BALTIMORE (AP) — Maryland Attorney General Doug Gansler is considering whether to appeal a tax decision by the state’s highest court.
If the court decision stands, Gansler said it could cost local governments between $40 million and $50 million annually.
“Ultimately, it would be a pretty big fiscal hit for our counties,” said Andrea Mansfield, legislative director for the Maryland Association of Counties.
The piggyback tax, a county income tax that ranges between 1.25 percent and 3.20 percent of the state income tax, is unique to Maryland. Out-of-state employers don’t typically withhold it.
Taxpayers would have to file an appeal to request a refund, but state law allows them to file appeals going back up to three years. About $128 million in piggyback taxes were collected over the past three tax years.
Maryland’s Court of Appeals ruled in January that the state must offer credits to taxpayers whose out-of-state income is subject to local piggyback taxes, but granted a delay. The court rejected Gansler’s request to reconsider last week, and he has 90 days to decide whether to appeal to the U.S. Supreme Court.
“The decision hasn’t been made yet,” Gansler spokesman David Paulson said.
The 2006 lawsuit brought by Brian and Karen Wynne of Howard County argues that the county was double-taxing them. Gansler’s office argues that the piggyback tax is a feature of interstate commerce and the Court of Appeals overreached.
Attorney Christopher T. Handman, who challenged the law on the Wynnes’ behalf, doubts the Supreme Court would agree to hear the appeal.
“We don’t think this case is a good vehicle for the court to review these constitutional law questions,” Handman said. “If they do take it, we have complete confidence that the Court of Appeals wrote a really thorough opinion that evaluated the constitutional law questions and got those questions exactly right.”
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