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MURPHY'S END
April 22, 2008
The dramatic life of the Murphy case came to a quiet end yesterday when the U.S. Supreme Court declined to take the case.
The U.S. Appeals Court for the D.C. Circuit shocked the tax world with its initial Murphy decision, in which it ruled that damages awarded a whistleblower were not taxabe under the Constitution. The initial D.C. Circuit decision implied that any item not considered "income" in 1913 could not be subject to an income tax today.
Most tax students criticized the Murphy decision, and the three-judge panel quietly withdrew its decision and issued a more conventional ruling holding that the whistleblower damages were taxable.
A whistleblower advocacy group issued a press release that blames "pressure from the Bush administration" for the D.C. Circuit's reconsideration of its own decision. That's a strange way to describe near-universal criticism by the tax bar, unless Karl Rove's tentacles extend further than I would have ever guessed.
The TaxProf rounds things up.
Link: Complete Tax Update coverage of Murphy.
• Murphy decision Bookmark: del.icio.us • Digg • reddit
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