MAINE	SUPREME	JUDICIAL	COURT	                                       Reporter	of	Decisions	
Decision:	 2019	ME	19	
Docket:	   Yor-18-115	
Argued:	   November	6,	2018	
Decided:	  January	29,	2019	
	
Panel:	    SAUFLEY,	C.J.,	and	ALEXANDER,	MEAD,	GORMAN,	JABAR,	HJELM,	and	HUMPHREY,	JJ.	
	
	
                             ERIC	V.	WARNQUIST	et	al.		
                                         	
                                        v.	
                                         	
                              STATE	TAX	ASSESSOR	
                                         	
	
HUMPHREY,	J.	

      [¶1]	 	 Eric	 V.	 Warnquist	 and	 Rosamond	 C.	 Warnquist	 appeal	 from	 a	

summary	judgment	entered	by	the	Superior	Court	(York	County,	O’Neil,	J.)	in	

favor	of	the	State	Tax	Assessor	(the	Assessor)	on	the	Warnquists’	appeal	from	

the	assessment	of	tax	on	certain	foreign	income.		See	M.R.	Civ.	P.	80C;	5	M.R.S.	

§	11001	(2017).	

      [¶2]		The	Warnquists	claim	that	the	court	misinterpreted	and	misapplied	

36	M.R.S.	§	5217-A	(2017)	regarding	the	income	tax	credit	available	to	them	for	

income	 taxes	 paid	 to	 a	 foreign	 jurisdiction.	 	 They	 also	 challenge	 the	 court’s	

determination	 that	 the	 penalties	 and	 interest	 assessed	 against	 them	 for	 the	

2012	 and	 2013	 tax	 years	 were	 appropriate.	 	 See	 36	 M.R.S.	 §§	 186,	 187-B(7)	

(2017).		We	affirm	the	court’s	judgment.	
2	

                                  I.		BACKGROUND	

	     [¶3]		The	following	facts	are	drawn	from	the	properly	formed	portions	of	

the	 parties’	 statements	 of	 material	 facts	 and	 their	 stipulated	 exhibits.	 	 See	

BCN	Telecom,	Inc.	v.	State	Tax	Assessor,	2016	ME	165,	¶	3,	151	A.3d	497.	

      [¶4]		The	Warnquists	are	residents	of	Cape	Neddick,	Maine,	and	own	two	

rental	properties	in	the	county	of	Rogaland,	in	the	country	of	Norway.		One	of	

the	properties	is	a	single-family	home	and	the	other	is	an	industrial	complex.		

In	2013,	the	home	was	taken	by	“expropriation,”	the	Norwegian	equivalent	of	

eminent	domain.		The	Warnquists	paid	income	taxes	to	Rogaland	on	the	rental	

income	 from	 both	 properties	 and	 on	 the	 income	 from	 the	 expropriation—

$208,860	in	2012	and	$238,374	in	2013.		The	Rogaland	taxes	were	based	on	

the	Warnquists’	gross	income	and	did	not	include	any	deductions	for	expenses	

related	to	the	properties.			

      [¶5]	 	 On	 their	 2012	 and	 2013	 federal	 tax	 returns,	 the	 Warnquists	

reported	their	Norwegian	income,	as	well	as	income	from	interest,	dividends,	

and	 pensions	 sourced	 in	 Maine,	 and	 deducted	 from	 this	 income	 certain	

expenses	allowed	by	the	federal	tax	code,	including	expenses	associated	with	

the	 properties,	 to	 establish	 their	 federal	 adjusted	 gross	 income	 (AGI).		
                                                                                                      3	

The	Warnquists	 then	 imported	 their	 federal	 AGI	 to	 their	 Maine	 tax	 returns.		

