- 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