Penny J. Sutherland - Page 10




                                       - 10 -                                         
         law “‘is itself justified by a rational legislative purpose.’”  Id.          
         (quoting Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S.         
         717, 730 (1984)); see also Estate of Kunze v. Commissioner, ___              
         F.3d  ___ (7th Cir., Nov. 16, 2000), affg. T.C. Memo. 1999-344;              
         DeMartino v. Commissioner, 862 F.2d 400 (2d Cir. 1988), affg. 88             
         T.C. 583 (1987).                                                             
              In determining whether the retroactive application of an income         
         tax statute violates the Due Process Clause, we examine whether “the         
         nature of the tax and the circumstances in which it is laid * * * is         
         so harsh and oppressive as to transgress the constitutional                  
         limitation.”  Welch v. Henry, supra at 147.  This “harsh and                 
         oppressive” standard “does not differ from the prohibition against           
         arbitrary and irrational legislation” that applies generally to              
         economic legislation.   Pension Benefit Guaranty Corp. v. R.A. Gray          
         & Co., supra at 733.                                                         
              Courts have held retroactive tax amendments unconstitutional            
         only in those cases where the amendment imposes “a wholly new tax,           
         which could not reasonably have been anticipated by the taxpayer at          
         the time of the transaction.”  Wiggins v. Commissioner, 904 F.2d             
         311, 314 (5th Cir. 1990), affg. 92 T.C. 869 (1989); see also                 
         Blodgett v. Holden, 275 U.S. 142 (1927); Nichols v. Coolidge, 274            
         U.S. 531 (1927); Untermyer v. Anderson, 276 U.S. 440 (1928).  On the         
         other hand, courts have held that Congress acts rationally when it           
         cures “what it reasonably viewed as a mistake”.  United States v.            






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011