Supreme Court Upholds Cleveland Municipal Income Tax on Nonresident’s Stock Option Income

2020-07-06 14:51:42

<a href="/wp-content/uploads/2020/07/w2.jpg"><img class="alignright size-full wp-image-11746" src="/wp-content/uploads/2020/07/w2.jpg" alt="w2" /></a> A former Ohio resident could not avoid Cleveland municipal income tax even after retiring and moving to Florida.<a href="https://www.supremecourt.ohio.gov/"> The Ohio Supreme Court</a> held income generated from employee stock options received as compensation while employed in Cleveland were properly taxed by the City, even though the employee had retired and moved out-of-state before she exercised the options. <em><a href="https://cases.justia.com/ohio/supreme-court-of-ohio/2020-2018-0794.pdf?ts=1580825030">Willacy v. Cleveland Board of Income Tax Review, 2020-Ohio-314 (Feb. 4, 2020).</a></em> As this case illustrates, stock options and other deferred compensation may be subject to state and local taxes based upon where the compensation was earned, even if the income is not realized until years later after the taxpayer moves away.   In this case, the taxpayer’s former employer in Cleveland granted her options to purchase shares of common stock at a discounted price as compensation for her employment. Thus, the options constituted qualifying wages subject to Cleveland’s municipal income tax. However, the taxpayer did not exercise the stock options until years later after she retired and moved to Florida. When she exercised the option, the Cleveland employer withheld and remitted municipal income tax on the stock’s appreciation in accordance with <a href="http://cleveland-oh.elaws.us/code/coor_ptone_txvii_ch191_sec191.1302">Cleveland Codified Ordinances 191.1302(a).</a> The taxpayer challenged the tax, asserting that the income generated was intangible income not subject to taxation, and that Ohio lacked the minimum connection to tax the income required under the Due Process Clause.   The Court rejected these arguments, holding stock options received in exchange for employment services are qualifying wages subject to tax—essentially as deferred compensation. Specifically, the Court held the taxpayer’s Due Process rights were not violated because: (1) the stock-option income was generated from work performed in Cleveland; and (2) since the income was compensation for her work, the income was fairly attributable to her activity in Cleveland. It made no difference that the Taxpayer did not exercise the options until several years later when she was a full-time Florida resident.   If you have received stock options or other assets as compensation from your Ohio employer, you may be subject to Ohio state and local income taxes even after you have moved away. If you have questions about how to minimize taxes on stock options or similar compensation from employment, please feel free to <a href="https://www.ohiostatetaxblog.com/contact/">contact us.</a>   Attorney <a href="https://www.bdblaw.com/attorneys/steven-a-dimengo/">Steven A. Dimengo</a> is Managing Partner of Buckingham, Doolittle & Burroughs, LLC. He helps clients with complicated tax challenges including Ohio sales/use, income, commercial activity and federal taxes and has represented clients before the Ohio Supreme Court. Steve can be reach at <a href="mailto:[email protected]">[email protected]</a> or <a href="tel:330.258.6460">330.258.6460</a>.   <a href="https://www.bdblaw.com/attorneys/richard-b-fry-iii/">Richard B. Fry III</a> is a partner and Buckingham’s Taxation Practice Group Chair. He focuses on state and local tax compliance and controversies, including Ohio and multistate sales/use tax, commercial activity tax, and personal income tax issues. Rich can be reached at <a href="mailto:[email protected]">[email protected]</a> or <a href="tel:330.258.6423">330.258.6423</a>   <a href="https://www.bdblaw.com/attorneys/nathan-m-fulmer/">Nathan M. Fulmer</a> is an associate in Buckingham’s Taxation Practice Group. He represents clients on a broad range of tax planning and controversy matters. His joint degree in taxation allows him to provide unique solutions when assisting clients on business matters. Nate can be reached at <a href="mailto:[email protected]">[email protected]</a> or <a href="tel:330.258.6464">330.258.6464</a>. <strong> </strong> <strong>About Buckingham, Doolittle & Burroughs:</strong> Buckingham, Doolittle & Burroughs, LLC is a corporate law firm that counsels middle-market executives and business leaders all over Ohio and beyond. With offices in Canton, Akron, and Cleveland, Buckingham offers clients Business Law Reimagined through sophisticated and practical legal services. Serving the region for more than 100 years, Buckingham’s mission is to deliver meaningful experiences through the practice of law, exceed expectations in terms of service, counsel and business sense, and to offer continuous value to the industries, communities and clients they serve. For more information, news and updates, visit <a href="http://www.bdblaw.com/">bdblaw.com</a>.  

Refund Opportunities for Nonresidents of Ohio for Ohio Income Tax on Capital Gain from the Sale of Pass-Through Entity.

2016-05-12 17:37:24

Under <a href="http://codes.ohio.gov/orc/5747.212v1">R.C. 5747.212</a>, Ohio personal income tax is imposed on capital gains realized by out-of-state investors who hold a 20% or greater interest in a pass-through entity or closely held C-corporation doing business in Ohio. Per the statute, the nonresident investor’s gain is apportioned to Ohio according to the three-year average of the entity’s Ohio apportionment ratio. However, the Ohio Supreme Court has held that imposing this tax on a nonresident’s capital gain from the sale of an equity interest in a pass-through entity violated the nonresident’s due process rights, absent a finding that the investor conducted a unitary business with the entity. <a href="http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2016/2016-Ohio-2805.pdf"><em>Corrigan v. Testa</em></a><em>, </em>2016-Ohio-2805. Corrigan was a Connecticut resident who owned the majority interest (79.29%) in Mansfield Plumbing, L.L.C. As a manager, Corrigan participated in the high-level strategic management of the company and visited the company for board meetings and other management presentations. “According to Corrigan, his role and capacity was as an ‘investor who bought companies with the intention of providing financial and strategic expertise to grow the company for an eventual exit via a sale to a third party.’” <em>Corrigan</em>, at ¶8. But the company’s day-to-day operations were overseen by the company’s other officers and managers. Upon the sale of his interest in the company, which resulted in a $27.5 million capital gain, Corrigan paid a portion of the tax owed according to R.C. 5747.212 and filed for a refund, which the Tax Commissioner denied. Normally, the gain from the sale of an intangible is sitused to the taxpayer’s domicile. <a href="http://codes.ohio.gov/orc/5747.20v1">R.C. 5747.20(B)(2)(c).</a>  However, R.C. 5747.212 is a special rule which apportions the gain from the sale of an interest in a pass-through entities or closely held C-corporation doing business in Ohio. The Court found that taxing the gain from an intangible owned by a nonresident was unconstitutional, unless the nonresident engaged in business that was unitary with the company being sold. Otherwise, the taxpayer has not purposely availed itself of the protections and benefits justifying the state’s tax under the Due Process Clause of the U.S. Constitution. Therefore, since Corrigan had not participated in a business unitary with Mansfield Plumbing, Ohio could not tax any portion of his gain from the sale of his interest in the company. The Tax Commissioner argued that Corrigan had subjected himself to Ohio tax by holding an interest in a pass-through entity doing business in the state. This position was based upon the Ohio Supreme Court’s previously ruling that the state could tax a nonresident’s distributive share of pass-through entity income based upon the entity’s connections to Ohio. <a href="http://www.supremecourt.ohio.gov/rod/docs/pdf/0/1999/1999-Ohio-61.pdf"><em>Agley v. Tracy</em></a>, 87 Ohio St.3d 265, 719 N.E. 2d 951 (1999). <a href="http://www.supremecourt.ohio.gov/rod/docs/pdf/0/1999/1999-Ohio-382.pdf"><em>Dupee v. Tracy</em></a>, 85 Ohio St.3d 350, 708 N.E. 2d 698 (1999). However, the Court distinguished these cases because Corrigan’s gain was from the sale of an intangible and not generated by Ohio business activity. It should be noted that had Mansfield Plumbing sold its assets, as opposed to Corrigan selling his membership interest, Corrigan would have been taxed on the company’s gain from the asset sale that passed-through to Corrigan. Thus, this is an additional consideration as to the structure of a sale for nonresident investors planning to sell their pass-through entity. Nonresident investors who have paid tax under R.C. 5747.212 within the last four years should consider filing a refund claim with the Ohio Tax Commissioner. Please <a href="https://www.ohiostatetaxblog.com/contact">contact us</a> if you have any questions about this case or whether you may be entitled to a refund.

