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Senator calls for probe of BP tax plans
WASHINGTON |
WASHINGTON (Reuters) - A senator from Florida called on Wednesday for a congressional inquiry into BP Plc's plan to use losses from the Gulf oil spill to reap $10 billion in tax benefits.
Senator Bill Nelson said he wants a probe into whether BP, which announced on Tuesday a $32 billion charge linked to the clean-up, will be deducting legal expenses related to nondeductible fines and penalties, and whether BP should deduct the full cost of its $20 billion cleanup fund.
"I was appalled upon learning that BP intends to shift nearly $10 billion of the costs related to the Gulf oil spill to the backs of American taxpayers, including the very taxpayers whose lives have been devastated by the spill," Nelson, a Democratic member of the tax-writing Senate Finance Committee, wrote to the panel's chairman, Max Baucus.
Nelson urged Baucus to start a probe of the federal tax treatment of costs incurred by BP as a result of the spill.
Tax experts have said it would be natural for BP to deduct costs from the cleanup of the worst oil spill in U.S. history as a business expense.
Fines and penalties are usually not tax deductible.
Nelson mentioned the decision by Boeing Co to forgo tax benefits from a $615 million settlement over an ethics probe, under pressure from lawmakers.
He also said that Goldman Sachs group Inc is electing not to deduct its $550 million settlement recently announced with the U.S. Securities and Exchange Commission.
(Reporting by Kim Dixon; editing by Andre Grenon)
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1. Boeing Co. was under ethics charges and Goldman Sachs was found to be in violation of SEC guidelines. At this point, we do not know if and to what extent BP violated any laws or regulations. Consequently, its a bit early to put them in the same category. In making this parallel, Senator Nelson is is jumping the gun by presuming guilt. Our legal system just dosen’t work that way.
2. The amount at question for the tax deduction is a very considerable sum that is important to BP in meeting its obligations to the public. The sums for Boeing and Goldman are much smaller and not part of funding activities for the public good.
3. According to tax law, if done according to standard accounting proceedures, a deduction would be legal and legitimate. There’s good reason for this. The money is being paid to others who declare it as income. Without a deduction, the money is being taxed twice. That is counter to the law and spirit of the tax codes.
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