The Untermyer v. Anderson case in 1927 revolved around the constitutionality of a retroactive tax law. The Supreme Court ruled that the Revenue Act of 1924, which imposed gift taxes on transfers made before its enactment, was unconstitutional as it violated the due process clause of the Fifth Amendment. The court held that retrospective taxation is not inherently illegal or unjust but must meet certain criteria to be considered constitutional - namely, it should be used sparingly and only under exceptional circumstances such as during times of war or financial crisis. In this instance, however, there were no such exigencies present to justify imposing a retroactive tax burden on citizens for actions taken prior to when they could have known about potential tax implications.

In the dissenting opinion for Untermyer v. Anderson, Justice Oliver Wendell Holmes Jr., joined by Justices Louis Brandeis and Harlan Fiske Stone, argued that the tax in question was not a direct tax but an excise tax on the transfer of property at death. They contended that it did not matter whether this transfer occurred through inheritance or gift; both were subject to taxation under Congress's power to levy taxes on "all Duties, Imposts and Excises." The majority's distinction between gifts made during life versus those made at death was irrelevant from a constitutional standpoint. Furthermore, they disagreed with the majority’s view that such a gift tax would be equivalent to taxing property itself rather than its transfer. In their view, if this logic were applied consistently across all forms of taxation (including income taxes), it could potentially invalidate much of federal revenue law.