955 P.2d 49 (Ariz.Tax 1998), TX 97-00119, Kerr v. Killian

Docket Nº:TX 97-00119, TX 97-00131, TX 97-00150.
Citation:955 P.2d 49, 191 Ariz. 293
Party Name:Clark J. KERR and Billie Sue Kerr, husband and wife; Susan Moran, Steve Allen and John Udall, individually and as representatives of the class comprised of federal employees who paid Arizona income taxes on federal retirement contributions during one or more of the years 1984 to date, Plaintiffs, v. Mark J. KILLIAN, in his capacity as Director of t
Case Date:March 03, 1998
Court:Tax Court of Arizona
 
FREE EXCERPT

Page 49

955 P.2d 49 (Ariz.Tax 1998)

191 Ariz. 293

Clark J. KERR and Billie Sue Kerr, husband and wife; Susan Moran, Steve Allen and John Udall, individually and as representatives of the class comprised of federal employees who paid Arizona income taxes on federal retirement contributions during one or more of the years 1984 to date, Plaintiffs,

v.

Mark J. KILLIAN, in his capacity as Director of the Arizona Department of Revenue, the Arizona Department of Revenue of the State of Arizona, Defendant.

Nos. TX 97-00119, TX 97-00131, TX 97-00150.

Tax Court of Arizona.

March 3, 1998

Page 50

[191 Ariz. 294] Bonn, Luscher, Padden & Wilkins, Chtd. by Paul Bonn, Randall Wilkins, John Cassidy and D. Michael Hall, Phoenix, and O'Neil, Cannon & Hollman, S.C. by Eugene O. Duffy, Milwaukee, WI, for plaintiffs.

Grant Woods, Attorney General by Patrick Irvine and Scott Keiper, Assistant Attorney General, Phoenix, for defendant.

CATES, Judge.

1. The matter at issue arises from both an appeal from the Arizona Board of Tax Appeals and the Tax Court case of Kerr v. Waddell. The underlying case was brought by four named plaintiffs, former and current employees of various federal government agencies, who undertook to represent all similarly situated federal employees subject to Arizona's state income tax on federal retirement contributions. 1 During the tax years 1985 through 1990, the State of Arizona, as directed by the Arizona Department of Revenue, imposed state income taxes upon the federal employees' mandatory federal retirement contributions. Although Arizona state

Page 51

[191 Ariz. 295] and local employees pay mandatory state retirement contributions, the State did not tax these contributions.

2. The complaint in Kerr alleged that federal employees had been discriminated against with respect to the taxation of their mandatory retirement contributions in violation of the federal constitutional doctrine of intergovernmental tax immunity, codified in 4 U.S.C. § 111, because state and local employees were not taxed similarly. Years of litigation and administrative action, in which the plaintiff class was represented by the two law firms who now seek fees, resulted in a Court of Appeals decision which concluded that Arizona's taxation of federal employees' mandatory retirement contributions was illegal and in violation of federal law. These efforts also resulted in a Board of Tax Appeals decision that the federal employees were entitled to a refund of the illegally collected taxes, which created a fund in the amount of approximately $28 million.

3. In the present action, plaintiffs' attorneys' motion for partial summary...

To continue reading

FREE SIGN UP