It is quite common for Congress to enact tax legislation that applies retroactively. Typically, such legislation is retroactive back to the beginning of the year of enactment, but other periods are sometimes used as well. One question often asked is whether legislation that amends the federal tax laws in a way that retroactively increases a taxpayer's tax liability is constitutional. The short answer is that retroactive tax legislation is not absolutely barred by the U.S. Constitution. In fact, the Supreme Court, recognizing that retroactive application of tax laws is sometimes required by "the practicalities of producing national legislation," has deemed it a "customary congressional practice." As such, there are few examples of retroactive tax legislation being struck down as unconstitutional. Having said that, it is possible for retroactive tax legislation to violate the Constitution. For example, extended periods of retroactivity might raise concerns under the Fifth Amendment's Due Process Clause. Other provisions of the Constitution may be implicated depending on the particulars of a specific bill (e.g., if the bill appears to target certain taxpayers or penalize past conduct). This report examines the constitutional provisions that might be implicated by retroactive tax legislation, including legislation that seems intended to punish past behavior. Specifically, it looks at how a court might analyze whether retroactive tax legislation violates the due process guarantees of the Fifth Amendment; is a taking for purposes of the Fifth Amendment; violates the prohibition against ex post facto legislation; is an unconstitutional bill of attainder; or violates the equal protection guarantees of the Fifth Amendment. Retroactive tax legislation potentially implicates the Due Process Clause of the Fifth Amendment, which states that no person shall "be deprived of life, liberty, or property, without due process of law." Of the constitutional provisions discussed in this report, this clause presents the most common potential concern for Congress because it appears that extended periods of retroactivity might be unconstitutional. The standard used to determine whether retroactive tax legislation violates substantive due process is whether the retroactive application is "supported by a legitimate legislative purpose furthered by rational means." This is known as the rational basis test, and it is a low standard of review by the courts. Once it is met, "judgments about the wisdom of such legislation remain within the exclusive province of the legislative and executive branches...." There have only been a few instances in which the Supreme Court has held that retroactive application of tax laws violated the Due Process Clause. While these cases have not been overruled, the Supreme Court has downplayed their significance, noting they "were decided during an era characterized by exacting review of economic legislation under an approach that has long since been discarded." Nonetheless, the cases are useful because the Court in subsequent cases has contrasted them with permissible legislation, thus indicating they may represent the boundaries of the Due Process Clause. The most common potential concern with respect to substantive due process is the length of the retroactivity. The Supreme Court has made clear that a modest retroactive application of tax laws is permissible, describing it as a "customary congressional practice" required by "the practicalities of producing national legislation." As a result, tax legislation that is retroactive to the beginning of the year of enactment has routinely been upheld against due process challenges. There does not seem to be any serious question as to whether such a period of retroactivity is constitutional. What then happens with periods of application that go beyond the year of enactment? The Court has upheld several tax laws where the period of retroactivity extended into the preceding calendar year. For example, in United States v. Carlton , the Court upheld the retroactive application of a federal estate tax provision that limited the availability of a recently added deduction for the proceeds of sales of stock to employee stock ownership plans. The deduction was added by the Tax Reform Act of 1986, which had not included a requirement that the taxpayer own the stock immediately prior to death. The lack of such a requirement essentially created a loophole that Congress fixed with the 1987 amendment. The Tax Reform Act of 1986 was enacted in October 1986, and the amendment was enacted in December 1987, to apply as if incorporated in the 1986 law. In upholding the 1987 law, the Court explained that the period of retroactivity was permissible since it was only slightly more than one year, as well as noting that the IRS had announced its concern with the original law as early as January 1987 and a bill to make the correction was introduced in Congress the very next month. However, it does appear that due process concerns may be raised by a more extended period of retroactivity. In Nichols v. Coolidge (one of the few cases where the Supreme Court struck down a retroactive tax on due process grounds), the Court disallowed the