Ohio School District Forced to Return $5.5 Million in Illegal Taxes to Taxpayers
Indian Hill Board of Education raised taxes without a vote, refused to refund money
Cincinnati, OH – After a five-plus year legal battle concluded with an Ohio Court denying all of its objections, the Indian Hill Exempted Village School District Board of Education late yesterday finally conceded that it must return the $5.5 million that it illegally assessed taxpayers after raising taxes without a public vote in 2010.
The 1851 Center for Constitutional Law’s victory on behalf of a certified class of all school district property taxpayers comes nearly one year after the 1851 Center prevailed in striking down the tax increase before the Ohio Supreme Court. After the Court’s unanimous December 2014 decision, the school district still refused to return the funds, requiring the Center to file a class action lawsuit in January of 2015.
In affirming that Ohio taxpayers maintain a constitutional right to recover unlawfully-imposed taxes, Judge Martin of the Hamilton County Court of Common Pleas denied the Board’s Motion for Summary Judgment, rejecting the Board’s position that it was not required to return any of the funds, or that in the alternative, it was required to return $2 million at most.
Indian Hill School District property taxpayers can expect a refund check by March 1, 2016. Amounts are expected to be approximately $1,000 for the average taxpayer, and much greater for many others.
“The outcome of this case reflects the principles that property taxes cannot be increased without a vote by citizens, unlawfully-collected taxes must be returned to those taxpayers from whom they were taken, and government must pay interest to taxpayers when it has kept their funds for many years, as here,” said Maurice Thompson, Executive Director of the 1851 Center for Constitutional Law.
“These results should dissuade other school districts from attempting to unlawfully raise taxes. Nevertheless, Ohioans should have a hard look at their school board members, who, absent scrutiny, could quite literally be getting away with theft, as would have otherwise happened here.”
Due to the class-action status of the case, the Court of Common Pleas will hold several hearings over the coming months to finalize the case, including addressing the administrative complexities of issuing pro rata refunds not just to current homeowners in the district, but to those that owned homes during the period of illegal taxation.
Rather than settling the matter in January, the Board diverted nearly $200,000 from funds earmarked for the education of school district children to pay attorneys fees of $400 per hour. Unable to find Cincinnati law firms willing to defend its practices, the Board opted to hire a firm consisting of Washington D.C. lobbyists and Cleveland lawyers.
The Board and its lawyers argued that it was entitled to keep the taxpayers’ money because each and every taxpayer did not file an individual protest letter with each and every property tax payment, and further argued that perhaps it could have legally raised taxes, albeit to a lesser extent, in the absence of the unlawful tax increase that it chose.
The 1851 Center countered by explaining that state and federal Due Process Clauses have been held to require the return of unlawfully-charged taxes. The Court took little time in flatly rejecting the firm’s arguments and siding with the 1851 Center.
“Judge Martin should be commended for scrutinizing and seeing through the Board’s outlandish arguments rather than just reflexively siding with government – – the Court deserves credit for doing justice for Ohio taxpayers,” added Thompson.