Title: Wynne v. Comptroller of Maryland

State: maryland

Issuer: Maryland Supreme Court

Document:

Brian Wynne and Karen Wynne v. Comptroller of Maryland 
No.  12, September Term 2019 
 
 
Taxation – Tax Refunds – State Budget Legislation – Dormant Commerce Clause.  A 
previous Court of Appeals decision held that the Maryland statute providing a credit against 
the Maryland income tax liability of a Maryland resident based on income taxes paid to 
other states on income earned in those states violated the dormant Commerce Clause of the 
federal Constitution.  That decision held that the statute could be rendered constitutional 
by amending the credit provision to apply it more broadly, among other ways.  That 
decision was appealed to the Supreme Court.  While the appeal was pending, the General 
Assembly, in anticipation that the Supreme Court would affirm the decision, enacted State 
budget reconciliation and finance acts that broadened the tax credit, authorized refunds 
computed on a retroactive application of the credit, and specified that the interest rate paid 
on those refunds would be pegged to the prime rate of interest charged by banks (instead 
of the minimum 13% interest rate that the tax code already provided for certain refunds).  
After the Supreme Court affirmed the Court of Appeals decision, payment of refunds and 
interest in accordance with the remedial legislation enacted by the General Assembly did 
not violate the dormant Commerce Clause. 
 
 
 
IN THE COURT OF APPEALS 
OF MARYLAND 
 
No. 12 
 
September Term, 2019 
 
 
 
BRIAN WYNNE AND KAREN WYNNE 
 
V. 
 
COMPTROLLER OF MARYLAND 
 
_____________________________________ 
 
 
 
 
Barbera, C.J., 
 
 
 
McDonald 
 
 
 
Watts 
 
 
 
Hotten 
 
 
 
Getty 
 
 
 
Booth, 
 
 
 
Greene, Jr., Clayton  
 
 
 
   (Senior Judge, Specially  
 
 
 
    Assigned) 
 
 
 
 
 
JJ. 
______________________________________ 
 
 
Opinion by McDonald, J. 
 
______________________________________ 
 
Filed: June 5, 2020  
Circuit Court for Anne Arundel County  
Case No. C-02-CV-18-001788 
Argument:  October 2, 2019 
 
 
 
This appeal is the latest chapter in litigation between Appellants Brian and Karen 
Wynne and Appellee State Comptroller.  The litigation began when the Wynnes challenged 
an aspect of the Maryland income tax law – in particular, the credit allowed by State law 
against a Maryland resident’s income tax liability based on taxes the resident paid to other 
states on income derived from those states.  The Wynnes argued that the Maryland tax 
scheme discriminated against interstate commerce and thus violated what is known as the 
dormant Commerce Clause of the federal Constitution.  Both this Court and the Supreme 
Court, in closely divided decisions, agreed with that argument.   
In response, the General Assembly amended the Maryland tax code to comply with 
the court decisions, authorized the Comptroller to pay refunds to those taxpayers affected 
by the provision held to be invalid, and provided for the State to pay interest on those 
refunds at a rate pegged to the prime rate used by banks, but less than the 13% interest rate 
paid on certain other refunds.   
After the Comptroller issued a refund to the Wynnes in compliance with the 
legislation passed by the General Assembly, the Wynnes appealed, seeking the higher rate 
of interest and arguing, among other things, that the interest rate set by the General 
Assembly violated the dormant Commerce Clause.  After an administrative ruling in the 
Wynnes’ favor, the Circuit Court for Anne Arundel County held that the General 
Assembly’s action did not violate the dormant Commerce Clause.  We agree.   
2 
 
I 
Legal Landscape 
 
This case concerns the rate of interest paid on certain income tax refunds.  The 
refunds were authorized, and the interest rate was set, in budget-related bills passed by the 
General Assembly.  The dispute in this case concerns how the dormant Commerce Clause 
of the federal Constitution may constrain the choices made by the General Assembly when 
it authorized those refunds and established an interest rate for the refunds.  To set the table, 
we begin with some basic principles. 
A. 
Tax Refunds and Interest 
Under the common law, a payment voluntarily made to the State, even if made in 
error, could not be recovered unless a statute specifically authorized a refund – a principle 
known as the “voluntary payment doctrine.”  See Brutus 630, LLC v. Town of Bel Air, 448 
Md. 355, 359-63 (2016); see also White v. Prince George’s Co., 282 Md. 641, 651-52 
(1978).  To mitigate the perceived harshness of this doctrine, the General Assembly has 
enacted various statutes authorizing the payment of refunds for mistaken, erroneous, or 
illegal payments made to the State.  Id.   
Among the statutes allowing for refunds are the laws relating to tax refunds.1  A 
taxpayer who erroneously pays, or is wrongfully assessed, more income tax than is due 
may make a claim for a refund of the amount of the overpayment.  Maryland Code, Tax-
                                              
1 In some circumstances, due process considerations may require a state to provide 
a tax refund or take other action to rectify a constitutional violation.  See Part IV.B.1 of 
this opinion. 
3 
 
General Article (“TG”), §13-901(a), (c).  The claim must be filed within the period allowed 
by statute.  TG §13-1104.  In certain circumstances specified by statute, the refund is to be 
paid with interest.  See Comptroller v. Fairchild Indus., Inc., 303 Md. 280, 284 (1985) 
(payment of interest on tax refund is a “matter of grace” that must be authorized by 
legislative enactment). 
The State pays interest with respect to a claim for refund of an overpayment of 
income tax only in limited circumstances.  Indeed, it seems safe to say that the vast majority 
of income tax refunds in Maryland are paid without interest.2   For example, no interest is 
paid when money is withheld from a worker’s pay for income tax, the withholdings exceed 
the worker’s tax liability, and a refund is paid after a return is filed.  See TG §13-
603(b)(2)(ii) (no interest payable for excess withholding).  With respect to other refunds of 
income tax payments, no interest is to be paid if the overpayment is a result of an error or 
mistake of the taxpayer that is not attributable to the State.  TG §13-603(b)(2)(i).  Even 
when interest is payable on a tax refund, it begins to accrue only at 45 days after a claim is 
made for the refund.  TG §13-603(a).  In other words, no interest is paid if the refund is 
made within 45 days of the claim. 
For those circumstances in which the General Assembly has authorized the payment 
of interest on tax refunds, it has periodically adjusted the rate of interest.  When the State 
                                              
2 The federal government similarly does not pay interest on tax refunds to 
individuals, unless the IRS takes more than the administratively prescribed time (typically 
45 days) to generate the refund after a tax return is filed.  See IRS – Interest for Individuals, 
available at https://perma.cc/8265-HWXH. 
4 
 
income tax law was first enacted in 1937, that law provided for payment of 6% interest 
when the refund related to an overpayment that “result[ed] from an error not due to the 
fault of the taxpayer.”  Maryland Code, Article 81, §242 (1937).3  Over the years as 
inflation has waxed and waned, the General Assembly has, at various times, increased the 
rate of interest, reduced it, or pegged it to a particular benchmark.  See, e.g., Chapter 139, 
Laws of Maryland 1975 (increasing rate of interest to 9%); Chapter 615, Laws of Maryland 
1982 (rate of interest to be set in relation to “average investment yield on State money”); 
Chapter 322, Laws of Maryland 2016 (gradually reducing minimum rate of interest).   
Pertinent to this case, in 2006, the General Assembly amended the statute to increase 
the interest rate on income tax refunds to a minimum of 13%.  Chapter 587, Laws of 
Maryland 2006, codified at TG §13-604(b).(2006).4  A decade later, the General Assembly 
amended that statute to gradually reduce the minimum rate of interest on tax refunds.  
Chapter 322, Laws of Maryland 2016. 
                                              