36	M.R.S.	§	5102(1-C)(A)	(2017).			

        [¶6]		To	avoid	what	they	viewed	as	double	taxation	on	the	income	from	

the	 properties,	 the	 Warnquists	 claimed	 a	 tax	 credit	 on	 their	 2012	 and	 2013	

Maine	returns,	pursuant	to	36	M.R.S.	§	5217-A,	for	the	full	amount	of	the	income	

taxes	 they	 paid	 to	 Rogaland,	 which	 was	 based	 on	 the	 gross	 income	 from	 the	

properties.		For	each	tax	year,	the	Warnquists	used	a	“Worksheet	for	Credit	for	

Income	 Tax	 Paid	 to	 Other	 Jurisdiction,”	 issued	 by	 Maine	 Revenue	 Services	

(MRS),	to	calculate	the	section	 5217-A	credit.		Instructions	on	the	worksheet	

guide	taxpayers	through	each	step	of	the	credit	calculation.		Because	the	credit	

the	 Warnquists	 claimed	 in	 both	 years	 exceeded	 the	 amount	 of	 their	 Maine	

income	tax	obligations,	they	paid	no	Maine	income	taxes.			

        [¶7]		In	2014,	the	Assessor1	audited	the	Warnquists’	2012	and	2013	tax	

returns.		The	Assessor	increased	the	Warnquists’	standard	deduction	for	2012,	

but	 also	 determined	 that	 the	 Warnquists	 had	 claimed	 a	 larger	 credit	 than	 is	

allowed	 under	 section	 5127-A	 because	 they	 overstated	 the	 income	 that	 was	



   1		The	Assessor	is	the	executive	director	of	MRS.		See	Leadership,	Dep’t	of	Admin.	&	Fin.	Servs.,	

https://www1.maine.gov/dafs/about/leadership	(last	visited	Jan.	23,	2019);	see	also	Dep’t	of	Admin.	
&	 Fin.	 Servs.,	 Bureau	 of	 the	 Budget,	 Maine	 State	 Government	 Annual	 Report	 2017-2018	 (2018),	
https://www.maine.gov/budget/sites/maine.gov.budget/files/inline-files/2018%20Annual%20Re
port_1.pdf.				
4	

taxed	by	both	Rogaland	and	the	State	of	Maine.2		The	Assessor	calculated	the	

portion	of	the	Warnquists’	Rogaland	income	that	was	subject	to	tax	in	Maine	

and,	based	on	that	calculation,	adjusted	the	Warnquists’	section	5217-A	credits	

for	both	tax	years	and	issued	assessments	for	tax,	interest,	and	penalties.			

         [¶8]	 	 After	 receiving	 notice	 of	 the	 recalculations,	 adjusted	 credits,	 and	

assessments	 from	 the	 Assessor,	 together	 with	 an	 explanation	 of	 how	 to	

properly	calculate	the	section	5127-A	credit,3	the	Warnquists	timely	petitioned	

the	Assessor	for	reconsideration	of	its	decision	pursuant	to	36	M.R.S.	§	151(1)	

(2017).		The	Assessor	denied	the	petition.			

	        [¶9]	 	 The	 Warnquists	 then	 appealed	 to	 the	 Board	 of	 Tax	 Appeals	 (the	

Board).		36	M.R.S.	§	151(2)(F)(1)	(2017).		The	Board	reduced	the	tax	assessed	

for	2012	by	$66	because	the	Warnquists	understated	their	allowable	standard	

deduction,	 but	 otherwise	 upheld	 the	 assessments	 in	 a	 decision	 dated	

July	21,	2016.		The	Warnquists	sought	reconsideration	of	the	Board’s	decision;	




     2		In	Maine,	income	is	taxed	after	deductions	for	expenses	(net	income),	while	in	Norway,	income	

is	taxed	without	any	deductions	(gross	income).		See	36	M.R.S.	§§	5121,	5142	(2017).	
     3		This	was	not	the	first	time	the	Assessor	explained	to	the	Warnquists	how	to	calculate	the	section	

5217-A	 credit.	 	 The	 Assessor	 imposed	substantial	understatement	 penalties	 on	 the	 Warnquists	in	
2008,	2009,	2010,	and	2011	for	similar	section	5217-A	miscalculations	and	issued	letters	explaining	
how	to	properly	assess	the	credits	they	were	entitled	to	in	these	years.			
                                                                                                          5	

the	Board	denied	that	request	on	August	18,	2016.		See	4	C.M.R.	18	674	100-9	

§	305(1),	(2)	(2017).			

