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PENNSYLVANIA RESIDENTS WIN PARTIAL VICTORY IN NEW YORK TAX SUIT

 PENNSYLVANIA RESIDENTS WIN PARTIAL VICTORY IN NEW YORK TAX SUIT
 HARRISBURG, Pa., Dec. 3 /PRNewswire/ -- Gov. Robert P. Casey announced today that two Pennsylvania residents have won a partial victory in a suit challenging the New York state income tax law.
 A New York appellate court in Albany last week invalidated a portion of the law requiring a nonresident having no New York income to file a joint New York income tax return if the person's spouse earned New York income and the couple filed a joint federal income tax return.
 Other provisions of the law, which tax persons on the basis of their individual total income, including income earned outside New York, were upheld by the court.
 "New York has been unfairly taxing Pennsylvania resident married couples by requiring them to file joint New York State income tax returns even when only one spouse has New York source income," Casey said. "Based on this decision and the denial of a class action certification, it would be prudent for similarly situated taxpayers to file individual protective refund claims with New York state."
 New York has a progressive income tax, similar to the federal income tax, which imposes higher tax rates as a taxpayer's income level increases. Beginning with tax year 1988, New York began to impose its income tax rate on Pennsylvanians and other nonresidents who work in New York based on their total income -- including income earned outside of New York and income earned by a spouse if the couple filed a joint federal income tax return.
 Although New York effectively taxes nonresidents only on income earned in New York, by including a spouse's income in the determination of the tax rate, many individuals are being taxed at a higher rate because the total income of the married couple places them in a higher New York tax bracket.
 At the instruction of Casey, Pennsylvania in May filed a "friend of the court" brief on behalf of a Pennsylvania couple and a New Jersey couple who had filed the suit. After losing in a lower court, the couples called on the appellate court to declare parts of the New York Tax Reform and Reduction Act of 1987 unconstitutional and prohibit any continuing enforcement of the questionable provisions.
 Casey also submitted testimony to the U.S. Congress voicing his opposition to the tax and urged Congress to take action to overturn the law.
 Although New York may appeal this decision to New York's highest court, Casey urges all Pennsylvanians who have been adversely affected by the tax to immediately file a protest, if they have not done so already, for each year that they paid New York income taxes since 1988. Protests should be sent to the New York Department of Taxation and Revenue, W.A. Harriman Campus, Albany, N.Y., 12227-0125.
 Casey said taxpayers should also file a protest with their 1991 New York income tax returns if New York continues to collect its tax based on total marital income.
 "Part of the court's decision suggests that to make a claim for a refund, taxpayers must individually protest," Casey said. "Although New York will likely not make refunds at this time, taxpayers could be denied the opportunity to request refunds of excess taxes paid unless they promptly file a protest with New York."
 In order to maximize their chances for refund of the taxes, the governor urges all taxpayers adversely affected by the tax to also file a formal claim for a refund as soon as possible. Depending upon a taxpayer's individual circumstances, the statute of limitations for tax years 1988 and 1989 for filing a formal refund could soon expire. Forms may be obtained from the New York Tax and Revenue Department in Albany.
 /delval/
 -0- 12/3/91
 /CONTACT: Sue Grimm of the Commonwealth News Bureau, 717-783-1116/ CO: Commonwealth of Pennsylvania; New York Tax and Revenue Department ST: Pennsylvania, New York IN: SU: LEG


LJ -- PH015 -- 8724 12/03/91 11:33 EST
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Publication:PR Newswire
Date:Dec 3, 1991
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