Condee v. Lindley, 83-1979
| Decision Date | 11 July 1984 |
| Docket Number | No. 83-1979,83-1979 |
| Citation | 12 OBR 79,465 N.E.2d 450,12 Ohio St.3d 90 |
| Parties | , 12 O.B.R. 79 CONDEE, Aud., Appellee, v. LINDLEY, Tax Commr., Appellant. |
| Court | Ohio Supreme Court |
On October 30, 1981, appellee, Dorothy L. Condee, Gallia County Auditor, filed a notice of appeal with the Board of Tax Appeals ("board") seeking review of certificates of valuation for the 1981 tax year that were issued by the Tax Commissioner ("commissioner"). Specifically at issue was the propriety of the commissioner's apportionment of the tax value of personal property owned by the Ohio Power Company and the Ohio Valley Electric Company.
The disputed apportionment involved the distinction drawn by the commissioner between the "situsable" (having a fixed location) and non-situsable personal property of the electric companies. Upon the informal instruction of the commissioner, the electric companies had reported (each year since approximately 1969) the value of situsable property at seventy percent of its true taxable value while reporting the remaining thirty percent of the situsable property value as part of the total non-situsable property value. This "seventy-thirty split" in the reporting of situsable property tax values resulted in only seventy percent of the taxable value of the electric companies' situsable property in Gallia County being directly included in the certificates of valuation issued by the commissioner to the county. The remaining thirty percent of the value of the Gallia County situsable property was placed into the "pool" of non-situsable property value, which "pool" of non-situsable property value was apportioned by formula among the tax districts or counties wherein the electric companies' non-situsable property (e.g., transmission lines, poles, material, supplies) was located.
Appellee complained in her appeal to the board that the commissioner's "seventy-thirty" instruction for the reporting of situsable property values by electric companies deprived Gallia County of a dollar-for-dollar apportionment of tax attributable to property within its boundaries and distorted the computation used to apportion non-situsable property values. Appellee also asserted that the commissioner's informal instruction was, in effect, a rule; and, as such, it was void because it had not properly been adopted pursuant to the procedures set forth in R.C. Chapter 119.
The board found that, in view of the fact that a formal rule had never been promulgated with regard to the policy of allocating thirty percent of situsable property value to non-situsable property value, the commissioner's "seventy-thirty" instruction was arbitrary, unreasonable, and therefore invalid.
The cause is now before this court upon an appeal as of right.
Baker & Hostetler, David A. Johnston, Jr., and Joseph J. Van Heyde II, Columbus, for appellee.
Anthony J. Celebrezze, Jr., Atty. Gen., and James C. Sauer, Asst. Atty. Gen., for appellant.
The primary and determinative issue before the court is whether the Tax Commissioner's policy (allocating thirty percent of situsable property value to the non-situsable property value category when compiling and issuing certificates of tax valuation on public utility property) is an improperly adopted rule and therefore invalid.
The record in the instant case reveals that prior to 1969 the Department of Taxation utilized a formula for determining the taxable value of situsable public utility property, which formula did not require that a standard percentage of the situsable property value be allocated to the non-situsable property value category. However, "around 1969," according to James Witzel, Administrator of the Public Utilities Tax Division of the Department of Taxation, the commissioner informally advised all public utilities to report situsable property value at only seventy percent of its true taxable value while reporting the remaining thirty percent of situsable value as non-situsable property value. Thereafter, the "seventy-thirty split" in the reporting of situsable property value was employed by the commissioner as a matter of administrative policy.
The commissioner asserts that he has acted under the mandate of, and in compliance with, R.C. 5727.15(B) in instructing public utilities to report their situsable property values using the "seventy-thirty" formula. R.C. 5727.15(B) provides in relevant part:
"When the property of such public utility is located in more than one county in this state, the assessed value of such property, except that mentioned in section 5709.02 of the Revised Code, shall be apportioned by the commissioner between the several counties and the taxing districts therein in the proportion which the property located in such county and taxing district bears to the entire value of the property of such public utility, valued as provided in sections 5727.01 to 5727.62 of the Revised Code, so that to each county and each taxing district therein there shall be apportioned such part of the entire valuation as will fairly equalize the relative value of the property therein located to the whole value of the property. * * * " 1
The commissioner argues that the "seventy-thi...
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