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Navigating the Apportionment Landscape After Maryland v. Wynne: Maximizing Tax Credit Opportunities

THURSDAY, JANUARY 21, 2016, 1:00-2:50 pm Eastern

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January 21, 2016

Navigating the Apportionment Landscape After Maryland v. Wynne

Christopher L. Doyle, Partner Hodgson Russ cdoyle@hodgsonruss.com Debra Silverman Herman, Partner Hodgson Russ dherman@hodgsonruss.com Alexandra P .E. Sampson Reed Smith asampson@reedsmith.com

Notice

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Navigating the Apportionment Landscape post-Wynne v. Maryland

I. Wynne Holding in Detail II. Treating Other State and Local Taxes as Creditable State Tax

Debra S. Herman, Esq. dherman@hodgsonruss.com 646.218.7532

• Article I, of §8, clause 3 of U.S.

Constitution: The Commerce Clause

• Grants Congress power “to

regulate commerce … among the several states”

6

Background of the Case: Constitutional Law

The “Negative” or “Dormant” Commerce Clause

• Though framed as positive grant of power to

Congress, Court has “consistently held this language to contain a further, negative command.”

• “Prohibiting certain state taxation even when

Congress has failed to legislate on the subject” (Jefferson Lines, 1995)

7

Constitutional Law The Basics

• This “negative” aspect has been disputed:
• In Wynne, Justice Scalia called it a “judicial fraud!”
• Also he said it “has deep roots, like many weeds”
• He also called it the “Synthetic Commerce Clause”

and the “Imaginary Commerce Clause”

• But it’s not going anywhere
• Do the same protections apply to individuals?

8

Constitutional Law The Basics

• Two theories of income taxation
• Residency-based taxation
• Source-based taxation
• Analog: allocable income and apportionable income for

corporations –

• Allocated income is often assigned to commercial

domicile since “residency” of corporation within the state supports “in personam” jurisdiction over the income

9

Two Theories of Income Taxation

• States generally tax their own residents on all

income, regardless of source

• Nonresidents only taxed on income from in-state

sources

• Wages for in-state services
• Income from in-state business
• Income from in-state property

10

State Taxation of Residents and Nonresidents

• Most states allow residents a credit for taxes paid to
• ther states, but thought it was as a policy

accommodation, not a constitutional requirement. Chickasaw Nation, 515 U. S., at 463, n. 12.

• States’ credit systems are not absolute. Important

limitations:

• No credit for foreign taxes paid;
• Not all states grant credit for taxes paid at entity level;
• Not all states grant credits for local taxes;
• No states allow income tax credits for gross receipts

taxes, B&O taxes, margins taxes;

• May limit tax credit to state’s effective tax rate on

income.

11

Resident Credits

• Different sourcing rules
• Example: CT will only give credit for taxes paid to other

states on income from sources in that state — determined under CT’s sourcing rules!

• “Convenience Rule” Problem
• “Unearned” or “Non-Source” Income
• If two states impose tax on a taxpayer’s intangible

income (not sourceable anywhere), usually no resident credits

• CT/NY dual residency: prime example
• New Jersey is much nicer!

12

Resident Credits – Other Limitations

• MD residents pay tax on their worldwide income
• MD personal income tax has two components:

(1) state and (2) county

• Nonresidents only pay tax on sourced income,

but they pay BOTH the state and county tax (called “special nonresident tax”)

• Residents only allowed credit against state

portion of tax

13

Wynne Background – MD Rules

• MD residents who held stock in an S corp. that
• perated and filed returns in 39 other states
• Reported flow-through income from the S corp.
• n MD income tax returns
• Claimed resident tax credit (against both the

state and county components) for taxes paid to

• ther states
• The MD State Comptroller disallowed credit

against county component

14

Wynne Background - Facts

• So Wynnes pay tax to MD as residents (say 6%)

and rate includes a county component (say 1%)

• They also pay tax in CA at 13% rate
• MD will allow an offset for CA taxes paid, but
• nly against the 6% state tax; 1% county tax can

NEVER be offset

• Constitutional dispute: Is that legitimate? Can a

state tax its residents on all income and NOT provide full credit for taxes paid to other states?

15

Wynne Background

• Affirmed the Hearings and Appeals Section’s

ruling, which held that no credit was required against the county component of MD’s income tax

• Tax Court reversed by Circuit Court for Howard

County, which held that MD’s tax scheme violated the Commerce Clause

16

Wynne Tax Court Decision

• MD’s high court affirmed the Circuit Court
• Evaluated MD’s tax under Complete Auto’s four-

part test

• 1. Substantial nexus with taxing state
• 2. Fairly apportioned
• 3. Doesn’t discriminate against interstate commerce
• 4. Fairly related to services provided by the state
• Held that MD’s tax violated #2 and #3

17

Wynne MD Court of Appeals Decision

• 5 – 4 decision by U.S. Supreme Court on May 18, 2015
• Held: Maryland’s income tax scheme violates the

Dormant Commerce Clause

• Maryland’s income tax scheme unconstitutionally

discriminates against interstate commerce because it fails the internal consistency test.

• Maryland’s tax scheme operates like a tariff “the

paradigmatic example of a law discriminating against interstate commerce”

18

Supreme Court Holding

Maryland Comptroller of Treasury v. Wynne, 135 S. Ct. 1787 (2015)

(2015)

• Majority: 5 Justices
• Alito, Roberts, Kennedy, Sotamayer, Breyer
• Dissent: 4 Justices
• Ginsberg, Scalia, Kagan
• Thomas — separate dissent

19

Supreme Court Scorecard

During Oral argument, Chief Justice John Roberts observed that:

20

Oral Argument- Supreme Court

“if each State did what we’re talking about, people who work in one State and live in another would pay higher taxes overall than people who live within one State and work in the same State.”

• Justice Roberts was talking about the “Internal

Consistency Test”

• The Commerce Clause requires that taxes on interstate

commerce be nondiscriminatory and fairly apportioned.

• This test is designed to allow us to distinguish

between:

i. a tax structure that is inherently discriminatory (bad); and ii.

• ne that might result in double taxes only as a result of

two nondiscriminatory state schemes (OK)

• Past cases may have suggested that the Commerce

Clause was N/A to individual income taxes; the Court laid that to waste

21

The Internal Consistency Test

• Are resident credits now constitutionally

required?

• Per majority, yes
• But only if states also tax nonresidents
• Dissenters took a different view, but don’t expect this

to change

22

Are Resident Credits Now Constitutionally Required?

• What state resident credit schemes are or

could be directly impacted by the decision?

• States
• Wisconsin, North Carolina, Tennessee, Massachusetts
• Local Jurisdictions
• NYC, Philadelphia, Cleveland, Detroit, Kansas City, St.

Louis, Wilmington (DE), Indiana’s counties

23

Treating Other State and Local Taxes as Creditable State Tax – Post Wynne

IMPACT IN PHILADELPHIA AND PENNSYLVANIA

Treating Other State and Local Taxes as Creditable State Tax

24

• Somma v. Commonwealth of Pennsylvania, 405

A.2d 1323 (Pa. Cmmnw. 1979)

• Addressed the constitutionality of allowing a

credit for taxes paid to other states but not for taxes paid to PA local jurisdictions.

• The court held that such a tax scheme was

constitutional and changing the scheme required a legislative remedy, not a judicial remedy.

25

No Credit for PA Local Tax Paid

• Before 2014, a PA resident taxpayer was entitled

to a credit against PA personal income tax due for the amount of any income tax imposed on him by another state upon income that is also taxable in PA. 72 P.S. § 7314.

• The term “state” for this purpose included a

foreign country. 72 P.S. § 7314(t).

• However, the credit for foreign taxes paid was

repealed effective for tax year 2014 and thereafter.

26

No Credit for Foreign Taxes Paid

• Philadelphia imposes a tax upon salaries, wages, commissions,
• ther compensation and net profits. Phila. Code §§ 19-1500, et seq.
• All compensation and net profits of residents are taxed wherever
• earned. Philadelphia residents are also taxed upon their unearned

income.

• Nonresidents are only taxed upon compensation and net profits

earned in Philadelphia.