        [¶10]	 	 On	 October	 18,	 2016,	 the	 Warnquists	 filed	 a	 petition	 for	 review	

pursuant	to	M.R.	Civ.	P.	80C	and	5	M.R.S.	§	11001	requesting	that	the	Superior	

Court	 grant	 them	 relief	 from	 the	 tax,	 penalties,	 and	 interest	 imposed	 against	

them.4	 	 36	 M.R.S.	 §	 151-D(10)(I)	 (2017).	 	 They	 argued	 that	 under	 section	

5217-A,	they	were	entitled	to	a	credit	for	all	of	the	taxes	paid	to	Norway—even	

though	that	credit	was	greater	than	the	amount	of	taxes	otherwise	due	to	Maine	

on	 that	 same	 income—and	 further	 asserted	 that	 the	 court	 should	 abate	 the	

penalties	 and	 interest	 assessed	 against	 them	 pursuant	 to	 36	 M.R.S.	 §§	 186,	

187-B(7).		In	response,	the	Assessor	filed	a	motion	for	summary	judgment	on	

September	19,	2017.			

        [¶11]		On	March	7,	2018,	the	Superior	Court	(York,	O’Neil,	J.)	granted	the	

Assessor’s	 motion	 for	 summary	 judgment,	 upholding	 the	 tax,	 penalties,	 and	

interest	 assessed	 against	 the	 Warnquists.	 	 The	 court	 held	 that	 there	 was	 no	



   4	 	 Because	 a	 determination	 by	 the	 Assessor	 or	 the	 Board	 is	 not	 considered	 “an	 adjudicatory	

proceeding	within	the	meaning	of	that	term	in	the	Maine	Administrative	Procedure	Act,”	the	Superior	
Court	reviews	the	assessment	of	taxes	de	novo.		36	M.R.S.	§§	151(2)(D),	151-D(10)(I)(4)	(2017);	see	
also	BCN	Telecom,	Inc.	v.	State	Tax	Assessor,	2016	ME	165,	¶	2,	151	A.3d	497.		“The	court	shall	make	
its	own	determination	as	to	all	questions	of	fact	or	law,	regardless	of	whether	the	questions	of	fact	or	
law	 were	 raised	 before	 the	 division	 within	 the	 bureau	 making	 the	 original	 determination	 [the	
Assessor]	or	before	the	board.”		36	M.R.S.	§	151-D(10)(I).			
6	

genuine	 issue	 of	 material	 fact	 pursuant	 to	 M.R.	 Civ.	 P.	 56(c)	 and	 interpreted	

section	5217-A	to	limit	the	credit	available	to	a	taxpayer	to	an	amount	no	larger	

“in	 relation	 to	 the	 total	 amount	 of	 taxes	 owed	 than	 the	 proportion	 that	 the	

taxpayer’s	 adjusted	 gross	 income	 from	 the	 foreign	 jurisdiction	 bears	 to	 the	

taxpayer’s	 entire	 Maine	 adjusted	 gross	 income.”	 	 After	 noting	 that	 the	

Warnquists	 had	 not	 been	 “double	 taxed,”	 the	 court	 held	 that	 the	 Warnquists	

had	 failed	 to	 establish	 reasonable	 cause	 for	 a	 waiver	 or	 abatement	 of	 the	

assessed	penalties	and	failed	to	satisfy	the	court	that	they	were	entitled	to	an	

abatement	 of	 the	 assessed	 interest.	 	 See	 36	 M.R.S.	 §§	 186,	 187-B(7).	 	 The	

Warnquists	then	timely	appealed.		See	M.R.	App.	P.	2B(c).			

