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June 7, 2022

Ninth Circuit affirms dismissal of constitutional challenge to Mandatory Repatriation Tax under subpart F

The Ninth Circuit has affirmed (Charles G. Moore, et ux. v. United States) a district court's dismissal of a challenge to the Mandatory Repatriation Tax (MRT) as unconstitutional. Added by the Tax Cuts and Jobs Act of 2017, the MRT modified subpart F by classifying earnings of controlled foreign corporations (CFCs) after 1986 as taxable in 2017, thus taxing US taxpayers who own at least 10% of a CFC on the CFC's profits after 1986, even if the distributions were not distributed. The appeals court held the MRT is consistent with the Apportionment Clause and does not violate the Due Process Clause.