• The Sterling Act (the enabling Act) (Act of August 5, 1932, P.L. 45,

53 P.S. § 15971) and Philadelphia Wage Tax Ordinance, however, are SILENT regarding credits against Philadelphia tax for other like taxes paid to other states or political subdivisions in other states.

• Thus, Philadelphia does not allow a credit against the Philadelphia

wage/net profits tax for similar taxes paid to other states or political subdivisions.

27

No Credit Against Philadelphia’s Wage/Net ProfitsTax

• 53 P.S. § 6924.317 – which does not apply to Philadelphia
• “Payment of any tax on income to any State other than

Pennsylvania or to any political subdivision located in Pennsylvania shall, to the extent that such income includes salaries, wages, commissions, or other compensation or net profits of businesses, professions or other activities but in such proportions as hereinafter set forth, be credited to and allowed as a deduction from the liability of such person for any other tax on salaries, wages, commissions, other compensation or net profits of businesses, professions or

• ther activities imposed by any political subdivision of this

Commonwealth under the authority of this chapter.”

28

Compare with Local Tax Enabling Act

• Hypothetical -- Imagine a Philadelphia and PA resident

Taxpayer earns income in Wilmington, Delaware.

• Current law:
• Taxpayer will initially be liable for 4 taxes: 1) PA-level tax; 2)

Philadelphia-level tax; 3) DE-level tax; 4) Wilmington-level tax

• Taxpayer will receive a credit against PA-level tax for income

taxes paid to DE

• Taxpayer will NOT receive a credit against PA-level tax for

income taxes paid to Wilmington

• Taxpayer will NOT receive a credit against Philadelphia-level

tax for income taxes paid either to DE or to Wilmington

• Current law is unconstitutional, see Wynne

29

Wynne’s Impact on Current PA and Philadelphia Tax Schemes

• Taxpayer is a resident of Philadelphia and Pennsylvania
• Taxpayer is subject to the Philadelphia wage tax (based

upon earned income); the Philadelphia School Income Tax (“SIT”) (based upon unearned income); and the PA Personal Income Tax (“PIT”).

• Taxpayer works in Maryland and owns a residence in

Maryland

• Taxpayer is present in Maryland more than 6 months out
• f the taxable year and is thus a resident of Maryland
• Maryland seeks to tax 100% of the earned and unearned

income at the County and State level.

30

Dual Resident Fact Pattern

• North Eastern States Tax Officials Association
• Cooperative Agreement on Determination of

Domicile (October 1, 1996) was intended to address the potential for multiple taxation under the dual-resident fact pattern

31

NESTOA

• NESTOA §4, earned income is subject to tax by the state

where the income is sourced, whereas unearned income is subject to tax by the taxpayer’s state of domicile

• As applied to our fact pattern, PA receives PIT limited to

unearned income; Philadelphia receives SIT based upon unearned income; Philadelphia does not receive wage tax; and Maryland, at both the state and county level, receives income tax based upon wages earned in Maryland but not upon unearned income

• Such scheme is compliant with Wynne

32

NESTOA’s Intended Effect on Dual Resident Fact Pattern

• NESTOA’s actual effect on dual-resident fact pattern:

UNCLEAR

• Per Section 4, “agencies shall comply with all statutory

and regulatory requirements of their state and this agreement shall in no way be construed to bind an agency to [NESTOA’s] uniform approach.”

• Thus, a State is not necessarily required to comply with

NESTOA.

33

NESTOA’s Actual Effect on Dual Resident Fact Pattern

• Current PA and Philadelphia tax schemes are
• unconstitutional. See Wynne.
• Wynne’s impact may also reach the dual resident fact

pattern if a State does not adhere to NESTOA’s uniform approach.

34

Conclusion

Treating Other State and Local Taxes as Creditable State Tax

IMPACT IN NEW YORK STATE AND NEW YORK CITY

35

Wynne Impact in NYS and NYC

• Must NYS allow resident credit against NYC personal

income taxes for source income in other states?

• CA is typical example, since NYC resident with source

income pays 13% to CA and only gets credit against 8% NYS tax.

• No longer can say Commerce Clause n/a to

individuals

• Unlike MD, NYC doesn’t tax nonresidents
• But is there a fair apportionment issue?

