[Cite as MacDonald v. Shaker Hts. Income Tax Bd. of Rev., 2014-Ohio-708.]

                            IN THE COURT OF APPEALS OF OHIO

                                 TENTH APPELLATE DISTRICT


William E. MacDonald, III, et al.,                   :

                Appellants-Appellees,                :
                                                                            No. 13AP-71
v.                                                   :               (BTA No. 2008-K-1883)

City of Shaker Heights Income Tax                    :           (REGULAR CALENDAR)
Board of Review et al.,
                                                     :
                Appellees-Appellants.
                                                     :




                                          D E C I S I O N

                                  Rendered on February 27, 2014


                Baker & Hostetler LLP, and Christopher J. Swift, for
                William E. MacDonald, III and Susan MacDonald.

                William M. Ondrey Gruber, for City of Shaker Heights and
                Robert Baker.

                Barbara A. Langhenry, Director of Law, and Linda L.
                Bickerstaff, for amicus curiae city of Cleveland.

                Shana F. Marbury, for amicus curiae The Greater Cleveland
                Partnership; and Linda Woggon, for amicus curiae Ohio
                Chamber of Commerce.

                          APPEAL from the Ohio Board of Tax Appeals

KLATT, J.
        {¶ 1} Appellants, City of Shaker Heights, Robert Baker, Tax Administrator, and
Regional Income Tax Agency, appeal from a decision and order of the Board of Tax
Appeals ("BTA") finding that the supplemental executive retirement plan ("SERP") of
No. 13AP-71                                                                             2

appellee, William E. MacDonald, III, constituted a pension benefit that was not subject to
tax by the city of Shaker Heights. Because the BTA's decision is not unreasonable or
unlawful, we affirm.
Facts and Procedural History
      {¶ 2} The relevant facts in this case are undisputed. MacDonald was employed by
National City Corporation ("National City") for over 38 years. MacDonald was a resident
of the city of Shaker Heights until December 27, 2006.         On December 31, 2006,
MacDonald retired from his employment at National City. At the time of his retirement,
MacDonald was vice chairman of National City and he qualified for benefits under
National City's qualified retirement plan and SERP. The SERP is a nonqualified deferred
compensation plan that was intended to supplement the qualified retirement plan.
      {¶ 3} MacDonald received his benefit from the qualified plan and the SERP in the
form of a joint and survivorship annuity measured by the joint lives of MacDonald and his
wife, appellee, Susan MacDonald. The MacDonalds began receiving monthly annuity
payments in 2007. Those payments will cease upon the death of the last surviving spouse.
MacDonald received no 2006 payments under the SERP.            However, at the time of
MacDonald's December 31, 2006 retirement, the present value of his SERP benefit
became fixed and determinable.
      {¶ 4} The National City SERP was unfunded before MacDonald's retirement and
did not represent a salary deferral. Rather, the SERP, in conjunction with the qualified
plan, provided an income replacement ratio of approximately 60 percent of pre-
retirement income as a benefit upon retirement, after taking into account the other
benefits receivable by MacDonald including social security.
      {¶ 5} The MacDonalds jointly filed their 2006 city income tax return for Shaker
Heights. The present value of MacDonald's SERP benefit not previously reported was
included in box 5 of their 2006 form W-2 entitled "Medicare, wages and tips," and totaled
$14,566,611. The MacDonalds calculated their 2006 city income tax liability based upon
the amount reported in box 18 of MacDonalds' form W-2, entitled "local wages, tips, etc."
Box 18 indicated an amount of $5,459,597.
      {¶ 6} The Regional Income Tax Agency, acting as Shaker Height's tax
administrator, issued a notice to the MacDonalds indicating that their 2006 municipal tax
No. 13AP-71                                                                               3

