LAW REVIEW 1179
SCRA Only Protects Your Military Income from State Income Tax
By Captain Samuel F. Wright, JAGC, USN (Ret.)
4.5—Protection from State/Local Tax Authorities
7.0—Military Voting Rights
Q: I am a life member of ROA. In 1988, I was commissioned an Ensign in the commissioned corps of the National Oceanic and Atmospheric Administration (NOAA), a commissioned corps in the United States Department of Commerce. My first NOAA assignment was on a NOAA vessel home ported in Florida, and while there I established my domicile in that state. I registered to vote there and voted in person on Election Day while serving in the state. Over the last 20-plus years, I have maintained my domicile in Florida. I vote there by absentee ballot, and I use as my “permanent home address” the apartment where I lived while assigned to that NOAA vessel more than 20 years ago.
I have been on active NOAA service continuously for my entire career, and I am currently serving at the NOAA headquarters in Maryland. I physically reside in an apartment near the NOAA headquarters, since I cannot commute from Florida. But I do not consider Maryland to be my domicile. I have never voted or registered to vote anywhere but Florida.
Florida has no state income tax and that has been a blessing to me over my NOAA career. I have been told that a federal law called the Soldiers’ and Sailors’ Civil Relief Act (SSCRA) protects me from having to pay state income tax to whatever state where I happen to be stationed, so long as I maintain my Florida domicile. But now somebody has told me that the SSCRA does not apply to NOAA Corps officers. Does it apply?
In 2003, Congress enacted the Servicemembers Civil Relief Act (SCRA), as a long-overdue rewrite of the SSCRA, which dates back to 1917. Under the SSCRA, coverage of NOAA Corps officers and Public Health Service (PHS) commissioned corps officers was ambiguous. Under the SCRA, PHS and NOAA officers are unambiguously covered.
The SCRA is codified in title 50 Appendix of the United States Code, sections 501-597b (50 U.S.C. App. 501-597b). You can find the SCRA definitions at 50 U.S.C. App. 511. “The term ‘servicemember’ means a member of the uniformed services, as that term is defined in section 101(a)(5) of title 10, United States Code.” 50 U.S.C. App. 511(1). This most definitely includes the NOAA Corps and the PHS Corps.
Q: This is confusing. Is the NOAA Corps an armed force, or is it a uniformed service?
A: The NOAA Corps (like the PHS Corps) is a uniformed service but not an armed force. All armed forces are uniformed services, but not all uniformed services are armed forces.
As defined in the United States Code, the armed forces are the Army, Navy, Marine Corps, Air Force, and Coast Guard. 10 U.S.C. 101(a)(4). The uniformed services are the five armed forces plus the NOAA Corps and the PHS Corps. 10 U.S.C. 101(a)(5).
Whenever a Senator or Representative introduces a bill to provide some new or expanded benefit to members of the “armed forces,” we (ROA) and The Military Coalition (of which ROA is a very active member) ask the sponsor to change “armed forces” to “uniformed services” so that NOAA Corps and PHS Corps officers will benefit. Sometimes they agree to make this change, and sometimes they don’t.
Q: As I approach the end of my NOAA career, I have been attending graduate school part time. In connection with the graduate school program, I have been selected for a “fellowship” under which I will receive about $10,000 for work in my new field, over the next few months. I will be doing this work on a part-time basis on weekends and in the evening, not to interfere with my NOAA duties, and with permission from NOAA authorities. Maryland’s tax department claims that it can make me pay Maryland state income tax on this fellowship income, even if I do not pay Maryland state income tax on my NOAA salary. Is that correct?
“Compensation of a servicemember for military service shall not be deemed to be income for services performed or from sources within a tax jurisdiction of the United States if the servicemember is not a resident or domiciliary of the jurisdiction in which the servicemember is serving in compliance with military orders.” 50 U.S.C. App. 571(b) (emphasis supplied).
If you have income other than your NOAA salary, Maryland is not precluded from taxing that income.
“A tax jurisdiction may not use the military compensation of a nonresident servicemember to increase the tax liability imposed on other income earned by the nonresident servicemember or spouse subject to tax by the jurisdiction.” 50 U.S.C. App. 571(e).
This means that Maryland is limited to taxing the $10,000 in fellowship income at the rate that would apply if $10,000 were your only income during the year. Because the state income tax is progressive, the tax on $10,000 will be only a few dollars.
Q: I expect to retire from the NOAA Corps sometime in the latter part of 2012. When I retire, I will likely remain in the same apartment in Maryland and take a civilian job, likely for the Federal Government or a federal contractor. In this scenario, will I be required to pay Maryland state income tax on my NOAA retired pay and my civilian salary after I retire from NOAA?
“The term ‘period of military service’ means the period beginning on the date on which a servicemember enters military service and ending on the date on which the servicemember is released from military service or dies while in military service.” 50 U.S.C. App. 511(3).
Once you leave active service, by retirement or otherwise, the special SCRA rules no longer apply to you. Presently, the Maryland apartment where you usually sleep is not your domicile. On the day after you leave active duty, that apartment is your domicile. You will need to pay Maryland state income tax on your NOAA retirement income and your civilian salary.
You will also need to register to vote in Maryland. Once you are off active duty, you are no longer a Florida domiciliary, and you are no longer eligible to vote in Florida by absentee ballot.