Third Annual Northeast Ohio State and Local Tax Conference Provides Invaluable Updates on the Current State of Ohio and Multistate Taxes

2016-01-08 15:12:22

The third annual Northeast Ohio State and Local Tax Conference was held on November 12, 2015 in Independence, Ohio. Matt Chafin, Chief Legal Counsel for the <a href="http://www.tax.ohio.gov/">Ohio Department of Taxation</a>, led off the Conference with an Ohio Tax Update, providing valuable insight to the Department of Taxation’s posture and recent initiatives. Chafin is the highest-ranking official in the Tax Commissioner’s office and is directly involved in establishing policy.   “This one day, comprehensive conference is the only one of its kind in Northeast Ohio,” said <a href="http://www.bdblaw.com/attorneys/steven-a-dimengo/">Steve Dimengo</a>, co-founder of the Northeast Ohio State and Local Tax Conference and partner at <a href="http://www.bdblaw.com/">Buckingham Doolittle & Burroughs LLC</a>. “Every year we are honored to have so many talented tax professionals, from all over the state, who are willing to present at our conference. This is an event we will continue, and continue to improve, for many years to come.”   The Northeast Ohio State and Local Tax Conference covered a wide array of topics, including aligning state tax planning with business incentives, combined reporting, and apportionment trends. The Conference featured well-recognized speakers from both private practice and government taxing authorities. <a href="http://www.bdblaw.com/attorneys/steven-a-dimengo/">Steve Dimengo</a> presented on a variety of topics, including creative maximization of Ohio sales/use tax exemptions, Ohio’s nonresident law after <a href="https://www.ohiostatetaxblog.com/9841"><em>Cunningham</em></a>, and an overview of Ohio sales/use tax updates. Fellow Buckingham partner, Richard Fry, presented an update on the Ohio Commercial Activity Tax and moderated the panel discussion regarding minimizing real property tax and maximizing Ohio tax incentives.   We hope that you will join us for the Fourth Annual Northeast Ohio State and Local Tax Conference in November 2016.   If you have any questions regarding the topics covered at the Northeast Ohio State and Local Tax Conference or if you have any Ohio tax questions, please contact <a href="http://www.bdblaw.com/attorneys/steven-a-dimengo/">Steve Dimengo</a>, <a href="http://www.bdblaw.com/attorneys/richard-b-fry-iii/">Richard Fry</a>, or <a href="http://www.bdblaw.com/attorneys/casey-j-davis/">Casey Davis</a>.   <a href="mailto:[email protected]">Contact us</a>.

Are you sure you’re an Ohio non-resident? Bright-line residency effectively muted: Ohio Supreme Court rules taxpayers must satisfy the burdensome common-law domicile test for Ohio income tax even when residency affidavit filed.

