Tax News Update    Email this document    Print this document  

March 13, 2023

IRS will acquiesce in Fifth Circuit decision that federal oil spill tax on exported crude oil is unconstitutional

In an Action on Decision (AOD-2023-01), an attorney in the IRS Passthroughs and Special Industries division has recommended that the agency acquiesce in Trafigura Trading LLC v. United States, 29 F.4th 286 (5th Cir. 2022), stating that IRS (1) will no longer attempt to collect the IRC Section 4611(b)(1)(A) tax imposed on domestic crude oil that is exported and (2) will encourage taxpayers to request reconsideration of denied refund claims that argued IRC Section 4611(b)(1)(A) was unconstitutional. Despite recommending acquiescence, the AOD also asserts that the Fifth Circuit wrongly decided the case in several respects. (For background, see Tax Alert 2022-0869)

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor