The U.S. Supreme Court has agreed to hear a constitutional challenge to a tax established by the Tax Cuts and Jobs Act. The taxpayers, a married couple, owned shares in a controlled foreign corporation (CFC). This made them subject to the mandatory repatriation tax (MRT), which says that owners of 10% or more shares of a CFC must pay a pro rata share of its earnings (15.5% on liquid and 8% on illiquid assets). The couple argues that the MRT violates the Sixteenth Amendment as a tax on unrealized income. But the Ninth Circuit Court held that the MRT doesn’t violate the Apportionment Clause of the Constitution or the Fifth Amendment’s Due Process Clause.
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