A poke around in the FAQs at the admirable website of http://www.renunciationguide.com/ brought up this tidbit that never seems to have surfaced or been kicked around at Brock — memory of nothing on the topic has further tested out against a no-result word search on “Carlton”:
An interesting question would be whether the IRS would attempt to retroactively apply the potential Congressional law change. Retroactive law is against the constitutions of most countries of the world. Nonetheless, in a 1994 case, U.S. vs. Carlton, the U.S. Supreme Court held in an unanimous decision that changes in tax law — and only tax law — can be applied retroactively if the law has a rational legislative purpose and is not arbitrary, and the period of retroactivity is not excessive. These criteria are extremely broad; as Justice Scalia wrote in a concurring opinion, the Court’s vague criteria effectively “guarantee[] that all retroactive tax laws will henceforth be valid.”
Quotation here is limited to that single paragraph. Renunciation Guide commentary goes on to speculate about how interaction with citizenship law should mitigate the potential for retroactivity in the area of expatriation:
http://www.renunciationguide.com/FAQ.html#DateOfExpatriationAtFirstInterviewOrSecond
Multiple Brock threads have latched onto the topic of retroactivity. Here’s an opportunity for one more. Those who love the law stuff may want to dig into the case itself. Others may care to speculate about what has been going on since 1994, and how much that decision has fueled any guidance that has come from the IRS (on things like Form 8854, for instance).
*This Supreme Court decision confirming the validity of retroactive tax laws might well be the explanation as to why the Tax Reform Act of 1976, which horrendously increased the US tax obligations of citizens abroad and which was signed on October 4, 1976 was made effective as of January 1 of that year. I vaguely recall an explanation I heard back then to justify this retroactivitiy. It was that since it had been introduced in Congress some time before it was voted on, there would have been a window of opportunity for persons who were affected to take actions to avoid its likely provisions if it had not been made retroactive.
As it turned out Congress later delayed the efffective date by one year, but not because it had been made retroactive. And it finally never went into effect because Congress superceeded the provisions in that law by another law which replaced the foreign earned income exclusion with a series of deductions for certain expenses for overseas Americans. That only make things worse, so shortly thereafter Congress scrapped the deduction provisions and re-introduced the FEIE.