The Ohio Supreme Court in MacDonald v. City of Shaker Heights Income Tax Board of Review, Slip Opinion No. 2015-Ohio-3290 affirmed that the BTA had the authority to conduct a de novo review of the municipal tax board’s determination regarding whether MacDonald’s Supplemental Executive Retirement Plan (“SERP”) annuity payments were exempt “pension” income. Both the BTA and Tenth District Court of Appeals held that the SERP amounts were pension income. The SERP benefit at issue was not a salary deferral and was unfunded before the taxpayer’s retirement. The benefit was intended to replace a portion of the taxpayer’s pre-retirement income after taking into consideration other benefits to be received through a qualified plan and Social Security. It was received in the form of joint and survivorship annuity measured by the joint lives of the taxpayer and his wife. Pension income was specifically excluded from taxation under the municipality’s ordinance.
The BTA’s holding as to pension income characterization, affirmed by the Tenth District, was not before the Supreme Court due to its rejection of jurisdiction of such substantive issue. Therefore, the Tenth District’s decision is still good law and refund claims can be filed based upon this authority. Click here to read our previous post regarding the Tenth District’s opinion. For additional information about how this decision may impact your municipal tax obligations, please contact Steve Dimengo, Rich Fry, or Casey Davis.
