Groff v. State of Md.

• Decision Date: 02 July 1986
• Docket Number: Civ. No. K-84-3613.
• Citation: 639 F. Supp. 568
• Parties: William R. GROFF, v. STATE OF MARYLAND Comptroller of the Treasury.
• Court: U.S. District Court — District of Maryland

639 F. Supp. 568

William R. GROFF, v. STATE OF MARYLAND Comptroller of the Treasury.

Civ. No. K-84-3613.

United States District Court, D. Maryland.

July 2, 1986.

William R. Groff, pro se.

Stephen H. Sachs, Atty. Gen. and John K. Barry and Gerald Langbaum, Asst. Attys. Gen., Annapolis, Md., for defendant.

FRANK A. KAUFMAN, Senior District Judge.

This case involves a dispute between a taxpayer¹ and the Income Tax Division of the Comptroller of the Treasury of the State of Maryland in connection with a Maryland income tax assessment for the year 1981. The underlying dispute involved is whether or not plaintiff was domiciled in the State of Maryland in 1981 and thus liable for Maryland state income tax as a "resident." See Md.Ann.Code art. 81, §§ 279(i) and 288(a) (1980). Plaintiff contests the assessment itself and complains of various due process violations arising out of the assessment, specifically claiming that he has not been afforded a prompt hearing in the Maryland courts and that he has been unconstitutionally charged with penalties and interest. The complaint seeks substantive relief protecting plaintiff against any assessment based on domicile and declaratory and/or injunctive relief staying collection of the assessment. See Complaint at 2.

Defendant seeks dismissal² of plaintiff's complaint pursuant to Federal Civil Rule 12(b)(1), contending that this federal district court lacks subject matter jurisdiction because of the provisions of the Tax Injunction Act of 1937 28 U.S.C. § 1341 (1982). That Act provides: "The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State." For the reasons stated in the within opinion, this Court concludes that plaintiff has been afforded a "plain, speedy and efficient remedy" in the Maryland state courts and that, accordingly, this Court does not have subject matter jurisdiction.

Plaintiff asserts that during 1981 he was a resident of the State of Illinois, that he earned his entire 1981 income in Illinois, and that he paid taxes in that State on his earnings.³ Plaintiff claims that he owes no Maryland income tax for 1981. In previous and subsequent years plaintiff lived and worked in Maryland and has included his earnings as taxable income. There are no disputes concerning years other than 1981.

Plaintiff claims that (1) he was not a resident of Maryland in 1981 and therefore owes no state tax for that year; (2) provisions of the Maryland Code dealing with domicile, residency, and interest and penalties are unconstitutional, see Md.Ann. Code art. 81, §§ 279(i) and 288(a) (1980); art. 19 § 19 (1981);⁴ (3) refunds otherwise due for subsequent tax years have been delayed pending resolution of this case in violation of plaintiff's right not to be deprived of property without due process of law; (4) penalties and interest have been assessed against plaintiff, also in violation of plaintiff's due process rights; and (5) plaintiff has been denied opportunities to be heard in the Maryland state courts.⁵ Plaintiff also challenges the constitutionality of the Maryland income tax system on the ground that his 1981 Maryland tax assessment was 2.44 times higher than his Illinois state income tax for that same year. Plaintiff appears to be requesting that this Court enjoin further collection in connection with the 1981 assessment; order the payment to him of refunds to which he is entitled; and declare certain provisions of the Maryland Tax Code unconstitutional on their face and as applied to plaintiff herein.

The following chronology provides a brief history of the events leading up to and postdating the institution of the within suit. On or about April 13, 1982, plaintiff and his wife filed a combined separate return in Maryland for the 1981 tax year.⁶ That return listed income for plaintiff totalling $37,005, but computed the tax owed as zero. Plaintiff's wife, having lived and worked in Maryland during 1981, included all of her income as taxable income on their tax return. The return did not claim nonresident status or note a change in domicile, nor did it seek credit for taxes paid to the State of Illinois. See Affidavit of Owen J. Silk ¶ 3(a) (hereafter "Silk Aff."). Thereafter, on May 25, 1982, the Maryland Income Tax Division sent a Notice of Revised Income Tax Computation to Mr. and Mrs. Groff calculating a tax amount due from the figures shown on the Groffs' return. See Silk Aff. ¶ 3(b) and Silk Exh. B. The notice assessed against plaintiff unpaid Maryland income tax in the amount of $2,119.47, including penalties and interest. See Silk Aff. ¶ 3(b) and Silk Exh. B. The assessment was based on the Income Tax Division's conclusion that plaintiff was still domiciled in Maryland during 1981 despite his Illinois residence. Plaintiff responded to that notice with a letter dated June 21, 1982, claiming that he did not owe any Maryland tax for 1981 because he had paid Illinois tax that year and had not worked in Maryland in 1981. See Silk Aff. ¶ 3(c) and Silk Exh. C.

