Alabama credit for taxes paid to other states

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October 2017


On September 28, 2016, the Alabama Tax Tribunal in Moody v. State of Alabama Department of Revenue rejected the credit limitation on taxes paid to other states that is set out in Alabama regulations because it is contrary to the plain language of the statute establishing the credit. The Alabama Department of Revenue appealed the decision and then requested its dismissal, which was granted.  The Department has instead focused on another decision before the Tribunal.

The takeaway

Potential refund opportunities may exist for taxpayers based on a recalculation of the credit for taxes paid to other states. Alabama residents with income subject to tax in more than one jurisdiction should examine their returns to determine if any credit for taxes paid to other states has been limited based on Regulation 810-3-21-.03 and evaluate if a refund opportunity exists.

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Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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