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MURPHY'S LAW UNDONE?
December 26, 2006
A three-judge panel of the Federal Circuit Court of Appeals shocked the tax world in August when they barred as unconstitutional the taxation of emotional damages. The broad language of the Murphy decision threatened many long-accepted elements of the tax law.
Last Friday the same three judges had second thoughts. They have vacated their own decision and scheduled a rehearing on it in April.
The IRS had petitioned the appeals court for an "en banc" rehearing, in which all 12 (I think) D.C. Circuit appeals judges would re-hear the case. The three original Murphy panel members ordered the rehearing "on the court's own motion," so they will do the rehearing themselves.
Presumably the three judges wouldn't have bothered with the rehearing -- including a full briefing schedule and oral arguments -- absent serious doubts about their original decision.
Hat tip: The TaxProf, who has an excellent set of links to the relevant documents and prior coverage.
Link: Complete Tax Update Murphy Coverage.
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