Bass, Berry & Sims attorneys Mike Sontag, Steve Jasper, and Michael Cottone authored an article for the Journal of Multistate Taxation & Incentives that examined the appropriate remedy when a taxpayer successfully challenges the constitutionality of a discriminatory tax exemption. Following successful challenges, states have often attempted to eliminate an unconstitutional exemption instead of providing a refund. The authors argue that courts should generally not allow states to retroactively eliminate an unconstitutional tax exemption in response to a successful challenge. Instead, in the vast majority of cases, the correct result is “to provide the taxpayer a refund for the amounts that would not have been paid had it received the same exemption.”
What to Do with an Unconstitutional Exemption?, Michael Sontag, Stephen Jasper & Michael Cottone, Journal of Multistate Taxation & Incentives, Vol. 30, No. 2, Copyright 2020, Thompson Reuters/Tax & Accounting.