36

Wynne Impact in NYS and NYC

• Is NY’s Statutory Residency Test unconstitutional?
• Court of Appeals in Tamagni upheld rule; declined to

apply Commerce Clause analysis, but said that rule was fine anyway even if it did

• How does the Wynne rule, that the Commerce Clause

applies to individuals, affect the analysis?

• Must a credit be provided for taxes paid to other states

in all circumstances?

• Different rule for “non-sourced” income?
• 1995 NESTOA agreement attempted to remedy

37

Wynne Impact in NYS and NYC

• Is NY’s “convenience rule” unconstitutional?
• Court of Appeals in Zelinsky upheld rule; applied

Commerce Clause analysis and said that rule was fine

• No question about IC test; taxpayer conceded

the rule passed.

• External consistency was issue
• But what about reverse-convenience days?

38

Treating Other State and Local Taxes as Creditable State Tax

IMPACT IN KENTUCKY AND SURROUNDING STATES

39

• The Kentucky Constitution provides for the levy of local

license taxes or fees on “franchises, stock used for breeding purposes, [and] the various trades,

• ccupations and professions.” Ky. Const. § 181.
• The majority of Kentucky’s counties and cities levy an

“occupational license fee” and “net profits license fee” (read “income tax”) on the compensation of individuals and net profits of businesses, respectively.

40

KENTUCKY’S HISTORY

• The occupational license fees levied by Kentucky’s

counties and cities differed from the taxes of Philadelphia, for example, in that Kentucky’s local taxes are imposed, not based on residency, but based on revenue derived from work or services performed in the local taxing jurisdiction.

• There is no provision for a credit for taxes paid to
• ther states or local taxing jurisdictions for the
• ccupational license fee on wages.
• The net profits license fee is apportioned.

41

THE APPLICATION

• However, as a result of limiting taxation to compensation

earned in the taxing district, the occupational license fee passes the internal consistency test used by the Court in Wynne.

• The problem emerges if a local taxing jurisdiction in one
• f Kentucky’s seven contiguous states imposes a tax

without a credit.

• As of 2011, 91 Indiana counties and 774 Ohio

municipalities and school districts levied local income taxes.

• In the jurisdictions that do not provide a credit, the

discriminatory effect described in and prohibited by Wynne results.

42

THE DISCRIMINATION (OR LACK THEREOF)

• Kansas has interpreted the Wynne decision to mean that

Kansans who commuted to work and paid Kansas City, Missouri’s 1% earnings tax over the past three years are eligible to receive a partial refund.

• See Kansas Dept. of Revenue Notice 15-15 (8/10/2015)
• Thus, Kansans who paid Kansas City Missouri’s

earnings tax can now claim the payment as a credit against their Kansas state tax bill

43

Wynne impact in Kansas

• Implications for National Tax Policy
• Challenge to residency-based tax at the

federal level?

44

Wynne Impact

Navigating the Apportionment Landscape After Maryland v. Wynne

Internal Consistency & External Consistency January 21, 2016

Alexandra E. Sampson, Esq. P – 202.414.9486 asamspon@reedsmith.com

Alexandra E. Sampson

• A former Fellow to the Council on

State Taxation

• Represents companies before

administrative and judicial tribunals in Maryland.

• Frequently quoted on issues

concerning Maryland taxation, including the Wynne case.

• Vice-Chair of the D.C. Bar State and

Local Tax Section

46

Overview

• Fair Apportionment Generally
• Internal Consistency Test Criteria
• External Consistency Test Criteria
• What is “fair apportionment”?
• Historical application
• Modern day state examples

47

Fair Apportionment Generally

48

Fair Apportionment, Generally

• Commerce Clause requires state and local taxes to be “fairly

apportioned”

• Taxation of income that does not have its source in the taxing state is

not, in itself, sufficient to invalidate a formula, but the Court will strike down the formula “if the taxpayer can prove by ‘clear and cogent evidence’ that the income attributed to the State is, in fact, out of all appropriate proportions to the business transacted … in that State, . . . or has led to a grossly distorted result.” Moorman Mfg. Co. v. Bair, 437 U.S. 267, 274

• Serves Two Functions:
• Eliminates the risk of multiple taxation
• Prevents extraterritorial taxation

49

Fair Apportionment, Generally

Container Corp. (US 1983)

• Internal Consistency
• Requirement: The formula, if applied by every jurisdiction, would result

in no more than 100% of the business’ income being taxed.

• Concern = trade interference
• External Consistency
• Requirement: The factor(s) used in the formula must actually reflect a

reasonable sense of how income is generated.

• Concern = economic justification

50

What is Fair Apportionment?

51

What is Fair Apportionment?

• Does it depend on “full apportionment?”
• Does it depend on what other States do?
• Does it mean the same thing for a three-factor equally weighted

formula, as it does for a four-factor double-weighted sales formula, or a single-sales formula?

52

Historical Application

• Container Corp.
• Jefferson Lines
• ATA II

53

How Much is Enough for a Violation?

• Container Corp. (U.S.) – 14% increase in tax is “within the

substantial margin of error inherent in any method of attributing income among the components of a unitary business.”

• New Yorker (IL) – upheld taxes of 120% of its combined

circulation and advertising revenues and 126% of its advertising revenues.

• Citizens Utilities (IL) – upheld a 213% increase in tax liability
• Filtertek, Inc. (IL) – upheld increases of 561% and 807% to

income in Illinois

54

It is not a question of enough.

• SO WHAT? The proper analysis is not what percentage of

income is taxed throughout the U.S., or how much does a taxpayer’s liability increase, but whether the method fairly reflects (i.e. apportions the taxpayer’s income to the State based upon) the taxpayers activity within that State.

• Consider Miami Corp. (IL) – 300% increase in tax liability was

not in itself distortive but the failure of the formula to reflect intangible property in the property factor was distortive, and so separate accounting of income from intangible property holdings was appropriate under IITA Sec. 304(f).

55

Modern Day State Examples - Decided

• Alabama
• Add-back statutes
• VFJ Ventures (AL Ct. App. 2008)
• California
• Scope of UDITPA 18 discretionary power
• Microsoft (CA 2006)
• New Jersey
• Throw Out Rule
• General Engines / Pfizer (NJ Tax Court 2008)
• Violated internal consistency and external consistency
• Alternative Minimum Assessment Cap
• Violates internal consistency

56

Modern Day State Examples – Questionable Regimes

• Massachusetts
• The First Marblehead Corp. et al. v. Commissioner of Revenue (US Sct.

remanded Oct. 2015)

• New Jersey
• New York
• QFI Election & Mandatory Apportionment Rules
• Both violate internal consistency test
• Mandatory apportionment rules violate the external consistency test

57

Contact Information

REED SMITH LLP

1301 K Street, NW Suite 1000, East Tower Washington, D.C. 20005 P – 202.414.9200 F – 202.414.9299 reedsmith.com

Alexandra E. Sampson, Esq.

Associate P – 202.414.9486 asampson@reedsmith.com

Additional information and articles available at: www.reedsmith.com/statetax

58

Navigating the Apportionment Landscape post-Wynne v. Maryland

V. Changes to Apportionment Formulas & VI. Refund Claim Procedures

Christopher L. Doyle cdoyle@hodgsonruss.com

• V. CHANGES TO APPORTIONMENT

PERCENTAGES

• The internal consistency test applies to all income taxes as well as

the bits and pieces that go into calculating the tax.

• If an internal consistency analysis shows that a state’s tax scheme, if

applied at all states, would result in more than a 100% apportionment

• f income, it is probably unconstitutional under Wynne.

How does Wynne support a change to state tax apportionment schemes?

60

• It is not actual double taxation, it is hypothetical double

taxation

• Assuming every state has the target state’s tax laws, would

there be double taxation?

• Wynne involved hypothetical double taxation based on rates

and the absence of cross-credits for sourced income

• But hypothetical double taxation could also result in tax

schemes that rely on apportionment

Internal consistency redux

61

• The Supreme Court’s response to First Marblehead v.

Massachusetts Commissioner of Revenue

• “The petition for a writ of certiorari is granted. The judgment is

vacated, and the case is remanded to the Supreme Judicial Court of Massachusetts for further consideration in light of Comptroller of Treasury of Md. v. Wynne, 576 U. S. ____ (2015).”

