The Ohio Board of Tax Appeals (BTA) must consider NASCAR’s challenge to the tax commissioner’s determination that it owes nearly $550,000 in state taxes for broadcasting stock car races in Ohio, the Ohio Supreme Court ruled today.

The BTA had rejected an appeal by NASCAR Holdings, which challenged the Ohio tax commissioner’s commercial activity tax (CAT) assessment. The BTA dismissed the case because it was filed by a Florida attorney who was not licensed to practice law in Ohio.

But in a 6-1 per curiam opinion, the Court ruled that the BTA has jurisdiction to hear an appeal when a nonlawyer files the notice of appeal  on behalf of a taxpayer as long as the person filing is authorized by the taxpayer to do so.

The Court remanded the case to the BTA to consider the merits of NASCAR’s appeal.

In a dissenting opinion, Justice Patrick F. Fischer wrote that Ohio courts have long ruled that a lawyer not licensed to practice in the state engages in the unauthorized practice of law when filing a BTA appeal on behalf of another, and that the BTA lacks jurisdiction to hear the case as a result. He stated the BTA lawfully dismissed NASCAR’s appeal.

State Audits NASCAR in 2012
NASCAR Holdings is a Daytona Beach, Florida-based corporation that owns the National
Association for Stock Car Auto Racing. NASCAR conducts races at motorsports facilities throughout North America and broadcasts its premier divisions on network and cable television. In 2012, the Ohio Department of Taxation completed an audit of NASCAR for tax years 2005 to 2010 and assessed NASCAR $549,520 for failing to file CAT returns and failing to pay commercial activity taxes.

NASCAR filed a petition for reassessment with the tax commissioner. In January 2015, the tax commissioner issued his final determination, rejecting NASCAR’s arguments and affirming the assessment.

NASCAR appealed to the BTA, and its notice of appeal was filed by Michael J. Bowen, a Florida attorney who is not employed by NASCAR and is not licensed to practice in Ohio. The tax commissioner asked the BTA to dismiss the appeal, arguing that the BTA lacked jurisdiction over NASCAR’s appeal because Bowen had engaged in the unauthorized practice of law by filing the notice of appeal. NASCAR conceded that Bowen was not authorized to practice in Ohio, but it argued that this did not preclude Bowen from filing the notice of appeal on NASCAR’s behalf. In June 2015, the BTA agreed with the tax commissioner and dismissed NASCAR’s appeal. NASCAR appealed to the Ohio Supreme Court, which was required to hear the case.

Court Relies on 1980 Case Decision
NASCAR argued to the court that R.C 5717.02(A) allows an appeal by the taxpayer to the BTA and that under Jemo Assoc., Inc. v. Lindley decision, any authorized agent may file an appeal on behalf of the taxpayer, even if doing so constitutes the unauthorized practice of law. Because Bowen was NASCAR’s authorized agent, NASCAR asserted that the BTA had jurisdiction to hear the case.

In Jemo, a corporate accountant submitted the notice of appeal to the BTA. At that time, the BTA had in place an administrative rule that required an appeal to be signed by a corporate officer or an attorney. Since the accountant was not a corporate officer or an attorney, the board dismissed the appeal.

The Court reversed the dismissal of Jemo’s appeal to the BTA in a plurality opinion. The plurality found that R.C. 5717.02 had no restrictions limiting who could act on behalf of the taxpayer, so whether the BTA had jurisdiction over an appeal turned on whether the person filing the notice of appeal was authorized by the taxpayer to file it.

BTA Maintained Jemo Did Not Apply
The BTA had found that Jemo did not apply to NASCAR’s appeal because NASCAR’s agent was a non-Ohio attorney who engaged in the unauthorized practice of law by filing the notice of appeal to the BTA.

The Court found that the BTA was wrong to distinguish this case from Jemo solely on the ground that NASCAR’s agent was engaged in the unauthorized practice of law.According to the Court, R.C. 5717.02 places no limits on the corporate taxpayer’s authority to designate an agent to sign the notice of appeal. And under Jemo, who may properly act as the taxpayer’s agent is a question of fact that hinges on whether the taxpayer authorized the filing of the notice of appeal.

“In this case, there appears to be no dispute that NASCAR authorized Bowen to file the notice of appeal to the BTA. So under R.C. 5717.02 and Jemo, the notice of appeal filed by Bowen properly invoked the BTA’s jurisdiction,” the opinion stated.

As a final matter, the tax commissioner argued that since Jemo is a plurality opinion it has no binding authority that the Court must follow. The Court agreed that Jemo was not binding authority. But the court nevertheless found Jemo to be persuasive authority.

Chief Justice Maureen O’Connor and Justices Terrence O’Donnell, Sharon L. Kennedy, Judith L. French, William M. O’Neill, and R. Patrick DeWine joined the majority opinion.

Jemo Superseded by Law Change, Subsequent Cases, Dissent Maintained
In his dissent, Justice Fischer argued that no court has cited Jemo to support the claim that an authorized agent can file an appeal to the BTA if that agent is simultaneously engaging in the unauthorized practice of law. He cited the Court’s 1997 Sharon Village Ltd. V Licking Cty. Bd. of Revision that found nonattorneys could not file property valuation complaints on behalf of corporate taxpayers.

In response to the ruling, the General Assembly amended the state law in 1999 to allow certain persons to file valuation complaints regardless of whether those persons were attorneys. However, the changes did not impact the holding of Sharon Village regarding cases where the issues of jurisdiction and the unauthorized practice of law both arise in a case.

“Moreover, Ohio courts have found that when a filing constitutes the unauthorized practice of law, the court is deprived of jurisdiction to rule on that filing,” he wrote.

He concluded that, without an exemption in the state law that permits a BTA appeal to be filed by a nonlawyer, the nonlawyer who files such an appeal is engaging in the unauthorized practice of law. He stated that it was not unreasonable or unlawful for the BTA to follow the Sharon Village decision and cases that have since reinforced that ruling.

2015-1157. NASCAR Holdings, Inv. V. Testa, Slip Opinion No. 2017-Ohio-9118.

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