Comptroller of the Treasury v. Blanton

GREENE, J. In this case, we must determine whether a tax credit provided pursuant to Maryland Code (1998, 2004 Repl.Vol.), § 10-703(a) of the Tax-General Article, may be applied to ⁵³¹ both State and local income taxes paid by an individual. 1 We hold that § 10-703(a) of the Tax-General Article does not reduce the amount owed by a Maryland resident for local income tax. The tax credit may be applied only to reduce the amount of an individual’s state income tax liability. In so holding, we reverse the judgment of the Circuit Court for Baltimore County that, for the purposes of the tax credit in § 10-703(a), “State income tax” includes both State and local income taxes. Edward L. Blanton, Jr., and his wife, Estelle E. Blanton (collectively “the Blantons”) contested their 2001 income tax assessment by filing a complaint with the Maryland Comptroller of the Treasury (hereafter “Comptroller”).

A hearing officer from the Comptroller’s office determined that the tax credit applied exclusively to reduce state income taxes. 2 The Blantons appealed to the Maryland Tax Court and that administrative body affirmed the Comptroller’s decision. The Blantons filed a petition for judicial review in the Circuit Court for Baltimore County. After a hearing in the Circuit Court, the hearing judge reversed the decision of the Tax Court. On November 10, 2004, the Comptroller appealed that decision to the Court of Special Appeals.

Before that court could decide the appeal, we issued, on our initiative, a writ of certiorari. Comptroller v. Blanton, 387 Md. 122 , 874 A.2d 917 (2005). Facts The underlying facts in this case are largely undisputed. In 2001, the Blantons, as residents of Baltimore County, Maryland, held property interests in North Carolina and paid income taxes in both states.

On August 15, 2002, the Blantons filed a 2001 Form 502 Resident Maryland Tax Return (“Form ⁵³² 502”). The Blantons’ federal adjusted gross income was $360,036.00 and their Maryland taxable net income was $287,676.00. The Maryland State income tax was $13,754.44 and the local Baltimore County tax was $8,026.16, for a combined total of $21,780.60. The Blantons were allowed a credit of $10,905.60, calculated under the Maryland tax formula, for taxes paid to North Carolina for North Carolina income tax.

After application of the credit, the Blantons owed $2,849.44 for State income tax, while the local income tax portion remained at $8,026.16. The total combined amount of Maryland and local tax owed was $10,875.60. The amount owed after prior payments, taxes withheld, and all credits and offsets was $4,637.60, not including interest and penalties. Instead of paying the amount of tax assessed by this State, the Blantons subtracted the North Carolina income tax amount of $16,782.00 from $21,780.60, which yielded a difference of taxes owed as $4,998.00. 3 Further, the Blantons enclosed a letter with their Maryland income taxes in which they challenged the layout of Form 502.

Specifically, they argued that the flaw in Form 502 exists in the fact that the State and local income taxes are calculated independently of each other. The Comptroller disregarded the letter and sent a letter to the Blantons, requiring them to pay the outstanding tax balance of $4,637.60. 4 In a letter dated October 22, 2002, the Blantons requested an informal hearing on the assessment. A hearing was later held. In the Notice of Final Determination, dated January 13, 2003, the Comptroller affirmed the assessment, finding that the Legislature intended a credit against the State income tax only. 5 Among other ⁵³³ things, the Comptroller stated that the definition of “State” under § 1-101 (u) excluded counties or local districts. 6 On January 28, 2003, the Blantons filed a “Petition of Appeal” with the Maryland Tax Court.

On December 3, 2003, a hearing was held where both parties presented oral arguments. The Tax Court determined that the Legislature defined State tax and local tax as two distinct taxes, and, as such, they “are not the same, they are two separate ideas.” Further, the Tax Court concluded that § 10-703(a) of the Tax-General Article that states “a resident may claim a credit only against the State income tax” directs a credit against the State income tax only. In addition, on December 18, 2003, the Tax Court affirmed the Comptroller’s decision and held that the Legislature intended for the credit to apply against the State income tax and not the local income tax. On January 7, 2004, the Blantons filed a petition for judicial review in the Circuit Court for Baltimore County.

