The Ohio Supreme Court has ordered the state tax commissioner to recalculate the tax rates for wooded areas near farmland. This decision comes after a unanimous ruling that found the current agricultural use values (CAUVs) for woodlands from 2015 to 2020 were not based on accurate, reliable, and practical data, as required by the Ohio Administrative Code.
A group of landowners challenged these tax values, arguing that the state underestimated the costs of clearing wooded land, leading to excessively high taxes for unfarmed wooded areas. Justice Melody Stewart, writing for the Court, noted that the tax commissioner had acknowledged difficulties in finding reliable data and had doubled the clearing cost rate from $500 to $1,000 per acre without adequate support.
"But the problem is that simply doubling the rate does not necessarily result in a reasonable endpoint," Justice Stewart wrote. "The doubling method used to calculate the rate is not supported by any recognized authority, whether it be statistical, legal, agricultural, or otherwise."
This decision reverses an earlier ruling by the Ohio Board of Tax Appeals (BTA), which had allowed the use of the $1,000 figure. The case has been remanded to Patricia Harris, the current tax commissioner, with instructions to adopt a new clearing-cost rate that complies with Adm. Code 5703-25-33.
Many of the landowners involved were part of a previous appeal against similar clearing costs approved by BTA in 2015. In Adams v. Testa, another Supreme Court decision overturned a BTA ruling that denied landowners' right to challenge CAUV entries for woodland clearing costs.
The CAUVs were created following a 1974 amendment to the Ohio Constitution. This amendment allowed land exclusively devoted to agricultural use to be valued based on its agricultural value rather than its fair market value. The tax commissioner must consider factors such as soil productivity and crop prices when determining these values.
From 1983 to 2014, a $500-per-acre clearing cost rate was applied for woodlands. In 2015, this was proposed to be increased to $1,000 per acre—a move contested by some landowners who argued it did not reflect true clearing costs.
During BTA hearings on this issue, former Ohio Department of Taxation employee Gloria Gardner described how she attempted to document clearing costs in collaboration with John Dorka from the Ohio Forestry Association. They estimated average clearing costs at $3,350 per acre but suggested setting them at $1,000 per acre due to various constraints.
Shelley Wilson from the Department of Taxation testified at these hearings and stated that no reliable data supported lowering clearing costs below $1,000 per acre.
Agricultural advisory committee meetings continued after 2015 and provided figures showing higher clearing costs—more than $3,750 per acre—raising concerns about potential overtaxing leading farmers to sell woodlands for non-agricultural uses.
In its analysis of administrative rules governing CAUV calculations, Justice Stewart explained that information must be obtained from reliable sources like cooperative extension agencies and other relevant bodies. The Court concluded that failing to obtain such information violated mandatory duties outlined in Adm.Code 5703-25-33(B).
"The tax commissioner’s logic...need not be met when...the department deems information given unreliable or faces difficulties obtaining such information," stated Justice Stewart. "Yet there is no exception...that would allow departing from this standard under presented circumstances."
While noting that additional evidence can be used beyond appeals material for deciding appropriate rates going forward; ultimately mandating recalculations compliant with established directives remains imperative.
2023-0733 Adams v Harris Slip Opinion No:2024-OHIO-4640