retroactive application of an estate tax provision that changed the tax treatment of a transfer 12 years after the transfer had occurred. The Court later unfavorably compared the 12-year period with periods where the "retroactive effect is limited." This suggests that due process concerns are raised by an extended period of retroactivity. However, it is not clear how long a period might be constitutionally problematic. The Court has recognized retroactive liability for periods beyond one or two years in non-taxation contexts, but it is not clear how a similar situation arising under the tax laws would be addressed. One issue often raised is that it may seem unfair to change the tax laws once a taxpayer has done something based on the law as it existed at the time. The fact that taxpayers may have concluded a transaction in reliance on prior law is generally not important to the analysis as "reliance alone is insufficient to establish a constitutional violation." As the Court has made clear, "[t]ax legislation is not a promise, and a taxpayer has no vested right in the Internal Revenue Code." In other words, Taxation is neither a penalty imposed on the taxpayer nor a liability which he assumes by contract. It is but a way of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must bear its burdens. Since no citizen enjoys immunity from that burden, its retroactive imposition does not necessarily infringe due process.... Additionally, lack of notice of the retroactive effect of a tax law is not dispositive of whether due process has been violated. Lack of notice may, nonetheless, be a concern when the retroactive legislation enacts a wholly new tax. This was the issue in two cases where the Court struck down retroactive tax legislation on due process grounds— Blodgett v. Holden and Untermyer v. Anderson . Both dealt with the constitutionality of retroactive application of the Revenue Act of 1924, which enacted the gift tax. The legislation was introduced in February 1924, enacted that June, and applied to gifts made after January 1, 1924. The taxpayer in Blodgett made a gift in January 1924, and the taxpayer in Untermyer made a gift in May 1924, while the bill was in conference. The plurality in Blodgett and the majority in Untermyer held the retroactive application was unconstitutional because it was arbitrary as the taxpayers made gifts without knowing they would subsequently be subject to tax. In such a situation, a taxpayer has "no reason to suppose that any transactions of the sort will be taxed at all." The Court in later cases has clearly distinguished the two cases on the basis that they dealt with the "creation of a wholly new tax" and therefore "their authority is of limited value in assessing the constitutionality of subsequent amendments that bring about certain changes in operation of the tax laws." Thus, while lack of notice is not dispositive, the Court has suggested that lack of notice may violate due process if the retroactive law creates a "wholly new tax." Since the two cases dealing with the creation of the gift tax, it does not appear the Court has found any other situations where lack of notice was an issue. In some instances, the Court determined the retroactive tax provision was not a wholly new tax, as with the provision in Carlton , which amended a new estate tax deduction that was enacted 14 months prior as part of a major overhaul of the tax code. Even in a case with what looked like a brand new tax—a tax on silver under the Silver Purchase Act—the Court upheld a 35-day period of retroactivity. In that case, the law was enacted on June 19, 1934, retroactive back to May 15, 1934. In upholding the law's retroactive application, the Court suggested that taxpayers had sufficient notice since there had been pressure for legislation for months, the President had sent a message to Congress encouraging such a tax on May 15, and the bill that became the act was introduced on May 23. This suggests that it would be rare for a tax provision to be characterized as a "wholly new tax" so long as taxpayers were on some kind of notice that a tax might be imposed. While it is often asked whether retroactive tax legislation would violate the Takings Clause of the Fifth Amendment, it seems unlikely this would be the case. Since the 19 th century, the Supreme Court has ruled that the sovereign's taxing power and its power to take private property upon payment of just compensation are distinct. As the Court said in 1880, "neither is taxation for a public purpose, however great, the taking of private property for public use, in the sense of the Constitution." More recently, the Ninth Circuit noted that the rule that taxes do not effect takings is "well established." Most of the retroactivity challenges to taxes have been litigated on a substantive due process, rather than takings, theory. The Supreme Court has indicated that, at least for economic legislation, an enactment that does not offend due process is highly unlikely to offend the Takings Clause. As discussed above, it is rare for a court to find retroactive tax legislation to violate due process, and the few takings decisions that deal with retroactive taxes find no constitutional infirmity.