New York Tax Appeals Tribunal holds retroactive law violates due process

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January 2020

Overview

The New York Tax Appeals Tribunal held a tax law enacted in April 2009 amending tax credit qualifications applicable to the 2009 tax year violated a taxpayer’s US and New York Constitutional due process protections. Although involving a relatively short 97-day retroactive period, the tax amendments were enacted after the taxpayer could take any action to forestall the revocation of its certification pursuant to the new qualifications. Accordingly, the Tribunal determined the retroactive application of the 2009 amendments violated the taxpayer’s due process rights and allowed the taxpayer to qualify for the credits for the 2009 tax year. The state cannot appeal decisions of the Appeals Tribunal.

Retroactive state tax legislation has become more prevalent in recent years. Although this case applies to a dated tax year involving a credit qualification, the Tribunal’s analysis in this successful taxpayer challenge to a retroactive law may be instructive for similar constitutional challenges.

The takeaway

Retroactive state tax legislation has become more prevalent in recent years. The Tribunal’s decision is noteworthy in holding that a retroactive application of a law change may be unconstitutional even if the period of retroactivity is for a short period of time. Although this case applies to a dated tax year involving a credit qualification, the Tribunal’s analysis in this successful taxpayer challenge to the retroactive application of a law change may be instructive for similar constitutional challenges.

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Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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