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Noonan’s Notes Blog is written by a team of Hodgson Russ tax attorneys led by the blog’s namesake, Tim Noonan. Noonan’s Notes Blog regularly provides analysis of and commentary on developments in the world of New York and multistate tax law. Noonan's Notes Blog is a winner of CreditDonkey's Best Tax Blogs Award 2017.


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Decision Issued in Chamberlain v. NYS, the First “Wynne Challenge” to New York’s Statutory Residency Scheme

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Last year, we filed a lawsuit on behalf of Richard Chamberlain and Martha Crum against the New York State Tax Department, alleging that New York’s statutory residency scheme improperly subjected them to double taxation in violation of the Federal Commerce Clause.

Our suit was primarily based on the constitutional analysis employed by the U.S. Supreme Court in the 2015 Wynne v. Maryland case, where the Court struck down a portion of Maryland’s resident credit scheme on constitutional grounds. We alleged, in light of the analysis used by the Supreme Court in the Wynne decision, that New York’s scheme was unconstitutional. As part of the submission to the court in support of our motion for summary judgment, we included an expert affidavit from Professor Ruth Mason, the author of one of the influential amicus curiae briefs in the Wynne case, and one of the nation’s foremost authorities on the dormant Commerce Clause and tax discrimination. More details on Wynne and these constitutional arguments can be found in this article.

Earlier this month, an Albany County trial court Judge held that New York’s scheme was constitutional, despite the U.S. Supreme Court ruling, and granted the Tax Department’s motion for summary judgment on the issue. Click here to read the case. In a two-paragraph analysis, Judge McDonough of the Albany County Supreme Court held that the Wynne case did not alter the constitutional analysis that New York courts had used in pre-Wynne decisions, and also that the tax passed the “internal consistency test” used by the Supreme Court in the Wynne decision.

As should be expected with a case of this magnitude, the taxpayers will soon appeal Judge McDonough’s ruling to New York’s Court of Appeals, the highest judicial court in New York. Interestingly, this will be the second time in the last three years that New York’s high court has been presented with an issue concerning New York’s tax on “statutory residents.” In 2014, we handled the Gaied case before the Court of Appeals, where the Court, in unanimously reversing a lower court ruling, held that the Tax Department’s interpretation of the “permanent place of abode” requirement of the statutory residency test was irrational and inconsistent with the language and intent of the statute.

We expect a final decision by New York’s Court of Appeals sometime within the next 12 months.

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