A federal appeals court nipped a $200 million penalty that the IRS imposed on ExxonMobil for wrongly seeking a $1 billion tax refund, with the panel likening the underlying and convoluted area of law to “occult mysteries.”
The government imposed the $200 million penalty because it said Exxon’s billion-dollar refund request was excessive and unreasonable, but Judges Gregg Costa, Edith Brown Clement and James Graves of the U.S. Court of Appeals for the Fifth Circuit said the oil company reasonably construed a complicated tax issue over whether its income from certain transactions came from a lease or sale of minerals. It was a dispute that had to go to a bench trial, the panel noted.
