AAA-CPA Files Amicus Brief to US Supreme Court
U.S. (August 2019) The American Academy of Attorney-CPAs (“AAA-CPA”) filed an Amicus Curiae Brief in the United States Supreme Court in support of the petitioners in Edelman v. New York State Department of Taxation and Finance (No. 18-1570). The case involves the double taxation of intangible income earned by a taxpayer who is domiciled in one state and a statutory resident of another. New York refuses to provide a credit for taxes paid on intangible income to the taxpayer’s home state, reasoning that this income is fair game to double-tax because such investment income has “no identifiable situs” and therefore is not sourced to any specific state.
The Edelmans reside in Connecticut and paid taxes on their intangible income in Connecticut, but they were later forced to pay taxes to New York on the same intangible income after an audit by the State of New York. A domiciled resident of New York would not face this double taxation of intangible income that a statutory resident faces, thereby creating a scheme that unfairly discriminates against individuals who engage in interstate commerce. The Commerce Clause limits an individual state from enforcing tax schemes that create an undue burden on interstate commerce. New York should be required to fairly apportion the income tax burden of its statutory residents to avoid discrimination against individuals that engage in interstate commerce.
The AAA-CPA found this case important to address because of the broad implications across the nation. New York asserts that this type of law is followed in roughly half of the states that assess taxes, which demonstrates how widespread the impact on interstate commerce is. Our society is changing rapidly with the increased mobility of Americans and the law should reflect that reality. Individual taxpayers should be protected from unconstitutional policies implemented by a given a state. AAA-CPA members, with both accounting and law backgrounds, have unique perspectives on business and taxes. As such, the AAA-CPA has a compelling interest in the issues presented in this case, namely how one state’s income tax and credit structure affects individuals who reside in a different state, and the resulting policy considerations of double-taxation. The case is fully briefed and awaiting a determination as to whether the Court will grant review. A decision is expected in October 2019.