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prior tax-free treatment of Social Security benefits by mandating
that all Social Security benefits, including disability insurance
benefits, be at least partially includable in gross income. In
making this change, Congress gave no indication that it intended
to allow an exception under section 104 or otherwise. Indeed, to
allow an exception under section 104 for Social Security
disability insurance benefits would appear incongruous with the
stated purpose of section 86 to treat “more nearly equally all
forms of retirement and other income that are designed to replace
lost wages”. S. Rept. 98-23, supra at 25-26, 1983-2 C.B. at 328.
This Court decided Haar v. Commissioner, 78 T.C. 864 (1982),
over 20 years ago. On numerous occasions since, Congress has
amended section 104 in various respects.11 At no time has
Congress sought to overturn Haar or to clarify the scope of the
section 104(a)(4) exclusion in light of Haar. “[P]rolonged
11 See Victims of Terrorism Tax Relief Act of 2001, Pub. L.
107-134, sec. 113(a), 115 Stat. 2435 (2002) (amending sec.
104(a)(5) as relates to terrorist attacks); Taxpayer Relief Act
of 1997, Pub. L. 105-34, sec. 1529, 111 Stat. 1075 (creating
personal injury presumption for heart disease and hypertension of
former police officers and firefighters for purposes of sec.
104(a)(1)) (amended by Internal Revenue Service Restructuring and
Reform Act of 1998, Pub. L. 105-206, sec. 6015(c)(1), 112 Stat.
821); Small Business Job Protection Act of 1996, Pub. L. 104-188,
sec. 1605(a), 110 Stat. 1838 (restricting sec. 104(a)(2) to
personal physical injuries and sickness); Omnibus Budget
Reconciliation Act of 1989, Pub. L. 101-239, sec. 7641(a), 103
Stat. 2379 (making sec. 104(a)(2) inapplicable with respect to
punitive damages in connection with a case not involving physical
injury or physical sickness); Act of Jan. 14, 1983, Pub. L. 97-
473, sec. 101(a), 96 Stat. 2605 (amending sec. 104(a)(2) with
respect to amounts received by suit or agreement).
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