2015-07-09 16:55:44

<a href="http://www.supremecourt.ohio.gov/">The Ohio Supreme Court</a> delivered a significant blow to individuals claiming nonresident status for Ohio personal income tax under the bright-line residency statute. <em><a href="http://www.supremecourt.ohio.gov/ROD/docs/pdf/0/2015/2015-Ohio-2744.pdf">Cunningham v. Testa, 2015-Ohio-2744</a></em>. The Ohio statute provides that an individual is irrebuttably presumed to be a nonresident if the individual satisfies three requirements: (1) maintains an abode outside Ohio for the entire year; (2) satisfies the contact period test (recently increased to less than 212 Ohio contact periods); and (3) files an affidavit verifying domicile is outside Ohio.  <a href="http://codes.ohio.gov/orc/5747.24">R.C. 5747.24(B)</a>. Bright-line residency, originally enacted in 1993, is intended to streamline residency determinations which under the common-law domicile test are extremely fact intensive. Under the previous interpretations of the bright-line residency statute, an individual filing the required affidavit was considered a nonresident provided the two factual statements in the affidavit were true – the taxpayer maintained a non-Ohio abode and had less than the stated Ohio contact periods (182 prior to 2015). It was believed all other facts were irrelevant, even if the taxpayer would have been considered an Ohio resident under the common-law domicile test. This is no longer the case. <a href="http://www.supremecourt.ohio.gov/">The Supreme Court</a> held that the presumption is not binding when the Tax Commissioner “has a substantial basis for rejecting the claim of non-Ohio domicile” that is supported by “specific information that warranted the finding.” In <em><a href="http://www.supremecourt.ohio.gov/ROD/docs/pdf/0/2015/2015-Ohio-2744.pdf">Cunningham</a></em>, the taxpayer signed a homestead exemption application for his Cincinnati residence under penalties of perjury attesting that he was domiciled in Ohio. This contradictory statement meant his residency affidavit contained a false statement – that he was not domiciled in Ohio. Due to the false statement, the non-residency presumption was no longer irrebuttable and actually required the taxpayer to meet the common-law residency test. The <a href="http://www.supremecourt.ohio.gov/">Court</a> then considered a bevy of additional facts in concluding the common-law test was not met – that the taxpayer voted in Ohio; held an Ohio driver’s license; was born, raised, and educated in Ohio; was married and raised a family in Ohio; and generally had mailed delivered to Ohio. Quoting the <a href="http://bta.ohio.gov/">Board of Tax Appeals’</a> <a href="http://app.bta.ohio.gov/2011-N-4641.pdf">decision</a>, the dissent points out this decision “essentially renders the ‘bright-line’ non-residency status… moot, as the commissioner could always challenge the veracity of the statement that the taxpayer was not domiciled in Ohio.” The question now becomes what constitutes a “substantial basis” for disputing the affidavit’s non-residency statement and how specific must the Tax commissioner’s information be to support this basis. Does it require a contradictory statement sworn to under penalties of perjury, as in <em><a href="http://www.supremecourt.ohio.gov/ROD/docs/pdf/0/2015/2015-Ohio-2744.pdf">Cunningham</a></em>, or is any fact supporting non-residency, such as registering a vehicle with Ohio, sufficient? The only certain protections taxpayers have are those facts which the Tax Commissioner cannot consider under <a href="http://codes.ohio.gov/oac/5703-7-16">O.A.C. § 5703-7-16(A)</a>. This decision is contrary to <a href="http://www.governor.ohio.gov/">Governor Kasich’s</a> policy to reduce Ohio individual income tax obligations through reduced rates, minimizing tax on small-business owners, and increasing the permissible presence under the bright-line residency statute. It will have significant implications for taxpayers claiming non-Ohio residency, but having multiple residences, such as retirees with significant investment / intangible income that split time between Ohio and another state. We will post a follow-up article with planning tips that individuals should consider to increase the likelihood their non-resident status will be recognized under this new interpretation of the bright-line statute based upon our substantial experience supporting non-resident status under the common-law domicile test. If you have any questions, contact <a href="http://www.bdblaw.com/cp_people/steven-a-dimengo/">Steve Dimengo</a>, <a href="http://www.bdblaw.com/cp_people/richard-b-fry-iii/">Rich Fry</a>, or <a href="http://www.bdblaw.com/cp_people/casey-j-davis/">Casey Davis</a>. <a href="http://www.bdblaw.com/wp-admin/post-new.php">Contact us</a>.

