Maryland taxpayers that have received refunds or filed refund claims because of the decision in Comptroller v. Wynne can preserve their right to receive the full 13% interest taxpayers are typically paid on refunds. Last year, Maryland enacted legislation stating taxpayers receiving Wynne-related refund claims would only be paid the prime interest rate rounded to the nearest whole number, instead of the general rate of 13%. Thus, the current interest rate being paid on Wynne refund claims is only 3%; the legislation is expected to be challenged in court on constitutional grounds. A number of taxpayers seeking the full 13% interest rate have already filed appeals with the Comptroller.
In anticipation of litigation on this issue, the Comptroller has established a procedure whereby taxpayers can challenge the interest they received on their Wynne refunds. A summary of the procedure is below.
- Taxpayer receives refund;
- Comptroller Letter – the Comptroller will issue a letter to all taxpayers that receive a Wynne-related refund. The letter will instruct the taxpayer that he or she has 90 days from receipt of the letter to file a request for adjustment to the refund for the additional interest. The Comptroller will begin sending the letters to taxpayers that have already received refunds this month. Taxpayers that have yet to receive their refund(s) will receive the letter either with their refund or shortly thereafter.
- Request for Adjustment – taxpayers will be required to submit the request for adjustment, which will include a computation of the additional amount of interest being requested. Even though the Comptroller will be issuing one letter per tax year that a taxpayer received a Wynne-related refund, a taxpayer that received multiple refund checks (i.e., refunds for multiple years) can submit a request for an adjustment that includes more than one tax year. However, taxpayers will still need to be mindful of the 90-day deadline associated with each refund received.
- Comptroller Denial – the Comptroller will deny the requests for adjustment.
- Protest – taxpayer will have 30 days to protest the denial with the Hearings & Appeal section.
- Protest Held in Abeyance – all protests will be held in abeyance pending the outcome of litigation. Depending on the level of appeal the litigation reaches, protests filed by taxpayers could be held in abeyance for multiple years.
The Comptroller has indicated that it is currently processing protective refund claims filed in 2014. All protective claims (i.e., claim filed before the Wynne decision was issued in May of 2015) are expected to be processed by the end of the year. This means that most of the refund claims that have been submitted since the Wynne decision was issued will likely not be processed until 2016.
If you have questions related to a Wynne refund claim or another Maryland tax issue, please contact your Aronson tax advisor or Michael L. Colavito, Jr.at 301-231-6200.