A federal appeals court is weighing whether to review a controversial tax decision in which a unanimous three-judge panel struck down as unconstitutional the federal income tax on nonphysical, compensatory damages awards. (See 'Court Tosses Federal Tax Statute Covering Emotional Damages,' Medical Malpractice Law & Strategy, Nov. 2006).
Full Court May Weigh Taxation of Damages
A federal appeals court is weighing whether to review a controversial tax decision in which a unanimous three-judge panel struck down as unconstitutional the federal income tax on nonphysical, compensatory damages awards. (<i>See</i> 'Court Tosses Federal Tax Statute Covering Emotional Damages,' <i>Medical Malpractice Law & Strategy</i>, Nov. 2006). Claiming the case is one of 'exceptional importance' to the execution of the nation's tax laws, the Bush administration recently asked the full U.S. Circuit Court of Appeals for the District of Columbia to rehear <i>Murphy v. U.S.</i>, No. 05-5139. In October, the court, on its own motion, ordered lawyers for Marrita Murphy to respond to the government's rehearing petition, a signal that the court is interested, according to some circuit watchers.
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