Home

On Thursday, the oil company BP reached an agreement to pay $18.7 billion to settle all the remaining federal and state claims from the years of litigation following the catastrophic 2010 Gulf oil spill. But thanks to provisions in the tax code, they might be able to deduct a large chunk of that sum from their taxes.

According to tax code, when a company pays a fine, the company is free to write it off their corporate income taxes, unless the fine is expressly for violation of the law. Typically that’s indicated by the fine being called a “penalty,” meant to punish the company for wrongdoing. If the language of the settlement describes the fine differently—as “money to resolve claims,” or money used for restoration, for example—the fine can be treated for tax purposes as a business expense. Or, put another way, the fines can be treated as though they were “just compensating for damages that happened, the same way as you were a company that cleaned someone’s rugs and you spilled something on their rugs, you pay them to replace their rug,” explained Phineas Baxandall, the senior tax and budget policy analyst at the U.S. Public Interest Research Group (U.S. PIRG), a consumer-oriented nonprofit that advocates against such write-offs.

Continue reading:  How BP’s $18.7 Billion Gulf Spill Fine Could Be One Giant Tax Deduction

14 thoughts on “How BP’s $18.7 Billion Gulf Spill Fine Could Be One Giant Tax Deduction

  1. It’s hard to tell what’s worse these days — the immense injuries inflicted on us by corporate capitalism and its eager lackeys, or the howling insults we receive from the same generous folks. It’s about time we repay them all, in kind. Independence Day? Not ours, it would seem.

    Like

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s