
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, June 6, 1995                   TAG: 9506060136
SECTION: VIRGINIA                    PAGE: C-4   EDITION: NEW RIVER VALLEY 
SOURCE: Associated Press
DATELINE: RICHMOND                                 LENGTH: Short

COURT: PENSION TAX DEADLINE NOT UNFAIR

A federal appeals court Monday upheld a lower court's ruling that North Carolina does not owe relief to illegally-taxed federal pensioners who failed to comply with the terms of a refund program.

A three-judge panel of the 4th U.S. Circuit Court of Appeals unanimously rejected the pensioners' argument that the time limitations for claiming refunds deprived them of their constitutional right of due process.

State law required pensioners to pay the assessed tax, then make the refund request within 30 days. Pensioners argued that the state led them to believe they had three years to request refunds, but the court ruled that documents explaining the procedure were sufficiently clear.

The dispute stems from a 1989 U.S. Supreme Court ruling that a Michigan statute giving state retirement income more favorable tax exemption treatment than federal income was unconstitutional.

Until 1989, North Carolina was one of 22 states, including Virginia, that treated state retirement income more favorably than federal pensions.

Federal retirees in Virginia also sued. The General Assembly approved an out-of-court settlement.

by CNB