Ohio Supreme Court Affirms Personal Income Tax Assessment Even Though Tax Commissioner Never Affirmatively Supported Residency Status at Lower Administrative Level

In Krehnbrink v. Testa, the Taxpayer did not file an Ohio income tax return for the year at issue claiming all of his income had been earned outside of Ohio. The Tax Commissioner affirmed the assessment based upon lack of evidence as to non-Ohio income. There was no reference in the Tax Commissioner’s Final Determination to an Ohio residency finding


The first time the Tax Commissioner even addressed residency was in an email at the Board of Tax Appeals (“BTA”), where the Tax Commissioner noted that residents are taxed on all of their income regardless of source and obtain a credit to the extent of income tax paid to other states. Before the BTA, the Tax Commissioner also introduced evidence that the Taxpayer had an Ohio residence based upon property records, voter registration, vehicle registration and use of other Ohio addresses. The BTA simply affirmed the assessment without residency.


On appeal, the Supreme Court held that even though neither the Tax Commissioner nor the BTA affirmatively addressed residency as the basis for assessment, the ability to assert liability based upon Ohio resident status was not waived because of the evidence presented at the BTA. Due to the de novo nature of BTA proceedings, the Ohio Supreme Court held that the Tax Commissioner was allowed to raise such basis for the assessment for the first time at the BTA. The Court affirmed the assessment based upon evidence of Ohio resident status.