According to the court filing, in 2006, the Moores invested $40,000 in Kisancraft Machine Tools Private Limited, a company that supplies basic equipment to farmers. The Moores also received shares in the company, which was founded by Moore's friend, Ravindra Kumar Agrawal.
In 2018, the Moores learned they owed income tax on the company's reinvested profits dating back to 2006, increasing their tax bill by about $15,000. Backed by conservative and business groups, the Moores sued, arguing that the tax violated the Constitution's apportionment requirements because it was levied on their shares in the company, which they considered personal property, rather than on income they earned.
Lower courts, including the 9th Circuit Court of Appeals, sided with the federal government. In a dissenting opinion, Judge Patrick J. Bumathai, a Trump appointee, said the appeals panel's decision ran counter to “ordinary meaning, history, and precedent” that recognizes that “an income tax must be a tax on realized income.”
The Moores appealed to the Supreme Court, which agreed to rehear the case.
In their petition, the couple argued that the 9th Circuit's decision “swept away essential limitations on Congress' taxing power and paved the way for non-apportionment taxes (as in this case) on property or anything Congress considers to be 'income.'”
Biden administration lawyers argued that the 9th Circuit Court of Appeals “rightly rejected” the Moores' arguments that the tax is unconstitutional, arguing that the Moores' arguments are “not supported by constitutional text, congressional practice, or our court precedent,” adding that the case lacks “imminent future importance” because it is a one-time tax that applies only to pre-2018 income.