On July 23, 2004, a hearing was held. Thereafter, on October 15, 2004, the Circuit Court reversed the decision of the Tax Court and held that an ambiguity existed with the term “State income tax.” The Circuit Court further held that the definition of “State income tax” also includes local income tax for purposes of the tax credit under § 10-703(a) of the Tax — General Article. 7 Standard of Review This Court recently examined, in detail, a court’s role in reviewing an administrative agency’s adjudicatory decision, and held that a court’s task on review is not to “substitute its judgment for the expertise of those persons who constitute the admin ⁵³⁴ istrative agency,” United, Parcel v. People’s Counsel, ... 336 Md. [569,] ... 576-577, 650 A.2d [226,] ... 230 [(1990)], quoting Bulluck v. Pelham Wood Apts., ... 283 Md. [505,] ... 513, 390 A.2d [1119,] ... 1124 [(1978)]. Even with regard to some legal issues, a degree of deference should often be accorded the position of the administrative agency. Thus, an administrative agency’s interpretation and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts.

Lussier v. Md. Racing Commission, 343 Md. 681, 696-697 , 684 A.2d 804, 811-812 (1996), and cases there cited; McCullough v. Wittner, 314 Md. 602, 612 , 552 A.2d 881, 886 (1989) (“The interpretation of a statute by those officials charged with administering the statute is ... entitled to weight.”). Furthermore, the expertise of the agency in its own field should be respected. Fogle v. H & G Restaurant, 337 Md. 441, 455 , 654 A.2d 449, 456 (1995); Christ v. Department of Natural Resources, 335 Md. 427, 445 , 644 A.2d 34, 42 (1994) (legislative delegations of authority to administrative agencies will often include the authority to make “significant discretionary policy determinations”); Bd. of Ed. for Dorchester Co. v. Hubbard, 305 Md. 774, 792 , 506 A.2d 625, 634 (1986) (“application of the State Board of Education’s expertise would clearly be desirable before a court attempts to resolve the” legal issues). Maryland Aviation Administration v. Noland, 386 Md. 556, 571-72 , 873 A.2d 1145, 1154-55 (2005), quoting Board of Physician Quality Assurance v. Banks, 354 Md. 59, 68-69 , 729 A.2d 376, 381 (1999) (alternation in original) (alterations added) (footnote omitted).

Recognizing that the agency’s decision is “prima facie correct and presumed valid,” “we must review the agency’s decision in the light most favorable to it.” Comptroller of the Treasury v. Citicorp Int’l. Commc’ns, 389 Md. 156, 163 , 884 A.2d 112, 116 (2005)(quoting Ramsay, Scarlett & Co. v. Comptroller, 302 Md. 825, 834-35 , 490 A.2d 1296, 1301 (1985)); Md.Code (1998, 2004 Repl.Vol.) § 13-411 of the Tax-General Article (“[a]n assessment of tax ... is prima facie correct”). ⁵³⁵ Unless the Tax Court’s decision was erroneous as a matter of law, or its conclusion was not supported by substantial evidence, we must affirm that decision. See Citicorp, 389 Md. at 164 , 884 A.2d at 117 ; CBS v. Comptroller, 319 Md. 687, 697-98 , 575 A.2d 324, 329 (1990) (internal quotations and citations omitted). Analysis The issue in this case is whether the language of § 10-703(a) of the Tax — General Article allows for a credit solely toward the State income tax, or allows for a credit toward both State and local income taxes.

We hold that the statute refers only to the State income tax. The Comptroller maintains that the Circuit Court erred when it failed to recognize that only non-substantive changes wei'e made to § 10-703(a) of the Tax-General Article during the Legislature’s revision of the tax code in 1988. 8 The Comptroller argues that when the Legislature undertakes code recodification, any modifications or enactments ordinarily are non-substantive, unless the Legislature denotes otherwise. Further, the Comptroller contends that the plain language of § 10-703(a), which states that a taxpayer may “claim a credit only against the State income tax,” explicitly means that the local tax is not available for the credit. The Blantons argue that the Legislature intended that § 10-703(a) of the Tax — General Article include both State and local income tax; thus, the Maryland Tax Return, ⁵³⁶ Form 502, which separates computation of State and local taxes, is inaccurate. 9 The issue sub judice is one of statutory interpretation.

The cardinal rule of statutory interpretation is to ascertain and effectuate legislative intent. O’Connor v. Baltimore County, 382 Md. 102, 113 , 854 A.2d 1191, 1198 (2004); Privette v. State, 320 Md. 738, 744 , 580 A.2d 188, 191 (1990) (citations omitted). We may consider the general purpose and aim of a statute in an effort to discern legislative intent. Kaczorowski v. City of Baltimore, 309 Md. 505, 513 , 525 A.2d 628, 632 (1987).

