Case No. 17-419 | W. Va.
Preview by Samuel E. Meredith, Senior Online Editor
West Virginia does not collect tax on some kinds of retirement benefits given to former state law enforcement officials. The state does not, however, extend this same tax relief to retired federal law enforcement personnel. The question presented by Dawson v. Steager is whether this tax policy is permissible under “the doctrine of intergovernmental tax immunity.” Brief for the Petitioners at i, Dawson v. Steager, No. 17-419 (U.S. filed Aug. 28, 2018); see also 4 U.S.C. § 111 (2018).
James Dawson served for many years as a federal law enforcement official, including as the U.S. Marshal for the Southern District of West Virginia. Dawson is now retired and must pay taxes on money received from his retirement plan. Dawson and his wife applied to the state for a tax exemption, believing that Dawson’s retirement plan should be taxed in the same manner as those of former state law enforcement officers.
The state rejected the Dawsons’ request for an exemption, a decision that the Dawsons then challenged in court. The first court to review the issue agreed with the Dawsons that the state was required to provide the exemption, citing the intergovernmental tax immunity doctrine. The Supreme Court of West Virginia reversed.
The Dawsons rely on Davis v. Michigan Department of Treasury, 489 U.S. 803 (1989), and argue that the intergovernmental tax immunity doctrine is “a bright-line rule” that precludes states from placing disparate tax obligations on federal and state employees absent “‘significant differences between the two classes.’” Brief for the Petitioners at 10, No. 17-419 (U.S. filed Aug. 28, 2018) (quoting Davis, 489 U.S. at 815–16).
The state, on the other hand, contends that its approach to taxing former state law enforcement officials is permissible because it is only “a granular exemption” that “does not create the inconsistent tax treatment with which [the intergovernmental tax immunity doctrine] is concerned.” Brief for Respondent at 17, Dawson v. Steager, No. 17-419 (U.S. filed Oct. 16, 2018).