3 See Chapter 11, §8, Special Session, Laws of Maryland 1937 (enacting income tax 
law).  
4 The 2006 legislation set the rate of interest at “the greater of” 13% or three 
percentage points above the prime rate of interest charged by banks.  Another aspect of that 
legislation was to equate the interest rate paid on those refunds for which interest was 
authorized with the interest rate to be paid on moneys owed to the State.  Previously, in 
Maryland, a higher interest rate was charged on moneys owed to the State than paid on 
refunds, as is the case under federal tax law and the law of a number of other states.  See, 
e.g., Shop Talk:  Are State Tax Interest Rates a Secret Weapon for Eliminating State 
Deficits, 119 J. Tax’n 144 (2013).  The policy underlying that difference is presumably to 
incentivize the filing of timely and accurate tax returns. 
5 
 
As we shall see, the General Assembly provided specific direction as to the payment 
of refunds in situations such as that of the Wynnes, as well as the rate of interest to be paid 
on any such refunds.  As we shall also see, that direction came in annual budget-related 
bills. 
B. 
Balancing the State Budget with the “BRFA” 
Income tax proceeds and income tax refunds are part of the revenues and 
expenditures, respectively, that comprise the State budget.  Like many state constitutions5 
– and in contrast to the federal Constitution – the Maryland Constitution requires that the 
State budget be balanced.  This requirement applies both when the budget is proposed by 
the Governor, and when it is enacted by the General Assembly.  Maryland Constitution, 
Article III, §52(5a).   
Under the executive budget system set forth in the State Constitution, the Governor 
submits to the General Assembly a proposed State budget in a Budget Bill that is to contain 
“a complete plan of proposed expenditures and estimated revenues” for the next fiscal year.  
Maryland Constitution, Article III, §52(3).  With limited exceptions, the General Assembly 
may only reduce items of expenditure.  Id., §52(6).  Upon its enactment by the General 
Assembly, the Budget Bill becomes law without further action by the Governor.6  Id.; see 
                                              
5 See Ronald K. Snell, State Constitutional and Statutory Requirements for Balanced 
Budgets, available at https://perma.cc/6KSE-CQ3P. 
6 See, e.g., Chapter 19, Laws of Maryland 2020. 
6 
 
generally Richard E. Israel, A History of the Adoption of the Maryland Executive Budget 
Amendment (March 5, 2004), available at https://perma.cc/SP26-HJDM. 
To help carry out the constitutional directive to balance the budget, in recent 
decades, the Governor has frequently proposed, and the General Assembly has enacted, 
additional legislation specifically designed to complement the estimates of revenues and 
expenditures in the Budget Bill to ensure that the budget is balanced.  Such a bill often 
carries a title such as the “Budget Reconciliation and Financing Act” – or “BRFA” for 
short.7  Such a bill combines a variety of measures for limiting expenditures that State law 
would otherwise require – e.g., altering statutory spending formulas or spending mandates 
– or increasing revenues beyond what would otherwise be generated by existing law – e.g., 
increasing taxes or fees or transferring funds from special funds to the general fund on a 
one-time basis – thereby eliminating a gap that might otherwise exist between expenditures 
and revenues under the Budget Bill alone.8  A BRFA is enacted after the enactment of the 
Budget Bill to which it pertains.9 
                                              
7 See, e.g., Budget Reconciliation and Financing Act of 2020, Chapter 538, Laws of 
Maryland 2020.  A BRFA is typically introduced as an “administration bill” at the request 
of the Governor.  See Blackstone v. Sharma, 461 Md. 87, 126 n.19 (2018). 
8 Typically, the Governor proposes, and the General Assembly enacts, a third 
budget-related bill known as the Capital Budget Bill, which concerns longer-term capital 
projects and is regarded as a Supplementary Appropriation Bill governed by Article III, 
§52(8) of the State Constitution.  See, e.g., Chapter 537, Laws of Maryland 2020.   
9 Of the three budget-related bills, only the Budget Bill itself is mandated by the 
State Constitution and not subject to a gubernatorial veto.  Maryland Constitution, Article 
III, §52(5) (“The Governor shall deliver … the Budget and a bill for all the proposed 
appropriations [to the General Assembly].”).  
7 
 
The Maryland Constitution requires that any bill “embrace but one subject.”  
Maryland Constitution, Article III, §29.  In theory, the single subject of a BRFA is the 
balancing of the State budget.  See, e.g., Bill Review Letter for Senate Bill 192 (2020 
BRFA) (April 28, 2020) at p. 2.   
C. 
The Dormant Commerce Clause 
State fiscal laws are constrained in certain respects by the federal Constitution.  The 
Constitution expressly authorizes Congress “[t]o regulate Commerce . . . among the several 
States” – a provision referred to as “the Commerce Clause.”  Article I, §8, cl. 3.  The 
Supreme Court has long recognized that the Commerce Clause necessarily contains a 
“negative implication” – i.e., that states may not discriminate against interstate commerce 
without congressional approval.  This negative implication has come to be known as the 
“dormant Commerce Clause.”10  This interpretation of the Commerce Clause strikes at 
“one of the chief evils that led to the adoption of the Constitution” – economic 
protectionism by states that would burden interstate commerce.  See Comptroller v. Wynne, 
135 S.Ct. 1787, 1794 (2015) (citing The Federalist Nos. 7, 11 (Alexander Hamilton), and 
42 (James Madison)). 
                                              
10 The term “dormant” generally means “inactive” or “asleep.”  Given the frequency 
with which this constitutional doctrine is invoked to challenge state legislation, it is, as 
some have characterized it, “anything but dormant.”  Direct Marketing Assn. v. Brohl, 814 
F.3d, 1129, 1148 (10th Cir. 2016) (Gorsuch, J., concurring).  The doctrine is also referred 
to, perhaps more accurately, as the “negative Commerce Clause.”  See, e.g., South Dakota 
v. Wayfair, Inc., 138 S.Ct. 2080, 2100 (2018) (Thomas, J., concurring); Frey v. 
Comptroller, 422 Md. 111, 142 (2011). 
8 
 
Justice Robert Jackson once noted that the Commerce Clause “is one of the most 
prolific sources of national power and an equally prolific source of conflict with legislation 
of the state [as] it does not say what the states may or may not do in the absence of 
congressional action, nor how to draw the line between what is and what is not commerce 
among the states.”  H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 534-35 (1949).  It 
has thus fallen to the Supreme Court to give meaning to the dormant Commerce Clause as 
one of the “great silences of the Constitution.”  Id.  However, not all justices have warmed 
to the task.  See Comptroller v. Wynne, 135 S.Ct. at 1808 (Scalia, J., dissenting) 
(characterizing dormant Commerce Clause as a “judicial fraud”). 
II 
The Prequel 
A. 
The Wynne’s 2006 Pass-Through Income 
During the period relevant to this case, Brian and Karen Wynne were a married 
couple who resided in Howard County, Maryland.11  During 2006, they received significant 
income as a result of Mr. Wynne’s position as president of Maxim Healthcare Services, 
Inc. (“Maxim”), a nationwide medical staffing company, and his partial ownership of 
Maxim.  Maxim was organized as a Maryland corporation that elected to be treated as a 
Subchapter S corporation under the Internal Revenue Code.  As such, Maxim passed its 
                                              
