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In such instance, retroactivity would not be constitutionally
objectionable on grounds related to a wholly new tax.
Accordingly, petitioner’s situation does not present reason for
departure from the lenient standards typically employed to
evaluate tax legislation.
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, supra at
300, 1996-3 C.B. at 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. 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, i.e., slightly less than 2 years, does
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