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<!-- Pursuant to community consensus reached at Talk:Tax protester/Request for comment, any POV tags will be removed unless they refer to a talk page section showing specific examples of bias. -->{{US Constitution article series}}
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The '''Sixteenth Amendment''' ('''Amendment XVI''') to the ] allows the Congress to levy an ] without apportioning it among ] or basing it on ] results. This amendment exempted income taxes from the constitutional requirements regarding ], after income taxes on rents, dividends, and interest were ruled to be direct taxes in '']'' (1895). It was ratified on February 3, 1913.

==Text==
{{quote|The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.}}

==Other Constitutional provisions regarding taxes==
], Section 2, Clause 3:

{{quote|Representatives and ] shall be apportioned among the several States which may be included within this Union, according to their respective Numbers...<ref>''Knowlton v. Moore'' {{ussc|178|41|1900}} and '']'' {{ussc|220|107|1911}}</ref>}}

Article I, Section 8, Clause 1:

{{quote|The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.}}

Article I, Section 9, Clause 4:

{{quote|No ], or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken.}}

This clause basically refers to a tax on property, such as a tax based on the value of land,<ref name=hylton>'']'' {{ussc|3|171|1796}}</ref> as well as a capitation.

==Income taxes pre-''Pollock''==

Until 1913, customs duties (tariffs) and excise taxes were the primary sources of federal revenue.<ref>Buenker, John D. 1981. "The Ratification of the Sixteenth Amendment." ''The Cato Journal''. 1:1. </ref> During the War of 1812, Secretary of Treasury A.J. Dallas made the first public proposal for an income tax, but it was never implemented.<ref>Baack, Bennet T. and Edward John Ray. 1985. "Special Interests and the Adoption of the Income Tax in the United States." ''The Journal of Economic History'' V. 45, No. 3. pp. 607-625.</ref> The Congress did introduce an income tax to fund the ] through the ].<ref>{{cite web|url=http://www.findingdulcinea.com/news/on-this-day/July-August-08/On-this-Day--Congress-Enacts-First-Income-Tax.html|title=On This Day: Congress Passes Act Creating First Income Tax|publisher=Findingdulcinea.com|accessdate=2012-03-26}}</ref> It levied a ] of 3% on annual income above $800, which was equivalent to ${{formatnum:{{Inflation|US|800|1861}}}} in today's money.{{Inflation-fn|US}} This act was replaced the following year with the ], which levied a ] of 3–5% on income above $600 (worth ${{formatnum:{{Inflation|US|600|1862}}}} today{{Inflation-fn|US}}) and specified a termination of income taxation in 1866. The Civil War income taxes, which expired in 1872, proved to be both highly lucrative and highly skewed against the more industrialized states, with New York, Pennsylvania and Massachusetts generating about 60 percent of the total revenue collected.<ref>Baack and Ray, p. 608.</ref> In the two decades following the expiration of the Civil War income tax, the Greenback movement, the Labor Reform Party, the Populist Party, the Democratic Party and many others would call for a graduated income tax.<ref>ibid</ref>

The ] advocated a graduated income tax in 1887.<ref>{{cite web|url=http://www.slp.org/pdf/platforms/plat1887.pdf|title=Socialist Labor Party Platform|format=PDF|accessdate=2012-03-26}}</ref> The ] "demand a graduated income tax" in its 1892 platform.<ref>{{cite web|url=http://historymatters.gmu.edu/d/5361|title=Populist Party Platform, 1892|publisher=Historymatters.gmu.edu|accessdate=2012-03-26}}</ref> The Democratic Party, led by ], advocated the income tax law passed in 1894,<ref>{{cite book|url=http://books.google.com/books?id=WORfl6qe2ewC&pg=PA159&lpg=PA159&dq=%22point+of+attack+is+the+income+tax%22&source=web&ots=qmUzGYDw8V&sig=D43o-g5ZGrR2SisjH6mTYjBboVo|title=Speeches of William Jennings Bryan, pp. 159-179|publisher=Books.google.com|accessdate=2012-03-26}}</ref> and proposed an income tax in its 1908 platform.<ref>{{dead link|date=March 2012}}</ref>

