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
In my last post I discussed the fact that the U.S. Supreme Court has agreed to hear the Moore’s challenge to the 965 Transition Tax.
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.
Although the 965 Transition Tax was the fact that prompted the litigation, the issue as framed for the Supreme Court was:
22-800 MOORE V. UNITED STATES
DECISION BELOW: 36 F.4TH 930
CERT. GRANTED 6/26/2023QUESTION PRESENTED:
The Sixteenth Amendment authorizes Congress to lay “taxes on incomes … without apportionment among the several States.” Beginning with Eisner v. Macomber, 252 U.S. 189 (1920), this Court’s decisions have uniformly held “income,” for Sixteenth Amendment purposes, to require realization by the taxpayer. In the decision below, however, the Ninth Circuit approved taxation of a married couple on earnings that they undisputedly did not realize but were instead retained and reinvested by a corporation in which they are minority shareholders. It held that “realization of income is not a constitutional requirement” for Congress to lay an “income” tax exempt from apportionment. App.12. In so holding, the Ninth Circuit became “the first court in the country to state that an ‘income tax’ doesn’t require that a ‘taxpayer has realized income.”‘ App.38 (Bumatay, J., dissenting from denial of rehearing en banc).
The question presented is:
Whether the Sixteenth Amendment authorizes Congress to tax unrealized sums without apportionment among the states.
LOWER COURT CASE NUMBER: 20-36122
The relevant facts as recited in the petition may be found in the Appendix* below.