Sorting Ohio Tax Claims, Due Process, and the Role of Data

I was recently reading a report issued by the Ohio Department of Taxation regarding ways to fix the backlog of cases experienced by the Board of Tax Appeals (the “BTA”) and it raised some thoughts about narrowly tailoring laws to fit goals and the potential role of data in decision-making. In short, Ohio cut funding to the BTA just when the economic downturn, the collapse in the housing market, and the rise in anti-tax sentiment conspired to give the BTA a record number of taxpayers appealing the valuation of their property (and therefore the amount of their property taxes) — smart move Ohio. The report attempts to offer solutions to this problem.

The report offers up a number of recommendations you might expect — such as the use of technology to be more efficient. My problem with the report is that its centerpiece solution is a “small claims” process for residential valuation appeals, which eliminates many due process protections (e.g., right to appeal, discovery, introduction of new evidence) in exchange for expediency. The report claims this is nothing new, citing the similar practice of treating claims differently based on a specific dollar amount (e.g., claims disputing less than $50,000) but the department is overlooking a very important difference.

I am not a due process expert but it would seem that a statute discriminating against taxpayers with smaller amounts in dispute is closely related to the goal of directing simple claims to a streamlined process (it assumes small amounts correlate to simple claims). However, discriminating against taxpayers with residential taxpayers in favor of commercial or industrial taxpayers is not as focused in that it makes the assumption that residential valuations claims are less complex (an assumption which I think is less well-grounded). For example, a taxpayer disputing a millions of dollars in valuation or a controversial new tax law will have less rights than a taxpayer with a commercial property who is disputing $5000 in valuation.

This is also an example where good legal data and metrics could aid in decision-making. Assuming a due process challenge was made and a court needed to decide which statutory method is a more closely tailored to to the government’s goal (i.e., sort claims by dollar amount or sort claims by property type), actual data showing what factor most closely correlates with complex legal issues would be enormously useful to the court. My own sense that dollar amount is a safer assumption is itself an assumption — I would rather see real statistical evidence to back this up.