NationsBank of Texas v. United States

For several years, the maximum estate-tax rate was 55 percent. On January 1, 1993, part of a law that had been enacted in 1981 finally went into effect and lowered the maximum estate-tax rate to 50 percent. In March 1993, while the 50 percent maximum rate was in effect, Ellen Garwood died with a gross estate valued at approximately $28 million. In August 1993, Congress passed a new law that (1) increased the maximum estate-tax rate to 55 percent going forward and (2) retroactively raised the maximum estate-tax rate to 55 percent for anyone who had died between January 1, 1993, and August 1993 with a taxable estate of more than $3 million. The retroactive portion of the law increased Garwood’s estate’s tax bill by approximately $1.3 million. As the executor of Garwood’s estate, NationsBank of Texas, N.A. (NationsBank) (plaintiff) sought a $1.3 million refund in the United States Court of Federal Claims. NationsBank argued that retroactively applying the new tax-rate law to a previous event was unconstitutional for several reasons, including arguments that the retroactivity violated (1) the constitutional prohibition on ex post facto laws, (2) due-process principles, and (3) equal-protection principles. The Court of Federal Claims ruled that the law’s retroactivity was constitutional and dismissed the complaint. NationsBank appealed to the Federal Circuit.