Supreme Court Demonstrates Interest in County Income Tax

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The Supreme Court has shown interest in the Maryland State Comptroller of the Treasury v. Brian Wynne case by requesting the U.S. Solicitor General to file a brief expressing the view of the United States.  At issue is whether the failure to allow a credit against the county income tax violates the commerce clause because it discriminates against interstate commerce. Should the Supreme Court not take up this case and the Maryland Court of Appeals decision stand, counties could be faced with refunding more than $190 million in income taxes, plus interest, for prior years and providing approximately $50 million a year in credits prospectively.

During a briefing before the House Ways and Means Committee today, the Comptroller’s Office provided an overview of the case and its fiscal impacts. MACo has been following this issue closely and information can also be found on our blog Conduit Street.

Under current law, a resident taxpayer with income in another state is permitted a credit against their Maryland income tax, but not their local income tax.  Mr. Wynne challenged this statute and prevailed in the State’s highest court, the Maryland Court of Appeals.  The Maryland Attorney General petitioned the Supreme Court to hear this case in October 2013. While a definitive time line is not known, the Supreme Court may not receive a brief from the U.S. Solicitor General until June 2014.  If Supreme Court takes up the case, it will likely be argued in fall of 2014 with a decision in January 2015.