June 26, 2023 – Great News! – The US Supreme Court Agrees To Hear Moore 965 Transition Tax Case!
A direct link to the Supreme Court site which will track the progress and filings of all briefs (including what are expected to be a large number of amicus briefs) is here.
The brief from the CATO Institute frames the question addressed to the Supreme Court as follows:
Whether Congress may levy income tax on a tax-payer who has not realized income.
What follows is a twitter thread (which I will continually update) which includes commentary, resources and general information about the appeal.
Huge news!! The US Supreme Court has agreed to consider the constitutionality of the IRC S. 965 @USTransitionTax. The issues include whether real tax can be imposed on deemed income that the person never received. The result may have some bearing on the 877A expatriation tax too! https://t.co/GeXLKp3SkA
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) June 26, 2023
Litigation against the 965 Mandatory AKA transition tax has come from two sources.
The first source was from U.S. tax lawyer Monte Silver. His challenge to the tax was based generally on procedural grounds and specifically on the failure of U.S. Treasury to comply with the provisions of the Regulatory Flexibility Act. Despite a heroic, valiant and determined effort the Supreme Court refused to hear his cert petition. As a result, in May 2023, his challenge came to an end. Monte Silver’s challenge focused on the legality of the Treasury Regulations insofar as they applied to US citizens living outside the United States.
The second source is the Charles Moore case. This case is arguing that the tax is unconstitutional. Although brought on behalf of an individual shareholder of a CFC, the case makes no mention of the application of the tax to Americans abroad. On June 26, 2023 (about a month after denying the cert petition in the Silver case) the U.S. Supreme Court agreed to hear the Moore case. To be clear, this case is attacking the constitutionality of the tax (not the procedural aspects) head on. Much will be written about this issue and the case.
On September of 2019 I wrote a post describing the Moore lawsuit arguing that the Section 965 Transition Tax AKA Mandatory Repatriation Tax is unconstitutional. Although the Moore’s were not successful in the District Court and Appeals court, the Supreme Court of the United States has agreed to hear the case!
The Cert Petition
The Cert petition was based on an appeal from the 9th Circuit and a dissenting judgment from the plaintiff’s application to rehear the case in the 9th Circuit.
The original 9th Circuit decision is here.
The decision of the 9th Circuit denying the request (with the dissent) to rehear the Moore case is here.
An excellent article discussing the history of the Moore “Transition Tax” ligation is here.
The cert petition in CHARLES G. MOORE and KATHLEEN F. MOORE, Petitioners, v. UNITED STATES OF AMERICA,Respondent, includes: