State and Local Tax (SALT) attorney Will Thistle was quoted in Bloomberg BNA on the Alabama Department of Revenue’s efforts to limit the credit allowed for income taxes paid to other states, despite recently dropping its appeal of a court ruling that threatens the policy. The Alabama Tax Tribunal found in a September 2016 decision that the revenue department's formula for limiting credits for income taxes paid to other states violated the underlying Alabama statute—ruling against the revenue department and in favor of taxpayers Samuel S. and Linda W. Moody (Ala. Dep't of Revenue v. Moody).
The Moody case isn't the first time an Alabama court has considered and struck down a revenue department regulation to limit credits for taxes paid to other states, said Thistle, who represented the Moodys in the circuit court appeal.
“The decision made by the Alabama Tax Tribunal was based on a plain reading of the tax credit statute and a 1954 Alabama Supreme Court case that rejected the same limitation used in the Department's regulation,” Thistle explained.
Thistle and the tribunal's decision referenced the Alabama Supreme Court decision in State v. Robinson Land & Lumber Co. of Alabama Inc., in which the court rejected the same kind of percentage limit on credits that the department is imposing now.
Taxpayers whose credits were limited since the department's regulation took effect in 2013 are likely due refunds, Thistle added.
“A number of taxpayers have already filed refund claims based on the decision by the Tax Tribunal, and we expect that more will follow suit now that the Department's appeal of the Tax Tribunal's decision has been dismissed,” he said.
The complete article, “Alabama Fights to Keep Limit on Credits for Other States’ Taxes,” appeared in Bloomberg BNA on September 8, 2017. (login required)