11 Many of the facts recited in this part of the opinion are derived from a stipulation 
of facts dated September 2, 2016, filed by the parties in the Maryland Tax Court and 
included in the record of this case. 
9 
 
income through to its owners, such as Mr. Wynne, without that income being taxed at the 
corporate level. 12   
With respect to tax year 2006, much of Maxim’s income was generated by 
operations outside Maryland and was also taxed by the states in which it was earned.  
Because they derived income from Maxim’s operations in many states, the Wynnes filed 
state income tax returns for the 2006 tax year and paid income taxes on pass-through 
income in 39 other states in which Maxim operated.  As Maryland residents, the Wynnes 
also reported that income on their 2006 Maryland income tax return.  
B. 
Tax Credit for Out-of-State Income Taxes as of 2006 
With respect to tax year 2006, the Maryland income tax law included two features 
that led the Wynnes to challenge the constitutionality of the tax code.  First, as remains true 
today, the income tax was comprised of two components – a “state income tax” and a 
“county income tax,” sometimes called the “piggyback tax,” that varies according to the 
county of the taxpayer’s residence.13  TG §10-101 et seq.  The State Comptroller collects 
the entire income tax and remits the county portion to the appropriate county.   
                                              
12 Under the Internal Revenue Code, a shareholder in a Subchapter S corporation 
reports the share of income and losses on the shareholder’s personal federal income tax 
return and, in this way, the income is characterized as having “passed through” to its 
owners “as if such item were realized directly from the source from which realized by the 
corporation.”  26 U.S.C. §1366(b).  Maryland has adopted similar tax treatment for 
Subchapter S corporation income reported by shareholders on their personal state income 
tax returns.  TG §10-104(6). 
13 Nonresidents who earn income in Maryland pay a “special nonresident tax” in 
lieu of the county portion of the income tax, which is set at a rate equal to the lowest county 
tax rate.  TG §10-106.1. 
10 
 
Second, as in many other jurisdictions, Maryland law provides a tax credit for 
income taxes paid on the same income in other jurisdictions.  As of 2006, that tax credit 
was applied against the state portion of the Maryland income tax, but it was not applied 
against the county portion of the Maryland income tax.  TG §10-703(a) (2015). 
C. 
The Wynnes Challenge the Maryland Tax Credit Scheme 
On their 2006 Maryland income tax return, the Wynnes reported their “pass-
through” income from Maxim and claimed a tax credit for income taxes paid in other states 
on both the state and county portions of their Maryland income tax return.  Consistent with 
the State income tax law at that time, the Comptroller disallowed the credit claimed as to 
the county income tax and issued a tax assessment against the Wynnes.  The Wynnes 
sought review in the Maryland Tax Court.  With a minor exception, the Tax Court upheld 
the Comptroller’s decision.  While the matter was on appeal, the Wynnes paid the 
assessment. 
The Wynnes then pursued judicial review in the Circuit Court for Howard County.  
The Circuit Court held that the absence of a credit with respect to the county portion of the 
Maryland income tax meant that the Maryland tax credit scheme violated the dormant 
Commerce Clause.  In a divided decision, this Court agreed with the Circuit Court, as did 
the United States Supreme Court in a decision involving an unusual 5-4 split.14  
Comptroller v. Wynne, 431 Md. 147 (2013), aff’d, 575 U.S. 542 (2015). 
                                              
14 Justice Alito wrote the majority opinion, which was joined by the Chief Justice, 
Justice Kennedy, Justice Breyer, and Justice Sotomayor.  Three dissenting opinions were 
authored or joined by Justice Scalia, Justice Thomas, Justice Ginsburg, and Justice Kagan. 
11 
 
Both this Court and the Supreme Court held that extension of the tax credit to the 
county portion of the income tax would cure the constitutional defect, but both decisions 
also acknowledged that there might be other ways of adjusting the State income tax law 
that would avoid the sort of discrimination against interstate commerce forbidden by the 
dormant Commerce Clause.  431 Md. at 189; 135 S. Ct. at 1806. 
D. 
Legislative Response  
While the case was pending in the Supreme Court, the General Assembly 
anticipated that the Supreme Court might affirm this Court’s decision and responded in 
three significant ways:  (1) amending the Maryland tax code to allow a tax credit against 
the county portion, as well as the state portion, of the Maryland income tax for income 
taxes paid in other states; (2) providing for the payment of refunds with respect to prior tax 
years as a result of the Wynne decision; and (3) setting the annual rate of interest paid on 
those tax refunds.  The General Assembly took those actions as part of the BRFAs in 2014 
and 2015.  See Chapter 489, §§4, 26, 27, Laws of Maryland 2015; Chapter 464, §§16, 20, 
Laws of Maryland 2014.15   
 
 
                                              
15 Other states also reacted to the Supreme Court’s decision by changing their 
treatment of tax credits for income taxes paid to another state.  See, e.g., Ind. Code Ann. 
§6-3.5-7 (providing credit for out-of-state tax paid against the then in-effect Indiana county 
economic income tax); Kan. Stat. Ann. §79-32,111(a) (applying tax credits towards local 
income taxes); see also https://perma.cc/3SAL-T7NN (explaining change in practice in 
Iowa with respect to tax credits and availability of refunds in light of the Wynne decision). 
12 
 
1. 
2014 BRFA  
During the 2014 session of the General Assembly, the Governor proposed, and the 
General Assembly ultimately enacted, a BRFA to help balance the budget bill for fiscal 
year 2015.  Chapter 464, Laws of Maryland 2014 (“2014 BRFA”).  As originally proposed 
by the Governor, the bill relaxed some limitations on the use of special funds, increased 
the portion of certain revenues directed into the State’s general fund, transferred a portion 
of the accumulated funds in certain special funds to the State’s general fund, and reduced 
certain mandated expenditures under existing law.  Senate Bill 172 (2014), first reader.16 
The bill was amended in various respects by the General Assembly as it made its 
way through the Legislature.  An amendment initially proposed by the House, and 
ultimately adopted by the Conference Committee and approved by both houses of the 
Legislature, dealt with the potential fiscal consequences of two then-recent decisions of 
this Court.  One of those decisions was this Court’s decision in the Wynne case.17  At that 
                                              
16 The 2014 BRFA was introduced after the State’s Bureau of Revenue Estimates 
reported in December 2013 that the State had experienced a relatively slow recovery from 
the Great Recession of 2008-9 and characterized the fiscal outlook as “precarious.”  See 
Estimated Maryland Revenues for Fiscal Years ending June 30, 2014 and June 30, 2015 
(December 11, 2013), available at https://perma.cc/UX7N-SJXT. 
17 The other decision was DeWolfe v. Richmond, 434 Md. 403 (2012) and 434 Md. 
444 (2013), which established a right to counsel for criminal defendants at initial bail 
hearings and which would potentially increase expenditures to compensate appointed 
counsel.  See 2014 BRFA §17; Revised Fiscal and Policy Note for Senate Bill 172 (June 
17, 2014) at 63-64. 
 
