MACo Executive Director, Michael Sanderson testified in opposition to SB 1024, Income Tax – Interest Rate – Wynne Case, to the Senate Budget & Taxation Committee on March 17, 2016.
This bill would establish a punitive interest rate paid by the State to income tax payers receiving refunds under the recent Maryland State Comptroller of the Treasury v. Brian Wynne court decision, overriding prior General Assembly action to set the rate for this class of refunds at a more reasonable market-based rate.
From the MACo testimony,
MACo does not contest the need to refund taxpayers based on prior overpayment, and to compensate them fairly with interest. The General Assembly’s actions in 2014 anticipated this eventuality – and correctly determined that these cases merited reasonable, but not punitive, compensatory interest payments.
The issuance of a 3% “market rate” interest (substantially greater than what the State earned on these holdings during that time, incidentally) accomplishes this balanced policy goal.
This bill creates an unwarranted windfall to taxpayers who have suddenly benefited from an unexpected court ruling, at the expense of other taxpayers and local services. For these reasons, MACo recommends an UNFAVORABLE report on SB 1024.
For more on 2016 MACo legislation, visit the Legislative Database.