Commonwealth, Revenue Cabinet v. Gossum

REYNOLDS, Justice.

This appeal is from the judgment of Marshall Circuit Court for which transfer was granted. This controversy involves whether, and to what extent, federal retirees are entitled to refunds of state taxes paid on their federal retirement annuities.

I. ENTITLEMENT TO REFUND

Before its amendment, effective July 13, 1990, KRS 141.021 exempted state retirement annuities, regardless of amount, from state income tax, but exempted federal retirement annuities only up to $4,000. In 1989, the United States Supreme Court held a similar Michigan statute violative of the federal…