The Moore Supreme Court Case and Its Potential Impact

It isn't every day that a dispute over a $14,729 tax bill gets every corner of the tax world paying attention—but the potential ramifications of the dispute now before the Supreme Court go far beyond that. The court will hear oral arguments next month in Moore v. United States, in which Charles and Kathleen Moore, a retired couple from Washington state, are arguing that the “mandatory repatriation tax” should be declared unconstitutional. That tax, enacted as part of the 2017 tax-overhaul law, imposed a one-time levy on accumulated foreign corporate profits when the US changed its tax system so as to tax foreign profits going forward. It also led to the Moores’ $14,729 tax bill, which they had to pay on earnings of an Indian machine-tool company in which they’d invested, even though the earnings weren’t distributed to them. If the high court rules in the Moores’ favor, it could lead to hundreds of billions of dollars in refunds to giant multinational companies that paid the mandatory repatriation tax. Some observers think it could also play havoc with other taxes on foreign income, partnership taxes, and other forms of tax that are similarly based on undistributed income. The Moores and their supporters distinguish the mandatory repatriation tax from other provisions, and contend it can be struck down without disrupting the rest of the tax code. The US Chamber of Commerce said in a brief supporting the Moores that such concerns were "badly overblown." Bloomberg Tax senior reporter Michael Rapoport spoke about the Moore case with Reuven Avi-Yonah, a law professor at the University of Michigan, who specializes in corporate and international taxation. Avi-Yonah filed a friend-of-the-court brief with two other law professors last month urging the Supreme Court to reject the Moores’ challenge. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.