United States

Manifest injustice: More than a moldy old doctrine

Don’t leave the manifest injustice doctrine sitting in the toolbox.

INSIGHT ARTICLE  | 

Don’t leave the manifest injustice doctrine sitting in the toolbox. It’s not just a moldy old doctrine

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Brian Kirkell, Mo Bell-Jacobs, and Ryan Carnes discuss how the state of New Jersey has highlighted and extended a doctrine that may benefit taxpayers when states retroactively apply new laws. Retroactive legislation has time and time again caused a nuisance for any competent tax professional. It’s simply impossible to plan for tax law changes that have not yet been enacted. Until crystal balls come with CPA licenses, retroactivity and its consequences should not be ignored.

Recently, a number high-profile retroactivity cases have made it state supreme courts, but with the U.S. Supreme Court refusing to hear those challenges, taxpayers and tax professionals have received little guidance on handling retroactivity.

Enter New Jersey and the manifest injustice doctrine.

The state courts in New Jersey have helped provide a reliable defense for taxpayers caught in the net of retroactive laws with seemingly no remedy: the manifest injustice doctrine. Used to avoid a clearly unfair result, Manifest Injustice: More Than a Moldy Old Doctrine, discusses how New Jersey taxpayers have fared claiming manifest injustice and whether the doctrine should be considered in other jurisdictions.

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