Wynne-Related Interest Claims: The Tax Court Rules

The Maryland Tax Court has issued a taxpayer-friendly decision regarding interest on Wynne-related claims. Comptroller of the Treasury v. Brian Wynne, et ux. was a case decided by the U.S. Supreme Court in 2015 that concerned the credit Maryland taxpayers can take for taxes paid to other states. As a result of the Supreme Court’s decision, Maryland taxpayers are now able to claim the credit against their local income taxes and can also take the credit for income taxes paid to localities outside of Maryland.

Many taxpayers filed claims for refunds of taxes paid on returns from years before the Supreme Court decision, and the state is required to pay them interest on their claims. Interest on tax refunds is generally paid at a rate of 13% (for the years at hand), but a 2014 Maryland law fixed the interest rate at 3.25% for the Wynne-related refund claims. Taxpayers had disputed the interest reduction, and now the Maryland Tax Court has issued an order stating that the use of a lower interest rate is unconstitutional.

Despite the favorable ruling, taxpayers are advised to remain patient—experts expect the State to appeal the ruling. We will continue to provide updated information as it becomes available.

If you have any questions, please do not hesitate to contact your Hertzbach tax advisor at 410-363-3200.