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As regards legitimate governmental purpose, the legislative
history accompanying the SBJPA notes that “Courts have
interpreted the exclusion from gross income of damages received
on account of personal injury or sickness broadly in some cases
to cover awards for personal injury that do not relate to a
physical injury or sickness.” H. Conf. Rept. 104-737, at 300
(1996), 1996-3 C.B. 741, 1040. Congress’s choice to narrow the
exclusion, and any retroactive application of the change, would
therefore appear to be rationally linked to the legitimate
objective of raising revenue. The legislative history further
reveals that the change was intended as a curative measure
designed to reduce or eliminate ambiguity in the otherwise
applicable law. Reference is made to “confusion” that “led to
substantial litigation”, including the Supreme Court cases of
Commissioner v. Schleier, 515 U.S. 323 (1995), and United States
v. Burke, 504 U.S. 229 (1992). H. Rept. 104-586, at 143 (1996),
1996-3 C.B. 331, 481.
In addition, the period of “retroactivity” alleged by
petitioner in this case does not exceed what has been upheld in
other tax litigation. See, e.g., Licari v. Commissioner, 946
F.2d 690 (9th Cir. 1991) (upholding application of tax penalty
passed in 1986 to returns previously filed for years 1982 through
1984), affg. T.C. Memo. 1990-4; Canisius Coll. v. United States,
799 F.2d 18, 26-27 (2d Cir. 1986) (upholding 4-year retroactive
application); Temple Univ. v. United States, 769 F.2d 126 (3d
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