liability would be calculated based on the value listed in box 5 of his form W-2
($14,566,611), rather than the amount listed in box 18 ($5,459,597). Shaker Heights
sought to tax in 2006 the present value of the future monthly payments to the
MacDonalds under the SERP. This determination by the tax administrator significantly
increased the MacDonalds' municipal tax liability. The MacDonalds contended that the
SERP benefit was a pension, and therefore, exempt from municipal taxation pursuant to
the Codified Ordinances of the City of Shaker Heights ("C.O".) 111.0901. They appealed
the tax administrator's determination to the Shaker Heights Income Tax Board of Review
("board of review").
       {¶ 7} The matter proceeded to hearing before the board of review. The parties
were afforded the opportunity to call witnesses, submit evidence, and argue their
respective positions. The board of review found that (1) the SERP benefit was not a
pension as that term is used in the city's income tax ordinance; (2) the SERP benefit was
not a pension payment or proceeds from a pension as these terms are used in the city's
income tax ordinance; and (3) the SERP benefit is not exempt from taxation under any
other provision of the city's taxing ordinances.
       {¶ 8} The MacDonalds appealed the board of review's decision to the BTA
pursuant to R.C. 5717.011. The record of proceedings before the board of review was filed
with the BTA. After the BTA allowed discovery, the matter proceeded to hearing. Over
appellants' objection, the BTA permitted the parties to introduce additional evidence at
the hearing. The BTA reversed the decision of the board of review, finding that the SERP
benefit was a pension, and therefore, not subject to municipal tax under C.O. 111.0901.
       {¶ 9} Appellants appeal, assigning the following errors:
              [I.] The Board of Tax Appeals erred when it found that the
              amounts attributable to the Appellee's, William E. MacDonald
              III ("MacDonald"), non-qualified deferred compensation plan
              constitute a pension benefit and are not subject to tax by the
              City of Shaker Heights as a "pension".

              [II.] The Board of Tax Appeals erred in allowing the
              introduction of new evidence and new witnesses, and
              conducting a de novo review of the decision of the Shaker
              Heights Municipal Income Tax Board of Review, when the
              Appellees, William E. MacDonald, III and Susan W.
              MacDonald were afforded every opportunity to introduce
No. 13AP-71                                                                            4

              witnesses and testimony before the Shaker Heights Municipal
              Board of Review.

Legal Analysis
      {¶ 10} An appellate court reviews a decision of the BTA to determine whether it is
reasonable and lawful. R.C. 5717.04; HIN, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 124
Ohio St.3d 481, 2010-Ohio-687, ¶ 13; Cousino Constr. Co. v. Wilkins, 108 Ohio St.3d 90,
2006-Ohio-162, ¶ 10. "It is well settled that [an appellate] court will defer to factual
determinations of the BTA if the record contains reliable and probative support for
them." Strongsville Bd. of Edn. v. Wilkins, 108 Ohio St.3d 115, 2006-Ohio-248, ¶ 7;
Am. Natl. Can Co. v. Tracy, 72 Ohio St.3d 150, 152 (1995).
      A. First Assignment of Error
      {¶ 11} Appellants contend in their first assignment of error that the BTA erred in
finding that the SERP benefit constitutes a pension that is not subject to Shaker Heights
municipal tax. Appellants advance three arguments to support this contention. First,
appellants contend that the BTA erred when it examined whether the SERP benefit
constituted a pension. According to appellants, because a benefit from a nonqualified
deferred compensation plan such as the SERP is not expressly exempted from the
municipal tax under C.O. 111.0901(b) and 111.0901(c), it is by definition taxable. We
disagree.
      {¶ 12} State law permits a municipality to tax "qualifying wages."            R.C.
718.01(H)(10).   Qualifying wages include amounts attributable to a nonqualified
deferred compensation plan unless the municipality has exempted that compensation
from taxation. The city of Shaker Heights has exempted pensions from its municipal
tax. C.O. 111.0901(b) and (c). The term "pensions" is not defined in Shaker Heights
municipal code. The MacDonalds argued before the board of review and the BTA that a
benefit from a nonqualified deferred compensation plan such as the SERP is a pension,
and therefore, its value must be deducted from the qualifying wage. Nothing in Shaker
Heights municipal code or in state law clearly indicates whether or not benefits from a
nonqualified deferred compensation plan, such as the SERP at issue here, is a pension.
Therefore, we reject appellants' argument that the BTA erred when it examined whether
the SERP benefit constitutes a pension for purposes of C.O. 111.0901(c).
No. 13AP-71                                                                           5

