136 Cong. Rec. S1577-02, S15805 (Oct. 18, 1990). The Senator continued that, faced with the need to raise taxes, "few things could be more important than our ability to collect taxes that are admittedly owed to the Federal Government but are not being paid." Id. Senator Lieberman also noted that the Amendment was "fair" because "it would not apply to those assessments as to which the current statute of limitations has already expired." Id.
Senator Glenn stated that the government was unable to collect $ 600 million in 1983 and $ 2.1 billion in 1989 due to the expiration of the statute of limitations. Id. By extending the statute of limitations to ten years, the government could collect an additional $ 250 to $ 600 million over five years. Id. As these comments make clear, the purpose of the Amendment and its retroactive application was to raise revenue without imposing additional prospective tax liabilities. Such a purpose is rational and reasonable. See Carlton, 114 S. Ct. at 2023.
Other factors to be considered in assessing retroactive tax legislation include (1) whether the legislation abrogates vested rights, (2) whether the taxpayer relied on prior law so that, had he been able to foresee enactment of the legislation, he may have avoided the tax, and (3) whether the period of retroactivity is itself unduly harsh. Canisius College v. United States, 799 F.2d 18, 25-27 (2d Cir. 1986), cert. denied, 481 U.S. 1014, 95 L. Ed. 2d 495, 107 S. Ct. 1887 (1987).
Here, each of these factors favors the government. First, the extended limitations period does not abrogate any rights of the taxpayer. Rocanova did not have a "right" to avoid his tax liabilities after six years. Thus, by extending the statute of limitations to ten years, the government did not abrogate any of Rocanova's rights. Similarly, by merely extending the statute of limitations, Congress in no way created a new liability, imposed a new tax, or imposed any other new obligation on Rocanova whatsoever. The Amendment's only effect is that the government has more time to collect taxes that Rocanova admittedly owes but has not paid.
Second, Rocanova could not have relied on the prior limitations period to avoid the tax, for he admittedly owed the taxes that were assessed. If the new limitations period applied retroactively to revive expired claims, Rocanova could argue that its retroactive application upset his settled expectation of finality. The Amendment, however, only applied to still existing claims. Thus, the longer limitations period does not interfere with any of Rocanova's valid expectations.
Third, although the Amendment allows the government to collect taxes that were assessed as many as six years earlier,
that amount of time does not by itself give rise to a due process claim. Generally, retroactive tax legislation only applies to the previous tax year. Canisius College, 799 F.2d at 26. Nevertheless, "there is nothing intrinsic in the 'harsh and oppressive' test . . . that requires a one-year bench mark as the constitutional limit of retroactivity." Id. at 26-27; see also Wiggins v. Commissioner of Internal Revenue, 904 F.2d 311, 316 (5th Cir. 1990). Instead, tax legislation should be reviewed on a case-by-case basis, considering "'the nature of the tax and the circumstances in which it is laid.'" Canisius College, 799 F.2d at 27 (quoting Welch, 305 U.S. at 147).
Here, I find that there is nothing inappropriate about the length of retroactivity. The very purpose of the Amendment required its application to all existing tax liabilities. Furthermore, Congress specifically avoided the harsh result of resurrecting limitations periods that had already expired. Given the statute's purpose and the nature of limitations periods in general, there was no way to avoid a period of retroactivity of several years. Under the circumstances, such retroactive application does not give rise to a due process claim.
II. Equal Protection Claim
Rocanova also argues that the retroactive application of the Amendment violates the Equal Protection Clause. The Equal Protection Clause guarantees that a state will not subject an individual to invidious discrimination. Harris v. McRae, 448 U.S. 297, 322, 65 L. Ed. 2d 784, 100 S. Ct. 2671 (1980). To determine whether a state has acted in a discriminatory manner, the plaintiff must show that the state has acted to the disadvantage of some class of people. Maher v. Roe, 432 U.S. 464, 470, 53 L. Ed. 2d 484, 97 S. Ct. 2376 (1977). Generally, a statutory classification is valid if it is rationally related to a legitimate governmental purpose. Regan v. Taxation With Representation, 461 U.S. 540, 547, 76 L. Ed. 2d 129, 103 S. Ct. 1997 (1983). Congress enjoys particularly broad latitude "in creating classifications and distinctions in tax statutes." Id.
Rocanova defines the class at issue as "a class of people who have existing tax assessments on November 5, 1990, regardless of the time in which those existing tax assessments were made, so long as the six-year statute of limitations had not yet passed on that date." (Plaintiff's Br. at 30). As discussed at length above, however, the classification purportedly created by retroactive application of the Amendment is rationally related to the legitimate governmental purpose of raising revenue without imposing new or additional tax liabilities. Thus, retroactive application of the Amendment does not give rise to an equal protection claim.
III. Ex Post Facto Claim
Rocanova's final argument is that the retroactive tax legislation constitutes punishment and thus violates the Ex Post Facto Clause. The Ex Post Facto Clause does not apply to civil tax legislation that does not impose punishment. See United States Trust Co. v. New Jersey, 431 U.S. 1, 17 n.13, 52 L. Ed. 2d 92, 97 S. Ct. 1505 (1977); Bankers Trust Co. v. Blodgett, 260 U.S. 647, 652, 67 L. Ed. 439, 43 S. Ct. 233 (1923). In no way does extending the statute of limitations provided in § 6205(a), particularly where the Amendment did not apply to expired claims, constitute punishment.
Accordingly, the Ex Post Facto Clause simply is inapplicable to this case.
For the foregoing reasons, plaintiff's motion for summary judgment is denied and defendants' motion for summary judgment is granted. The Clerk of the Court is directed to enter judgment in favor of the defendants dismissing the complaint with prejudice and without costs.
Dated: New York, New York
May 29, 1996
United States District Judge