                                   II.		DISCUSSION	

      [¶12]	 	 In	 considering	 an	 appeal	 from	 a	 summary	 judgment,	 we	 review	

de	novo	whether	there	was	no	genuine	issue	of	material	fact	and	whether	either	

party	was	entitled	to	judgment	as	a	matter	of	law.		See	M.R.	Civ.	P.	56(c);	Blue	

Yonder,	LLC	v.	State	Tax	Assessor,	2011	ME	49,	¶	7,	17	A.3d	667.		Because,	in	an	

appeal	from	the	Maine	Board	of	Tax	Appeals,	the	Superior	Court	is	authorized	

to	rule	on	legal	matters	de	novo,	see	36	M.R.S.	§	151-D(10)(I),	we	review	the	

court’s	interpretation	of	the	law	directly	and	do	 not	defer	to	the	interpretive	

ruling	 of	 the	 Assessor	 or	 the	 Board.	 	 See	 Blue	 Yonder,	 2011	 ME	 49,	 ¶¶	 6-7,	
                                                                                        7	

17	A.3d	667;	see	also	BCN	Telecom,	2016	ME	165,	¶	2,	151	A.3d	497.		On	appeal,	

the	 Warnquists	 challenge	 the	 Superior	 Court’s	 interpretation	 of	 36	 M.R.S.	

§	5217-A	 and	 its	 denial	 of	 their	 request	 to	 abate	 the	 penalties	 and	 interest	

assessed	against	them.			

A.	   Section	5217-A		

	     [¶13]	 	 The	 Warnquists	 contend	 that	 section	 5217-A	 permits	 them	 to	

claim	a	credit	against	their	Maine	income	tax	obligation	for	all	of	the	income	tax	

they	paid	to	Rogaland.		The	Assessor	argues	that	section	5217-A	allows	a	credit	

only	 for	 the	 tax	 the	 Warnquists	 paid	 to	 Rogaland	 on	 income	 that	 is	 taxed	 by	

both	Maine	and	Rogaland.			

      [¶14]	 	 We	 review	 de	 novo	 the	 Warnquists’	 challenge	 to	 the	 court’s	

interpretation	of	section	5217-A.		See	Sears,	Roebuck	&	Co.	v.	State	Tax	Assessor,	

2012	ME	110,	¶	8,	52	A.3d	941.		Section	5217-A	provides:	

          A	 resident	 individual	 is	 allowed	 a	 credit	 against	 the	 tax	
      otherwise	 due	 under	 this	 Part	 .	 .	 .	 for	 the	 amount	 of	 income	 tax	
      imposed	on	that	individual	for	the	taxable	year	by	.	.	.	any	political	
      subdivision	of	a	foreign	country	that	is	analogous	to	a	state	of	the	
      United	States	with	respect	to	income	subject	to	tax	under	this	Part	
      that	 is	 derived	 from	 sources	 in	 that	 taxing	 jurisdiction.	 	 In	
      determining	 whether	 income	 is	 derived	 from	 sources	 in	 another	
      jurisdiction,	 the	 assessor	 may	 not	 employ	 the	 law	 of	 the	 other	
      jurisdiction	 but	 shall	 assume	 that	 a	 statute	 equivalent	 to	 section	
      5142	applies	in	that	jurisdiction.		The	credit,	for	any	of	the	specified	
      taxing	 jurisdictions,	 may	 not	 exceed	 the	 proportion	 of	 the	 tax	
      otherwise	 due	 under	 this	 Part,	 excluding	 the	 tax	 imposed	 by	
8	

     section	 5203-C,	 that	 the	 amount	 of	 the	 taxpayer’s	 Maine	 adjusted	
     gross	income	derived	from	sources	in	that	taxing	jurisdiction	bears	
     to	the	taxpayer’s	entire	Maine	adjusted	gross	income	.	.	.	.	
         	