Prior to the ] decision in '']'', all income taxes had been considered indirect taxes imposed without respect to geography, unlike direct taxes, that must be apportioned among the states according to population.<ref>Commentary, James W. Ely, Jr., on the case of ''Springer v. United States'', in answers.com, at </ref><ref>"Again the situation is aptly illustrated by the various acts taxing incomes derived from property of every kind and nature which were enacted beginning in 1861, and lasting during what may be termed the Civil War period. It is not disputable that these latter taxing laws were classed under the head of excises, duties, and imposts because it was assumed that they were of that character inasmuch as, although putting a tax burden on income of every kind, including that derived from property real or personal, they were not taxes directly on property because of its ownership.” ''Brushaber v. Union Pac. Railroad'', {{ussc|240|1|1916}}, at 15</ref>

==The ''Pollock'' case==

In 1894, an amendment was attached to the ] that attempted to impose a federal tax of 2% on incomes over $4,000 (worth ${{formatnum:{{Inflation|US|4000|1894}}}} today{{Inflation-fn|US}}). The income tax law was strongly favored in the South and moderately supported in the eastern North Central states but heavily opposed in the West and the Northeast (with the exception of New Jersey).<ref>Baack and Ray, p. 610</ref> Derided as "un-Democratic, inquisitorial, and wrong in principle,"<ref>{{cite news|title=Mr. Cockran's Final Effort|url=http://query.nytimes.com/mem/archive-free/pdf?res=9907E7D81638E233A25752C3A9679C94659ED7CF|work=New York Times|date=1894-01-31|format=PDF}}</ref> it was challenged in ].

In '']'', the ] declared certain taxes on incomes — such as those on property under the 1894 Act — to be ] unapportioned ]es. The Court reasoned that a tax on ''income from property'' should be treated as a tax on "property by reason of its ownership" and so should be required to be apportioned. The reasoning was that taxes on the rents from land, the dividends from stocks and so forth burdened the property generating the income in the same way that a tax on "property by reason of its ownership" burdened that property.

After ''Pollock'', while income taxes on wages (as indirect taxes) were still not required to be apportioned by population, taxes on interest, dividends and rent income were required to be apportioned by population. The ''Pollock'' ruling made the ''source of the income'' (e.g., property versus labor, etc.) relevant in determining whether the tax imposed on that income was deemed to be "direct" (and thus required to be apportioned among the states according to population) or, alternatively, "indirect" (and thus required only to be imposed with geographical uniformity).<ref>Read a description of the decision at the </ref>

In his dissent to the ''Pollock'' decision, Justice ] stated:{{quote|When, therefore, this court adjudges, as it does now adjudge, that Congress cannot impose a duty or tax upon personal property, or upon income arising either from rents of real estate or from personal property, including invested personal property, bonds, stocks, and investments of all kinds, except by apportioning the sum to be so raised among the States according to population, it practically decides that, without an amendment of the Constitution — two-thirds of both Houses of Congress and three-fourths of the States concurring — such property and incomes can never be made to contribute to the support of the national government.<ref>{{cite web|url=http://www.law.cornell.edu/supct/html/historics/USSC_CR_0158_0601_ZD.html|title=Justice Harlan's dissenting opinion in '&#39;Pollock'&#39;|publisher=Law.cornell.edu|accessdate=2012-03-26}}</ref>}}

Members of Congress responded to ''Pollock'' by expressing widespread concern that many of the wealthiest Americans had consolidated too much economic power.<ref>See the quotes from Theodore Roosevelt at the </ref>

==Adoption==

On June 16, 1909, President ], in an address to Congress, proposed a 2% federal ] on ]s by way of an ] and a constitutional amendment to allow the previously enacted income tax.{{quote|Upon the privilege of doing business as an artificial entity and of freedom from a general partnership liability enjoyed by those who own the stock.<ref>{{cite web|url=http://www.presidency.ucsb.edu/ws/print.php?pid=68517|title=Taft Address of June 16, 1909 (American Presidency Project)|publisher=Presidency.ucsb.edu|date=1909-06-16|accessdate=2012-03-26}}</ref><ref>{{cite book|url=http://books.google.com/books?pg=PA166&vq=june+16+1909+%22income+tax%22&dq=june+16+1909+%22income+tax%22&id=Sm9aaKTgAWsC&output=html|title=President Taft Presidential addresses|publisher=Books.google.com|accessdate=2012-03-26}}</ref>}}

