ExxonMobil on Wednesday lost a case against the U.S. government over its claims that the IRS owed the company a $1.3 billion tax refund. The case, which dates back more than half a decade, hinges on Exxon’s claims that it overpaid income taxes from 2006 to 2009 on operations in Qatar and Malaysia that the company initially claimed were mineral leases, but later revised as sales. The back-and-forth between the government and the oil giant resulted in the IRS fining Exxon $200 million for claiming an excessive refund. Exxon paid the penalty—which was eventually overturned—but also never backed down and continued its tactics, which the Fifth Circuit Court of Appeals readily called out in its ruling.
“Exxon is not the only oil company making this argument. Its gambit is the latest installment in a series of nearly identical claims that companies have filed nationwide,” the circuit judges wrote. “We join the unanimous chorus—judges who comprise two courts of appeals and three district courts (9-0 for those keeping score)—to hold that Exxon’s credit reduced its excise-tax liability such that it can only deduct the excise tax it paid out of pocket.”
Why would a company that readily boasted $17.9 billion in earnings in the second quarter of 2022 alone advocate so fiercely for a tax return? Easy. Greed.
The case itself hinges on Exxon’s misdeeds with renewable fuel credits it hopes can somehow line its pockets without requiring the company to make meaningful changes to its polluting business. Through creative accounting means, Exxon tried time and again to revise its returns in order to receive more money back after the fact. Such tactics included trying to claim mixture credits because it produced both alternative fuels and more traditional oil and gas, while at the same time not claiming those credits and deducting its excise taxes—taxes typically levied on products like gasoline and cigarettes—as a cost of goods sold. The IRS previously rejected its creative accounting measures, and so too did the Fifth Circuit Court of Appeals.
“The text is clear: Exxon’s renewable-fuel credit reduced its excise tax,” the judges concluded. “It can deduct only the reduced amount.”
April Siese August 04, 2022 at 10:40PM From Daily Kos
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