Constitutional Limitations: Retroactive Tax Legislation: Where Is the Modesty?

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

Retroactive taxes generally must be limited to a modest period of retroactivity. However, with the Supreme Court's denial of cert. in the Miller v. Johnson and General Motors cases, retroactive periods of 6 to 11 years have been allowed to stand. In this article, Erica Horn and Stephen Sherman, of Stoll Keenon Oden PLLC, examine recent state tax cases that deal with the retroactive application of curative changes to existing tax statutes, as well as retroactivity of new tax treatments. The authors discuss those factors the courts are willing to consider in determining whether due process has been violated.