An income tax amendment to the Constitution was first proposed by Senator ] of Nebraska. He submitted two proposals, Senate Resolutions Nos. 25 and 39. The amendment proposal finally accepted was Senate Joint Resolution No. 40, introduced by Senator ] of Rhode Island, the Senate majority leader and ] Chairman.<ref>Volume 36, Statutes at Large, 61st Congress Session I, Senate Joint Resolution No. 40, p. 184, approved July 31, 1909</ref>

On July 12, 1909, the resolution proposing the Sixteenth Amendment was passed by the ]<ref>Senate Joint Resolution 40, 36 Stat. 184.</ref> and was submitted to the state legislatures. Support for the income tax was strongest in the western and southern states and opposition was strongest in the northeastern states.<ref>{{cite web|url=http://www.cato.org/pubs/journal/cj1n1/cj1n1-10.pdf|title=The Ratification of the Federal Income Tax Amendment, John D. Buenker|format=PDF|accessdate=2012-03-26}}</ref> Supporters of the income tax believed that it would be a much better method of gathering revenue than tariffs, which were the primary source of revenue at the time. From well before 1894, Democrats, Progressives, Populists and other left-oriented parties argued that tariffs disproportionately affected the poor, interfered with prices, were unpredictable, and were an intrinsically limited source of revenue.{{Citation needed|date=March 2013}} The South and the West tended to support income taxes because their residents were generally less prosperous, more agricultural and more sensitive to fluctuations in commodity prices.{{Citation needed|date=March 2013}} A sharp rise in the cost of living between 1897 and 1913 greatly increased support for the idea of income taxes, including in the urban Northeast.<ref>Buenker, p. 186.</ref> A growing number of Republicans also began supporting the idea, notably Theodore Roosevelt and the "Insurgent" Republicans (who would go on to form the Progressive Party).<ref>Buenker, p. 189</ref> These Republicans were driven mainly by a fear of the increasingly large and sophisticated military forces of Japan, Britain and the European powers, their own imperial ambitions and the perceived need to defend American merchant ships.<ref>Baack and Jay, p. 613-614</ref> Moreover, these progressive Republicans were, as the name suggests, convinced that central governments could play a positive role in national economies.<ref>Buenker, p. 184</ref> A bigger government and a bigger military, of course, required a correspondingly larger and steadier source of revenue to support it.{{Citation needed|date=March 2013}}

Opposition to the Sixteenth Amendment was led by establishment Republicans because of their close ties to wealthy industrialists, although not even they were uniformly opposed to the general idea of a permanent income tax. In 1910, ] ], shortly before becoming a Supreme Court Justice, spoke out against the income tax amendment. While he supported the idea of a federal income tax, Hughes believed the words "from whatever source derived" in the proposed amendment implied that the federal government would have the power to tax state and municipal bonds. He believed this would excessively centralize governmental power and "would make it impossible for the state to keep any property".<ref>{{cite web|url=http://www.cato.org/pubs/journal/cj1n1/cj1n1-9.pdf|title=Arthur A. Ekirch, Jr., "The Sixteenth Amendment: The Historical Background," p. 175, '&#39;Cato Journal'&#39;, Vol. 1, No. 1, Spring 1981.|format=PDF|accessdate=2012-03-26}}</ref>

Between 1909 and 1913, several conditions favored passage of the Sixteenth Amendment. Inflation was high and many blamed Federal tariffs for the rising prices. The Republican Party was divided and weakened by the loss of Roosevelt and the Insurgents who joined the Progressive party, a problem that blunted opposition even in the Northeast.<ref>Buenker, pp. 219-221</ref> The Democrats won both houses and the Presidency in 1912 and the country was generally in a left-leaning mood, with the Socialist Party winning a seat in the House in ] and polling six percent of the popular presidential vote in ].