      {¶ 13} In their second argument, appellants contend that the pension exemption
contained in C.O. 111.0901(b) and (c) is limited to payments made to a retired employee
from the employer after retirement. Because the present value of the SERP benefit
listed in box 5 of the MacDonald's 2006 form W-2 did not reflect payments received by
MacDonald in 2006, appellants contend that the SERP benefit is not a pension, and
therefore, it is taxable as qualifying wages. In support of this argument, appellants
primarily rely on the testimony of Mark Taranto, the assistant tax director for the
Regional Income Tax Agency.       Mr. Taranto testified that the common usage and
interpretation of the term pension as used in the city's income ordinance is a payment
after retirement.
      {¶ 14} However, the BTA relied upon other testimony presented at the hearing
indicating that benefits from a nonqualified deferred compensation plan, such as the
SERP at issue, is a pension.    Patricia Edmond, former executive vice president at
National City, testified that the SERP was intended to provide a pension. Edmond also
stated that National City classified its SERP as a pension in its 2006 annual report to
shareholders.   William Dunn, a senior benefits partner at PriceWaterhouseCoopers
testified that National City's SERP was a pension. In addition, professor Ray Stephens,
an accounting expert, testified that the reporting of National City's SERP as a pension
was proper under general accepted accounting principles ("GAAP").
      {¶ 15} Both appellants and the MacDonalds presented evidence and advanced
arguments that supported their respective positions.      The BTA examined all the
evidence presented at the hearing and reflected in the record. Based upon this evidence,
the BTA concluded that the MacDonalds' SERP benefit listed in box 5 of their 2006 form
W-2 is a pension and, therefore, that amount must be deducted from the MacDonalds'
income in calculating the taxable qualifying wage.         This determination is not
unreasonable or unlawful.
      {¶ 16} Appellants also contend that the BTA's decision conflicts with Wardrop v.
Middletown Income Tax Review Bd., 12th Dist. No. CA2007-09-235, 2008-Ohio-5298.
Although the Wardrop case also involved the issue of whether a SERP benefit was
taxable under Middletown's ordinance, the language of the ordinance was substantially
different than the Shaker Heights ordinance at issue here. In Wardrop, the Middletown
No. 13AP-71                                                                            6

ordinance expressly stated that earnings designated as "deferred compensation" were
taxable. Id. at ¶ 36. In addition, the Middletown ordinance expressly distinguished tax-
exempt "pensions" from taxable "earnings designated as deferred compensation." Id. at
¶ 38. Because the SERP plan at issue in Wardrop described itself as a "deferred
compensation arrangement" and because Middletown's ordinance expressly imposed a
tax on earnings designated as deferred compensation, the appellate court affirmed the
trial court's judgment that the SERP payments were not exempt from municipal
taxation. These facts are in marked contrast to those presented in this case. Here, the
Shaker Heights ordinance does not expressly tax deferred compensation. Moreover,
Wardrop involved an R.C. Chapter 2506 appeal—not an appeal pursuant to R.C.
Chapter 5717.     For the reasons discussed in connection with appellants' second
assignment of error, there are significant differences between these two avenues of
appeal.    For all these reasons, we find Wardrop distinguishable, and therefore,
unpersuasive.
       {¶ 17} In their third and final argument in support of their first assignment of
error, appellants contend that the BTA should not have concluded that the SERP benefit
is a pension based solely upon National City's characterization and treatment of the
SERP as a pension. We disagree with appellants' characterization of the rationale used
by the BTA in arriving at its decision.
       {¶ 18} The BTA did not conclude that MacDonalds' SERP benefit was a pension
solely because National City treated the SERP as a pension. The BTA's decision also
notes the testimony of William Dunn who stated that "a pension is any plan sponsored
by an employer that provides for post-retirement income that's designed to supplement
their income for life." The SERP at issue meets this definition. Ray Stevens, a professor
of accounting, also testified that the manner in which National City reported the SERP
(as a pension) was consistent with GAAP. Lastly, the BTA noted that MacDonald's
SERP benefit was not specifically funded by National City prior to MacDonald's
retirement and that none of MacDonald's cash salary was deferred to fund the SERP
benefit.   The BTA found that all these factors supported its determination that
MacDonald's SERP benefit constituted a pension. Because the BTA's decision is not
unreasonable or unlawful, we overrule appellants' first assignment of error.
No. 13AP-71                                                                             7

