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Melof v. James5/28/1999
This case presents the question whether Alabama's retirement-benefit taxation classifications conflict with Amendment 25 to the Alabama Constitution of 1901 and equal-protection guarantees of the United States and Alabama Constitutions.
On April 14, 1989, this class action was filed in the Montgomery County Circuit Court against Governor Fob James and the State commissioner of revenue in their official capacities (hereinafter collectively referred to as "the State"), on behalf of four subclasses of persons who had paid Alabama state income tax on retirement benefits received through the retirement programs of their employers: the Federal Government (including the military services); certain Alabama political subdivisions; and private employers. The complaint alleged that Alabama's system of exempting certain state retirees from income tax on retirement benefits while taxing the retirement benefits of private retirees and some public retirees (hereinafter that system is called the "retirement-tax structure") violated the Equal Protection Clause of the Fourteenth Amendment as well as an equal-protection guarantee of the Alabama Constitution provided under the combination of §§ 1, 6, and 22.
The case was filed pursuant to the United States Supreme Court's decision in Davis v. Michigan Dep't of Treasury, 489 U.S. 803 (1989), holding that Michigan's practice of applying different income-tax structures on federal and state retirement income was invalid under 4 U.S.C. § 111 and under the intergovernmental-tax-immunity doctrine.
The circuit court consolidated this case with two other cases that had been filed against the State:
"Rinehart v. Sizemore, CV-89-704, and Olts v. Sizemore, CV-89-734. Those two cases involved the taxation of retirement benefits of federal and military retirees. The parties involved in all three cases agreed to: 1) ratify Rinehart as establishing the appropriate class to represent the federal and military retirees, 2) dismiss the Olts case, and 3) sever the claims of the private retirees from those of the federal and military retirees. A judgment was eventually entered for the federal and military retirees in Sizemore v. Rinehart, 611 So. 2d 1064 (Ala. Civ. App. 1992), writ quashed, 611 So. 2d 1069 (Ala. 1993)."
The four subclasses of retirees (with their representatives) are as follows:
"(1) Fred Melof; Melof receives a pension pursuant to a 'defined benefit plan' as a former employee of United States Steel Corporation. Since tax year 1991, Melof's retirement benefits have been exempt from income tax. Melof represents taxpayers who have paid income tax on private retirement benefits for the years 1985 to 1990."
"(2) E.K. Alley; Alley, a retired police officer, received a pension and annuity from the City of Birmingham and the Alabama Peace Officers Annuity and Benefit Fund. Alley paid income tax for the years 1985 through 1990 on his retirement benefits in excess of $8,000.00 per year. Alley represents two subclasses: (a) eligible peace officers and fire fighters who paid income tax on retirement benefits in excess of $8,000.00 per year for the years 1985 through 1990; and (b) taxpayers who have paid income tax on retirement benefits from a municipal, county or public board which has not or had not joined the State Employees Retirement System of Alabama for the years 1985 through the present."
"(3) Marilyn Mooring; Mooring, a retired private school teacher, receives a pension pursuant to a 'defined contribution plan' offered by her former employer. Mooring represents taxpayers who have paid income tax on retirement benefits received from a 'defined contribution plan,' or other private or pub
Page 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Alabama Personal Injury Attorneys
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