(emphasis	added).5			

          [¶15]		“In	interpreting	a	tax	statute,	we	look	first	to	its	plain	meaning	to	

give	effect	to	the	Legislature’s	intent.”		State	Tax	Assessor	v.	MCI	Commc’s.	Servs.,	

2017	ME	119,	¶	7,	164	A.3d	952.		When	a	tax	statute	provides	a	credit,	it	must	

be	 narrowly	 construed.	 	 Goggin	 v.	 State	 Tax	 Assessor,	 2018	 ME	 111,	 ¶	 14,	

191	A.3d	 341;	 see	 also	 Foster	 v.	 State	 Tax	 Assessor,	 1998	 ME	 205,	 ¶	 8,	

716	A.2d	1012	(it	is	well	settled	that	“taxation	is	the	rule	and	tax	exemption	is	

the	 exception”).	 	 The	 taxpayer	 seeking	 the	 credit	 “must	 show	 that	 it	 is	

unmistakably	within	the	spirit	and	intent	of	the	statute.”		DaimlerChrysler	Servs.,	

N.	 Am.,	 LLC	 v.	 State	 Tax	 Assessor,	 2003	 ME	 27,	 ¶	 7,	 817	 A.2d	 862	 (quotation	

marks	omitted);	see	also	36	M.R.S.	§	151-D(10)(I)	(“The	burden	of	proof	is	on	

taxpayer.”).			




     5	
     	 Title	 36	 M.R.S.	 §	 5142,	 which	 deals	 with	 computation	 of	 taxable	 income	 of	 nonresident	
individuals,	provides	in	relevant	part:	

          					1.	General.		The	Maine	adjusted	gross	income	of	a	nonresident	individual	derived	
          from	or	connected	with	sources	in	this	State	is	the	sum	of	the	following	amounts:	
          	
                  A.	The	net	amount	of	items	of	income,	gain,	loss,	and	deduction	entering	into	
                  the	 nonresident	 individual's	 federal	 adjusted	 gross	 income	 that	 are	 derived	
                  from	or	connected	with	sources	in	this	State	.	.	.	.
                                                                                                     9	

       [¶16]		 Because	the	section	5217-A	credit	reduces	a	resident	individual	

taxpayer’s	 Maine	 income	 tax	 obligation,	 we	 first	 determine	 what	 that	 tax	

obligation	is.		The	process	begins	with	an	identification	of	the	taxpayer’s	Maine	

taxable	net	income,	which	is	the	person’s	reported	federal	AGI	adjusted	by	any	

modifications,	 deductions,	 and	 exemptions	 required	 or	 allowed	 under	 Maine	

law.	 	 See	 36	 M.R.S.	 §§	 5121,	 5122	 (2017).	 	 The	 taxpayer’s	 Maine	 income	 tax	

obligation	is	then	calculated	based	on	that	taxable	net	income.		36	M.R.S.	§	5121.		

Next,	 Maine	 law	 authorizes	 several	 credits	 against	 the	 taxable	 net	 income,6	

including	a	credit	for	income	taxes	paid	to	another	jurisdiction—the	credit	at	

issue	in	this	case.		36	M.R.S.	§	5217-A.		The	result	of	these	calculations	is	the	

individual’s	Maine	income	tax	obligation.	

       [¶17]	 	 Section	 5217-A	 is	 complicated,	 but	 not	 ambiguous.	 	 The	 plain	

language	of	the	statute	makes	clear	(1)	who	is	eligible	to	receive	the	tax	credit,	

(2)	what	income	forms	the	basis	of	the	credit,	and	(3)	at	what	amount	the	credit	

is	capped.			

