Tax Notes State

COVID-19 may have halted production of daytime TV,1 but it has not stood in the way of the ongoing soap opera that is Maryland’s litigation with Brian and Karen Wynne. The first season of Wynne was a smash hit, culminating in an exciting finale in which the Supreme Court held that Maryland’s personal income tax regime was in violation of the dormant commerce clause in 2015’s Comptroller of the Treasury v. Wynne (Wynne I).2

Autores: Michael I. Lurie

The second season of Wynne just reached its conclusion with the Maryland Court of Appeals’ June 5 decision in Wynne v. Comptroller of the Treasury (Wynne II). In Wynne II, the court of appeals held that Maryland did not violate the dormant commerce clause by statutorily reducing the overpayment interest due on refunds owed as a result of the holding in Wynne I.

However, Wynne II may not be the end of the story. As explained in more detail below, Maryland’s statutory reduction to overpayment interest likely violates due process as construed by the Supreme Court in Reich v. Collins. The Maryland Court of Appeals did not address this question in Wynne II, so there is a chance that Wynne will be renewed for a third season.

I. Recap of Wynne I: The Dormant Commerce Clause and Internal Consistency

Like the beginning of any good sequel, we begin with a brief recap. If you are well versed in the comptroller of Maryland/Brian and Karen Wynne saga, this is where you hit “skip recap” and move to Section 2. Otherwise, here is some historical perspective.

In 2006 two Maryland residents, Brian and Karen Wynne, filed a Maryland income tax return on which they claimed a credit for income taxes paid to other states. At the time, Maryland law allowed a credit against the state income tax for income taxes paid to other states, but it did not allow a similar credit against the county income tax.3