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The Impact of Wynne

Since its release just a few weeks ago, the United States Supreme Court’s decision in Comptroller of the Treasury of Maryland v. Wynne has provoked considerable discussion among tax practitioners and a similar uncertainty in the business community. Wynne established that Maryland’s mechanism for providing taxpayers a less-than-full credit against income taxes paid to other jurisdictions ran afoul of the Commerce Clause and was therefore unconstitutional. 

In the law firm context, a partner has the best chance of reaping Wynne’s benefits if he or she is a Maryland resident paying income tax on a firm’s pass-through income earned outside of Maryland. A claim for refund via amended or supplemental return (2014) must be filed within the statute of limitations which is the later of 3 years from the tax return filing or 2 years from the payment of the tax. The Maryland Comptroller’s website provides specific instructions.  

Although the decision is based on Maryland’s particular system, it does raise the issue of who else may benefit and what actions those taxpayers should take to preserve their refund claims. Beyond Maryland, the prospect for success is less certain as our earlier article on the case points out, but certainly worth considering for Philadelphia, Pennsylvania residents with significant pass-through income earned outside the resident state.

If you wish to discuss your specific situation, please contact your tax advisor.

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