• See Knoll and Mason, How the Massachusetts Supreme

Judicial Court Should Apply Wynne, State Tax Notes (December 21, 2015)

How do we know apportionment can be a problem?

62

• Massachusetts used a three-factor apportionment

formula.

• One of the factors was the property factor.
• FM’s property consisted of participation interests in

student loans originated by other lenders.

• The question was where these capital assets (i.e. the

loans) were located for purposes of computing the property factor. The Issue in First Marblehead

63

• Two rules:
• Massachusetts domiciled corporations: Loans are

deemed to be in Massachusetts if the corporation is domiciled in Massachusetts and the loan is assigned by the taxpayer to an out-of-state location where the taxpayer has no regular place of business

• Out-of-state domiciled corporations: SINAA test:

preponderance of where Solicitation, Investigation, Negotiation, Approval and Administration occur The Massachusetts Property Factor

64

• It’s complicated to say but easier to apply
• The sayin’ of it: If the state’s apportionment regime applied in

all states, then would the apportionment element (generally a factor) used by a corporation domiciled in the state (assuming its activities were wholly within the state) be exceeded by the sum of: (1) the apportionment element a taxpayer involved in interstate business would need to use in its state of domicile

• n “inbound income sources”, and (2) the apportionment

element such taxpayer would need to use in other states on that same income source (which would be an outbound income source with respect to that taxpayer)? If so, the apportionment regime violates the internal consistency test.

What is the internal consistency analysis for apportionment factors?

65

• If the sum of: (1) the factor applied by the state of

domicile to an income source that is inbound; and (2) the analogous factors applied by non-domiciliary states to that same income source exceeds 100%, then the internal consistency test is violated.

• Massachusetts treated all of the loans as being in
• Massachusetts. So if any other state, applying

Massachusetts’ apportionment regime, could say that any

• f the loans were also located in such other state, the

regime violates internal consistency. The application of it is easier:

66

• Presumptions that are not rebuttable
• Any distinction applied to businesses domiciled within the

state

• The words “and” and “or”
• Any indication that a sourcing or allocation percentage

can be in excess of 100% What are some clues you should look for in suspect statutes and regulations?

67

• New York’s regulation defining the gross income factor for non-

resident individuals and partnership apportionment

• 20 NYCRR 132.15(f) "Gross income percentage". The gross

income percentage is computed by dividing (1) the gross sales

• r charges for services performed by or through an office,

branch or agency of the business located within New York State, by (2) the total of all gross sales or charges for services performed within and without New York State. The sales or charges to be allocated to New York State include all sales negotiated or consummated, and charges for services performed, by an employee, agent, agency or independent contractor chiefly situated at, connected by contract or

• therwise with, or sent out from, offices, branches of the

business, or other agencies, situated within New York State.

Some examples that look suspicious

68

• What if a sale is negotiated in one state but

consummated in another state?

• What if a service is performed by an employee chiefly

situated in one state but dispatched by a branch in another state? New York’s gross income percentage regulation

69

• The instructions to the IT-203 state the following:

Line 45 – Income percentage To compute your income percentage, divide the amount from line 31 in the New York State amount column by the amount from line 31 in the Federal amount column. (These amounts must be entered in the boxes to the left of line 45.) Round the result to the fourth decimal place. For example, if the amounts used were $12,000 divided by $36,000, the result would be .3333. Enter this decimal on line 45; do not convert to a percentage. If the amount on line 31 in either the Federal amount column or New York State amount column is zero or less, enter 0 on line 45. If the amount on line 31 in the New York State amount column is more than the amount on line 31 in the Federal amount column, the income percentage will be more than 100%. For example, if the amounts used were $25,000 divided by $15,000, the result would be 1.6667. If you used Form IT 230, Part 2, you must complete the Nonresident and part year resident income percentage schedule of Form IT 230 I, Instructions for Form IT 230, to compute the income percentage to enter on line 45.

