Cleveland faces appeal over tax refund interest claims from residents

In a legal dispute involving the city of Cleveland, two residents, Kate Wos and David Steffes, have filed an appeal after their case was dismissed by a trial judge. They argue that the city failed to pay interest on their tax refunds, which they claim were issued more than 90 days after their returns were filed. The Buckeye Institute, representing Wos and Steffes, contends that the city is legally obligated to pay interest on these refunds according to local law. This law stipulates that tax refunds are subject to interest at the federal funds rate plus an additional 5% if not paid within the specified timeframe. Wos filed her 2021 municipal income tax return on March 12, 2023, and received her refund six months later, in September, without any interest. Similarly, Steffes, who filed for a refund after his employer closed its Cleveland office during the COVID-19 pandemic, received his refund in late 2023, also lacking interest. The lawsuit highlights that both individuals, along with other nonresidents who filed municipal income tax returns, are entitled to interest due to the city's failure to meet the 90-day requirement. The Buckeye Institute argues that there are no administrative remedies to exhaust in this case, emphasizing the clarity of the law regarding interest on late refunds. The appeal seeks to rectify what they view as an error in the trial court's dismissal of their claims, advocating for the rights of affected taxpayers. This case underscores the broader implications of municipal tax policies and the responsibilities of local governments in handling tax refunds, particularly in the wake of the COVID-19 pandemic.