The Virginia Tax Review always includes something that I end up chewing on for far longer than I expect to, and the most recent number to cross my desk (Spring 2009) is no exception. It includes a piece entitled The Recovery of Unlawful Taxes by Jacob Nussim of the Bar-Ilan Law faculty in Israel. The piece is an English language version of work that apparently has appeared in Hebrew, and a technical version of the piece has been available on SSRN for a while now. But the food for my thoughts is all in the readily accessible VTLR version.
Issues relating to refunds of illegal taxes have reemerged recently, at least in the federal system. First came the government’s defeat in the International Court of Trade in the Harbor Maintenance Tax litigation in the 1990’s, and then came continuing litigation despite the government’s recent concessions regarding the Telephone Excise Tax. Neither case involved major threats to the fisc, but both involve potentially significant changes in the procedural rules that historically have discouraged taxpayers from pursuing claims that federal taxes were unlawfully collected. If Congress is forced in the coming years to invent new tax instruments, the ground rules for handing challenges to these new tax instruments will become increasingly important. Continue reading "Who’s Left With the Money?"