The Office of the Attorney General has formally requested the Circuit Court of Anne Arundel County to review the Maryland Tax Court’s ruling which essentially raises the Wynne Case refund interest rate from three to 13 percent – a decision which would likely cost Maryland counties $30 to $40 million.
On May 23, the Maryland Tax Court ruled that providing taxpayers lower interest rate payments on Wynne refunds than on other refunds is unconstitutional, because it violates the Commerce Clause. From the opinion:
The Wynne refunds are the result of income tax provisions relating to income earned in other states by Maryland residents that only allow credits against the state income tax and not against county “piggyback” taxes. The U.S. Supreme Court ruled this was unconstitutional.
Following the exact same logic, granting interest at a lower rate must also be unconstitutional.
The Budget Reconciliation and Financing Act of 2014 altered the annual interest rate paid for income tax refunds resulting from Wynne, requiring the Comptroller’s Office to use an annual interest rate equal to the average prime rate of interest during fiscal 2015: three percent.
MACo President Jerry Walker, Council Vice Chairman, Anne Arundel County submitted a letter to Attorney General Brian Frosh on June 11, 2018 requesting that his office seek judicial review of the tax court’s opinion. From that letter:
On behalf of Maryland’s 24 county jurisdictions, the Maryland Association of Counties (MACo) respectfully requests that your office appeal the Maryland Tax Court’s May 23, 2018, decision …. Counties stand at the ready to assist on this front however deemed most helpful and appropriate.
We hope that you can represent the Comptroller, and practically, all of Maryland’s counties, by distinguishing the matter of how the refund interest rate is set from the fundamental Commerce Clause issues inherent in the Wynne case.
Four days later, the Attorney General’s Office filed its Petition for Judicial Review, and Counsel to the Comptroller Brian Oliner sent MACo this response.
From that letter:
We would like to thank the Counties for offering assistance.
To this end, county attorneys willing to lend their expertise on this matter should contact MACo Associate Director Barbara Zektick, Esquire at email@example.com.
The case number for this matter is C-02-CV-18-001788. For the most recent information on this case, visit the Maryland Judiciary Case Search website and search this case number in the Anne Arundel County Circuit Court.
See Attorney General Brian Frosh moderate the panel, Like a Bridge Over Troubled Water: Know Your Water Law, at the MACo Summer Conference. The MACo Summer Conference will be held August 15-18, 2018 at the Rowland Powell Convention Center in Ocean City, Maryland. This year the conference’s theme is “Water, Water Everywhere.”
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