       [¶18]	 	 A	 Maine	 resident	 taxpayer	 is	 eligible	 for	 a	 credit	 under	 section	

5217-A	 if	 the	 taxpayer	 paid	 income	 tax	 to	 a	 qualified	 foreign	 jurisdiction	 for	



   6		“A	tax	credit	reduces	tax	liability	in	contrast	to	a	deduction[,]	which	reduces	income	subject	to	

tax.”		Tax	Credit,	West's	Tax	Law	Dictionary	§	T330,	Westlaw	(March	2018).	
10	

income	“derived	from	sources	in	that	taxing	jurisdiction.”		A	qualified	foreign	

jurisdiction	 includes	 “a	 political	 subdivision	 of	 a	 foreign	 country	 that	 is	

analogous	to	a	state	of	the	United	States.”		36	M.R.S.	§	5217-A.		In	this	case,	the	

qualified	foreign	jurisdiction	is	Rogaland,	Norway,	as	neither	party	disputes.			

       [¶19]	 	 In	 order	 to	 receive	 a	 credit	 for	 income	 tax	 paid	 to	 a	 qualified	

foreign	 jurisdiction,	 the	 foreign	 income	 on	 which	 the	 tax	 was	 based	 must	 be	

“subject	 to	 tax”	 in	 Maine.	 	 Section	 5217-A	 assumes	 that	 the	 qualified	 foreign	

jurisdiction	calculates	taxable	income	using	AGI	with	a	provision	analogous	to	

36	M.R.S.	§	5142.7		If	a	qualified	foreign	jurisdiction	defines	taxable	income	in	

some	 other	 manner,	 any	 taxpayer	 seeking	 a	 credit	 under	 section	 5217-A	 for	

taxes	paid	to	that	foreign	jurisdiction	must	recalculate	his	foreign	income	by	

“adjusting”	that	income	for	any	deductions	or	expenses	provided	for	in	Maine	

law.		See	36	M.R.S.	§	5142.		This	adjustment	ensures	that	the	credit	reflects	taxes	

paid	only	on	the	portion	of	the	income	earned	in	the	foreign	jurisdiction	that	

would	 be	 taxable	 if	 it	 had	 been	 earned	 in	 Maine.	 	 Section	 5217-A	 does	 not	

permit	taxpayers	to	claim	a	tax	credit	for	tax	paid	on	income	that	is	not	subject	

to	taxation	in	the	State	of	Maine	(i.e.,	the	expenses	and	deductions	“removed”	


   7		Section	5217-A	provides,	“In	determining	whether	income	is	derived	from	sources	in	another	

jurisdiction,	the	assessor	may	not	employ	the	law	of	the	other	jurisdiction	but	shall	instead	assume	
that	a	statute	equivalent	to	section	5214	applies	in	that	jurisdiction.”			
                                                                                          11	

from	the	taxpayer’s	gross	income).		In	essence,	taxpayers	seeking	tax	credits	for	

income	 taxes	 paid	 to	 foreign	 jurisdictions	 that	 define	 taxable	 income	 as	

something	other	than	adjusted	gross	income	must	calculate	their	“foreign	AGI”	

before	they	can	properly	calculate	the	maximum	credit	available	to	them	under	

section	5217-A.			

       [¶20]	 	 The	 maximum	 credit	 allowed	 under	 section	 5217-A	 may	 not	

exceed	 “the	 proportion	 of	 the	 tax	 otherwise	 due	 under	 this	 Part	 .	 .	 .	 that	 the	

amount	of	the	taxpayer’s	Maine	adjusted	gross	income	derived	from	sources	in	

that	 taxing	 jurisdiction	 bears	 to	 the	 taxpayer’s	 entire	 Maine	 adjusted	 gross	

income.”	 	 The	 language	 is	 complicated,	 but	 the	 application	 is—for	 taxes—

relatively	simple	in	practice.		First,	a	taxpayer	must	calculate	what	percentage	

of	his	or	her	total	 Maine	AGI	is	derived	 from	sources	 in	the	qualified	foreign	

jurisdiction.	 	 To	 explain	 how	 to	 perform	 the	 necessary	 calculations,	 MRS	