Both Wynne and Richmond potentially increased the financial burden of county 
governments, as the Wynne case could require refunds of the local portion of the State 
income tax and the Richmond decision affected expenses in the District Court and circuit 
courts normally borne by the pertinent county.   
13 
 
time, it was estimated that the State  owe approximately $190 million in refunds and $51 
million in interest calculated under the then-current law, and that tax revenues would 
decrease by $43 million annually, if the Wynne decision were affirmed.18  In response, 
Section 16 of the 2014 BRFA provided: 
That, notwithstanding any other provision of law, the Comptroller 
shall set the annual interest rate for an income tax refund that is the result of 
the final decision under Maryland State Comptroller of the Treasury v. Brian 
Wynne, et ux. 431 Md. 147 (2013) at a percentage, rounded to the nearest 
whole number, that is the percent that equals the average prime rate of 
interest quoted by commercial banks to large businesses during fiscal year 
2015, based on a determination by the Board of Governors of the Federal 
Reserve Bank. 
 
2014 BRFA §16.19  It was estimated that this provision would save an estimated $38.4 
million in interest expenditures with respect to potential refunds that would otherwise 
reduce revenue passed on to local governments.20 
 
This section of the 2014 BRFA thus reduced State and local expenditures by limiting 
the interest to be paid on a refund occasioned by the Wynne case to the prime rate – a rate 
                                              
18 Revised Fiscal and Policy Note for Senate Bill 172 (June 17, 2014) at 67; Bill 
Review Letter for Senate Bill 172 (May 14, 2014) at 10; see also Revised Fiscal and Policy 
Note for House Bill 72 (June 19, 2015) at 71. 
19 This annual interest rate was made applicable to income tax refunds based on the 
Wynne decision attributable to tax years from 2006 through 2014.  2014 BRFA §20. As 
indicated in the text, the General Assembly later provided in separate legislation for a 
graduated reduction in the interest rates generally pertaining to tax refunds.  Chapter 322, 
§1, Laws of Maryland 2016.  
20 Revised Fiscal and Policy Note for Senate Bill 172 (June 17, 2014) at 67.  
 
14 
 
of interest banks charge for creditworthy borrowers21 – instead of the minimum 13% rate 
that the law otherwise provided in the tax code at that time.  
2. 
2015 BRFA  
 
During its next session, while the Wynne case remained pending in the Supreme 
Court, the General Assembly again addressed the prospective Supreme Court decision in 
the 2015 BRFA.  Chapter 489, Laws of Maryland 2015 (“2015 BRFA”).22  In anticipation 
that the Supreme Court might affirm this Court’s decision, the Legislature amended the 
income tax law to provide a credit against the county income tax for income taxes paid in 
other states on the same income.  2015 BRFA §4.  The effectiveness of the new credit was 
made contingent on advice from the Attorney General that the decision ultimately issued 
by the Supreme Court would invalidate the then-current practice of allowing a credit only 
against the state portion of the Maryland income tax.  2015 BRFA §§4, 26.  The legislation 
also set forth a mechanism for the Comptroller to pay refunds and ultimately pass the cost 
on to the counties that were the beneficiaries of the county income tax.  Id., §27. 
 
A little more than a month after the General Assembly adjourned in 2015, the 
Supreme Court issued its decision affirming the judgment of this Court. 
 
                                              
21 “Prime rate” is “the interest rate that a commercial bank holds out as its lowest 
rate for a short-term loan to its most creditworthy borrowers.”  Interest rate, Black’s Law 
Dictionary (11th ed. 2019).  
 
22 Like the 2014 BRFA, the 2015 BRFA also addressed the fiscal impact of this 
Court’s decision in the Richmond case.  See 2015 BRFA §20; Revised Fiscal and Policy 
Note for House Bill 72 (June 19, 2015) at 69. 
15 
 
III 
The Sequel 
A. 
The Comptroller Issues Refunds 
Following the Supreme Court decision, the Comptroller issued tax refunds to 
affected taxpayers and, in accordance with the direction of the General Assembly in the 
2014 BRFA, included interest computed at an annual rate of 3%.  The parties agree that, 
assuming the retroactive application of the credit for the county portion of the state income 
tax enacted in the 2015 BRFA, the Wynnes overpaid their 2006 Maryland income tax by 
$28,789 (including interest and penalties).  The Wynnes received $33,084, including a 
refund of the overpayment and $4,295.52 in interest at an annual rate of 3%.  If the interest 
portion of the payment had been calculated at an annual rate of 13%, the Wynnes would 
have received more than $14,000 in additional interest.  
B. 
The Wynnes Dispute the Rate of Interest 
The Wynnes objected to the payment of interest on their refund at the 3% rate, as 
specified by 2014 BRFA §16, and pursued an administrative appeal.  The Comptroller 
issued a final determination in March 2016 rejecting their appeal.  The Wynnes then sought 
relief in the Maryland Tax Court.  In a three-paragraph order issued in May 2018, the Tax 
Court stated that it was following “the exact same logic” as the Supreme Court in the 
Wynnes’ earlier appeal and, without further elaborating its reasoning, concluded that 2014 
BRFA §16 was unconstitutional and reversed the Comptroller’s decision.  The Tax Court 
did not address other constitutional arguments made by the Wynnes in their appeal – i.e., 
that 2014 BRFA §16 was a retroactive law that violated the Due Process Clause, that §16 
16 
 
effected an unlawful taking in violation of the Fifth and Fourteenth Amendments, or that 
it deprived them of an accrued right in violation of Article 24 of the Maryland Declaration 
of Rights.  
The Comptroller sought judicial review of the Tax Court order in the Circuit Court 
for Anne Arundel County.  On December 21, 2018, the Circuit Court issued an 11-page 
opinion in which it analyzed the application of the dormant Commerce Clause and 
concluded that 2014 BRFA §16 did not violate that provision.  Accordingly, the Circuit 
Court reversed the decision of the Tax Court and remanded the matter for further 
proceedings.  The Circuit Court specifically noted that it was not reaching the other 
constitutional arguments made by the Wynnes.  
The Wynnes filed a timely notice of appeal.  Prior to briefing and argument in the 
Court of Special Appeals, the Wynnes filed a petition for a writ of certiorari with this 
Court, which we granted. 
IV 
Discussion  
A. 
Standard of Review 
Like the previous iteration of the controversy between the Wynnes and the 
Comptroller concerning their 2006 income tax return, this case involves judicial review of 
an administrative agency decision – i.e., a decision of the Maryland Tax Court – in light of 
the dormant Commerce Clause of the federal Constitution.  For the reasons set forth in our 
prior decision, we “look through” the decision of the Circuit Court to directly review the 
agency decision and do not defer to the agency’s views on a question of constitutional law.  
17 
 
See Wynne, 431 Md. at 160-61.  In any event, there was no explication of the constitutional 
issue in the Tax Court order to which we could defer. 
B. 
Whether 2014 BRFA §16 Violates the Dormant Commerce Clause  
We begin where we ended the last episode of this saga.  In analyzing the application 
of the dormant Commerce Clause to the county portion of the Maryland income tax, both 
this Court and the Supreme Court applied what is known as the “internal consistency test” 
to assess state tax schemes under the dormant Commerce Clause.  Both decisions used 
hypothetical examples to illustrate the operation of the existing Maryland tax credit and 
how it disfavored Maryland residents who had income that was earned and taxed out-of-
state.  Each majority opinion compared a hypothetical Maryland taxpayer who earned all 
or part of his income from interstate activities (Bob in the Supreme Court’s opinion, John 
in this Court’s opinion) with a hypothetical Maryland taxpayer who earned all of her 
income from intrastate activities (April in the Supreme Court’s opinion, Mary in this 
Court’s opinion).23  In those examples, the taxpayers who had income from interstate 
commerce (Bob and John) paid significantly more total tax than their counterparts whose 
income derived solely from activities in Maryland (April and Mary).  This comparison 
supported the conclusion that the existing Maryland tax scheme violated the dormant 
Commerce Clause. 
                                              
