## Facts

- Ellen Clayton Garwood died in March 1993 with a gross estate of about $28.1 million.
- At the time of death, the maximum federal estate-tax rate was 50% because a prior 55% rate extension had lapsed effective January 1, 1993.
- On August 10, 1993, Congress enacted a statute reinstating a 55% maximum estate-tax rate and applying that rate retroactively to estates over $3 million for decedents dying from January 1, 1993 through August 10, 1993.
- The retroactive provision increased the Estate’s liability by roughly $1.3 million.
- NationsBank, as independent executor, paid the additional tax, sought a refund, and challenged the retroactive rate increase as unconstitutional.
- The Court of Federal Claims granted summary judgment to the United States, and NationsBank appealed.

## Issues

1. Whether the retroactive estate-tax rate increase violates the Ex Post Facto Clause.
2. Whether the retroactive increase violates the Fifth Amendment’s Due Process Clause because it is arbitrary, irrational, or “harsh and oppressive.”
3. Whether applying the increase only to estates over $3 million and to a defined retroactive period violates equal-protection principles applied through the Fifth Amendment.

## Decision

- The Federal Circuit affirmed summary judgment for the United States.
- The retroactive estate-tax rate increase was held constitutional as applied to the Estate.
- The statute was not an ex post facto law because it was a revenue measure rather than penal legislation.
- The retroactive application satisfied due process because it furthered legitimate legislative purposes through rational means and was not constitutionally “harsh and oppressive,” given the roughly seven-month retroactive period and the rate history.
- The statute’s classifications (large estates and the January–August 1993 period) survived rational-basis review under equal-protection principles.

## Legal Principles

- The Ex Post Facto Clause restricts penal legislation and generally does not apply to ordinary tax statutes that adjust fiscal burdens.
- Retroactive federal tax legislation satisfies Fifth Amendment due process if it serves a legitimate legislative purpose by rational means and is not so “harsh and oppressive” as to exceed constitutional limits.
- In reviewing retroactive taxation, courts give substantial deference to Congress’s revenue and tax-policy judgments; reliance interests do not control where retroactivity is modest and rationally tied to legislative objectives.
- Federal tax classifications challenged under equal-protection principles are evaluated under rational-basis review unless a suspect class or fundamental right is involved; line-drawing by amount thresholds and effective-date windows is permissible if rationally related to legitimate governmental ends.

## Conclusion

The court upheld Congress’s retroactive restoration of a higher maximum estate-tax rate for large estates, concluding that the measure was a nonpenal revenue law supported by legitimate purposes, constitutionally reasonable in retroactive reach, and rational in its scope and classifications.


NationsBank of Tex., N.A. v. United States, 269 F.3d 1332 (Fed. Cir. 2001)