Suit: state stumbles backing up tax hike.

AuthorMartin, Edward
PositionTar Heel Tattler

Never look back. Not if you're the taxman, according to Raleigh lawyer Gene Boyce. The state taxed its wealthiest residents' 2001 incomes at a rate that wasn't adopted until September of that year. Boyce says that's unconstitutionally retroactive and wants a court to refund more than $70 million to 82,500 taxpayers. If the courts agree with him, the state will get another expensive lesson that shows its tax enforcement, at least by Boyce's reckoning, is too aggressive.

Boyce, in a string of eight similar lawsuits dating to 1989, has forced the state to return more than $1.5 billion to taxpayers. The most well-known was one challenging taxes on intangibles such as out-of-state stocks, which produced more than $440 million in refunds. Another forced the state to change how it taxed state and federal pensions, including military pensions. It led to $841 million in refunds. Mike Easley, now governor, was elected attorney general in 1992 and inherited both cases. "I haven't been invited to the governor's mansion for quite some time," Boyce, 71, says.

His latest suit will break his winning streak, N.C. Attorney General Roy Cooper and his legal staff predict. They contend that Boyce is misinterpreting the law. The only figure that matters, says George Boylan, a special deputy attorney general, is net income for the year, which can't be calculated until Dec. 31.

That might be a fine legal...

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