O'CONNOR v. United States

The petitioners, United States citizen employees of the Panama Canal Commission and their spouses, seek refunds of income taxes collected on salaries paid by the Commission between 1979 and 1981. We granted certiorari to resolve conflicting appellate interpretations of an international agreement. 474 U. S. 1050 (1986).

From 1904 to 1979, the United States exercised sovereignty over the Panama Canal and the surrounding 10-mile-wide Panama Canal Zone under the Isthmian Canal Convention, 38 Stat. 2234. On September 7, 1977, the United States and Panama signed the Panama Canal Treaty, T.I.A.S. No.…