This past Thursday June 20, 2024, the
Supreme Court of the United States issued a 7-2 opinion in Moore v. United
States, 602 U.S. __ (2024), ruling in favor of the Internal Revenue Service
(IRS) in an 83-page document with an interesting set of opinions. This ruling
upholds the right of Congress to tax U.S. shareholders on the undistributed
operating income of their foreign corporations.
Several
taxpayers were not happy with this new law, including Charles and Kathleen
Moore who contested the constitutionality of this mandatory repatriation tax.
They argued that this tax violated various constitutional provisions and they took
it to court, all the way to the U.S. Supreme Court in May 2023. And for the past few months since their petition with the U.S.
Supreme Court, we were faced with the potential invalidation of the transition
tax, and some tax professionals advised their clients to consider filing
protective refund claims contingent on the possibility that Moore case would be
decided in favor of the taxpayers.
The court ruled in favor of sustaining the mandatory repatriation tax, meaning that the mandatory repatriation tax remains in effect as part of U.S. tax law. If you know someone who has filed a protective claim, you can let them know that their protective claim does not need any further action as a result of the court case final ruling.
-by Laura Tshilumba, International Tax Practice Leader