Three advocates for a federal income tax ran in the ].<ref>Adam Young, "", Ludwig von Mises Institute, Sept. 7, 2004</ref> On February 25, 1913, ] ] proclaimed that the amendment had been ratified by three-fourths of the states and so had become part of the Constitution.<ref>{{cite web|url=http://caselaw.lp.findlaw.com/data/constitution/amendments.html|title=FindLaw: U.S. Constitution: Amendments|publisher=]|accessdate=2012-03-26}}</ref> The ] was enacted shortly thereafter.

According to the ], the following states ratified the amendment:<ref>{{cite web|url=http://www.usconstitution.net/constamrat.html|title=Ratification of Constitutional Amendments|publisher=U.S. Constitution Online|accessdate=April 20, 2012}}</ref>

# ] (August 10, 1909)
# ] (February 8, 1910)
# ] (February 19, 1910)
# ] (March 1, 1910)
# ] (March 7, 1910)
# ] (March 10, 1910)
# ] (April 8, 1910)
# ] (August 3, 1910)
# ] (August 16, 1910)
# ] (January 19, 1911)
# ] (January 20, 1911)
# ] (January 23, 1911)
# ] (January 26, 1911)
# ] (January 27, 1911)
# ] (January 30, 1911)
# ] (January 31, 1911)
# ] (January 31, 1911)
# ] (February 1, 1911)
# ] (February 9, 1911)
# ] (February 11, 1911)
# ] (February 15, 1911)
# ] (February 17, 1911)
# ] (February 23, 1911)
# ] (February 24, 1911)
# ] (March 2, 1911)
# ] (March 16, 1911)
# ] (March 31, 1911)
# ] (April 7, 1911)
# ] (April 22, 1911), after having previously rejected the amendment
# ] (May 16, 1911)
# ] (July 12, 1911)
# ] (April 3, 1912)
# ] (June 11, 1912)
# ] (June 28, 1912)
# ] (January 31, 1913)
# ] (February 3, 1913)

Ratification (by the requisite 36 states) was completed on February 3, 1913 with the ratification by ]. The amendment was subsequently ratified by the following states, bringing the total number of ratifying states to forty-two of the forty-eight then existing:
:37. ] (February 3, 1913)
:38. ] (February 3, 1913)
:39. ] (February 4, 1913)
:40. ] (February 19, 1913)
:41. ] (March 4, 1913)
:42. ] (March 7, 1913), after rejecting the amendment on March 2, 1911

The legislatures of the following states rejected the amendment without ever subsequently ratifying it:
:]
:]
:]
:]<ref>"Virginia House Opposes Federal Clause by 54 to 37", '']'', March 8, 1910</ref>

The legislatures of the following states never considered the proposed amendment:
:]
:]

==''Pollock'' nullified==

The Sixteenth Amendment nullified the effect of ''Pollock''.<ref>], "Constitutional Limits on the Taxing Power of the Federal Government," ''The Tax Lawyer'', Fall 1987, Vol. 41, No. 1, p. 3 (]) (''Pollock'' case "was in effect reversed by the sixteenth amendment")</ref><ref>"The Sixteenth Amendment to the Constitution overruled Pollock " ''Graf v. Commissioner'', 44 T.C.M. (CCH) 66, TC Memo. 1982-317, CCH Dec. 39,080(M) (1982).</ref> That means the Congress may impose taxes on income from any source without having to apportion the total dollar amount of tax collected from each state according to each state's population in relation to the total national population.<ref>{{cite web|url=http://caselaw.lp.findlaw.com/data/constitution/amendment16/01.html#2 |title=Findlaw: Sixteenth Amendment, History and Purpose of the Amendment |publisher=Caselaw.lp.findlaw.com |date= |accessdate=2012-03-26}}</ref>

In ''Wikoff v. Commissioner'', the ] said:{{quote|t is immaterial, with respect to Federal income taxes, whether the tax is a direct or an indirect tax. Mr. Wikoff relied on the Supreme Court's decision in Pollock v. Farmers' Loan & Trust Co. but the effect of that decision has been nullified by the enactment of the 16th Amendment.<ref>''Wikoff v. Commissioner'', 37 T.C.M. (CCH) 1539, T.C. Memo. 1978-372 (1978).</ref>}}