23 See 431 Md. at 167-69; 135 S.Ct. at 1803-5.  The Wynnes relied on similar 
hypotheticals in their briefs, both in this Court and in the Supreme Court.  See 2014 WL 
4681795 at pp. 22-23. 
18 
 
The State has now compensated taxpayers like Bob and John by providing refunds 
with interest at the prime rate.  Given that interest calculated at the prime rate exceeded the 
rate of inflation,24 hypothetical taxpayers Bob and John have received a sum that exceeds 
the present value of the extra taxes they paid in 2006 and have been made whole compared 
to April and Mary, who earned income solely from intrastate activities and paid less tax in 
2006. 
Placed in the context of the hypotheticals on which they relied in the prior litigation, 
the Wynnes essentially argue that the dormant Commerce Clause also requires that Bob 
and John should have received even more favorable treatment than April and Mary in the 
form of a 13% annual interest rate on their refunds.25  In our view, the dormant Commerce 
Clause does not require such a windfall for the Wynnes or their hypothetical counterparts. 
1. 
The State action at issue 
The provision at issue in this case – 2014 BRFA §16 – is part of the remedy provided 
by the General Assembly for the constitutional violation found by this Court and confirmed 
by the Supreme Court in the prior litigation.  The Due Process Clause requires the State to 
provide a “clear and certain remedy” for a violation of the dormant Commerce Clause, 
                                              
24 The interest received by the Wynnes amounted to a cumulative 14.92% of their 
refund ($4,295.52 ÷ $28,789).  As measured by the Bureau of Labor Statistics, the 
cumulative rate of inflation during the same period was approximately 10%.  See 
https://www.usinflationcalculator.com/.   
25 According to the figures in the parties’ stipulation, if a 13% annual rate were 
applied, the cumulative rate of interest on the Wynnes’ refund would be approximately 
65% ($18,679.70 ÷ $28,789).   
19 
 
although not necessarily in the form of a refund.  McKesson Corp. v. Division of Alcoholic 
Beverages, 496 U.S. 18, 32-39 (1990).  That remedy may take different forms, which may 
involve a full refund or partial refund, “so long as the resultant tax actually assessed during 
the contested tax period reflects a scheme that does not discriminate against interstate 
commerce.”  Id. at 41.  Moreover, when a state chooses to provide a refund for that purpose, 
the state may take into account its “legitimate interest in sound fiscal planning” by limiting 
that refund in various ways.  Id. at 45, 50-51; see also Fulton Corp. v. Faulkner, 516 U.S. 
325, 346-47 (1996).26   
The remedy adopted by the General Assembly involved a retroactive extension of 
the tax credit for the benefit of the Wynnes and similarly-situated taxpayers, resulting in 
the payment of refunds that would carry interest at approximately the prime rate.  The basis 
of the Wynnes’ claim in this appeal is that, had the General Assembly simply authorized 
the refunds as the remedy for the constitutional violation without specifying a rate of 
interest on those refunds, the minimum 13% interest rate in TG §13-604(b) would have 
applied to their refund.  It is the specification of a different interest rate pegged to the prime 
rate as part of this remedy that, in the Wynnes’ view, resulted in another violation of the 
dormant Commerce Clause.  
                                              
26 In discussing how a refund of a tax payment could satisfy a state’s obligation to 
provide a “clear and certain” remedy, the Supreme Court in McKesson did not suggest that 
interest was a required element of such a refund and indicated that a state could place 
various constraints on any refunds, such as limiting them only to taxpayers who paid the 
tax under protest or by enforcing a relatively short period of limitations for claiming a 
refund.  496 U.S. at 50.  At oral argument, the Wynnes’ counsel agreed that the refunds 
authorized by the 2014 and 2015 BRFAs satisfied the requirements of McKesson.   
20 
 
 
2. 
Application of the dormant Commerce Clause 
 
As explained above, the courts developed the doctrine of the dormant Commerce 
Clause as, in a sense, the flip side of the federal Constitution’s affirmative grant of power 
to Congress to regulate interstate commerce.  Hughes v. Oklahoma, 441 U.S. 322, 326 n.2 
(1979) (“The definition of ‘commerce’ is the same when relied on to strike down or restrict 
state legislation as when relied on to support some exertion of federal control or 
regulation.”).  It follows then that, when a state law is challenged as violative of the 
dormant Commerce Clause, one must first assess whether it regulates interstate commerce 
in some way, or purports to do so.  If the answer is “no,” then the dormant Commerce 
Clause presumably does not reach that law.  Thus, a threshold question is whether the law 
implicates interstate commerce.  See Camps Newfound/Owatonna, Inc. v. Town of 
Harrison, 520 U.S. 564, 572-75 (1997) (analyzing first whether state tax treatment of a 
non-profit summer camp implicates interstate commerce); C & A Carbone, Inc. v. Town of 
Clarkstown, 511 U.S. 383, 389-90 (1994) (analyzing first whether a municipal solid waste 
flow control ordinance regulates interstate commerce).    
If it appears that the law affects interstate commerce, the next question is whether 
the law discriminates against interstate commerce27 – an issue on which the party 
                                              
27 In many cases, particularly when the relationship of the challenged law to 
interstate commerce is evident, courts proceed directly to the question whether the law 
discriminates against interstate commerce.  See, e.g., West Lynn Creamery, Inc. v. Healy, 
512 U.S. 186, 192-94 (1994); Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 268-69 (1984).   
21 
 
challenging the constitutionality of the law bears the burden.  Hughes, 441 U.S. at 336.  A 
law may discriminate against interstate commerce on its face or in its practical effect.28  
Wyoming v. Oklahoma, 502 U.S. 437, 454-55 (1992); C & A Carbone, 511 U.S. at 402 
(O’Connor, J., concurring in the judgment).  In language resonant of Equal Protection 
analysis, it is sometimes said that state laws that discriminate against interstate commerce 
are subject to “the strictest scrutiny.”  Hughes, 441 U.S. at 337.  In other words, the law 
survives such scrutiny only if it “advances a legitimate local purpose that cannot be 
                                              