provides	 taxpayers	 with	 a	 worksheet.	 	 The	 worksheet	 contains	 both	

instructions	and	a	box	with	a	space	for	actual	calculations.		At	line	one	of	the	

box,	a	taxpayer	is	to	record	his	or	her	Maine	AGI,	which	includes	all	income—

foreign	and	in-state—reduced	by	any	applicable	deductions	and	modifications	

provided	by	Maine	law.		At	line	two,	the	taxpayer	records	the	income	earned	in	

the	foreign	taxing	jurisdiction.		The	instructions	accompanying	the	worksheet	
12	

make	clear	that,	in	recording	the	foreign	income,	the	taxpayer	must	record	the	

foreign	AGI.		The	instructions	state	that	the	income	included	in	line	two	“must	

be	 determined	 in	 the	 same	 way	 that	 a	 Maine	 nonresident	 calculates	

Maine-source	 income”	 and	 that	 “[i]ncome	 considered	 taxed	 by	 another	

jurisdiction	 is	 income,	 after	 deductions,	 that	 is	 analogous	 to	 Maine	 adjusted	

gross	 income	 (federal	 adjusted	 gross	 income	 plus	 or	 minus	 income	

modifications).”8			

      [¶21]		Lines	three	and	four	of	the	worksheet	guide	taxpayers	through	the	

calculations	 necessary	 to	 determine	 the	 proportional	 cap	 on	 the	 credit	 for	

foreign	income	tax	paid.		The	resulting	percentage	is	the	maximum	percentage	

of	the	taxpayer’s	overall	Maine	tax	liability	that	may	be	satisfied	using	a	section	

5217-A	credit.		For	example,	if	a	taxpayer’s	foreign	AGI	represents	seventy-five	

percent	of	his	total	Maine	AGI,	he	may	claim	a	credit	under	this	section	in	an	

amount	 up	 to	 seventy-five	 percent	 of	 his	 overall	 Maine	 tax	 liability,	 and	 no	

more.		In	its	entirety,	the	worksheet	reflects	the	complexities	of	section	5217-A,	

but	 it	 does	 not	 contradict	 the	 statute,	 nor	 is	 it	 susceptible	 to	 multiple	

interpretations.			




  8		Moreover,	the	worksheet	specifically	cites	to	section	5142.			
                                                                                                            13	

        [¶22]	 	 In	 this	 case,	 the	 Warnquists	 miscalculated	 their	 section	 5217-A	

credit	 because	 they	 failed	 to	 account	 for	 the	 differences	 in	 the	 Maine	 and	

Rogaland	 tax	 systems.	 	 When	 using	 the	 worksheet,	 they	 did	 not	 record	 their	

income	 from	 the	 Rogaland	 properties	 according	 to	 the	 definition	 of	 AGI	

provided	in	36	M.R.S.	§	5142.9		The	Warnquists’	failure	to	properly	account	for	

the	 expenses	 attributable	 to	 the	 properties	 in	 the	 calculation	 of	 their	 foreign	

AGI	resulted	in	a	credit	that	exceeded	their	Maine	tax	liability	on	the	income	

derived	 from	 Rogaland	 and	 effectively	 shielded	 them	 from	 tax	 liability	 on	

income	that	was	never	subject	to	tax	in	Rogaland—i.e.,	the	interest,	dividends,	

and	 pensions	 they	 received	 while	 they	 were	 Maine	 residents	 and	 that	 was	

included	in	their	Maine	AGI.			

        [¶23]	 	 The	 court	 recognized	 the	 Warnquists’	 error	 and	 correctly	

concluded	that	section	5217-A	may	not	be	used	to	shield	income	sourced	to	the	

State	 of	 Maine	 using	 untaxed	 portions	 of	 foreign	 revenue.	 	 Allowing	 the	

Warnquists	the	benefit	of	the	credits	they	claimed	would	result	in	 an	absurd	

and	 illogical	 taxation	 scheme	 that	 the	 Legislature	 did	 not	 intend.	 	 See	 Eagle	



