Ohio Court of Appeals Rules Exempt Entity May Not Apply For Tax Exemption After Property Is Sold
An Ohio court of appeals has affirmed a decision of the Board of Tax Appeals (BTA) that an entity that owned a property on the tax lien date does not have standing to file for an exemption for that tax year after it subsequently sold the property. It ruled that the BTA correctly dismissed the application for exemption. Wellington Square, LLC v. Testa, 2nd Dist. No. 2012 CA 0024, 2012-Ohio-4981.
Wellington Square, LLC, acquired a parcel of property on December 18, 2008. It sold the property on May 26, 2009. On December 21, 2009, it applied for exemption from taxation for the parcel for the 2009 tax year on the basis that the property was used for charitable purposes. The tax commissioner noted that R.C. 5715.27(A)(1) provides that owners of real property may file applications to have their property exempted from taxation.
Because Wellington Square no longer owned the property on the date that it applied for the exemption the commission denied the application on the basis that Wellington Square had no standing to file the application. On appeal to the BTA, the BTA affirmed the decision on the same basis. Wellington Square then appealed to the court of appeals.
R.C. 5715.27(A)(1) provides that an owner may file with the tax commissioner an application asking that the property be exempted from taxation. Referring to a prior decision of the Supreme Court of Ohio, the Court of Appeals of Clark County noted that the owner of property for purposes of this provision refers only to the legal title holder of the property on the date the application was filed. Since Wellington Square had previously sold the property, it was not the title holder of the property on the date it filed its application for exemption. Therefore, it did not have standing to file the application and the tax commissioner had properly dismissed the application.
Wellington Square argued that its application was proper because the relevant date to determine standing was January 1 of the year in question. The court rejected this argument because, although January 1 is the date on which property must be both owned by the person seeking exemption and used for exempt purposes, that was a separate question from the express requirements of the statute relating to standing and holding title to the property on the date the application was filed. Wellington Square also argued that since the property had been exempt from taxation for prior years, it was entitled to exemption for the subject year. The court of appeals rejected this argument because the status of the property for prior tax years is irrelevant for determining the procedural question relating to the filing of the application for the year in question.