Source: https://case-law.vlex.com/vid/509-u-s-86-605203118
Timestamp: 2019-04-18 22:37:33+00:00

Document:
In Davis v. Michigan Dept. of Treasury, 489 U.S. 803, this Court invalidated Michigan's practice of taxing retirement benefits paid by the Federal Government while exempting retirement benefits paid by the State or its political subdivisions. Because Michigan conceded that a refund to federal retirees was the appropriate remedy, the Court remanded for entry of judgment against the State. Virginia subsequently amended a similar statute that taxed federal retirees while exempting state and local retirees. Petitioners, federal civil service and military retirees, sought a refund of taxes assessed by Virginia before the revision of this statute. Applying the factors set forth in Chevron Oil Co. v. Huson, 404 U.S. 97, 106-107, a state trial court denied relief to petitioners as to all taxable events occurring before Davis was decided. In affirming, the Virginia Supreme Court concluded that Davis should not be applied retroactively under Chevron Oil and American Trucking Assns., Inc. v. Smith, 496 U.S. 167 (plurality opinion). It also held, as matters of state law, that the assessments were neither erroneous nor improper and that a decision declaring a tax scheme unconstitutional has solely prospective effect. In James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, however, six Members of this Court required the retroactive application of Bacchus Imports, Ltd. v. Dias, 468 U.S. 263which prohibited States from imposing higher excise taxes on imported alcoholic beverages than on locally produced beveragesto claims arising from facts predating that decision. Those Justices disagreed with the Georgia Supreme Court's use of Chevron Oil 's retroactivity analysis. After this Court ordered reevaluation of petitioners' suit in light of Beam, the Virginia Supreme Court reaffirmed its decision in all respects. It held that Beam did not foreclose the use of Chevron Oil 's analysis because Davis did not decide whether its rule applied retroactively.
(a) This rule fairly reflects the position of a majority of Justices in Beam and extends to civil cases the ban against "selective application of new rules" in criminal cases. Griffith v. Kentucky, 479 U.S. 314,323. Mindful of the "basic norms of constitutional adjudication" animating the Court's view of retroactivity in criminal cases, id., at 322that the nature of judicial review strips the Court of the quintessentially legislative prerogative to make rules of law retroactive or prospective as it sees fit and that selective application of new rules violates the principle of treating similarly situated parties the same, id., at 322, 323the Court prohibits the erection of selective temporal barriers to the application of federal law in noncriminal cases. When the Court does not reserve the question whether its holding should be applied to the parties before it, the opinion is properly understood to have followed the normal rule of retroactive application, Beam, 501 U.S. at 540 (opinion of Souter, J.), and the legal imperative to apply such a rule prevails "over any claim based on a Chevron Oil analysis," ibid. Pp. 94-98.
and since that issue has not been properly presented, this question and the performance of other tasks pertaining to the crafting of an appropriate remedy are left to the Virginia courts. Pp. 100-102.
242 Va. 322, 410 S.E.2d 629, reversed and remanded.
taxes imposed before Davis was decided. In accord with Griffith v. Kentucky, 479 U.S. 314 (1987), and James B. Beam Distilling Co. v. Georgia, 501 U.S. 529 (1991), we hold that this Court's application of a rule of federal law to the parties before the Court requires every court to give retroactive effect to that decision. We therefore reverse.
The Michigan tax scheme at issue in Davis "exempt[ed] from taxation all retirement benefits paid by the State or its political subdivisions, but levie[d] an income tax on retirement benefits paid by . . . the Federal Government." 489 U.S., at 805. We held that the United States had not consented under 4 U.S.C. § 111 to this discriminatory imposition of a heavier tax burden on federal benefits than on state and local benefits. 489 U.S., at 808-817. Because Michigan "conceded that a refund [was] appropriate," we recognized that federal retirees were entitled to a refund of taxes "paid. . . pursuant to this invalid tax scheme." Id., at 817.
of state taxes imposed on federal retirement benefits in 1985, 1986, 1987, and 1988 for up to one year from the date of the final judicial resolution of whether Virginia must refund these taxes. Va. Code Ann. § 58.1-1823(b) (Supp. 1992).
Petitioners, 421 federal civil service and military retirees, sought a refund of taxes "erroneously or improperly assessed" in violation of Davis 'nondiscrimination principle. Va. Code Ann. § 58.1-1826 (1991). The trial court denied relief. Law No. CL891080 (Va. Cir. Ct., Mar. 12, 1990). Applying the factors set forth in Chevron Oil Co. v. Huson, supra, at 106-107, the court reasoned that " Davis decided an issue of first impression whose resolution was not clearly foreshadowed," that "prospective application of Davis will not retard its operation," and that "retroactive application would result in inequity, injustice and hardship." App. to Pet. for Cert. 20a.
153 A.D. 382, Becker v. Colonial Life Ins. Co.

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