Willacy v. Cleveland Bd. of Income Tax Review

Opinion

 [*384]   [***563]  Per Curiam.

 [**P1]  Appellant, Hazel M. Willacy, was employed by the Sherwin-Williams Company in Cleveland from 1980 until she retired in 2009 and moved to Florida. During Willacy's employment, Sherwin-Williams compensated her, in part, with stock options. When she exercised some of those options in 2014 and 2015, Cleveland collected income tax on their value. Willacy appeals from the denial of her claim for refunds. This case presents the question whether Cleveland may [****2]  tax the options as income when Willacy did not work or live in the city during the tax years at issue.

 [**P2]  Willacy primarily argues that Cleveland's imposition of the tax violated due process. She also raises nonconstitutional arguments. We conclude that Willacy's arguments lack merit and hold that Cleveland properly taxed the compensation she received in 2014 and 2015.

I. FACTS AND PROCEDURAL HISTORY

 [**P3]  In 2007, when Willacy was working in Cleveland, Sherwin-Williams granted her options to purchase 2,715 shares of Sherwin-Williams common stock at $63.44 a share. The terms of the grant created a nine-year window for Willacy to exercise the options: she could first exercise them after one year, and they would expire on the tenth anniversary of the grant date. In 2009, Willacy retired and became a Florida resident.

 [**P4]  In 2014, Willacy exercised the options by purchasing 315 shares at the option price and immediately selling them at a market price of $192.646 a share, generating proceeds of more than $40,000. As required under Cleveland Codified Ordinances 191.1302(a), Sherwin-Williams withheld Willacy's municipal income-tax obligation (2 percent of the proceeds) and paid it to Cleveland. In 2015, [****3]  Willacy again exercised her options by purchasing 1,800 shares at the option price and immediately selling them at a market price of $275 a share, generating proceeds of more than $377,000. Sherwin-Williams again withheld Willacy's municipal income-tax obligation. There is no dispute that Willacy did not live or work in Cleveland in 2014 or 2015.

 [**P5]  [***564]   Willacy sought refunds from Cleveland based on the fact that she had resided in Florida during tax years 2014 and 2015. Cleveland's income-tax  [*385]  administrator, appellee Nassim M. Lynch, denied the refund requests. Willacy appealed that decision to appellee Cleveland Board of Income Tax Review, which affirmed the denial of the refunds. She then appealed to the Board of Tax Appeals ("BTA"), which also affirmed the denial. Willacy appealed the BTA's decision to the Tenth District Court of Appeals, and we granted her petition to transfer the appeal to this court under former R.C. 5717.04, 2017 Am.Sub.H.B. No. 49. 153 Ohio St.3d 1485, 2018-Ohio-3867, 108 N.E.3d 83.

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