      B. Second Assignment of Error
      {¶ 19} In its second assignment of error, appellants contend that the BTA erred
by (1) holding a hearing and allowing the introduction of additional evidence and
additional witnesses that could have been presented to the board of review; and (2)
conducting a de novo hearing without giving deference to the board of review's decision.
We disagree with both of these arguments.
      {¶ 20} In support of their argument that the BTA erred by allowing the
MacDonalds to present additional evidence at the hearing, appellants cite to the process
for an appeal of a "final order, adjudication, or decision of any officer, tribunal,
authority, board, bureau, commission, department, or other division of any political
subdivision of the state" to a court of common pleas. R.C. 2506.01(A). Appellants point
out that in an appeal of a board of review decision to a court of common pleas, R.C.
2506.03 limits the reviewing court's authority to consider evidence outside the
administrative record. However, those limitations do not exist in an appeal to the BTA
pursuant to R.C. 5717.011(C). In fact, upon the application of any interested party, the
BTA is required to "order the hearing of additional evidence, and the board may make
such investigation concerning the appeal as it considers proper." R.C. 5717.011(C).
Here, the MacDonalds requested a hearing before the BTA.            Therefore, appellants'
contention that the BTA erred when it permitted the introduction of additional evidence
conflicts with the express language in R.C. 5717.011(C).       The BTA did not err by
permitting the introduction of additional evidence.
      {¶ 21} Appellants also contend that the BTA erred by conducting a de novo
hearing without giving deference to the board of review's decision.           In essence,
appellants contend that the BTA failed to apply the correct standard of review. Again,
we disagree.
      {¶ 22} Pursuant to R.C. 5717.011(C), the BTA may hear an appeal based solely
upon the record and any evidence considered by the administrative body below, or upon
application of any interested party, it must set a hearing, permit the introduction of
additional evidence, and "make such investigation concerning the appeal as it considers
proper." Id. The statute does not set forth a standard of review.
No. 13AP-71                                                                            8

      {¶ 23} Appellants argue for a very deferential standard of review for R.C. 5717.011
appeals by again looking to appeals from a municipal taxing authority to a court of
common pleas pursuant to R.C. Chapter 2506. Although a court of common pleas may
hold a hearing in an R.C. Chapter 2506 appeal, its review must be confined to the
transcript of the administrative proceeding unless the appellant satisfies one of the
conditions contained in R.C. 2506.03. In addition, R.C. 2506.04 sets forth the standard
of review that the common pleas court must apply in deciding the appeal. R.C. 2506.04
provides:
              If an appeal is taken in relation to a final order, adjudication,
              or decision covered by division (A) of section 2506.01 of the
              Revised Code, the court may find that the order,
              adjudication, or decision is unconstitutional, illegal,
              arbitrary, capricious, unreasonable, or unsupported by the
              preponderance of substantial, reliable, and probative
              evidence on the whole record. Consistent with its findings, the
              court may affirm, reverse, vacate, or modify the order,
              adjudication, or decision, or remand the cause to the officer or
              body appealed from with instructions to enter an order,
              adjudication, or decision consistent with the findings or
              opinion of the court. The judgment of the court may be
              appealed by any party on questions of law as provided in the
              Rules of Appellate Procedure and, to the extent not in conflict
              with those rules, Chapter 2505. of the Revised Code.

(Emphasis added.)
      {¶ 24} However, because R.C. 2506.03 and 2506.04 contain significant provisions
not in R.C. 5717.011, appellants' reliance on these statutes, and case law involving R.C.
Chapter 2506 appeals, is misplaced. As previously noted, R.C. 5717.011 contains no
provision that limits the BTA's review to the record developed in the administrative
proceedings below when a hearing is requested. There is no provision in R.C. 5717.011(C)
that suggests the BTA must give any deference to a board of review decision. The BTA's
authority is not limited by an express standard of review. Moreover, deference to a board
of review decision is illogical when the BTA hears evidence not presented to the board of
No. 13AP-71                                                                                            9

review in conducting its own adjudication of the appeal.1 It is not this court's role to
second-guess the state legislature's policy reasons for establishing two different appeal
mechanisms for board of review decisions. We note that the appeal provided pursuant to
R.C. 2506.01 is expressly in addition to any other remedy or appeal provided by law. R.C.
2506.01(B). Because the BTA did not err when it permitted the MacDonalds to introduce
additional evidence at the hearing and when it considered that evidence in reaching its
decision, we overrule appellants' second assignment of error.
        {¶ 25} Having overruled appellants' two assignments of error, we affirm the order
of the BTA.
                                                                                      Order affirmed.