Our long-standing rule is that if the language used in ⁵³⁷ the statute is clear, unambiguous, and consistent with its objective, the words will be accorded their ordinary meaning. Ayres v. Townsend, 324 Md. 666, 672 , 598 A.2d 470, 473 (1991) (citations omitted); see G. Heileman Brewing Co. Inc. v. Stroh Brewery Co., 308 Md. 746, 755 , 521 A.2d 1225, 1230 (1987). We focus our attention mainly on Maryland Code (1988, 2004 Repl.Vol.), § 10-703(a) of the Tax — General Article, which provides in relevant part: § 10-703 Tax paid to another state (a) Except as provided in subsection (b) of this section, a resident may claim, a credit only against the State income tax for a taxable year in the amount determined under subsection (c) of this section for State tax on income paid to another state for the year. (Emphasis added.) The plain language of § 10-703(a) is unambiguous.

The word “only” is defined as “without others or anything further; alone; solely; exclusively....” Random House Dictionary of the English Language 1354 (2nd ed.1987). See Motor Vehicle Administration v. Jones, 380 Md. 164, 177 , 844 A.2d 388, 395-96 (2004); Riemer v. Columbia Medical Plan, Inc., 358 Md. 222 , 239-40 & n. 7, 747 A.2d 677 , 686-87 & n. 7 (2000). See also Gorge v. State, 386 Md. 600, 613 , 873 A.2d 1171, 1179 (2005) (stating that the words “only if’ have only one unambiguous and ordinary meaning). Further, Maryland has long accepted the doctrine of expressio (or inclusio) unius est exclusio alterius, or the expression of one thing is the exclusion of another.

Black’s Law Dictionary 1717 (8th ed.2004). Baltimore Harbor v. Ayd, 365 Md. 366, 385 , 780 A.2d 303, 314 (2001) (holding that “[w]e have long applied the principal of statutory construction, ‘expressio unius est exclusio alterius’.... ”). Accord Biggus v. Ford Motor Credit Co., 328 Md. 188, 214 , 613 A.2d 986, 999 (1992) (stating, “[tjhis is in keeping with the familiar maxim of statutory construction that ‘expres ⁵³⁸ sio unius est exclusio alterius ’ — the expression of one thing is the exclusion of another. Maryland has long recognized this basic rule”).

When attempting to discern legislative intent, “[i]t is a well-settled practice of this Court to refer to the Revisor’s Notes when searching for legislative intent of an enactment.” Dean v. Pinder, 312 Md. 154, 163 , 538 A.2d 1184, 1189 (1988) (citing Alters v. Tittsworth, 269 Md. 677, 683 , 309 A.2d 476, 480 (1973)); Murray v. State, 27 Md.App. 404, 409 , 340 A.2d 402, 405 (1975) (stating that it is well known that Revisor’s Notes express legislative intent). See also Kane v. Schulmeyer, 349 Md. 424, 435, 437 , 708 A.2d 1038, 1044, 1045 (1998) (noting that when this Court analyzed a venue statute it stated that, “a fair indication of legislative intent is discernable from the Revisor’s Notes” and “[t]hat intent is unmistakably revealed ... in the Revisor’s Note”); Briggs v. State, 289 Md. 23, 30-31 , 421 A.2d 1369, 1374 (1980) (recognizing that when this Court interpreted the trial de novo rule, we noted that the Revisor’s Notes denote legislative intent). When a substantial part of an Article is revised, “[a] change in the phraseology of a statute as part of a recodification will ordinarily not be deemed to modify the law unless the change is such that the intention of the Legislature to modify the law is unmistakable.” Rettig v. State, 334 Md. 419, 427 , 639 A.2d 670, 674 (1994) (quoting Office of Prof Employees Int’l. v. MTA, 295 Md. 88, 100 , 453 A.2d 1191, 1197 (1982)). Further, it is well-settled that: “[Recodification] of statutes is presumed to be for the purpose of clarity rather than change of meaning and, thus, even a change in the phraseology of a statute by a codification will not ordinarily modify the law unless the change is so radical and material that the intention of the Legislature to modify the law appears unmistakably from the language of the Code.” Hoffman v. Key Fed. Sav. & Loan Ass’n, 286 Md. 28, 37 , 416 A.2d 1265, 1269 (1979).

See also Tipton v. Partner’s Mgmt. Co., 364 Md. 419 , 773 A.2d 488 (2001); Riemer v. Columbia Med. Plan., Inc., 358 Md. 222 , 747 A.2d ⁵³⁹ 677 (2000); Blevins & Wills v. Baltimore County, Maryland, 352 Md. 620 , 724 A.2d 22 (1999); Giant