taxation

In The Law of Trusts and Trustees, George Gleason Bogert describes trusts as a “legal abstraction: a fiction created to represent the tripartite relationship among a settlor, a trustee, and a beneficiary.” The debatable location of a trust makes it difficult for courts to agree which jurisdictions may tax a trust’s income. For example, what if only a trust beneficiary is located in the state, may the state tax the trust’s income? 

In North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust the Supreme Court will decide whether the Due Process Clause prohibits states from taxing trusts based on trust beneficiaries’ in-state residency.

In Dawson v. Steager the Supreme Court will decide whether states may give some retired state and local government employees a bigger tax break on retirement benefits than retired federal employees.

West Virginia taxes the government-provided retirement income of most local, state, and federal employees. While retired federal employees and most state and local government employees may exempt up to $2,000 of retirement benefits from their taxable income, certain state and local police officers, sheriffs, and firefighters can exempt all of their benefits. This group comprises about two percent of all state government retirees.

The State and Local Legal Center (SLLC) has filed an amicus brief in the Ohio Supreme Court urging it to rule that Ohio’s commercial activity tax (CAT) applies to online vendors who sell in the state. The SLLC argues the holding of Quill Corp. v. North Dakota (1992), that states cannot require retailers with no in-state physical presence to collect use tax, should not be extended to a privilege-of-doing-business tax.  

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.