Howard Jacobson Comments in Law360 on Supreme Court Tax Case Decision
Howard Jacobson, a partner in Akin Gump’s tax practice, was quoted by Law360 in the article “Lawyers React To High Court Limiting Md.’s Taxing Power,” which looks at the Supreme Court’s decision in Comptroller of the Treasury of Maryland v. Wynne.
In a 5-4 ruling, the Court said the state of Maryland had violated the Constitution, and the commerce clause, in particular, by collecting taxes from its residents for income earned in other states without granting them a credit for taxes paid to those states. Most states offer such credits to their residents.
Jacobson, in response to the ruling, said the following:
“Now that the Supreme Court has ruled that Maryland’s taxing scheme was unconstitutional, the focus shifts to what I’ll call ‘Wynne II.’ In May 2014, Maryland enacted a law retroactively reducing the interest rate to be paid on refunds arising from the Wynne case from 13 percent to the prime rate, i.e., 3.25 percent. This raises several interesting questions. If the law was unconstitutional, can the state apply an interest rate almost 10 percentage points lower to those tax refunds? If it can, can it do so retroactively? Finally, given that the tax was unconstitutional, should interest be paid from the date the tax was imposed or, as the state would claim, only from the date 45 days after the refund claim was filed?”