New York – Retroactive application of credit changes is unconstitutional

June 2013


The retroactive application of amendments enacted in 2009 to the Empire Zone Program was a violation of program recipients’ due process, the Court of Appeals of New York concluded. Due process was violated because the taxpayers had no forewarning of the amendments, the length of retroactivity was excessive, and the state lacked a valid public purpose for the retroactivity. As the Court of Appeals is the highest court in the New York, affected taxpayers should consider refunds. Additionally, the decision should cause taxpayers adversely affected by retroactive tax legislation to ascertain whether retroactivity potentially runs afoul of due process based on the factors set out by the Court. [James Square Associates LP et al. v Commissioner, New York State Department of Economic Development, Nos. 87 – 91, (06/04/13)]

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