Ohio Supreme Court Resolves Grain Bin Taxation Issue
Grain bins are “business fixtures” that are personal property not subject to real property tax, according to a decision issued today by the Ohio Supreme Court.
The court case arose when the Metamora Elevator Company challenged the Fulton County auditor’s inclusion of grain storage bins in the company’s real property valuation. Metamora filed complaints with the county Board of Revision, arguing that the grain bins are business fixtures that should not be included in the company’s real property assessment. The Board of Revision disagreed with Metamora and the company appealed to the Board of Tax Appeals (BTA).
The Fulton County BTA ruled in favor of the company, determining that grains bins are personal property and should not be taxed as real property. The BTA reduced Metamora’s real property value by nearly $1.1 million, the value of the grain bins. Fulton County requested a review of the BTA decision by the Ohio Supreme Court, which agreed to hear the case. The issue before the Court was whether the grain bins are “fixtures” or “improvements” that are subject to real property tax or whether they are not subject to real property tax because they are “business fixtures” that qualify as personal property.
Ohio Supreme Court’s reasoning
In its decision authored by Justice O’Donnell, the Supreme Court explained that the legislature amended the Ohio Revised Code in 1992 to clarify the historically “elusive” distinction between real and personal property in Ohio. The court stated that the changes expressed a clear intent to identify fixtures as real property while defining business fixtures as personal property, according to two of th revised sections of Ohio law:
- ORC 5701.02(A), which states that “real property” includes “land itself * * * and, unless otherwise specified in this section or section 5701.03 of the Revised Code, all buildings, structures, improvements, and fixtures of whatever kind on the land.”
- ORC 5701.03(B), which defines “business fixture” as “an item of tangible personal property that has become permanently attached or affixed to the land or to a building, structure, or improvement, and that primarily benefits the business conducted by the occupant on the premises and not the realty. Business fixture includes, but is not limited to, machinery, equipment, signs, storage bins and tanks, whether above or below ground, and broadcasting, transportation, transmission, and distribution systems, whether above or below ground.
“Our analysis need go no further than to apply the expressed intent of the General Assembly to the undisputed facts of this case,” said the Court, and concluded that the legislature clearly intended for the term “business fixture” to include storage bins, and therefore to define storage bins as personal property not subject to real property tax.
The Court rejected the two arguments advanced by the county, that property classification cases depend upon what constitutes an “improvement” under the Ohio Constitution and that it would be unconstitutional for the legislature to classify constitutional “improvements” such as fixtures or structures as personal property simply because the fixtures might be used in business. Because the grain bins related more to the personal business than to the land, based on the definition of “business fixture” in ORC 5701.03, the Court saw no conflict between the personal property classification and the Ohio Constitution.
Implications for agriculture
Fulton County may not be the only county that classifies grain bins as real property for tax purposes. Landowners who own grain bins should review their property tax records and determine whether the real property value includes the value of grain bins located on the parcel. If the property tax does incorporate grain bin values, consult with the county auditor to discuss the situation. Ohio law allows a county auditor to correct "clerical errors" made in the collection of real property taxes, although there is a question of whether inclusion of grain bins in the real property value constitutes a clerical error. Ohio law also provides remedies for taxpayers who have overpaid taxes; landowners should consult with a tax attorney for guidance on these remedies. Note that filing a complaint with the Board of Revision is not an option, as March 30 was the deadline for filing complaints for the current tax year.
The case of Metamora Elevator Co. v. Fulton Cty. Bd. of Revision, Slip Opinion No. 2015-Ohio-2807 is available on the Ohio Supreme Court’s website, here.