The question of whether Virginia must refund unconstitutionally collected taxes paid by federal retirees will be one of the arguments the U.S. Supreme Court will hear in December.

The case, Harper v. Virginia Department of Taxation, comes before the court Dec. 2. It challenges a state Supreme Court ruling that no refunds are owed the retirees.

The dispute has its roots in a 1989 Supreme Court decision that states may not tax the retirement benefits of federal retirees while exempting from taxation the pensions of former state workers.

Virginia had such an arrangement, and federal retirees there unsuccessfully sought refunds.

The Supreme Court also announced last week that it would hear arguments Dec. 9 in a case challenging whether New York State has to forfeit an estimated $800 million in unclaimed interest and dividends on bonds and stocks that it collected under its abandoned property law.

In the case, Delaware v. New York, the justices will have to decide whether to accept recommendations made by a court-ordered special master. The special master concluded that unclaimed distributions of municipal bonds be turned over to the state in which the municipality is located. For corporate debt, the master recommended ruling that unclaimed dividends be sent to the state in which the issuing corporation has its principal executive offices.

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