Taxation Tag

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Posted 22 May 2015 in Case Notes, IMLA Briefs
In a 5-4 decision in Comptroller v. Wynne the Supreme Court held that Maryland’s failure to offer residents a full credit against income taxes paid to other states is unconstitutional. The State and Local Legal Center (SLLC)/International Municipal Lawyers Association (IMLA) filed an amicus brief in support of Maryland. Maryland taxes residents’ income earned in- and out-of-state. If Maryland residents pay income tax to another state for income earned there, Maryland allows them a credit against Maryland’s “state” tax but not its “county” tax. Maryland also taxes nonresident income earned in the state. Nonresidents pay Maryland “state” tax and a “special nonresident tax” equivalent to Maryland’s lowest “county” tax. The Wynne’s of Howard County, Maryland, received S-corporation income that was earned and taxed in numerous other states. They challenged Maryland’s failure to allow them to claim a credit against their Maryland county taxes as violating the dormant Commerce Clause, which prevents states from discriminating against or excessively burdening interstate commerce.

Posted 13 Mar 2015 in Case Notes, Commentary, IMLA Briefs
In Alabama Department of Revenue v. CSX Transportation the Supreme Court held 7-2 that railroads can be compared to their competitors when determining whether a tax is discriminatory in violation of the Railroad Revitalization and Regulatory Reform Act (4-R Act).  Different taxes paid by railroads and their competitors must be compared with determining whether a tax railroads pay is discriminatory.  The State and Local Legal Center (SLLC) filed an amicus brief in this case disagreeing with the Court’s first holding and agreeing with its second holding. The 4-R Act prohibits state and local governments from imposing taxes that discriminate against rail carriers (railroads).  Railroads in Alabama pay a four percent sales tax on diesel fuel as do other commercial and industrial purchasers.  Motor carriers (trucks) pay an excise tax of 19-cents per gallon and no sales tax.  Water carriers pay no sales or excise tax on diesel fuel. 

Posted 23 Sep 2014 in IMLA Briefs
Its simple math.  Really.  But will the Supreme Court do it?  The Eleventh Circuit refused. The question in Alabama Department of Revenue v. CSX Transportation is whether a state discriminates against rail carriers in violation of federal law even when rail carriers pay less in total state taxes than motor carriers?  No, argues the State and Local Legal Center (SLLC) in an amicus brief.  Forty-two states exempt motor carriers from sales tax on diesel fuel.  This case is relevant to local government because a number of cities and counties in Alabama impose an additional sales tax on railroad diesel fuel.calc Rail carriers (railroads) in Alabama pay a four percent sales tax on diesel fuel.  Motor carriers (trucks) pay an excise tax of 19-cents per gallon and no sales tax.  The Railroad Revitalization and Regulatory Reform Act (4-R) prohibits state and local governments from imposing taxes that discriminate against railroads.  Since CSX filed its complaint, railroads paid less in sales tax than trucks paid in excise tax.  But, the Eleventh Circuit refused to compare the total taxation of railroads and trucks to avoid the “Sisyphean burden of evaluating the fairness of the State's overall tax structure.”  Instead it concluded Alabama’s sales tax on railroads violates 4-R because Alabama’s competitors don’t pay it. The SLLC brief argues that given state’s traditional power to tax the Court should interpret 4-R narrowly.   The brief suggests the Court could take three approaches to rule in favor of Alabama.

Posted 03 Sep 2014 in Monday Morning Review
Here are last week's published decisions involving local governments:court collumn First Circuit
  • Town of Johnston v. Fed. Housing Finance Agency, No. 13-2034 (Aug. 27, 2014): The court affirmed the dismissal of the municipalities' claim that Fannie Mae and Freddie Mac failed to pay taxes on property transfers; the court found that statutory exemptions from taxation applied. As the court put it: "Six other circuits have recently considered this attempt to shoe-horn a transfer tax into a real property tax, and they have unanimously rejected the argument."
Second Circuit Third Circuit

Posted 26 Aug 2014 in Case Notes, Commentary
Even though the Supreme Court’s next term won’t officially begin until October 6, the Court has already accepted about 40 of the 70 or so cases it will decide in the upcoming months. For a more detailed summary of all the cases the Court has accepted so far affecting local government, read the State and Local Legal Center’s Supreme Court Preview for Local Governments.Supreme Court3 Here is a quick highlight of what is on the Court’s docket right now that will affect local government:

Posted 08 Aug 2014 in IMLA Briefs
Every Supreme Court tax case comes down to an argument perhaps most familiar to small children6355404323_cf97f9c58e: “It isn’t fair.” The State and Local Legal Center (SLLC)/International Municipal Lawyers Association (IMLA) amicus brief in Comptroller v. Wynne argues that the tax policy choice the Maryland legislature made is fair (or at least fair enough) and that state and local governments should be able to devise tax schemes without judicial interference. In Comptroller v. Wynne the Supreme Court will determine whether the U.S. Constitution requires states to give a credit for taxes paid on income earned out-of-state.

Posted 16 Jul 2014 in Monday Morning Review
Here are last week's published decisions involving local governments, a couple days late this week:Alexandria-court Second Circuit E.M. v. New York City Dept. of Ed., No. 11-1427 (July 11, 2014) (in IDEA case, concluding that district court improperly concluded that IEP was adequate by relying on retrospective evidence extrinsic to the IEP). Fourth Circuit Lefemine v. Wideman, No. 13-1629 (July 11, 2014) (reversing determination that successful plaintiff in 1983 First-Amendment case was not entitled to attorney's fees).

Posted 16 Jun 2014 in Monday Morning Review
Here are last week's published decisions involving local governments:SCT pillars Third Circuit
  • Rosano v. Township of Teaneck, No. 13-1263 (June 10, 2014) (in action by current and former police officers against Township alleging violation of Fair Labor Standards Act because it did not pay proper overtime and provide compensation for attending daily roll calls and putting on and taking off uniforms, affirming grant of summary judgment for Township).
Seventh Circuit

Posted 10 Feb 2014 in Monday Morning Review
Here are last week's published decisions involving local governments:SCT pillars Second Circuit Sixth Circuit Seventh Circuit

Posted 05 Feb 2014 in Monday Morning Review
Here are last week's published decisions involving local governments*:Alexandria-court First Circuit Fourth Circuit Fifth Circuit