October 9, 2018

Justices Will Side With Federal Retirees In W.Va. Tax Case

By Edward Zelinsky

Law360 - James Dawson is a retired U.S. marshal who resides in West Virginia. He receives a pension from the Federal Employees Retirement System, or FERS. Because Dawson is less than 65 years old,[1] he excludes for West Virginia income tax purposes the first $2,000 of his annual retirement income. West Virginia taxes the rest of Dawson’s FERS pension.

Dawson contends that West Virginia cannot tax any of his retirement income since West Virginia exempts entirely from its income tax a relatively small group of West Virginia state retirees, including some former law enforcement employees. While a lower West Virginia court agreed with Dawson, the Supreme Court of Appeals of the mountain state unanimously reversed and sustained West Virginia’s taxation of Dawson’s FERS income.

Read Professor Zelinsky's op-ed in Law360.