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Court Challenge to Maryland Tax Refund Interest Rate Change

A resident of Florida has filed a lawsuit challenging the constitutionality of legislative action taken by Maryland which retroactively reduced the interest rate owed on tax refunds. The outcome of the case could prove very pricey to the state government, which initiated the rate reduction as a means to hedge against the decision in another tax-related case which was ultimately heard by the United States Supreme Court.

The Maryland tax lawyers at Rosenberg Martin Greenberg will be following this matter closely in order to provide timely advice and assistance to clients who should receive refunds impacted by the controversial adjustment.

Wynne decision laid foundation for new lawsuit

In May of this year, the Supreme Court ruled in the much-discussed Wynne case that Maryland’s denial of credit to taxpayers for certain taxes paid on income earned out of state was unconstitutional. That decision in and of itself could end up costing local governmental units across the state upwards of $42 million annually in lost revenue. In addition, it created liability for roughly $200 million in tax refunds suddenly owed by the state.

In anticipation of the Supreme Court decision¬†in Wynne, Maryland’s General Assembly took action in 2014 designed to slash the state’s exposure to massive refund obligations should the justices rule in favor of the Wynnes. In that year, the legislature reduced the interest rate on tax refunds dating back to the period relevant to the Wynne complaint from 13 percent down to nearly 3 percent. It was projected that this shift would produce savings of $38 million for Maryland.

Plaintiff files suit, seeks class action certification

In the newly-lodged challenge to Maryland’s change in interest rates on Wynne tax refunds, plaintiff Michael Holzheid, a former resident of the state, argues that the retroactive reduction is in fact unconstitutional. While his own stake in the litigation is comparatively small, refunds stemming from the Wynne decision could total over 55,000 in number, and class action certification is being sought in the lawsuit. Thus far, the Office of the Comptroller has declined comment on the matter, and Maryland’s Attorney General is in the process of reviewing the complaint.

At the time of the Supreme Court’s decision in Wynne, Governor Larry Hogan publicly urged taxpayers to claim all refunds owed to them, stating that he would be happy to see the checks issued.

Skilled assistance with Maryland tax controversies and litigation

If you are among the many thousands of Maryland taxpayers potentially impacted by the Wynne decision and/or the outcome of the Holzheid lawsuit, the tax professionals at Rosenberg Martin Greenberg are prepared to assist you in obtaining the relief to which you are entitled.

Whether you require assistance in claiming a refund pursuant to Wynne or would like more information about the recent constitutional challenge to the General Assembly’s retroactive interest rate reduction, we invite you to contact us today. For a confidential consultation regarding these or any other tax concerns you may have, call 410.727.6600.

Rosenberg Martin Greenberg

25 South Charles Street, 21st Floor MD 21201
Phone: 410-727-6600
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Rosenberg Martin Greenberg

705 Melvin Avenue Annapolis, MD 21401
Phone: 410-727-6600
Map & Directions