Fox News op-ed, Will Congress Take a Pass on the Estate Tax and Send Us Back to 2001?, by Rodney P. Mock (California Polytechnic State University, San Luis Obispo — Orfalea College of Business) & Jeffrey E. Quijano (Fox Rothschild, Las Vegas):

Reaching into the graves of wealthy, dead taxpayers across the county to collect unpaid tax debts may seem reminiscent of a low-budget horror film, but it’s not. In fact, after the November midterm elections, Congress may empower the IRS to do just that. …

[In Carlton,] the Court reasoned that retroactive tax legislation satisfies constitutional due process requirements if the Congressional purpose for such legislation is neither illegitimate nor arbitrary and Congress acts promptly when enacting its legislation with only a modest period of retroactivity.

What Carlton indicates is that the Supreme Court is unlikely to apply the strict due process analysis to future taxpayer claims regarding the constitutionality of retroactive estate tax legislation. In fact, the Court appeared indifferent to taxpayer reliance on the existing tax legislation, and whether there is sufficient notice of any potential retroactive changes.

Carlton further suggests that Congress need only demonstrate it has a genuine purpose when enacting such legislation. With the present state of the economy, raising revenue for the U.S. Treasury presumably will suffice. And as for the timing of retroactive legislation, Carlton specifically stated that a one-year period of retroactivity is constitutional, as long as Congress acts “promptly.”

Now that we are in October, however, if Congress does in fact enact a retroactive estate tax it will become increasingly difficult to credibly argue that it acted promptly with its “fix.” And thus, as each month passes, it becomes increasingly likely that 2010’s deceased billionaires have escaped the federal estate tax. But should Congress continue to ignore this tax into 2011, many more of us should fear the estate tax zombie in its 2001 form.