Maryland State Comptroller of the Treasury v. Wynne
64 A.3d 453
Md.2013Background
- Wynnes, Maryland residents, owned Maxim Healthcare (an S corporation) with pass-through income attributed to them; Maxim earned substantial income in other states taxed there.
- Maryland taxes residents via state, county, and SNRT components; credit for out-of-state taxes applies only to state tax, not county tax.
- Wynnes claimed credit denial for Maxim’s out-of-state taxes against Maryland county tax violated the dormant Commerce Clause.
- Tax Court favored Comptroller; Circuit Court reversed; case proceeded to Maryland Court of Appeals for constitutional ruling.
- Majority held that failure to credit out-of-state taxes against the county tax violates the dormant Commerce Clause and remanded for recalculation of liability.
- Dissent argued Maryland law is constitutional and that the county tax without credit does not implicate the dormant Commerce Clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Dormant Commerce Clause applicability | Wynne: denial violates dormant Commerce Clause | Comptroller: tax scheme constitutional | Yes, violates dormant Commerce Clause |
| Internal consistency of apportionment | Wynne: internal inconsistency due to uncredited interstate_income | Blanton: internal consistency | No; internal consistency not satisfied |
| External consistency of apportionment | Wynne: external inconsistency—taxing out-of-state income without credit | ||
| Comptroller: credit framework does not violate external consistency | No; external consistency not satisfied |
Key Cases Cited
- Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977) (four-prong test for nondiscriminatory taxes under Commerce Clause)
- Fulton Corp. v. Faulkner, 516 U.S. 325 (1996) (discriminatory intangibles tax invalid under dormant Commerce Clause)
- Amerada Hess Corp. v. Dir., Div. of Taxation, 490 U.S. 66 (1989) (deduction denial does not unduly burden interstate commerce when activity outside state)
- Camps Newfound/Owatonna v. Town of Harrison, 520 U.S. 564 (1997) (facially discriminatory tax against interstate commerce invalid)
- Edwards v. California, 314 U.S. 160 (1941) (state action restricting interstate movement implicated Commerce Clause)
- Boston Stock Exchange v. State Tax Comm’n, 429 U.S. 318 (1977) (tax on in-state vs out-of-state sales—interstate impact analyzed under Commerce Clause)
- Oklahoma Tax Comm’n v. Jefferson Lines, 514 U.S. 175 (1995) (apportionment and nexus considerations for interstate taxation)
- General Motors Corp. v. Tracy, 519 U.S. 278 (1997) (dormant Commerce Clause protects markets, not taxpayers; requires interstate competition analysis)
- Frey v. Comptroller, 422 Md. 111 (2011) (Maryland SNRT implicated Commerce Clause; distinction from county tax)