Ohio Supreme Court dismisses lawsuit alleging state unlawfully double-taxes certain residents

COLUMBUS, Ohio — The Ohio Supreme Court on Wednesday dismissed a lawsuit filed by two Northeast Ohio taxpayers who claimed the state had “double-taxed” them and thousands of other Ohioans because they had never received W-2 forms from their employers.

Without comment, the seven-member court voted to dismiss the 2021 lawsuit, which stated that when Ohio taxpayers are unable to provide information from their W-2 forms about the amount of state income tax that was withheld from their paychecks (either because the forms were lost, destroyed, or were never issued), the state directs them to indicate on their tax return that no state income taxes were withheld by their employers – even when their employers withheld taxes.

The plaintiffs in the case, James Palm of Akron and Sara Pearson of Ravenna, attempted in 2020 to pay their income tax from previous years, but neither of them had W-2s to show how much their employers had retained. Palm says he couldn’t get his W-2s because the Dollar Tree store where he worked had closed, and Pearson says her ex-husband destroyed his W-2s or arranged for them be mailed to his mother’s house.

Palm claimed an Ohio Department of Taxation employee told him that since neither he nor the state knew how much his employer had withheld, he should report that no money had been withheld. . Subsequently, the state notified him that he owed $49.12 in unpaid income taxes.

When Pearson filed her taxes, she put “unknown” in the box for state income tax withholding; the lawsuit claimed that the state changed that to “zero” and that Pearson should be entitled to a tax refund.

State Treasurer Robert Sprague and Ohio Tax Commissioner Jeff McClain asked the court to dismiss the lawsuit for several reasons, including that the plaintiffs failed to follow the tax appeals process. usual, the state law on which they rely to plead their case does not. do not apply to individual taxpayers, and both taxpayers have not proven that they are owed money.

Dana Goldstein, an Akron-based community legal aid attorney who represents the plaintiffs, said in a previous interview that the state policy particularly hurts poorer Ohioans because they are less likely to ‘get W-2s every year for a number of reasons, including that they’re more likely to work seasonal or part-time jobs or tend to move house more often than wealthier residents.

However, Sprague’s brief disputed this assertion, saying plaintiffs “can hardly allege ‘systemic failure'” when they have not asked McClain’s office for a tax reassessment or, failing that, dismissed the case. to the Board of Tax Appeals.

The case was referred for mediation shortly after it was filed in August 2021. But mediation did not resolve the case, so the court returned it to its regular docket last May.

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