ERIC V. WARNQUIST et al.
STATE TAX ASSESSOR
Argued: November 6, 2018
Gregory J. Orso, Esq. (orally), Orso Law, PA, York, for
appellant Eric V. and Rosamond C. Warnquist
T. Mills, Attorney General, and Kimberly L. Patwardhan, 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
Eric V. Warnquist and Rosamond C. Warnquist appeal from a
summary judgment entered by the Superior Court (York County,
O'Neil, /.) in favor of the State Tax Assessor
(the Assessor) on the Warnquists' appeal from the
assessment of tax on certain foreign income. See
M.R. Civ. P. 80C; 5 M.R.S. §11001(2017).
The Warnquists claim that the court misinterpreted and
misapplied 36 M.R.S. § 5217-A (2017) regarding the
income tax credit available to them for income taxes paid to
a foreign jurisdiction. They also challenge the court's
determination that the penalties and interest assessed
against them for the 2012 and 2013 tax years were
appropriate. See 36 M.R.S. §§ 186,
187-B(7) (2017). We affirm the court's judgment.
The following facts are drawn from the properly formed
portions of the parties' statements of material facts and
their stipulated exhibits. See BCN Telecom, Inc. v. State
Tax Assessor, 2016 ME 165, ¶ 3, 151 A.3d 497.
The Warnquists are residents of Cape Neddick, Maine, and own
two rental properties in the county of Rogaland, in the
country of Norway. One of the properties is a single-family
home and the other is an industrial complex. In 2013, the
home was taken by "expropriation," the Norwegian
equivalent of eminent domain. The Warnquists paid income
taxes to Rogaland on the rental income from both properties
and on the income from the expropriation- $208, 860 in 2012
and $238, 374 in 2013. The Rogaland taxes were based on the
Warnquists' gross income and did not include any
deductions for expenses related to the properties.
On their 2012 and 2013 federal tax returns, the Warnquists
reported their Norwegian income, as well as income from
interest, dividends, and pensions sourced in Maine, and
deducted from this income certain expenses allowed by the
federal tax code, including expenses associated with the
properties, to establish their federal adjusted gross income
(AGI). The Warnquists then imported their federal AGI to
their Maine tax returns. 36 M.R.S. § 5102(1-C)(A)
To avoid what they viewed as double taxation on the income
from the properties, the Warnquists claimed a tax credit on
their 2012 and 2013 Maine returns, pursuant to 36 M.R.S.
§ 5217-A, for the full amount of the income taxes they
paid to Rogaland, which was based on the gross income from
the properties. For each tax year, the Warnquists used a
"Worksheet for Credit for Income Tax Paid to Other
Jurisdiction," issued by Maine Revenue Services (MRS),
to calculate the section 5217-A credit. Instructions on the
worksheet guide taxpayers through each step of the credit
calculation. Because the credit the Warnquists claimed in
both years exceeded the amount of their Maine income tax
obligations, they paid no Maine income taxes.
In 2014, the Assessor audited the Warnquists' 2012 and 2013
tax returns. The Assessor increased the Warnquists'
standard deduction for 2012, but also determined that the
Warnquists had claimed a larger credit than is allowed under
section 5127-A because they overstated the income that was
taxed by both Rogaland and the State of
Maine. The Assessor calculated the portion of the
Warnquists' Rogaland income that was subject to tax in
Maine and, based on that calculation, adjusted the
Warnquists' section 5217-A credits for both tax years and
issued assessments for tax, interest, and penalties.
After receiving notice of the recalculations, adjusted
credits, and assessments from the Assessor, together with an
explanation of how to properly calculate the section 5127-A
credit,  the Warnquists timely petitioned the
Assessor for reconsideration of its decision pursuant to 36
M.R.S. § 151(1) (2017). The Assessor denied the
The Warnquists then appealed to the Board of Tax Appeals (the
Board). 36 M.R.S. § 151(2)(F)(1) (2017). The Board
reduced the tax assessed for 2012 by $66 because the
Warnquists understated their allowable standard deduction,
but otherwise upheld the assessments in a decision dated July
21, 2016. The Warnquists sought reconsideration of the