District of Columbia v. Murphy

Background

Two people who worked for the federal government in Washington challenged the District’s new income tax. One was a Treasury economist who moved from Detroit in 1935, kept voter registration and other ties there, and was found by the Board to have intended to remain in Washington. The other had lived and worked in Washington since 1914, owned a home and local memberships, but also kept family ties and voting links to Pennsylvania. Both Boards applied an earlier court rule and held them not domiciled on tax day.

Reasoning

The Court examined the law’s history and prior cases and concluded Congress meant to tax people who voluntarily make Washington their permanent home, not those here because of government service. It held that merely living in Washington while in federal service does not automatically create a D.C. domicile. Domicile is a question of fact decided from many real-life signs — family, property, voting, club ties, and the person’s clear intent — so the cases must be reviewed again under that standard.

Real world impact

The decision protects many federal workers from being treated as D.C. domiciliaries without individualized review and forces tax officials to weigh personal facts. People who want to avoid the D.C. tax must show a fixed intent to return elsewhere. The ruling does not finally decide who owes tax here; it reverses the appeals court and sends the cases back for new fact-finding in line with the Court’s guidance.