Is the Dormant Commerce Clause in Jeopardy?

A case pending before the U.S. Supreme Court that has yet to grab the attention of the mainstream media is Maryland State Comptroller of Treasury v. Wynne. It’s a state tax case that is interesting because it could significantly change the scope of the dormant commerce clause. The dormant commerce clause is a principle inferred from the commerce clause, which restricts states from passing legislation that improperly discriminates against interstate commerce.

The facts in Wynne are not particularly complex. Brian Wynne and his wife are residents of Harris County, Maryland. They owned 2.4 percent of Maxim Healthcare Services Inc., an S corporation that was doing business in 39 states. In 2006, a substantial amount of income was passed through Maxim to the Wynnes. The Wynnes paid tax to most of the states in which Maxim did business.

As residents of Maryland, the Wynnes’ income was subject to Maryland income tax, which includes a state and county component. The county income tax is collected and administered by the state and is computed on the same tax base as the state income tax. For 2006, the Wynnes reported $2.7 million of income and $126,363 of Maryland state income tax. The state income tax rate was 4.75 percent. The Wynnes were also liable for county income tax at a rate of 3.2 percent. They claimed a credit of $84,550 for taxes paid to other states. The Maryland comptroller permitted the Wynnes to claim a credit against their state income taxes, but not against their county taxes. The Wynnes appealed.

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State and Local Sales Tax Rates Midyear 2014

Key Findings
• 45 states collect statewide sales taxes.
• 38 states collect local sales taxes.
• The five states with the highest average combined state-local sales tax rates are Tennessee (9.45 percent), Arkansas (9.24 percent), Louisiana (8.91 percent), Washington (8.88 percent), and Alabama (8.85 percent).
• Sales taxes rates differ by state, but sales tax bases also impact how much revenue is collected from a tax and how the tax effects the economy.
• The District of Columbia successfully expanded its sales tax to include some services, which allowed reductions in its individual and corporate income tax rates.
• Differences in sales tax rates cause consumers to shop across borders or buy products online.

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More than Just Day Counts: Changing Your Domicile Means Changing Your Life, Not Just Your Physical Location

More than Just Day Counts: Changing Your Domicile Means Changing Your Life, Not Just Your Physical Location
The income tax savings realized by moving to a state that does not impose an individual income tax can be substantial. But these tax savings often don’t come easy.

More than Just Day Counts: Changing Your Domicile Means Changing Your Life, Not Just Your Physical Location

Sales and Use Tax ‘Gotchas’: A Taxpayer’s Guide to Navigating

I. Introduction
According to, a “Gotcha” is an unexpected problem or usually unpleasant surprise and fully defined as an unexpected usually disconcerting challenge, revelation or catch. 1 A “Gotcha” is also a colloquial expression meaning ‘I’ve got you.’ In sales tax circles, a “Gotcha” is an unexpected outcome usually from an audit that seems illogical and counterintuitive. And when compared to the typical treatment of similar transactions by other states or, to a lesser extent, other tax types, is something you don’t see coming.


Gotchas are exceptions to the general rule. They result from activities with a high probability of error caused by the many variables that must be considered to comply with the law. Gotchas are difficult to automate and difficult to incorporate into everyday compliance activities. They touch all areas of the organization from how companies sell to how companies pay sales and use tax and everything in between.

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