New York’s source-fraction nonresident return instructions

70

• VI. Some refund claim procedures
• There doesn’t look like there is going to be any fight if:
• 1. You were a resident of Maryland in 2011-2014; and
• 2. You earned income and pay tax on that income in
• ther states (Exception: wages and salaries paid for

work done in DC, Pennsylvania, Virginia, or West Virginia due to a reciprocity agreement); and

• 3. You file a form claiming the refund.

Maryland reacts quickly

71

• MD has set up a web page dedicated to help steer

taxpayers in the right direction:

• http://governor.maryland.gov/you-may-be-owed-a-tax-

refund/

• The form is Form 502LC, and a fill-in the blanks .pdf is at:

http://forms.marylandtaxes.com/current_forms/502LC.pdf Maryland resources

72

• If you already filed your original return, you’ll need to attach the

Form 502LC to an amended return (probably a Form 502X) to claim the credit

• The credit is also available to those who are fiduciaries of Maryland

resident trusts that paid the Maryland fiduciary income tax

• You also need to send in a signed return from the non-Maryland

jurisdiction to which you paid tax

• If you paid tax to multiple non-Maryland jurisdictions, you’ll need to

prepare a separate Form 502LC for each of those jurisdictions

Some details

73

• Iowa has certain local surtaxes (EMS, School Districts)

for which it does not provide cross credits. And it recognizes that it has a Wynne problem

• There’s a webpage explaining how to claim a credit:

https://tax.iowa.gov/wynne-decision

• Pretty much you need to file an amended return (the IA

1040X) to claim a refund. Other states?

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Disclaimer

[Don’t you just hate lawyers?] This slide show is published and presented by Hodgson Russ LLP, which is a law firm. It is presented for general informational and entertainment purposes only and should not be construed as legal advice or legal opinion on any specific facts or circumstances. Although it should go without saying, we are compelled to tell you that your receipt of this document does not make us your lawyers. Hodgson Russ LLP will not establish an attorney/client relationship with you without first corresponding with you and sending you an engagement letter signed by one of our lawyers . If you have not received a signed engagement letter, you are not our client. Period. In any event, you’d be wise to not rely on what is written here. In striving for an easy-to-read presentation, the author may make sweeping legal statements like "the holding was…" or "the law is…" when what we really mean is "at this time we interpret that the court construed the law to apply in the following way…" or "at this time we understand that the government folks who administer these taxes for a living—and with whom we

• ften disagree—think the law should be applied in the following way… ." In short, the author may have sacrificed a little accuracy in favor of

brevity and readability. Furthermore, some of what we write here or say when we present these materials may be humor, sarcasm, satire, hyperbole, etc., which has no basis in fact or law but is included purely for entertainment purposes or to make a point. We are lawyers with a diverse client base; so we won't admit that anything stated in this document or in its presentation is 100 percent accurate, since we don't want to end up eating those words in some future situation in which we wish to take a contrary position. Accordingly, we won't cite this document in support of any position we are trying to prosecute or defend, and you shouldn't either. Information contained here is almost certainly inapplicable to your particular facts or situation; please consult an attorney (you can find the biographies of a few of my favorites at hodgsonruss.com) for specific advice applicable to your situation. Hodgson Russ LLP is not responsible for inadvertent errors in this document, and will almost certainly disavow the author (Chris Doyle? Never heard of him.) if he has written something here or says something in the presentation that a significant number of readers find offensive. Hodgson Russ LLP is likewise not responsible for readers who misconstrue the author’s attempts at humor or satire as reality, or misinterpret any statements here or in the presentation of these materials as reflective of the authors' sincere and immutable opinions. That said, this disclaimer is sincere. And immutable (for now, anyway). Finally (hooray!) we must admit that another reason we author and present stuff like this is that we hope you’ll be impressed by our knowledge of the state and local tax matters on which we chose to write and speak. In that sense, this material may be considered attorney advertising under the rules of certain jurisdictions in which Hodgson Russ lawyers practice (such as in Ontario, Canada, where certain of our attorneys are Licensed Foreign Legal Consultants, and in the states of New York and Florida). But if you have read this far, we think it is unlikely you’d be foolish enough to hire a lawyer based on an advertisement. So we welcome your further inquiries into our qualifications and experience.

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