                                    O'GRADY, J., concurs.
                        TYACKS, J., concurs in part and dissents in part.

TYACK, J., concurring in part and dissenting in part.

        {¶ 26} I respectfully concur in part and dissent in part.
        {¶ 27} Most of the facts in this case are not in dispute. William E. MacDonald, III
("MacDonald"), was a resident of the city of Shaker Heights until December 27, 2006.
MacDonald had been employed by National City Corporation for 38 years until his
retirement on December 31, 2006. MacDonald was vice-chairman and qualified for
benefits under the company's Non-Contributory Retirement Plan and Supplemental
Executive Retirement Plan ("SERP").              MacDonald elected to receive SERP benefits
beginning in 2007 in the form of a joint and survivor annuity that will cease upon the
death of MacDonald and his wife. The value of MacDonald's SERP benefit, that had not
been previously been reported, was included in Box 5 of his 2006 Form W-2 which totaled
$14,566,611. Mr. and Mrs. MacDonald filed their 2006 city income tax return with
Shaker Heights, calculating their tax liability on the amount reported in Box 18 of



1
  For these same reasons, we respectfully find the dissent's reliance upon AT&T Communications of Ohio,
Inc. v. Lynch, 132 Ohio St.3d 92, 2012-Ohio-1975 and Tetlack v. Bratenahl, 92 Ohio St.3d 46 (2001) to be
misplaced. Both cases involved R.C. Chapter 2506 appeals. In addition, we did not hold that appellants
had the burden of proof at the hearing before the BTA. Rather, we held that the BTA did not act
unreasonably or unlawfully in finding that the MacDonalds satisfied their burden in establishing that the
SERP benefit was a pension.
No. 13AP-71                                                                            10

MacDonald's W-2 form which totaled $5,459,597.84. It is not disputed that the SERP is a
nonqualified deferred compensation plan.
       {¶ 28} The Regional Income Tax Agency ("RITA"), acting as Shaker Heights' tax
administrator, issued a notice to MacDonald that his municipal tax liability would be
calculated based on Box 5 of his W-2. MacDonald appealed to the Shaker Heights Income
Tax Board of Review ("Shaker Heights Board") which is a municipal board of appeal
("MBOA"), arguing that the SERP was a pension and was exempt from municipal
taxation.
       {¶ 29} The Shaker Heights Board concluded that the amount in Box 5 that was
attributable to MacDonald's SERP was not a pension and had not been exempted by
Shaker Heights' Code of Ordinances 111.0901 and therefore is taxable as it is found in Box
5 of MacDonald's W-2. The MacDonalds appealed to the BTA, which reversed and found
that the SERP payments constitute a pension and are not subject to taxation. Appellants,
Shaker Heights et al., then timely appealed to this court.
       {¶ 30} Courts reviewing a BTA decision must consider whether the decision was
"reasonable and lawful." Cousino Constr. Co. v. Wilkins, 108 Ohio St.3d 90, 2006-Ohio-
162, ¶ 10. An appellate court will reverse a BTA decision that is based upon an incorrect
legal conclusion. Gahanna-Jefferson Local School Dist. Bd. of Edn. v. Zaino, 93 Ohio
St.3d 231 (2001). But "[t]he BTA is responsible for determining factual issues and, if the
record contains reliable and probative support for these BTA determinations," this court
will affirm them. Am. Natl. Can Co. v. Tracy, 72 Ohio St.3d 150, 153 (1995).
                   The Board of Tax Appeals did not follow the
                           proper standard of review

       {¶ 31} Appellants' second assignment of error asserts that the BTA improperly
conducted a de novo review of the Shaker Heights Board's decision and improperly
allowed the introduction of new evidence that could have been presented to the MBOA. I
agree in part. The BTA did not employ the correct standard of review because the
MBOA's findings are presumptively valid absent a demonstration that those findings are
clearly unreasonable or unlawful. However, there is no statutory prohibition to the BTA
allowing additional evidence.
No. 13AP-71                                                                              11

