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The Ohio Tax Commission Lowers Interest Rate on Court Judgments

Those ordered to pay on court judgments will see a break this year. In response to the ailing economy, the Tax Commissioner lowered the interest rate on court judgments for 2009 to five percent (5%) per annum.

Previously, the 2008 interest rate was eight percent (8%) per annum. According to Ohio law, the Ohio Tax Commissioner is required to determine annually the interest rate awarded on judgments in Ohio courts unless a different rate is specified in a written contract between the parties.

The five percent rate is a significant decrease. It is the lowest it has dropped since 2005.
Previously, the interest rate had steadily increased or remained the same. For years, the state’s interest rate on court judgments was set at ten percent, regardless of other economic factors. In 2004, the legislature amended the interest rate to a variable rate that the state tax commissioner recalculates annually based on national economic indicators. The rate is determined using a formula that rounds the federal short-term rate to the nearest whole number and adds three percent.

The new lower interest rate will affect thousands of people involved in liability, contract actions, personal injury actions and legal and medical malpractice cases. The interest rate on a particular case is the rate in effect at the time the judgment is rendered.

Therefore, any judgments obtained in 2008 will be calculated at the rate of eight percent while any judgments obtained this year will be calculated at the rate of five percent. Once a judgment is obtained the interest rate calculated is not subject to yearly review or modification. However, it is uncertain when the court may render judgment in any particular case.

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