TEI Files Amicus Brief With U.S. Supreme Court in Washington Dot Foods Retroactivity Case

On October 11, 2016, TEI filed an amicus brief with the U.S. Supreme Court in Dot Foods, Inc. v. State of Washington, Department of Revenue, No. 16-308. The petition seeks review of the Washington Supreme Court's decision in Dot Foods, Inc. v. State of Washington, Department of Revenue, 372 P.3d 747 (Wash. 2016) ("Dot Foods II"). Dot Foods II upholds 2010 legislation amending Washington's business and occupation tax in response to the Washington Supreme Court's decision regarding the interpretation of a statute in Dot Foods, Inc. v. Department of Revenue, 215 P.3d 185 (Wash. 2009) ("Dot Foods I"). The 2010 amendment retroactively eliminated taxpayer's claim to an exemption from the Washington tax back to 1983 and had the effect of denying the taxpayer's refund claims retroactively for four years. Dot Foods II is the latest in a line of state court decisions upholding retroactive tax legislation under the Due Process Clause. In November 2016, numerous taxpayers are expected to seek the Court's review of Gillette Commercial Operations North America v. Dep't of Treasury, 878 N.W. 2d 891 (Mich. App. 2015), a Michigan Court of Appeals' decision upholding a six-year retroactive amendment to that State's business tax.

TEI's brief maintains that the standard employed by the Washington and Michigan courts to assess the constitutionality of retroactive tax amendments imposes virtually no limit on retroactive tax legislation. As a result, several state legislatures have chosen to use retroactive tax legislation to overrule specific court decisions rather than prospectively amending their tax codes at the earliest reasonable opportunity. Moreover, the U.S. Supreme Court's intervention is necessary to resolve a conflict among state courts interpreting the Court's decision in United States v. Carlton, 512 U.S. 26 (1994), the seminal case addressing the constitutionality of retroactive tax legislation. TEI's brief was prepared under the aegis of TEI's State and Local Tax Committee, whose chair is Jamie Fenwick. TEI Tax Counsel Pilar Mata coordinated the preparation of the brief and was its principal author.

Download the brief.