Boulet v. State Tax Assessor
626 A.2d 33, 1993 Me. LEXIS 95 (1993)
Rule of Law:
Under Maine law, a resident individual is allowed a credit against state income tax for income tax paid to another state if that income is derived from sources in the other state, and for intangible income like lottery winnings, the source is determined by the physical location of the income-generating activity and property, not the taxpayer's domicile.
Facts:
- Raymond and Lorraine Boulet were residents of Lewiston, Maine.
- In March 1985, the Boulets purchased a winning ticket in the Massachusetts State Lottery in Salisbury, Massachusetts.
- In March 1989, the Boulets received a check for $69,640.75 as part of their Massachusetts lottery winnings.
- The Commonwealth of Massachusetts collected an income tax of $3,527 on the Boulets’ 1989 lottery winnings.
- All Massachusetts lottery operations, including the sale of tickets, location of property generating income, and payment, are confined to the borders of Massachusetts and governed by Massachusetts law.
Procedural Posture:
- The Boulets filed their 1989 Maine income tax return and claimed a $3,527 credit for income tax paid to Massachusetts.
- The State Tax Assessor disallowed the claimed credit.
- The Boulets filed a petition for reconsideration, which the Assessor subsequently denied.
- The Boulets sought judicial review of the Assessor's decision in the Superior Court (Androscoggin County) pursuant to M.R.Civ.P. 80C.
- The Superior Court affirmed the Assessor's disallowance of the credit.
- The Boulets, as appellants, appealed the Superior Court's judgment to the Maine Supreme Judicial Court.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does 36 M.R.S.A. § 5217-A allow Maine residents a tax credit for income tax paid to another state on lottery winnings when the lottery ticket was purchased, the lottery operations are situated, and the payment was made in that other state, despite the taxpayer's Maine domicile?
Opinions:
Majority - Dana, Justice
Yes, 36 M.R.S.A. § 5217-A allows Maine residents a tax credit for income tax paid to another state on lottery winnings if the income is derived from sources in that other state. The court found that the plain language of § 5217-A dictates that a credit is available for income tax paid to another jurisdiction on 'income derived from sources in that taxing jurisdiction.' The Boulets' lottery income was clearly derived from Massachusetts sources because the ticket was purchased there, the lottery has no presence outside Massachusetts, ticket sales are confined to Massachusetts, the property generating the income is in Massachusetts, and payment was made from Massachusetts under Massachusetts law. The Assessor's argument that the doctrine of mobilia sequuntur personam (movables follow the person), which would place the source of intangible income at the domicile of the owner (Maine), was rejected as inapplicable to this credit provision. The court also rejected the Assessor's attempt to incorporate the definition of 'income derived from sources within this State' from § 5142 (which deals with non-resident taxation of intangible property employed in a business) into § 5217-A. The court emphasized that § 5142 is intended for taxing nonresidents and has different policy considerations than § 5217-A, which grants a credit to residents. Tax credits are a matter of legislative grace, giving the state more flexibility in defining their scope than in constitutionally taxing non-residents, making it reasonable for the legislature to intend different definitions for 'source' in these distinct statutory contexts.
Analysis:
This case provides a crucial interpretation of 'income derived from sources in that taxing jurisdiction' within Maine's resident income tax credit statute, specifically for intangible income like lottery winnings. The ruling firmly rejects the application of the common law doctrine of mobilia sequuntur personam in this statutory context and highlights the fundamental distinction in policy considerations between taxing non-residents and granting credits to residents. This decision could influence future interpretations of 'source' language in tax credit statutes, steering courts towards considering the physical locus of income-generating activity or property rather than solely relying on the taxpayer's domicile, especially when different legislative intents are discernible.
