Dawson v. Steager

Summarized by:

  • Court: U.S. Supreme Court Certiorari Granted
  • Area(s) of Law: Tax Law
  • Date Filed: June 25, 2018
  • Case #: 16-0441
  • Judge(s)/Court Below: 2017 WL 2172006 (W. Va. May 17, 2017)
  • Full Text Opinion

Whether Supreme Court precedent and the doctrine of intergovernmental tax immunity bar states from exempting groups of state retirees from state income tax while discriminating against similarly situated federal retirees based on the source of their retirement income.

Petitioners applied for a tax exemption for a portion of their Federal Employee Retirement System (FERS) income under W. Va. Code § 11-21-12(c)(6), and were denied full exemption by the West Virginia Tax Department because Petitioners were federal employees. Petitioners appealed to the Office of Tax Appeals (OTA) and were again denied the full exemption. Petitioners sought review by the circuit court, which reversed the decision of the OTA, holding that the denial violated 4 U.S.C. § 111 and the doctrine of intergovernmental tax immunity. The circuit court also cited the decision of Davis v. Michigan Department of Treasury, 489 U.S. 803 (1989) which held that an income tax exemption for state beneficiaries which excluded beneficiaries of the federal government violated the intergovernmental tax immunity doctrine. Further, the circuit court declined to apply Brown v. Mierke, 443 S.E.2d 462 (W. Va. 1994) (holding that the exemption applied only to “a narrow class of state employees”) in the case. The Supreme Court of Appeals of West Virginia reversed the circuit court, holding that the denial of a full exemption did not violate the intergovernmental tax immunity doctrine. Petitioner argues that the decision in Davis controls, because the exemption discriminates against similarly situated federal retirees and favors state retirees.  

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