McManus v. State, Department of Revenue & Finance

LARSON, Justice.

E.J. McManus is a retired federal employee whose retirement benefits were subjected to Iowa income tax at a time when state employees’ retirement benefits were exempted. The United States Supreme Court, in Davis v. Michigan Department of Treasury, 489 U.S. 803, 817, 109 S.Ct. 1500, 1508-09, 103 L.Ed.2d 891, 906 (1989), ruled that this disparate treatment of retirement income violated the Federal Public Salary Tax Act of 1939, 4 U.S.C. § 111.

Effective January 1, 1989, Iowa’s tax statute was amended to end this preferential treatment, but McManus requested a refund of the income…