Rep. Troy Slams House Bill 344 for Expanding Corporate Tax Loophole, Shifting More Property Taxes onto Ohio Homeowners

COLUMBUS – State Representative Daniel P. Troy (D-Willowick), ranking member of the Ohio House Ways and Means Committee, today spoke out against House Bill (HB) 344, which passed out of the committee this week by a 10-6 vote along party lines. The legislation eliminates the ability to propose replacement levies for voter approval, and further restricts the tax complaint process for large, significantly undervalued properties.

“House Bill 344 deals with two very complicated tax issues, but the reality is simple: When big developers and huge out-of-state companies get to pay less on their property tax bill, working people, senior citizens, and small businesses have to pay more in real estate taxes to make up the difference,” said Rep. Troy. “This is already happening under Ohio’s property tax system, but House Bill 344 expands an existing loophole that already drives up property taxes for most Ohioans.”

Under current Ohio law, property transfers made within an LLC or as part of the sale of an LLC do not have to be disclosed to the county auditor, and they are not subject to a conveyance fee. It is already very challenging for auditors to accurately value these properties, but it is not impossible. As property values increase, the Ohio Constitution lowers the effective rate of levies to limit property tax increases without a vote of the people. If a large LLC property (a condo complex, a casino, etc.) is undervalued by millions of dollars, then the rest of the community with accurate property values will pay a higher tax rate in order for a levy to generate the same amount of revenue. 

Property tax complaints have already been severely curtailed by HB 126 (2022), which limited complaints not by a property owner only to recent sales that are at least 10% and $500,000 more than the auditor’s assessed value. HB 344 goes further by requiring a copy of a conveyance fee statement to file a property tax complaint. According to the Legislative Service Commission, this provision would prohibit challenges to the value of LLC properties (which are not subject to a conveyance fee) by anyone but the property owner – who would only challenge if they feel their property is overvalued. This creates a one-sided system of tax complaints for LLCs. 

“At a time of historic property tax increases, I am stunned that my Republican colleagues would vote to shift more of the tax burden onto Ohio’s most vulnerable, essentially raising taxes on them, and then somehow mysteriously calling it tax relief,” said Rep. Troy. “Our tax system should be fair and uniform, where no one is overburdened because others are under burdened. Ohioans have been crying out for real, meaningful property tax relief and House Bill 344 does absolutely nothing to help them.” 

Rep. Troy and other Democrats on the committee offered six amendments to the bill:

• add transparency to replacement levies
• remove conveyance fee requirement (don’t expand the loophole)
• disclose property sales/transfers within an LLC, apply conveyance fee (close the loophole)
• restore the ability to appeal to the Board of Tax Appeals
• remove new penalties under the bill
• enhance Board of Revision authority to gather information

All six amendments were tabled on party lines. Without amendments, HB 344 will incentivize more individuals to exploit the LLC “drop and swap” loophole, further shifting the tax burden off those who can most afford it (large developers, out of state housing conglomerates, and others using the loophole) and onto Ohioans who can least afford it.

HB 344 is opposed by the Ohio Township Association, the Ohio Library Council, the County Commissioners Association, the Ohio Association of County boards Serving People with Developmental Disabilities (OACB), the Association of Health Commissioners, the Ohio Parks and Recreation Association, Ohio Association of School Business Officials, Buckeye Association of School Administrators (BASA), and Ohio School Boards Association.

“We’ve heard from County Commissioners, the Township Association, Municipal Associations, and a representative from the largest Auditor’s office in the State of Ohio who all agree that this loophole is very problematic,” said Rep. Troy. “It needs to be closed, and certainly not expanded.”

HB 344 now heads to the House Floor, where it is expected to be voted on as early as next week.

EDITOR’S NOTE: A picture of Rep. Troy at Wednesday's committee hearing is attached to this release. Courtesy: Ohio House Democratic Caucus