Tax Refund Alert – The Wynne’s WIN! U.S. Supreme Court Upholds Lower Court Ruling: Many Maryland Taxpayers Entitled to Receive Tax Refunds

hand holding dollar signIn a 5-4 ruling, the Supreme Court said that Maryland’s income tax law is unconstitutional because it does not provide a full tax credit to residents for money earned outside the state, a ruling likely to cost Maryland counties and localities across the country hundreds of millions of dollars in revenue.  The court voted to affirm a 2013 Maryland Court of Appeals decision that the state’s practice of not granting a credit on the county segment of the state income tax violated the Commerce Clause because it might discourage individuals from doing business across state lines.  The case was brought by a Howard County couple, Brian and Karen Wynne, who reported $2.7 million in 2006 income from their S Corporation which does business in more than three dozen states.

Thousands of Maryland residents who do multi-state business and pay taxes in other states will no longer be paying double tax on non-Maryland business income. This means that Maryland residents, who pay taxes in other states, can file amended tax returns and claim a larger credit for taxes paid on their Maryland tax return and request a refund of overpaid taxes.  It is estimated that tax refunds totaling nearly $200 Million will now need to be processed and paid to Maryland residents.

The Comptroller’s leadership is having a meeting later this week or early next week to work out some of the logistics regarding the 2014 extended filings and refund claims. They do not anticipate starting the refund process until Mid-June. They plan to start with the oldest claims and move forward. They currently have no time frame of how long it will take to get through all the refund claims, but the hope is to have them finished before next regular filing season (January 2016).

If you have any questions regarding the Court’s decision or filing a claim for refund, please contact Andy Bareham: 410-307-6442 or abareham@katzabosch.com; Amy Garlitz: 410-307-6528 or agarlitz@katzabosch.com; or Dan Bottner: 410-307-2240 or dbottner@katzabosch.com.

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