JAMES GOGGIN et al.
STATE TAX ASSESSOR
Argued: May 15, 2018
G. Goggin, Esq. (orally), Verrill Dana, LLP, Portland, for
appellants James and Ann Goggin
T. Mills, Attorney General, and Thomas A. Knowlton, Asst.
Atty. Gen. (orally), Office of the Attorney General, Augusta,
for appellee State Tax Assessor
SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and
The question presented in this appeal is whether an
individual resident of Maine is entitled to a Maine income
tax credit for any portion of the business taxes imposed by
New Hampshire on a New Hampshire limited liability company of
which the Maine resident is a member. In its judgment entered
in the Business and Consumer Docket, the court
[Murphy, /.) determined that the Maine
resident's proportion of business taxes paid in New
Hampshire by the LLC did not qualify that resident for a tax
credit against her individual Maine income taxes. We affirm
James and Ann Goggin appeal from a judgment affirming the
State Tax Assessor's denial of a tax credit for a share
of New Hampshire business taxes paid by a New Hampshire LLC
proportional to the membership interest that Ann had in the
LLC. They argue that the court erred in interpreting
Maine's individual income tax statutes and that, as
applied, Maine's income tax statutes discriminate against
interstate commerce in violation of the Commerce Clause of
the United States Constitution.
The facts are drawn from the parties' stipulations of
fact and their joint exhibits. The joint exhibits consist,
primarily, of Maine and New Hampshire tax documents. James
and Ann Goggin lived in Maine at all relevant times, and they
filed joint federal and State income tax returns. GHK
Company, LLC, is a limited liability company formed in New
Hampshire in 1994 to own, develop, maintain, and lease a
parcel of commercial real estate in New Hampshire. For
federal income tax purposes, the LLC was classified as a
partnership for the 2012 through 2014 tax years, which are
the years at issue here. In each of those three years, the
LLC received rental income from its property. For each of
those years, Ann was allocated a percentage interest in the
profits and losses of the LLC.
The State of New Hampshire does not impose income taxes on
individuals except on certain "income received from
interest and dividends" not at issue here. N.H. Rev.
Stat. Ann. § 77:3(I)(a) (2012). The State of New
Hampshire imposed on the LLC, however, both a "business
profits tax" and a "business enterprise tax."
See N.H. Rev. Stat. Ann. §§ 77-A:2, 77-E:2
(2012). On its federal "Return of Partnership
Income" forms, the LLC took deductions for the New
Hampshire business taxes it paid. Specifically, among other
deductions, it deducted the amount of the New Hampshire
business taxes from the amounts of rental real estate income
that the LLC reported to the federal government. Ann
Goggin's share of the rental income was determined as a
percentage of those reduced amounts for purposes of the
LLC's attached Schedule K-l forms stating her
"Partner's Share of Income, Deductions, Credits,
For each of the 2012 to 2014 years, the Goggins reported in
their joint federal income tax return an amount of income
from the LLC that was similar to the amount stated in the
corresponding year's federal LLC form reporting Ann
Goggin's share of the LLC's rental income.
When the Goggins filed their joint Maine income tax returns
for the 2012 through 2014 tax years, they did not claim a
credit for the New Hampshire business taxes paid by the LLC.
Because the calculation of the Maine tax obligation was based
on the Goggins' federal adjusted gross income, the income
that they reported in their Maine tax returns also did not
include any income that the LLC had received but then paid in
New Hampshire business taxes.
In January 2016, the Goggins filed an amended Maine return
for each of the 2012, 2013, and 2014 tax years seeking a
personal income tax credit, and corresponding refund, for the
portion of the New Hampshire business tax paid by the LLC
that was proportional to Ann's membership interest. The
amended Maine returns did not, however, add to the
Goggins' Maine adjusted gross income any amount of the
LLC's income that went to pay the New Hampshire LLC
Maine Revenue Services denied the refund by letter dated May
9, 2016, and the Goggins requested reconsideration.
See 36 M.R.S. § 151(1) (2017). In a written
decision dated September 21, 2016, the ...