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Ohio Supreme Court decision will impact future tax cases

Written on Aug 4, 2023

By Greg Saul, Esq., CAE, director of tax policy 

While many members are still awaiting the decision on the 2020 municipal income tax refunds that should be released soon, the Ohio Supreme Court sided with the oil and gas industry Wednesday in a major decision affirming a series of sales/use tax write-offs for equipment used in oil and gas “fracking.” 

However, Stingray Pressure Pumping, L.L.C. v. Harris, Tax Commissioner is more significant for its watershed precedent of discarding Ohio’s long-standing deference to the state in tax disputes. The Court will no longer apply a public policy preference against the taxpayer, properly leaving those questions to the General Assembly. 

Justice Patrick DeWine wrote for the 5–2 majority and said courts must defer to the plain meaning of the Ohio Revised Code rather than past rulings and related public policy around oil and gas exemptions and other tax laws “construed strictly against the taxpayer.” 

Stingray had instead called for “normal rules of construction” not “tilted toward taxation.”  

Justice DeWine agreed and explained that the Court would no longer construe tax statutes against the taxpayer. In the past, the Court has read tax statutes in a way that favors taxation. But the Court’s task is to “provide a fair reading of what the legislature has enacted,” he stated. The Court will now read tax statutes neutrally based on their plain and ordinary meaning—not in a manner that favors or opposes taxation. 

DeWine signaled a new precedent for the state of Ohio: “Tax statutes must be read through a clear lens, not one favoring tax collection. Thus, we make clear today that henceforth we will apply the same rules of construction to tax statutes that we apply to all other statutes.” 

Chief Justice Sharon Kennedy and Justices Patrick Fischer and Joe Deters concurred in full. Justice Jennifer Brunner concurred in judgment only, and Justice Michael Donelly concurred in part and dissented in part, joined by Justice Melody Stewart. 

Read the entire case summary here

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