In ''Abrams v. Commissioner'', the Tax Court said:{{quote|Since the ratification of the Sixteenth Amendment, it is immaterial with respect to income taxes, whether the tax is a direct or indirect tax. The whole purpose of the Sixteenth Amendment was to relieve all income taxes when imposed from apportionment and from a consideration of the source whence the income was derived.<ref>82 T.C. 403, CCH Dec. 41,031 (1984)</ref>}}

==Case law==

The federal courts' interpretations of the Sixteenth Amendment have changed considerably over time and there have been many disputes about the applicability of the amendment.

===The ''Brushaber'' case===

In '']'', {{ussc|240|1|1916}}, the Supreme Court ruled that (1) the Sixteenth Amendment removes the ''Pollock'' requirement that certain income taxes (such as taxes on income "derived from real property" that were the subject of the ''Pollock'' decision), be apportioned among the states according to population;<ref>"As construed by the Supreme Court in the ''Brushaber'' case, the power of Congress to tax income derives from Article I, Section 8, Clause 1 of the Constitution, rather than from the Sixteenth Amendment; the latter simply eliminated the requirement that an income tax, to the extent that it is a direct tax, must be apportioned among the states." ], Martin J. McMahon, Jr. & Lawrence A. Zelenak, ''Federal Income Taxation of Individuals'', ch. 1, paragr. 1.01, Research Institute of America (2d ed. 2005), as retrieved from 2002 WL 1454829 (W. G. & L.).</ref> (2) the federal income tax statute does not violate the Fifth Amendment's prohibition against the government taking property without due process of law; (3) the federal income tax statute does not violate the Article I, Section 8, Clause 1 requirement that excises, also known as indirect taxes, be imposed with geographical uniformity.

===The ''Kerbaugh-Empire Co''. case===

In '']'', {{ussc|271|170|1926}}, the Supreme Court, through ], stated:{{quote|It was not the purpose or the effect of that amendment to bring any new subject within the taxing power. Congress already had the power to tax all incomes. But taxes on incomes from some sources had been held to be "direct taxes" within the meaning of the constitutional requirement as to apportionment. The Amendment relieved from that requirement and obliterated the distinction in that respect between taxes on income that are direct taxes and those that are not, and so put on the same basis all incomes "from whatever source derived". "Income" has been taken to mean the same thing as used in the Corporation Excise Tax of 1909 (36 Stat. 112), in the Sixteenth Amendment, and in the various revenue acts subsequently passed. After full consideration, this court declared that income may be defined as gain derived from capital, from labor, or from both combined, including profit gained through sale or conversion of capital.}}

===The ''Glenshaw Glass'' case===

In '']'', {{ussc|348|426|1955}}, the Supreme Court laid out what has become the modern understanding of what constitutes 'gross income' to which the Sixteenth Amendment applies, declaring that income taxes could be levied on "accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." Under this definition, ''any'' increase in wealth &mdash; whether through ]s, benefits, bonuses, sale of stock or other property at a profit, bets won, lucky finds, awards of ] in a lawsuit, ] actions &mdash; are all within the definition of income, unless the ] makes a specific exemption, as it has for items such as ] proceeds received by reason of the death of the insured party,<ref>{{usc|26|101}}.</ref> ]s, ]s, devises and inheritances,<ref>{{usc|26|102}}.</ref> and certain ]s.<ref>{{usc|26|117}}.</ref>

