W. Turner Boone et al v. Loren L. Chumley, Commissioner of The Tennessee Department of Revenue

W. Turner Boone and wife, Sally-Bruce M. Boone (“the Taxpayers”), are Tennessee residents who own stock in South Carolina corporations. In 2001, the Taxpayers paid South Carolina income tax of $43,328 based on pass-through income of $623,941. The Taxpayers received dividend distributions of $204,988 on the same income. They filed a 2001 Tennessee Hall Income Tax return reporting the dividends with a resulting tax of $12,288, against which they claimed a credit for a like amount based upon their payment of the South Carolina income tax. Their claimed credit is based upon a deduction allowed by statute for “tax paid to [another] state . . . provided, that there exists a tax credit reciprocity agreement between Tennessee and the other state.” Tenn. Code Ann. § 67-2-122 (2011). Loren L. Chumley, Commissioner of the Tennessee Department of Revenue (“the Commissioner”) declined to allow the credit. She gave notice of an outstanding tax liability for 2001 in the amount of $15,017.93, including penalties and interest. The Taxpayers paid the assessment under protest and filed this action against the Commissioner after they demanded and were denied a refund. The trial court upheld the Commissioner’s denial. The Taxpayers appeal. We affirm.