More States Could Face Post-Wynne Tax Refund Litigation

Arthur Rosen explained that New York state and New York City income taxes can be challenged after the Supreme Court’s Wynne decision because they don’t provide credits for taxes paid to other states on passive income such as capital gains, interest and dividends. Denying a credit for taxes paid on passive income earned in a person’s home state would seem to contradict the Supreme Court’s holding in Wynne according to Mr. Rosen, who added: “The Wynne decision stands for the proposition that the Commerce Clause’s internal consistency test applies in the context of personal income taxes.”