       {¶ 32} An appellate court's scope of review on issues of law is plenary, including
the issue of whether the court or agency below applied the proper standard of review.
Bartchy v. State Bd. of Edn., 120 Ohio St.3d 205, 2008-Ohio-4826, ¶ 43.
       {¶ 33} Appeals from a MBOA may be made to the county's court of common pleas
or the BTA, and are governed by R.C. 5717.011:
              Upon the filing of a notice of appeal with the board of tax
              appeals, the municipal board of appeal shall certify to the
              board of tax appeals a transcript of the record of the
              proceedings before it, together with all evidence considered by
              it in connection therewith. * * * The board may order the
              appeal to be heard upon the record and the evidence certified
              to it by the administrator, but upon the application of any
              interested party the board shall order the hearing of
              additional evidence, and the board may make such
              investigation concerning the appeal as it considers proper.

       {¶ 34} R.C. 5717.011(C). There is no guidance in the statute as to the standard of
review. Nor has the Supreme Court of Ohio articulated the standard of review by which
the BTA is to measure appeals from a MBOA. This is mostly due to the recent enactment
of R.C. 718.11 in 2003, beginning to apply for the 2004 tax year, which required the
creation of a MBOA in all municipal corporations that impose an income tax. R.C. 718.11.
       {¶ 35} By examining two similar tax appeal procedures to the one at bar, I believe
we can determine the potential standard of review in this case. The first standard is for an
appeal from the Ohio Tax Commissioner to the BTA in which "the tax commissioner's
findings 'are presumptively valid, absent a demonstration that those findings are clearly
unreasonable or unlawful.' Consequently, the taxpayer carries the burden 'to show the
manner and extent of the error in the Tax Commissioner's final determination.' " Global
Knowledge Training, L.L.C. v. Levin, 127 Ohio St.3d 34, 2010-Ohio-4411, ¶ 12, quoting
Stds. Testing Laboratories, Inc. v. Zaino, 100 Ohio St.3d 240, 2003-Ohio-5804, ¶ 30.
The second is for an appeal from a municipal board of review to a court of common pleas,
which is authorized by R.C. 2506.01, and "the court may find that the order, adjudication,
or decision is unconstitutional, illegal, arbitrary, capricious, unreasonable, or
unsupported by the preponderance of substantial, reliable, and probative evidence on the
whole record." R.C. 2506.04.
No. 13AP-71                                                                            12

       {¶ 36} Analyzing two cases from the Supreme Court, Tetlak v. Bratenahl, 92 Ohio
St.3d 46, 2001-Ohio-129, and AT&T Communications of Ohio, Inc. v. Lynch, 132 Ohio
St.3d 92, 2012-Ohio-1975, I believe we are able to determine that appeals from a
municipality board of review to the BTA is most analogous to appeals from the Tax
Commissioner.      In Tetlak, taxpayer Joseph Tetlak challenged the taxable status the
distributive share of his S corporation that he argued for the purposes of municipal
taxation was intangible income and therefore exempt. See Tetlak generally. Tetlak
initially filed a protest which was denied by the tax administrator of the Village of
Bratenahl who stated that the distributions was income from an unincorporated business
entity and therefore taxable by municipalities. Id.
       {¶ 37} Tetlak appealed to the Bratenahl Board of Review which upheld the tax
administrator's denial of Tetlak's protest. Id. Tetlak then filed an administrative appeal
pursuant to R.C. 2506.01 in the common pleas court. The trial court found that the
municipality may tax the distributions but the "determination must be supported by 'the
preponderance of substantial, reliable, and probative evidence on the whole record.' R.C.
2506.04. Finding that the [tax administrator] did not make such determination, the court
reversed the decision of the board of review." Id. at 47. The Eighth District Court of
Appeals affirmed the decision and the case went before the Supreme Court. Id.
       {¶ 38} The Supreme Court expresses, in reversing the judgment, that deference is
to be given to a municipality when reviewing an income tax determination:
              The taxpayer, not the village, has the burden of proof on the
              nature of the income at issue. It is well settled that ' "when an
              assessment is contested, the taxpayer has the burden '* * * to
              show in what manner and to what extent * * *' the
              commissioner's investigation and audit, and the findings and
              assessments based thereon, were faulty and incorrect." '
              Maxxim Med., Inc. v. Tracy (1999), 87 Ohio St.3d 337, 339,
              720 N.E.2d 911, 913, quoting Federated Dept. Stores, Inc. v.
              Lindley (1983), 5 Ohio St.3d 213, 215, 5 OBR 455, 457, 450
              N.E.2d 687, 688. Furthermore, the 'Tax Commissioner's
              findings are presumptively valid, absent a demonstration that
              those findings are clearly unreasonable or unlawful.' Id., 87
              Ohio St.3d at 339–340, 720 N.E.2d at 913–914.

              This reasoning is applicable at the municipal level.
Tetlak at 51-52.
No. 13AP-71                                                                            13

         {¶ 39} From this, I would conclude that the decisions of a MBOA are to be treated
with the same deference as those of the Tax Commissioner when appealed. The Supreme
Court twice uses the standards for the Tax Commissioner and specifically states that this
"reasoning is applicable at the municipal level" equating the deference given to the Tax
Commissioner and the hurdles required to overcome it as applicable to the Bratenahl tax
administrator or the Bratenahl Board of Review. Id. The case at bar is analogues to the
Tetlak; both cases examine the taxable status of a type of income by a municipality, the
Bratenahl Board of Review and the Shaker Heights Board in both cases concluded that the
income was taxable, both of the boards' decisions were overturned upon appeal. The
difference being the municipalities' boards' decision in Tetlak was appealed to a common
pleas court as opposed to the BTA. Tetlak emphasis that the taxpayer must overcome the
tax assessor's findings by showing that they are faulty or incorrect and that they are
presumed valid absent a showing of them being clearly unreasonable or unlawful. Id.
         {¶ 40} AT&T Communications affirms that, while appeals from a MBOA to a
common pleas court under R.C. 2506.01 resemble de novo proceedings, they are not de
novo. AT&T Communications at ¶ 13. In AT&T Communications, a refund of the city of
Cleveland's income tax was denied by the tax administrator. See AT&T Communications
generally. AT&T appealed to the Cleveland Board of Income Tax Review which affirmed
the refusal of the refund and AT&T filed an appeal pursuant to R.C. 2506.01. Id. Similar
to Tetlak, AT&T Communications is a municipal income tax dispute in which after the
MBOA affirms that administrator's findings the taxpayer appeals to the court of common
pleas.
         {¶ 41} The Supreme Court affirmed that the courts of common pleas exercise
appellate jurisdiction: "[W]hile an appeal under R.C. 2506.01 resembles a de novo
proceeding, it is not de novo. There are limits to a court of common pleas review of the
administrative body's decision. For example, in weighing evidence, the court may not
'blatantly substitute its judgment for that of the agency, especially in areas of
administrative expertise.' "    AT&T Communications at ¶ 13, quoting Dudukovich v.
Lorain Metro. Hous. Auth., 58 Ohio St.2d 202 (1979). We find that the BTA may not
conduct a de novo review of a MBOA's findings nor may they substitute their own
judgment. It is the MBOA not the BTA that has the expertise in the municipalities own
No. 13AP-71                                                                            14

taxing ordinances. There must be deference given to a MBOA's findings. The standards
that must be employed and the dispositions that must be reached are more limited than
relief that could be awarded pursuant to a trial, therefore the administrative appeal is
more akin to an appeal than a trial. See AT&T Communications at 14.
      {¶ 42} Examining Tetlak and AT&T Communications, I would find that in a
MBOA's decision appealed pursuant to R.C. 5717.011 to the BTA, the taxpayer, not the
village, has the burden of proof on the nature of the income at issue. Tetlak at 51. When
an assessment of a tax administrator is contested, the taxpayer has the burden to show in
what manner and to what extent the findings and assessments were faulty and incorrect.
Id. Furthermore, an appeal pursuant to R.C. 5717.011(C) is not a de novo proceeding, it is
more akin to an appeal than a trial, there may not be a substitution of judgment, and the
MBOA's findings are presumptively valid, absent a demonstration that those findings are
clearly unreasonable or unlawful. See Tetlak at 51-52; AT&T Communications at ¶ 13-14.
      {¶ 43} Shaker Heights' second assignment of error also argues that MacDonald
was precluded from introducing new evidence to the BTA that could have been introduced
to the MBOA. There is no statutory basis for this argument nor any case law that suggests
the BTA should be restricted in this way. The BTA is in fact required upon the application
of any interested party to "order the hearing of additional evidence, and the board may
make such investigation concerning the appeal as it considers proper." R.C. 5717.011(C).
While a court of common pleas in an R.C. 2506.01 appeal may consider evidence outside
the administrative record, that authority is limited. There is no statutory equivalent in
R.C. 5717.011. See AT&T Communications at ¶ 13. We find the BTA is able to hear
evidence in a MBOA appeal that could have been presented to the MBOA. Generally,
however, it would not be in a taxpayer's interest to purposely withhold evidence from a
MBOA as the MBOA's findings should be presumptively valid absent a demonstration
they are clearly unreasonable or unlawful.
  The BTA did not address the MBOA's findings or presume them as valid
      {¶ 44} Examining the BTA's decision and the Shaker Heights Board's decision, I
would find that the proper standard of review was not employed by the BTA which
conducted a hearing with no deference to factual findings, or interpretation of Shaker
Heights' city code by the Shaker Heights Board. The Shaker Heights Board's findings are
No. 13AP-71                                                                              15