InvestOhio - Personal Income Tax Credit for Investors in Ohio Small Businesses

2011-08-01 13:40:23

<p class="MsoNormal" style="margin: 0in 0in 0pt;"><a href="http://www.dispatch.com/live/content/business/stories/2011/06/30/investohio-is-now-a-tax-credit-program.html?sid=101"><span style="text-decoration: underline;"><span style="font-family: Times New Roman; color: #0000ff; font-size: small;">Added at the last minute</span></span></a><span style="font-family: Times New Roman; font-size: small;">, the recently enacted Ohio Budget Bill (<a href="http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_153"><span style="text-decoration: underline;"><span style="font-family: Times New Roman; color: #0000ff; font-size: small;">Am. Sub. H.B. 153</span></span></a><span style="font-family: Times New Roman; font-size: small;">) included a tax credit for individuals against their <a href="http://www.tax.ohio.gov/divisions/ohio_individual/individual/index.stm"><span style="text-decoration: underline;"><span style="font-family: Times New Roman; color: #800080; font-size: small;">Ohio personal income taxes</span></span></a><span style="font-family: Times New Roman; font-size: small;"> for investments in qualifying Ohio small business enterprises. An eligible small business enterprises must have: (1) less than $50 million in total assets or less than $10 in annual sales; and (2) 50 full-time equivalent Ohio based employees, or half of all its full-time equivalent employees located in Ohio. The credit equals 10% of the qualifying investment, limited to $1 million per individual investor ($2 million for spouses filing jointly).</span></span></span></p> <p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="font-family: Times New Roman; font-size: small;">An eligible investor is an individual, estate or trust subject to Ohio personal income tax making a cash investment in a qualifying small business enterprise. Within six months of the investment, the small business enterprise must invest in or incur the cost of tangible personal property, motor vehicles, real property or intangible personal property used in business primarily in Ohio, or compensation for newly-hired or retained employees for whom the enterprise must withhold Ohio income tax (excluding increased compensation for owners, officers and managers). The investor may not sell or dispose of the investment until the end of the applicable holding period, which is two years for investments made between July 1, 2011 and June 30, 2013 and five years for investments made on or after July 1, 2013.</span></p> <p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="font-family: Times New Roman; font-size: small;">The nonrefundable credit is claimed in the tax year that includes the last day of the holding period and may be carried forward up to seven years. To qualify for the InvestOhio small business credit, the investor (or the qualifying enterprise on behalf of the investor) must apply to the Ohio Director of Development for a small business investment certificate. Certificates will be issued in the order in which the applications are received.</span></p> <p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="font-family: Times New Roman; font-size: small;"> </span></p> <p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="font-family: Times New Roman; font-size: small;">For more information on whether you may qualify for the InvestOhio small business credit, or how to apply for the credit, please <a href="https://www.ohiostatetaxblog.com/index.php?option=com_contact&view=category&catid=12&Itemid=61"><span style="text-decoration: underline;"><span style="font-family: Times New Roman; color: #0000ff; font-size: small;">contact us</span></span></a><span style="font-family: Times New Roman; font-size: small;">. </span></span></p>

Ohio Income Tax Residency: Not So Clear for Athletes/Entertainers with Multiple Homes

2010-07-16 21:43:28

It’s no secret athletes and entertainers are attracted to no-income tax states, such as Florida, Texas and Nevada.  Recently, the tax savings offered by these states was <a href="http://online.wsj.com/article/SB10001424052748704075604575357232023445918.html">highly publicized </a>as a motivating factor for the departure of Northeast Ohio’s brightest star. Avoiding Ohio’s combined state and local income tax rate (up to 9%) offers a substantial incentive for athletes and entertainers to become Ohio nonresidents. By properly supporting a change in residency, nearly all of the athlete’s income, including his salary, earnings from endorsements and investment income, will avoid Ohio income tax.  However, establishing Ohio nonresident status for an athlete with continuing connections to Ohio (or, frankly, any individual with multiple residences) is not as simple as presented by the national media. This post addresses two situations: 1) an athlete who has always resided in Ohio signs with a team outside Ohio, but continues to maintain an Ohio home with immediate family residing in Ohio; and 2) an athlete that grew up and lived outside Ohio comes to play for an Ohio based team, but retains a residence in his “home” state. Unless the <a href="https://www.ohiostatetaxblog.com/archives/49-ohio-personal-income-tax/61-snowbirds-watch-out-for-ohios-qcontact-periodq-test.html">irrebuttable presumption of non-Ohio residency</a> applies, the athlete’s residency for Ohio personal income tax purposes is determined by the common law “domicile” test. One’s domicile is his permanent legal residence intended to be used for an indefinite period and to which, when absent, the person intends to ultimately return. The key focus is the athlete’s subjective intent as to his permanent residence – where he intends to remain indefinitely. In the first example, assume the athlete plays for a team in a no-income tax state, but  retains a luxurious Ohio home where his family continues to reside and to which the athlete will return in the offseason. The athlete may also wish to participate in or hold charitable events in Ohio. In order to overcome the presumption of Ohio residency due to the retention of an Ohio home, the athlete must take certain steps to evidence his change in intent or bear the risk of remaining an Ohio resident for income tax purposes. Actions and public statements inconsistent with the athlete’s change in intent may lead to a challenge of his resident status. In similar situations, albeit involving individuals with modest livings, taxpayers have been found to retain their Ohio residency even though they spent a majority of time outside Ohio for employment purposes, when the employment is temporary and the individual’s family stays in Ohio. One case even concluded that an individual’s five-year employment outside Ohio was temporary because he always intended to return to Ohio. In the second hypothetical, assume the athlete grew up and attended college in a no-income tax state but ultimately plays professionally for an Ohio team. The athlete purchases an Ohio residence where he resides in-season but continues to maintain an offseason home in the no-income tax state where his family primarily resides. Despite spending a significant amount of time in Ohio, the athlete intends to ultimately return to his home state after his tenure with the Ohio team ends. While the athlete’s intent may appear clear – not to be domiciled in Ohio – this intent may be scrutinized if, again, his actions or public statements are inconsistent. Although there is no cookie-cutter approach, through our substantial experience with Ohio personal income taxes and residency matters, we can outline and maintain a plan tailored to the athlete’s unique circumstances to support his bona fide intent to be domiciled in a no- or low-income tax state, despite maintaining a secondary Ohio residence and other connections to the state. Obviously, it is very advantageous to develop and implement this plan in conjunction with the individual’s change in domicile, rather than addressing it after the individual’s domicile is challenged.

