Portion of section 104(a)(2) deemed unconstitutional by DC Circuit Court

In an utterly stunning and unexpected decision released today the DC Circuit court in the case of Murphy vs US held today that Section 104(a)(2) is unconstitutional under the 16th amendment, which is the amendment authorizing an income tax, as applied to a recovery for non-physical personal injury, such as emotional distress and loss of reputation, unrelated to lost wages or earnings. This is big news and trial lawyers around the country are going to be needing advice on this immediately.

First, I want to thank Attorney Rob Wood for alerting me to this decision and giving me a brief synopsis. As most of you know Attorney Wood is considered by most to be the nations leading expert in the area of tax questions on taxable and non-taxable damages, and he was one of the first to know about this decision. Rob also provided me with a pdf copy of the actual decision which is available by clicking this link. Again, thank you Rob for providing the information and these resources so quickly.

Second, I want to make my readers aware that we will be doing a special podcast with Attorney Wood on this ruling tomorrow, and will rush to get it up and on the system for you to listen to by late Wednesday or first thing Thursday. I expect interest will be high and we plan on getting you the facts as quickly as we can.  

Clearly, section 104 (a)(2) is the very foundation of the settlement industry and anything that impacts it at the lower court level is going to be a matter of intense focus and interest.

If you have any questions on this and want me to include them in my interview tomorrow please notify me either here on the blog or by email before 9 am MST tomorrow morning and I'll do my best to include them in the question and answer phase.  

Posted on August 22, 2006 .