second, and third assignments of error, she
asserts that the BTA erred in denying that spouses paying joint estimated taxes may
allocate the amount to be paid on subsequently filed separate income tax returns, and
in finding that Mrs. Rambacher failed to provide information to support her appeal of the
tax commissioner’s determination. Because these assignments of error are interrelated,
we consider them jointly.
{¶18} Under R.C. 5747.09(B), “[e]very taxpayer shall make a declaration of
estimated taxes for the current taxable year, in the form that the tax commissioner shall
prescribe, if the amount payable as estimated taxes, less the amount to be withheld
Lawrence App. No. 13CA14 8
from the taxpayer’s compensation, is more than five hundred dollars.” “Taxpayers filing
joint returns pursuant to [R.C. 5747.08] shall file joint declarations of estimated taxes.”
Id.
{¶19} R.C. 5747.09 does not specify how joint estimated tax payments are to be
allocated between spouses when they file separate tax returns, i.e., electing the tax
status of “married filing separately.”
{¶20} The Internal Revenue Service recognizes that spouses can allocate their
payments as they desire for federal income tax purposes. IRS Pub. 505 (Rev. Feb.
2006), Separate Returns (“If you made joint estimated tax payments, you must decide
how to divide the payments between your returns. One of you can claim all of the
estimated tax paid and the other none, or you can divide it in any other way you agree
on”).
{¶21} The Ohio Department of Taxation has similarly recognized that it will apply
the joint estimated tax payments in the amount requested by the spouses to their
separate tax returns:
To address married taxpayers who remitted joint estimate payment
vouchers but subsequently filed their tax returns utilizing the “married filing
separately” status, ODT will apply the previous year credit carry forward
and estimated payments to the first return posted through the
department’s computer system. Routinely, a taxpayer counts on the
previous year credit carry forward as the first quarter estimated payment
for the subsequent tax year. Because of this assumption, the previous
year credit carry forward will always be the first payment applied to the
first return processed through the ODT system. This process will continue
with available estimated payments up to the amount requested on the
estimated payment line of the first return posted to the system.
If there are funds remaining that were not used to satisfy the amount
requested on the estimated payment line of the first IT-1040 or the SD-100
return to pass through the ODT system, any remaining amounts will be
Lawrence App. No. 13CA14 9
credited against the second spouse’s “married filing separately” or
“married filing jointly” return.
(Emphasis added.) IT 2006-01 (March 2006)
{¶22} The department claims that it failed to allocate the estimated payment in
the fashion requested by the Rambachers because its automated voucher system could
not recognize their notations on the preprinted form. This amounts to a concession that
the department failed to follow its own procedures under IT 2006-01. In spite of this
implicit concession, the commissioner claims that any error was rendered moot by Mr.
Rambacher’s cashing of the refund check. But as previously discussed, this case is not
moot. Moreover, the department could seek to recover the sum erroneously refunded
to Mr. Rambacher for the 2006 tax year.
{¶23} The BTA erred in determining that Mrs. Rambacher failed to provide
sufficient information to support her appeal of the tax commissioner’s assessment. The
record before the BTA included the Rambachers’ tax payment vouchers and tax returns,
which included their request that the tax department allocate $910 of their $1,400 joint
estimated tax payment to Mrs. Rambacher’s return. This information is all that was
needed to support her claim.
{¶24} Therefore, the BTA’s decision affirming the commissioner’s determination
assessing $1,097.47 in taxes, interest, and penalties against Mrs. Rambacher for the
2006 tax year is neither reasonable nor lawful. Her first, second, and third assignments
of error are sustained.
C. Remaining Assignments of Error
{¶25} In light of our disposition of Mrs. Rambacher’s first, second, and third
assignments of error, her fourth, fifth, and sixth assignments of error, which challenge
Lawrence App. No. 13CA14 10
the commissioner’s failure to timely file a transcript of the record of the proceedings
before him in the BTA and the BTA’s denial of her request for reconsideration, are
rendered moot. App.R. 12(A)(1)(c).
V. CONCLUSION
{¶26} Therefore, having sustained Mrs. Rambacher’s first, second, and third
assignments of error, we reverse the decision and order of the BTA and instruct the
department to issue the refund she seeks, together with statutory interest.
JUDGMENT ACCORDINGLY.
Lawrence App. No. 13CA14 11
JUDGMENT ENTRY
It is ordered that the DECISION AND ORDER IS REVERSED and that the
CAUSE IS REMANDED. Appellee shall pay the costs.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing the Ohio
Board of Tax Appeals to carry this judgment into execution.
Any stay previously granted by this Court is hereby terminated as of the date of
this entry.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
Abele, P.J. & Hoover, J.: Concur in Judgment and Opinion.
For the Court
BY: ________________________________
William H. Harsha, Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final judgment
entry and the time period for further appeal commences from the date of filing
with the clerk.