28 The courts have sometimes referred to a third category – purposeful 
discrimination.  See, e.g., Alliance of Auto. Mfrs. v. Gwadosky, 430 F.3d 30, 35-38 (1st Cir. 
2005); South Dakota Farm Bureau, Inc. v. Hazeltine, 340 F.3d 583, 593-96 (8th Cir. 2003); 
Waste Mgmt. Holdings, Inc. v. Gilmore, 252 F.3d 316, 335-36 (4th Cir. 2001).  However, 
it is difficult to conceive of a truly separate category of “purposeful discrimination” that 
does not also fit within the categories of either facial discrimination or discrimination in 
effect – that is, it is difficult to imagine a case in which a state legislature intended to 
discriminate against interstate commerce but did not make that purpose clear in the statute 
(and thereby did not facially discriminate) and also failed to achieve that purpose (and 
thereby did not discriminate in effect).  A review of dormant Commerce Clause cases that 
have considered “purposeful discrimination” concluded that the analysis conducted in 
those cases has been inconsistent and that the instances in which courts have decided 
dormant Commerce Clause cases by finding purposeful discrimination without also finding 
facial discrimination or discrimination in effect are “relatively rare.”  Julian C. Zebot, 
Awakening a Sleeping Dog:  An Examination of the Confusion in Ascertaining Purposeful 
Discrimination against Interstate Commerce, 86 Minn. L. Rev. 1063, 1084 (2002).  
Moreover, the Supreme Court, in its opinion concerning the prior litigation between the 
Wynnes and the Comptroller, stated that the “Commerce Clause regulates effects, not 
motives,” which would appear to discount the notion of a separate category based on 
discriminatory purpose.  135 S.Ct. at 1801 n.4. 
In any event, the Wynnes agree that the General Assembly’s motives in this case do 
not matter, and have only addressed the categories of facial discrimination and 
discrimination in effect. 
22 
 
adequately served by reasonable nondiscriminatory alternatives.”  New Energy Co. v. 
Limbach, 486 U.S. 269, 278 (1988).29 
 
3. 
Whether 2014 BRFA §16 regulates interstate commerce 
  
The Supreme Court has identified three broad categories of activity that may be 
regulated by Congress under the Commerce Clause:  (1) use of the channels of interstate 
commerce, (2) instrumentalities of interstate commerce, or persons or things in interstate 
commerce, or (3) intrastate activities having a substantial effect on interstate commerce.  
United States v. Lopez, 514 U.S. 549, 558-59 (1995).  Accordingly, state regulation of those 
activities may implicate the constraints imposed by the dormant Commerce Clause.   
 
Courts have concluded that a variety of state laws affect the channels of interstate 
commerce or those involved in such commerce – e.g., retail alcohol license guidelines,30 
                                              
29 The case law applying the dormant Commerce Clause has also applied a lesser 
standard of scrutiny, including a rational basis test, when a law does not discriminate 
against interstate commerce, but nonetheless burdens it in some way.  In such a case, the 
law will violate the dormant Commerce Clause only if the burden on interstate commerce 
“is clearly excessive in relation to the putative local benefits.”  Pike v. Bruce Church, Inc., 
397 U.S. 137, 142 (1970).  In assessing the benefits of a challenged law, the court conducts 
a rational basis review, before weighing it against the burden on interstate commerce.  
Colon Health Ctrs. of Am., LLC v. Hazel, 733 F.3d 535, 545 (4th Cir. 2013).  This standard 
is commonly referred to as the “Pike balancing” test.  See, e.g., Dep’t of Revenue of Ky. v. 
Davis, 553 U.S. 328, 353 (2008).  The Wynnes have not argued that 2014 BRFA §16 
should be assessed under the Pike balancing test, but rather that it should be invalidated 
under a strict scrutiny test as discriminatory in effect.  Cf. Cherry Hill Vineyard, LLC v. 
Baldacci, 505 F.3d 28, 36 (1st Cir. 2007) (challenger of state wine law under dormant 
Commerce Clause relied only on discrimination in effect theory and did not invoke Pike 
balancing). 
 
30 Tennessee Wine & Spirits Retailers Assoc. v. Thomas, 139 S.Ct. 2449 (2019). 
23 
 
milk pricing regulations,31 solid waste disposal ordinances,32 apple labeling laws.33  
Favorable tax treatment for in-state entities has been found to affect interstate commerce 
in a number of contexts – e.g., a charitable property tax exemption statute,34 a tax credit for 
in-state produced ethanol fuel,35 a state excise tax exemption for certain locally produced 
liquors,36 a tax exemption for wholesaling of  products produced in-state.37  In these cases, 
where a state regulation increased costs on the interstate flow of waste disposal, wines, and 
apples, or where a tax provision gave an advantage to intrastate production or products, the 
relevant interstate market was readily obvious and interstate commerce clearly implicated.   
This appeal concerns not an industry regulation or a tax, but the rate of interest paid 
on a tax refund provided as a remedy for a past constitutional violation.  The Wynnes 
contend that there is no distinction to be made between the rate of interest on a tax refund 
and the underlying tax itself because, as they see it, “[t]he dormant Commerce Clause 
applies to all government action,” although they later qualify that assertion by conceding 
                                              
31 West Lynn Creamery, 512 U.S. at 194-97. 
32 Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality of Or., 511 U.S. 93, 99 (1994). 
33 Hunt v. Washington State Apple Advert. Comm’n, 432 U.S. 333 (1977). 
34 Camps Newfound/Owatonna, 520 U.S. at 573-74. 
35 Limbach, 486 U.S. at 274. 
36 Bacchus Imports, 468 U.S. at 269. 
37 Armco, Inc. v. Hardesty, 467 U.S. 638 (1984). 
24 
 
that it applies only to “laws that harm interstate commerce to the benefit of intrastate 
commerce.” 
In our view, there is a fundamental difference between a tax and the rate of interest 
that may be paid on a tax refund.38  As the Supreme Court pointed out in the prior litigation 
between the Wynnes and the Comptroller, a tax can operate similarly to a tariff – “[t]he 
paradigmatic example of a law discriminating against interstate commerce.”  135 S.Ct. at 
1804.  A provision that prospectively affects one’s anticipated tax liability can have a direct 
impact on interstate commerce by its “distorting effect on the geography” of production or 
capital investment.  West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 193 (1994).  In 
contrast, it is considerably less likely that those involved in commercial activity consider 
tax refund procedures in their decision-making.  And the rate of interest, if any, that a state 
chooses to pay on a tax refund may be frequently adjusted in response to macroeconomic 
forces like the rate of inflation or other factors affecting a state’s fiscal outlook.  In many 
instances, the rate of interest on a tax refund (if interest is paid at all) may be determined 
well after any business decision affecting interstate commerce that generated the previously 
taxed income that is the subject of the refund.39   In short, the rate of interest paid on tax 
                                              
38 To be sure, a tax refund and any interest paid on that refund are clearly related.  
Whatever interest rate may apply, the amount of any interest is based on the amount of the 
refund and the administrative procedures for challenging the amount of interest are the 
same as the procedures for challenging the amount of the underlying refund.  See 
Comptroller v. Science Applications Intern. Corp., 405 Md. 185 (2008).  However, this 
does not mean that the interest rate on a refund presents the same question as the imposition 
of the tax for purposes of dormant Commerce Clause. 
39 In response to the observation that business decisions would generally pre-date 
the determination and timing of a tax refund, the Wynnes imagine a retroactive state tax 
25 
 
refunds is too attenuated from interstate commerce as to substantially affect or interfere 
with the decision-making that directs the flow of capital or the location of transactions.  
Accordingly, in our view, the interest rate established for tax refunds is not the sort 
of state action that implicates interstate commerce sufficiently to awaken the dormant 
Commerce Clause.  Nonetheless, we will also evaluate the Wynnes’ contention that 2014 
BRFA §16 discriminates against interstate commerce. 
 
4. 
Whether 2014 BRFA §16 discriminates against interstate commerce  
 
As noted above, the Wynnes bear the burden of showing that 2014 BRFA §16 
impermissibly discriminates against interstate commerce, either facially or in practical 
effect.   
 
At first glance, the Wynnes appear to have taken disparate positions in their briefing 
to this Court on whether 2014 BRFA §16 is facially discriminatory.40  In the end, they 
focus their argument on whether the provision is discriminatory in its practical effect.  This 
appears to be an appropriate decision in light of the case law concerning facial 
                                              
that discriminates against interstate commerce and argue that such a tax would be 
unconstitutional, not only under the Due Process clause and other constitutional provisions, 
but also under the dormant Commerce Clause.  Whatever merit that argument may have as 
a matter of academic discussion, it is not this case, which involves a remedy authorized by 
the General Assembly. 
40 Compare Brief of Appellants at 9 (heading entitled “Section 16 Discriminates on 
its Face against Interstate Commerce”) with Reply Brief of Appellants at 11 (“[W]e have 
never contended that Section 16 is facially discriminatory; we have instead explained that 
Section 16 is discriminatory in effect.”) (emphasis in original).  
26 
 
discrimination.41  Accordingly, we will likewise focus our discussion on whether the 
provision discriminates against interstate commerce in its effect. 
A fundamental principle under the dormant Commerce Clause is that “any notion 
of discrimination assumes a comparison of substantially similar entities.”  Dep’t of Revenue 
v. Davis, 553 U.S. 328, 342 (2008).  In this regard, it is important to remember that the 
focus of the dormant Commerce Clause is on “markets and participants in markets.”  
General Motors Corp. v. Tracy, 519 U.S. 278, 300 (1997).  There must be actual or 
prospective competition between entities in an identifiable market and state action that 
places an undue burden on interstate commerce.  Id.   
For example, in a case involving a state apple labeling law, the Supreme Court found 
that the law discriminated in effect in violation of the dormant Commerce Clause only after 
                                              
41 Cases applying the dormant Commerce Clause in which facial discrimination has 
been found generally involve explicit geographic references.  See, e.g., Camps 
Newfound/Owatonna, 520 U.S. at 572-77 (tax exemption statute expressly differentiated 
between institutions that served in-state residents and those “operated principally for the 
benefit of” out-of-state residents); Chemical Waste Mgmnt. v. Hunt, 504 U.S. 334, 336-37 
(1992) (state law imposed additional disposal fee for hazardous waste imported from 
outside the state); Healy v. Beer Inst., Inc., 491 U.S. 324, 340-41 (1989) (state law required 
interstate brewers or shippers of beer, but not intrastate brewers or shippers, to comply with 
certain price regulations); Limbach, 486 U.S. at 274 (tax credit against state fuel tax related 
to portion of gasohol comprised of ethanol produced within the state, but not within other 
states without a reciprocal credit).   
Here, as part of the remedy for the constitutional violation found in the earlier 
litigation between the Wynnes and the Comptroller, 2014 BRFA §16 set an annual interest 
rate for a refund paid to a taxpayer as a result of that court decision without expressly 
making any geographic distinctions.  Whether that interest rate had the effect of 
discriminating against interstate commerce is a different question, discussed in greater 
detail in the text of this opinion. 
27 
 
it conducted an exhaustive review of the record documenting the law’s deleterious effect 
on the interstate market for apples.  Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 
333 (1977).  Even when a party challenging a state law is able to identify a pertinent market, 
courts have declined to find a violation of the dormant Commerce Clause unless the 
challenger is able to demonstrate how the law discriminates in practical effect against 
interstate commerce or out-of-state economic actors.  See, e.g., Rocky Mountain Farmers 
Union v. Corey, 730 F.3d 1070, 1100 (9th Cir. 2013) (parties challenging state fuel standard 
law failed to satisfy the “particularly high” burden of showing that law had a discriminatory 
effect against out-of-state crude oil); Black Star Farms LLC v. Oliver, 600 F.3d 1225, 1232-
34 (9th Cir. 2010) (summary judgment appropriate when challenger of state wine 
distribution law offered only speculation that law “might” discriminate against interstate 
commerce); Kleinsmith v. Shurtleff, 571 F.3d 1033, 1040-41 (10th Cir. 2009) (out-of-state 
attorney challenging Utah law concerning nonjudicial foreclosures failed to show how the 
law altered the competitive balance between resident and non-resident attorneys); Cherry 
Hill Vineyard, LLC v. Baldacci, 505 F.3d 28, 36 (1st Cir. 2007) (stipulated record did not 
establish that state law relating to wine sales “alters the competitive balance between in-
state and out-of-state firms”); R & M Oil & Supply, Inc. v. Saunders, 307 F.3d 731, 734-
35 (8th Cir. 2002) (state law regulating storage of propane did not discriminate against 
interstate commerce in effect as stipulated record did not establish that, “as a practical 
matter,” the law placed out-of-state propane distributors at a competitive disadvantage); 
Eastern Ky. Res. v. Fiscal Court of Magoffin Co., 127 F.3d 532, 544 (6th Cir. 1997) (state 
law regulating waste disposal did not discriminate in effect as challengers failed to show 
28 
 
“how local economic actors are favored at the expense of out-of-state economic actors”); 
Nat’l Paint & Coating Ass’n v. City of Chicago, 45 F.3d 1124, 1132 (7th Cir. 1995) 
(challenger of municipal ordinance generally prohibiting sale of spray paint failed to 
demonstrate how ordinance would favor paint sales by in-state firms over those by out-of-
state firms). 
In the prior litigation between the Wynnes and the Comptroller concerning the 
Maryland tax credit scheme, we concluded that it affected the “market for capital and 
business investment.”  Wynne, 431 Md. at 164-65.  Here, 2014 BRFA §16 affected the 
interest to be paid on any tax refunds authorized if the Supreme Court were to affirm this 
Court’s decision in the prior litigation between the Wynnes and the Comptroller.  A year 
later, the Supreme Court did so and the Comptroller applied §16 to the refunds that were 
authorized by the General Assembly. 
It is evident that the General Assembly adopted 2014 BRFA §16 in light of the 
estimated $200 million in expenditures for thousands of refunds that could be required by 
an adverse Supreme Court decision in the Wynne case, a budget hit that would be 
exacerbated if a minimum 13% interest rate were applied to that sum – all of which would 
hinder the State’s already slow recovery from the Great Recession.  This was consistent 
with the constitutional responsibility of the Governor and the General Assembly to 
maintain a balanced budget.  Pegging an interest rate to be paid on those refunds to one 
commonly used by banks (and that ultimately exceeded the rate of inflation) ensured fair 
compensation of those taxpayers while maintaining the fiscal integrity of the State.  The 
Wynnes suggest that the General Assembly could have adopted alternative measures to 
29 
 
deal with the State’s fiscal situation and still allowed them to reap a 13% return on their 
refund.  However, that does not mean that the General Assembly’s chosen method for 
providing a remedy had the effect of disadvantaging out-of-state economic interests. 
The Wynnes have not pointed to any evidence, or other indication, that the interest 
rate set by 2014 BRFA §16 would alter the competitive balance for interstate investment – 
or any other interstate industry, for that matter.  Rather, they argue §16 discriminates in 
effect against interstate commerce because (1) it provided “Wynne claimants” with a 
“special, lower interest rate that no taxpayer engaged in intrastate commerce receives” and 
(2) the “defining feature” of Wynne claimants is that they engaged in interstate commerce.  
As a result, they conclude, §16 “sends a message” that Maryland will disadvantage 
taxpayers involved in interstate commerce and thereby discourages out-of-state investment 
by Maryland taxpayers – although they concede that the disincentive they perceive is 
“relatively small.”   
With respect to the first premise, the Wynnes mistakenly contend that they “receive 
far less interest on their refunds than other taxpayers.”  This argument ignores the fact that 
most taxpayers, including those whose livelihoods involve activities affecting interstate 
commerce, receive no interest at all on a tax refund.  Refunds owed to taxpayers other than 
those occasioned by our decision in Wynne may or may not be accompanied by interest at 
a different rate – or no interest at all.  The Wynnes have not demonstrated, and §16 does 
not entail, that taxpayers “engaged in intrastate commerce” necessarily receive interest on 
a tax refund at a rate greater than that applied to the Wynnes’ refund.  What apparently is 
the case is that the total amount of the refunds occasioned by the Wynne decision were 
30 
 
