Donaldson/guin obtains groundbreaking consitutional rulings in tax cases

As reported in The Wall Street Journal on September 6, 2006 ("Kentucky Suffers Setback in Muni-Bond Tax Case"), Donaldson & Guin, LLC "recently won a courtroom battle in a case that is stirring widespread interest among municipal-bond investors and state government officials." Donaldson/GUIN brought several cases, including Davis v. Dept. of Rev. of State of Kentucky and Dunn v. State of North Carolina, asserting that Kentucky and North Carolina violate the commerce clause of the United States Constitution by charging Kentucky and North Carolina residents taxpayers income tax on interest earned on municipal bonds issued in other states, while exempting from state income tax the interest earned on their own state's bonds.

The Kentucky Court of Appeals overturned the trial court's decision in favor of the state and the Kentucky Supreme Court refused to review the well-reasoned opinion by the Kentucky Court of Appeals.  The State of Kentucky's attorneys have stated that the State will petition the U.S. Supreme Court for a writ of certiorari.

In North Carolina, the trial court certified a class of taxpayers and the State appealed to the North Carolina Court of Appeals.  On October 17, 2006, the N.C. appellate court rejected the State's arguments and affirmed the trial court's class certification decision.  For a copy of the decision, click here (pdf doc).

David Guin and Tammy Stokes handled these cases for Donaldson & Guin, LLC. Our firm, which has extensive experience in municipal bond litigation, is prosecuting similar cases in a number of other states that permit classwide claims for tax refunds and will also pursue individual refunds for trusts and high-wealth individuals in states that do not permit class actions for tax refunds.  For more information, contact David Guin.