    9	 	 As	 discussed	 above,	 see	 supra	 at	 ¶	 19,	 section	 5217-A	 presumes	 that	 every	 foreign	 taxing	

jurisdiction	has	a	provision	identical	to	section	5142	through	which	it	calculates	the	taxable	income	
of	nonresidents	using	the	taxpayer’s	AGI.		Therefore,	although	the	Warnquists	are	residents	of	Maine,	
section	 5142	 is	 specifically	 applicable	 to	 their	 Norwegian	 income	 through	 section	 5217-A.	 	 See	
36	M.R.S.	§§	5142,	5217-A.	
14	

Rental,	Inc.	v.	State	Tax	Assessor,	2013	ME	48,	¶	11,	65	A.3d	1278.		The	court	

properly	upheld	the	decision	limiting	the	credit	available	under	section	5217-A	

to	the	tax	that	otherwise	would	be	due	on	the	same	income	in	Maine,	calculated	

after	deductions	for	expenses.		See	36	M.R.S.	§§	5142,	5217-A.			

B.	    Abatement	of	Penalties	and	Interest	

	      [¶24]	 	 The	 Warnquists	 also	 argue	 that	 the	 Superior	 Court	 erred	 by	

declining	to	waive	or	abate	the	penalties	and	interest	assessed	against	them	for	

the	 2012	 and	 2013	 tax	 years.	 	 See	 36	 M.R.S.	 §§	 186,	 187-B.	 	 We	 disagree.		

Reviewing	the	record	before	us	de	novo,	we	can	identify	no	basis	on	which	to	

abate	 or	 reduce	 the	 penalties	 and	 interest.	 	 See	 Victor	 Bravo	 Aviation,	 LLC	 v.	

State	Tax	Assessor,	2011	ME	50,	¶	24,	17	A.3d	1237.		The	Warnquists	have	failed	

to	demonstrate	that	they	relied	on	erroneous	information	provided	to	them	by	

MRS	or	that	there	is	substantial	authority	for	their	alternative	interpretation	of	

section	5217-A.		See	36	M.R.S.	§§	186,	187-B;	see	also	John	Swenson	Granite,	Inc.	

v.	State	Tax	Assessor,	685	A.2d	425,	429	(Me.	1996).		The	worksheets	that	the	

Warnquists	 used	 to	 calculate	 their	 taxes	 accurately	 reflected	 the	 limits	 of	

section	5217-A	by	clearly	defining	the	amount	of	the	foreign	income	tax	paid	
                                                                                                    15	

for	which	taxpayers	may	a	receive	credit.10		Moreover,	this	is	not	the	first	time	

the	 Warnquists	 miscalculated	 their	 credit	 under	 this	 section.	 	 They	 received	

notice	 of	 their	 repeated	 errors	 and	 were	 given	 instructions	 by	 the	 Assessor	

regarding	 the	 proper	 calculation	 of	 the	 credit	 in	 prior	 years.	 	 Therefore,	 the	

Superior	 Court	 did	 not	 err	 in	 its	 decision	 to	 uphold	 in	 full	 the	 assessment	 of	

penalties	and	interest	against	the	Warnquists.		See	36	M.R.S.	§§	186,	187-B(7).			

         The	entry	is:	

                            Judgment	affirmed.		
	
	     	       	      	      	      	
	
Gregory	 J.	 Orso,	 Esq.	 (orally),	 Orso	 Law,	 P.A.,	 York,	 for	 appellant	 Eric	 V.	 and	
Rosamond	C.	Warnquist	
	
Janet	T.	Mills,	Attorney	General,	and	Kimberly	L.	Patwardhan,	Asst.	Atty.	Gen.	
(orally),	Office	of	the	Attorney	General,	Augusta,	for	appellee	State	Tax	Assessor	
	
	
York	County	Superior	Court	docket	number	AP-2016-39	
FOR	CLERK	REFERENCE	ONLY	




   10		Specifically,	the	worksheets	instructed	taxpayers	regarding	the	proportionality	language	of	the	

statute	and	clearly	defined	the	foreign	income	tax	paid	for	which	a	taxpayer	may	receive	a	credit.		See	
supra	at	¶¶	20-21.		