likely to be substantial and that the Legislature needed to take account of that unanticipated 
expense in the BRFA as it endeavored to satisfy the constitutional mandate for a balanced 
budget.42  (As noted earlier, Wynne was not the only court decision that threatened the 
balanced budget and required special attention in the BRFA). 
The Wynnes argue generally that whether the State pays interest on tax refunds and 
how it sets the rate of interest paid to a particular category of refunds may lead to “skewed 
incentives for market participants” and will disincentivize them from conducting “income-
generating activities in other states with income taxes.”  They do not indicate what market 
participants would be affected other than to vaguely refer to the “tax refund anticipation 
loan industry.”43  The Wynnes do not explain how that industry, which makes very short-
term loans secured by tax refunds that typically are not eligible for interest, would be 
affected by 2014 BRFA §16.44  This perhaps illustrates the apparent difficulty that the 
                                              
42 The Wynnes argue that the General Assembly might have reduced State 
expenditures more for the relevant fiscal years by paying 3% on all tax refunds – but 
presumably mean to refer only to that subset of tax refunds for which the General Assembly 
has authorized the payment of interest.  
 
43 They also cite an academic article that discusses whether a new insurance product 
called “tax risk insurance,” which insures against the risk of an audit and tax assessment, 
is beneficial or may encourage abusive tax avoidance schemes and tax evasion.  See Kyle 
D. Logue, Tax Law Uncertainty and the Role of Tax Insurance, 25 Va. Tax Rev. 339 
(2005).  The article does not address tax refunds or the interest that may be paid on refunds. 
44 Refund anticipation loans are usually short-term, high-cost loans secured by a 
taxpayer’s expected refund (valued at a discount) and are generally marketed to lower-
income, cash-strapped customers seeking money in a hurry.  See Green v. H & R Block, 
355 Md. 488, 495-501 (1999); Leslie Book, Refund Anticipation Loans and the Tax Gap, 
20 Stan. L. & Policy Rev. 85 (2009); National Consumer Law Center, Refund Anticipation 
Loans and Checks, https://perma.cc/EJ3Q-27TM.  Under a State consumer protection law, 
promoters of such loans are subject to various disclosure and practice requirements.  See 
31 
 
Wynnes have in making a hypothetical comparison to an advantaged person with solely 
intrastate activities – someone equivalent to “Mary” or “April” in the prior iteration of their 
dispute with the Comptroller. 
With respect to the second premise, it is certainly true that the tax refund received 
by the Wynnes, and presumably those received by many other “Wynne claimants,” related 
to taxes paid as a result of income derived from business activities in other states.  
Nevertheless, as the Circuit Court noted, in some instances Maryland taxpayers who pay 
income tax to another state based on income generated in that state are not engaged in 
business activities in other states – for example, a holder of a winning out-of-state lottery 
ticket or a Maryland resident who happens to own real property in another state and sells 
it.  Such a taxpayer would also receive a refund under the 2015 BRFA, based on a 
retroactive allowance of a credit against the county portion of the Maryland income tax, 
with interest at the rate set by 2014 BRFA §16.    
The Wynnes contend that both of the examples cited by the Circuit Court fall within 
the “market for capital and business investment” and therefore “substantially affect” 
                                              
Maryland Code, Commercial Law Article (“CL”), §14-3801 et seq.  Because such loans 
typically last less than two weeks and interest is payable on tax refunds only after 45 days, 
the tax refunds securing such loans typically would not be eligible for interest.  See CL 
§§14-3803(b)(3), 14-3804(a)(5), 14-3805(a)(1); TG §13-603(a). 
In any event, there does not appear to be any suggestion that the Wynnes sought or 
received a refund anticipation loan in connection with their refund based on a tax credit for 
part of the tax on their pass-through Subchapter S corporation income. 
32 
 
interstate commerce.45  This would seem to stretch the concept of something that 
substantially affects interstate commerce to encompass any transaction that involves a 
Maryland resident receiving or paying money in another state – which would also result in 
an expansive view of Congress’ coincident authority to regulate such activities under the 
Commerce Clause. 
Even if we were to accept this premise, and even if all or most of the taxpayers 
entitled to refunds as a result of the Wynne decision and the General Assembly’s actions in 
the two BRFAs derived the pertinent income from interstate commerce, that alone does not 
mean that the law discriminates against interstate commerce.  See Exxon Corp. v. Governor 
of Maryland, 437 U.S. 117, 125-29 (1978) (the fact that a state law affected only out-of-
state entities does not by itself establish that the law discriminated against interstate 
commerce as that law did not disadvantage those entities in comparison to in-state 
competitors).  Rather, it reflects the remedial nature of the 2014 and 2015 BRFA 
provisions. 
 
 
                                              
45 Alternatively, the Wynnes argue that, in effect, the Comptroller has been too 
generous in his application of 2014 BRFA §16 in providing refunds under that provision 
to taxpayers not involved in interstate commerce.  In their view, §16, and presumably also 
the 2015 BRFA provisions authorizing refunds, should be construed narrowly not to apply 
to all taxpayers but only to taxpayers, like the Wynnes, whose refunds relate to business 
activities in other states.  While such a construction may advance the Wynnes’ attack on 
the constitutionality of §16 premised on the idea that it affects only refunds related to 
interstate commerce, it is contrary to one of the standard canons of statutory construction.  
See Harrison-Solomon v. State, 442 Md. 254, 287 (2014) (statutes to be construed to avoid 
conflict with Constitution). 
33 
 
 
 
C. 
Summary 
 
As noted earlier, the Wynnes no longer rely on the comparison of Bob and April 
and John and Mary.  They evidently found it difficult, as do we, to hypothesize a 
counterpart taxpayer engaged in solely intrastate activities who prevails in a constitutional 
challenge to the State tax code that results in a refund to the taxpayer and others, as well as 
a sizeable hit to the State budget, who would receive a better remedy from the General 
Assembly.  Certainly, nothing in §16 would require that result.  They are unable to point 
to a way in which the remedy that they received for the earlier constitutional violation and 
that satisfied the standard set by McKesson somehow itself disadvantages interstate 
commerce or advances the economic protectionism that the dormant Commerce Clause is 
thought to thwart.  They have not borne the burden of showing discrimination in effect. 
V 
Conclusion 
 
For the reasons set forth above, we hold that 2014 BRFA §16 does not violate the 
dormant Commerce Clause of the federal Constitution. 
 
JUDGMENT OF THE CIRCUIT COURT FOR 
ANNE 
ARUNDEL 
COUNTY 
AFFIRMED.  
COSTS TO BE PAID BY PETITIONERS.