Reed Smith Client Alerts

On May 22, 2017, the U.S. Supreme Court denied to hear taxpayer challenges to the retroactive application of changes to tax laws in Dot Foods v. Washington Department of Revenue, and six cases challenging Michigan’s retroactive repeal of an alternative apportionment method. Taxpayers have urged the Court to take a retroactivity case for years, and with today’s denials, we can expect additional challenges in the future.

Authors: Kyle O. Sollie


The U.S. Supreme Court denied seven petitions for a writ of certiorari seeking review of whether a retroactive change in tax law violates Due Process. One cert petition arose from a challenge to the Washington Legislature’s retroactive repeal of an exemption, and six cert petitions arose from the Michigan Legislature’s retroactive repeal of an alternative apportionment method. Although the facts vary, each petition involves the Court’s prior decision in United States v. Carlton.1 Carlton involved a retroactive change to the Internal Revenue Code, and whether such a change violated Due Process. The majority opinion held that a retroactive change in law is constitutional if it is “supported by a legitimate purpose furthered by rational means.”2 In a concurring opinion, Justice O’Connor agreed with the majority opinion, but noted that the decision was correct because the retroactivity period–roughly one year–was for a "relatively short period.”3 But a period of retroactivity beyond one year would raise “serious constitutional questions.”4