===Income taxation of wages, etc.===
Federal courts have ruled that the Sixteenth Amendment allows a direct tax on "wages, salaries, commissions, etc. without apportionment."<ref>''Parker v. Commissioner'', 724 F.2d 469, 84-1 U.S. Tax Cas. (CCH) paragr. 9209 (5th Cir. 1984) (closing parenthesis in original has been omitted). For other court decisions upholding the taxability of wages, salaries, etc. see ''United States v. Connor'', 898 F.2d 942, 90-1 U.S. Tax Cas. (CCH) paragr. 50,166 (3d Cir. 1990); ''Perkins v. Commissioner'', 746 F.2d 1187, 84-2 U.S. Tax Cas. (CCH) paragr. 9898 (6th Cir. 1984); ''White v. United States'', 2005-1 U.S. Tax Cas. (CCH) paragr. 50,289 (6th Cir. 2004), ''cert. denied'', ____ U.S. ____ (2005); ''Granzow v. Commissioner'', 739 F.2d 265, 84-2 U.S. Tax Cas. (CCH) paragr. 9660 (7th Cir. 1984); ''Waters v. Commissioner'', 764 F.2d 1389, 85-2 U.S. Tax Cas. (CCH) paragr. 9512 (11th Cir. 1985); ''United States v. Buras'', 633 F.2d 1356, 81-1 U.S. Tax Cas. (CCH) paragr. 9126 (9th Cir. 1980).</ref>

===The ''Penn Mutual'' case===

Although the Sixteenth Amendment is often cited as the "source" of the Congressional power to tax incomes, at least one court has reiterated the point made in ''Brushaber'' and other cases that the Sixteenth Amendment itself did not grant the Congress the power to tax incomes, a power the Congress had since 1789, but only removed the possible requirement that any income tax be apportioned among the states according to their respective populations. In ''Penn Mutual Indemnity'', the United States Tax Court stated:<ref>''Penn Mutual Indemnity Co. v. Commissioner'', 32 T.C. 653 at 659 (1959), ''aff'd'', 277 F.2d 16, 60-1 U.S. Tax Cas. (CCH) paragr. 9389 (3d Cir. 1960).</ref>

{{quote|In dealing with the scope of the taxing power the question has sometimes been framed in terms of whether something can be taxed as income under the Sixteenth Amendment. This is an inaccurate formulation... and has led to much loose thinking on the subject. The source of the taxing power is not the Sixteenth Amendment; it is ], of the Constitution.}}

The ] agreed with the Tax Court, stating:<ref>''Penn Mutual Indemnity Co. v. Commissioner'', 277 F.2d 16, 60-1 U.S. Tax Cas. (CCH) paragr. 9389 (3d Cir. 1960) (footnotes omitted).</ref>

{{quote|It did not take a constitutional amendment to entitle the United States to impose an income tax. Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429, 158 U. S. 601 (1895), only held that a tax on the income derived from real or personal property was so close to a tax on that property that it could not be imposed without apportionment. The Sixteenth Amendment removed that barrier. Indeed, the requirement for apportionment is pretty strictly limited to taxes on real and personal property and capitation taxes.}}{{quote|It is not necessary to uphold the validity of the tax imposed by the United States that the tax itself bear an accurate label. Indeed, the tax upon the distillation of spirits, imposed very early by federal authority, now reads and has read in terms of a tax upon the spirits themselves, yet the validity of this imposition has been upheld for a very great many years.}}{{quote|It could well be argued that the tax involved here is an "excise tax" based upon the receipt of money by the taxpayer. It certainly is not a tax on property and it certainly is not a capitation tax; therefore, it need not be apportioned. We do not think it profitable, however, to make the label as precise as that required under the Food and Drug Act. Congress has the power to impose taxes generally, and if the particular imposition does not run afoul of any constitutional restrictions then the tax is lawful, call it what you will.}}

===The ''Murphy'' case===

On December 22, 2006, a three-judge panel of the ] ]<ref>Order, Dec. 22, 2006, ''Murphy v. Internal Revenue Service and United States'', United States Court of Appeals for the District of Columbia Circuit.</ref> its unanimous August 2006 opinion in '']''.<ref>460 F.3d 79, 2006-2 U.S. Tax Cas. (CCH) paragr. 50,476, 2006 WL 2411372 (D.C. Cir. August 22, 2006).</ref> In an unrelated matter, the court had also granted the government's motion to dismiss Murphy's suit against the "Internal Revenue Service." Under ], a taxpayer may sue the federal government, but not a government agency, officer, or employee (with few exceptions). The court stated:

{{quote|Insofar as the Congress has waived sovereign immunity with respect to suits for tax refunds under {{uscsub|28|1346|a|1}}, that provision specifically contemplates only actions against the "United States." Therefore, we hold the IRS, unlike the United States, may not be sued '']'' in this case.}}

An exception to federal sovereign immunity is in the ], where a taxpayer may sue the ].<ref>()</ref> The original three-judge panel then agreed to rehear the case itself. In its original decision, the Court had ruled that {{uscsub|26|104|a|2}} was unconstitutional under the Sixteenth Amendment to the extent that the statute purported to tax, as income, a recovery for a non-physical personal injury for mental distress and loss of reputation not received in lieu of taxable income such as lost wages or earnings.

Because the August 2006 opinion was vacated, the full court did not hear the case '']''.

On July 3, 2007, the Court (through the original three-judge panel) ruled (1) that the taxpayer's compensation was received on account of a non-physical injury or sickness; (2) that gross income under section 61 of the Internal Revenue Code<ref>{{usc|26|61}} ()</ref> does include compensatory damages for non-physical injuries, even if the award is not an "accession to wealth," (3) that the income tax imposed on an award for non-physical injuries is an indirect tax, regardless of whether the recovery is restoration of "human capital," and therefore the tax does not violate the constitutional requirement of ], that ] or other ]es must be laid among the states only in proportion to the population; (4) that the income tax imposed on an award for non-physical injuries does not violate the constitutional requirement of ], that all ], ] and ]s be uniform throughout the United States; (5) that under the doctrine of sovereign immunity, the Internal Revenue Service may not be sued in its own name.<ref>Opinion on rehearing, July 3, 2007, ''Murphy v. Internal Revenue Service and United States'', case no. 05-5139, United States Court of Appeals for the District of Columbia Circuit, 2007-2 U.S. Tax Cas. (CCH) paragr. 50,531 (D.C. Cir. 2007)</ref>

The Court stated that "lthough the 'Congress cannot make a thing income which is not so in fact,' it can ''label'' a thing income and tax it, so long as it acts within its constitutional authority, which includes not only the Sixteenth Amendment but also Article I, Sections 8 and 9."<ref>Opinion on rehearing, July 3, 2007, p. 16, ''Murphy v. Internal Revenue Service and United States'', case no. 05-5139, United States Court of Appeals for the District of Columbia Circuit, 2007-2 U.S. Tax Cas. (CCH) paragr. 50,531 (D.C. Cir. 2007).</ref> The court ruled that Ms. Murphy was not entitled to the tax refund she claimed, and that the personal injury award she received was "within the reach of the congressional power to tax under Article I, Section 8 of the Constitution"—even if the award was "not income within the meaning of the Sixteenth Amendment".<ref>Opinion on rehearing, July 3, 2007, p. 5-6, ''Murphy v. Internal Revenue Service and United States'', case no. 05-5139, United States Court of Appeals for the District of Columbia Circuit, 2007-2 U.S. Tax Cas. (CCH) paragr. 50,531 (D.C. Cir. 2007).</ref> See also the ''Penn Mutual'' case cited above.

On April 21, 2008, the Supreme Court declined to review the Court of Appeals decision.<ref>{{cite web|url=http://www.scotusblog.com/2008/04/court-to-hear-anti-dumping-case/|title=Court to hear anti-dumping, sentencing cases|last=Denniston|first=Lyle|date=April 21, 2008|publisher=]|accessdate=21 April 2008}}</ref>

==See also==
* ]

==Notes==
{{Ibid|date=March 2013}}
{{reflist|colwidth=30em}}

==External links==
*
* Images of original documents
*
* The decision nullified by the Sixteenth Amendment
* Supreme Court opinion on the apportionment clause of the Constitution.
* - no new power of taxation (affirming constitutionality of income tax after Sixteenth Amendment)
* - Almanac of Policy Issues; annotated as "US Department of the Treasury Undated.".

{{US Constitution}}

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Revision as of 23:30, 7 March 2013

"S Amendment" redirects here. For the Irish amendment, see Sixteenth Amendment of the Constitution of Ireland.

.hi am sorry