On or about July 8, 1982, another Notice of Income Tax Assessment was sent to the Groffs, adding additional penalties and interest to the amount of the unpaid assessment.⁷ See Silk Exh. F. Defendant states that its computers are programmed automatically to send such notices approximately 45 days after the Notice of Revised Income Tax Computation is sent, unless specifically halted by taxpayer inquiry or protest. The notice stated that to contest the assessment, a taxpayer may file an appeal to the Maryland Tax Court within 30 days. See Silk Aff. ¶ 3(e). In addition to the computerized notice, on July 13, 1982, an employee of the Income Tax Division wrote to the Groffs, presumably responding to plaintiff's letter of June 21, 1982, requesting their 1981 Illinois tax return, see Silk Aff. ¶ 3(d) and Silk Exh. D, which plaintiff subsequently furnished. See Silk Aff. ¶ 3(d) and Silk Exh. E. Plaintiff returned the July 8, 1982 notice to the Income Tax Division on or about July 14, 1982, noting on the reverse side thereof that he believed that he owed no Maryland tax for 1981 because he lived and worked in Illinois during that year. While no formal appeal was filed by plaintiff at that time, see Silk Aff. ¶ 3(f), plaintiff claims herein that defendant's failure to respond to his July 14, 1982 comments "allowed the 30 day period during which taxpayers ... must respond, to expire." Complaint at 4.

Thereafter, on September 1, 1982, a collection notice was sent to plaintiff. See Silk Exh. G. On September 9, 1982, plaintiff responded, apparently pursuant to a telephone conversation, by enclosing a copy of his 1981 Illinois state tax return. See Silk Aff. ¶ 3(g) and Silk Exh. H. On or about September 22, 1982, an employee of the Income Tax Division wrote to the Groffs, enclosing a recalculation of the tax due, giving credit for Illinois taxes paid, and noting that it was "the belief of the Division that based upon facts known Mr. Groff was domiciled in the State of Maryland for the year 1981."⁸ A domicile questionnaire was also enclosed. See Silk Aff. ¶ 3(h) and Silk Exh. I. These audit changes produced a new right to appeal. On October 1, 1982, plaintiff returned the September 22, 1982 letter, and a completed domicile questionnaire, noting on the letter: "The enclosed form should initiate my appeal." See Silk Aff. ¶ 3(i) and Silk Exh. I.

Defendant proffers that the Income Tax Division file reflects no further action by either party until January 10, 1984, see Silk Aff. ¶ 3(j), at which time plaintiff wrote to the Division expressing concern that he might have lost his appeal rights⁹ and requesting a new assessment so that he could then pursue an appeal to the Maryland Tax Court. See Silk Aff. ¶ 3(k) and Silk Exh. I. Seven months later, on August 17, 1984, the Income Tax Division recalculated the tax due, disallowing other unrelated deductions taken by the Groffs, and crediting the Groffs for refunds held as an offset for the 1981 unpaid taxes. See Silk Aff. ¶ 3(l) and Silk Exh. K. It is not clear from the record in this case whether plaintiff received notification of the recalculation at the time it was prepared.

On September 26, 1984, plaintiff filed the within lawsuit in this federal district court, claiming, inter alia, that he had been denied access to the Maryland Tax Court since August 7, 1982, when the 30-day appeal period on the July 8, 1982 Notice of Income Tax Assessment allegedly expired. See Motion by Plaintiff and Memorandum in Support of Denial of Motion to Dismiss, filed January 22, 1984, at p. 1 of Attachment A. Thereafter, on or about October 3, 1984, plaintiff was sent a Notice of Income Tax Assessment based on the August 17, 1984 recalculation. The notice, as did the previous notice, advised plaintiff that the assessment could be contested by filing an appeal to the Maryland Tax Court within 30 days of the date of the notice. See Silk Aff. ¶ 3(m) and Silk Exh. L. In response to a letter apparently sent by plaintiff to the Maryland Tax Court, which was received on October 10, 1984, plaintiff was advised that to perfect a timely appeal he should file the Petition forms given to him by November 9, 1984. See October 10, 1984 letter from Robert L. Zouck to plaintiff and October 10, 1984 Order of the Maryland Tax Court. On October 24, 1984, plaintiff filed a Petition of Appeal. Receipt thereof was acknowledged by letter dated October 24, 1984. On January 16, 1985, a hearing date was set before the Maryland Tax Court for May 23, 1985. By Order dated May 31, 1985, the Maryland Tax Court affirmed the assessment. The record in the within case gives no indication that plaintiff has sought review of that decision in the courts of Maryland. See October 7, 1985 letter from Assistant Attorney General John K. Barry to this Court, ¶ 2.

SUBJECT MATTER JURISDICTION

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