Snowbirds: Watch Out For Ohio's "Contact Period" Test!

2009-12-17 20:24:58

Ohio has adopted a unique test for determining who is considered an Ohio resident for individual income taxes.  Based upon the number of  “contact periods” an individual has in Ohio during a given year, a presumption is created as to the individual’s residency.  A “contact period” occurs when an individual is in Ohio for any period of time on two consecutive days, while being away overnight from the individual’s non-Ohio residence.  Under this test, an individual is irrebuttably presumed <span style="text-decoration: underline;">not</span> to be an Ohio resident if he/she: 1) had a non-Ohio abode for the entire year; 2) had less than 183 Ohio contact periods during the year; and 3) timely filed an <a href="http://tax.ohio.gov/documents/forms/ohio_individual/individual/2009/PIT_ITDA_Nonmilitary_FI.pdf">Affidavit of Non-Ohio Residency/Domicile </a>with the Ohio Tax Commissioner in  the following year.  Failure to file the Affidavit will cause the individual to be presumed to be an Ohio resident. The “contact period” test often arises with respect to retirees that purchase a residence “down south”, while retaining their Ohio residence and continuing to spend significant time in the state – so-called “dual residents.”  Since the taxpayer has the burden of proving the number of non-Ohio “contact periods” he/she has during the year, it is crucial to keep complete records, perhaps even a daily journal, of those days spent outside of Ohio.  If you are contemplating moving out of the state, but retaining your Ohio residence, you should contact an Ohio state tax attorney  to confirm the necessary proof and records to be maintained to support the presumption that you are no longer an Ohio resident. However, it should be noted that the “contact period” test normally will not apply to transition years (the first year in which the non-Ohio residence is acquired), as this test does not apply to part-year Ohio residents.

Municipal Income Tax - SERP Constitutes Exempt Pension Income

2013-03-01 15:53:42

Municipalities are given the power to tax by the Ohio Constitution – commonly referred to as the Home Rule. This power can be, and has been, limited by the Ohio General Assembly under <a href="http://codes.ohio.gov/orc/718">Chapter 718 of the Ohio Revised Code</a>. Additionally, municipalities often limit the income subject to taxation by its own ordinances, with a common exclusion for pensions. Ohio municipalities have put increasing emphasis on taxing employment benefits supposedly earned while working in or a resident of the city, even if the taxpayer receives the income years after last working in the city or when he/she is no longer a resident. <i>See e.g., <a href="http://app.bta.ohio.gov/07z139dec.pdf">Boyer v. St. Bernard Municipal Bd. Of Appeal</a></i> (June 23, 2009), B.T.A. No. 2007-K-139; and <i><a href="http://www.sconet.state.oh.us/rod/docs/pdf/12/2008/2008-ohio-5298.pdf">Wardrop v. Middletown Income Tax Review Bd.</a> </i>(Oct. 13, 2008), 2008-Ohio-5298 (Ohio App. 12 Dist.). In a pro-taxpayer decision, the <a href="http://app.bta.ohio.gov/2008-K-1883.pdf">Ohio Board of Tax Appeals recently ruled</a> that a taxpayer’s receipt of benefits under a supplement executive retirement plan (SERP) after retirement, when no longer a resident, were not taxable. In this case, the taxpayer argued the SERP constituted a non-taxable pension under the Shaker Heights Codified Ordinances. Even though the SERP was not expressly referred to as a pension, the BTA found that the SERP met the common meaning thereof – generally speaking, “<i>any plan sponsored by an employer that provides for post-retirement income that’s designed to supplement their income for life</i>” according to expert William Dunn. Accordingly, the income at issue was excluded from taxation under Shaker Heights’ own ordinance.