Baker McKenzie’s SALT practice secured a win for Leadville Insurance Company (“Leadville”) in Maryland Tax Court. The Court ruled in favor of Leadville on its Motion for Summary Judgment and held that the Comptroller’s assessment of Maryland corporate income tax on Leadville was in error. Leadville Insurance Co. v. Comptroller of the Treasury, Case No. 13-IN-OO-0035 (Md. Tax Ct. Mar. 30, 2017). The Court found that Leadville, a Vermont insurance company with interest income from an affiliate with Maryland operations, was not subject to Maryland corporate income tax.
Leadville moved for summary judgment on grounds that insurance companies “subject to taxation under Title 6 of the Insurance Article” are exempt from the Maryland corporate income tax pursuant to Md. Code Ann. Tax-Gen § 10-104(4). The Comptroller opposed on grounds that Leadville should be considered to be subject to tax under Title 4 of the Insurance Article, relating to unauthorized insurers.
In making its determination in Leadville’s favor, the Court relied on its prior decision relating to a similarly-situated insurance company in Nat’l Indem. Co. v. Comptroller of the Treasury, Case No. 14-IN-OO-0433 (Md. Tax Ct. 2015). The Court stated that, “In National Indemnity, this Court held that the plain language of the statute at issue, the respondent’s own regulations and other published guidance provided that insurance companies similar to the petitioner were not subject to Maryland income tax. The Court sees no reason to distinguish this case from National Indemnity and will rely on the analysis therein.”
Although the Court did not further address the Comptroller’s position in its Order, it should be noted that Title 4 of the Insurance Article provides that the premium tax under Title 4 is “instead of all other state taxes.” Md. Code Ann. Ins. § 4-209(c). Thus, the potential distinction of whether Leadville was subject to tax under Title 4 or Title 6 did not appear to make a difference.
The Comptroller is expected to appeal this ruling. Leadville was represented in this matter by Scott Brandman of Baker McKenzie and Herman Rosenthal of Whiteford, Taylor & Preston.
Contact the Author: Scott Brandman