required to be shown to be clearly unreasonable for the BTA to draw a different
conclusion. This includes the reading of Shaker Heights' Code of Ordinances 111.0901
which originally found MacDonald's SERP not to be a pension and exempt from the
municipal income tax.
       {¶ 45} Though the BTA cites Tetlak in its decision, it does not accord any deference
to Shaker Heights Income Tax Board of Review's findings of fact that MacDonald's SERP
is not a pension. At no point does the BTA address the reasonableness of the Shaker
Heights Board's findings let alone address the question whether MacDonald has
demonstrated that those findings are clearly unreasonable. Instead, the BTA acted as if it
were writing on a clean slate.
       {¶ 46} The Shaker Heights Board concluded that the amount reported on
MacDonald's W-2 attributable to his SERP was not a pension but rather an amount that
had not been previously reported, "and that was, at the time of its reporting, known, fixed
and not subject to forfeiture to the benefit of Appellant. It was not a pension as that term
is commonly used, which is a payment of retirement benefits after retirement." Shaker
Heights Board's decision, at 10. The factual determinations about the SERP lead the
Shaker Heights Board to conclude that it was not a pension:
              [MacDonald] had the contractual right to SERP benefits if and
              when he completed his time and other requirements set out in
              the [National City] SERP program. Thus, with each month of
              service to [National City], [MacDonald], by his employee
              services, was "paying" for his contractual right to get those
              SERP benefits following his retirement.

              This "deferred" compensation continued to accrue in
              [MacDonald]'s favor until the end of 2006 when, in fact, its
              present value, shown in Box 5 of his W-2, was actually
              recognized as due and owing, though as yet unpaid and, thus,
              is income subject to the City's income tax.

              [MacDonald] chose to use that "income" to purchase a join life
              annuity. But [MacDonald] had the option to take the sum in
              cash, emphasizing that it was deferred compensation to which
              [MacDonald] was now entitled.

Shaker Heights Board's decision, at 11.
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         {¶ 47} These are some of the factual and legal conclusions of the Shaker Heights
Board that must be presumed valid unless demonstrated that they are clearly
unreasonable or unlawful.
         {¶ 48} The BTA did not really address the conclusions of the Shaker Heights
Board.     Instead, the BTA stated that while the SERP "falls within the ambit of a
nonqualified deferred compensation plan, we do not find such designation necessarily
mandates its exclusion from the commonly accepted definition of pension."             BTA's
decision, at 10. The BTA then simply made the determination that the SERP was a
pension. This ignored the Shaker Heights Board's conclusion that the SERP is a deferred
compensation that could be used by MacDonald as proof that the SERP was not a
pension.
         {¶ 49} The BTA then concluded that "we need look no further than the terms of
National City's SERP to discern its purpose, i.e., 'to provide for the payment of certain
pension, disability and survivor benefits in addition to benefits which may be payable
under other plans.' " BTA decision, at 11. This fails to address the conclusions and
arguments made by Shaker Heights Board. Again, I find that the BTA did not presume
Shaker Heights Income Tax Board of Review's findings as valid and did not show what
demonstrates those findings to be clearly unreasonable or unlawful.
         {¶ 50} The second assignment of error should be affirmed in part and overruled in
part. Since the majority of this panel does not do so, to that extent, I respectfully dissent
in part.
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