May 20, 2013: The United States Supreme Court today unanimously agreed that the U.S. Internal Revenue Service (IRS) overstepped its discretionary authority and improperly rejected tax credit claims sought by the company for taxes it paid in a foreign country, so-called “double taxation.”
Justice Clarence Thomas, writing for the unanimous Court, held that the foreign windfall tax falls into a category of income tax recognized in the U.S. and is therefore entitled to credit against U.S. taxes.
Southeastern Legal Foundation, joined by the U.S. Chamber of Commerce and the Goldwater Institute, argued as amici that the IRS Commissioner’s decision to deny the protection against double-taxation broke with decades of administrative decisions and legal precedent favoring tax credits – what the Supreme Court has described as the purpose behind existing federal law “to mitigate the evil of double taxation.” The “new interpretation” by the IRS Commissioner, which was today rejected by the Court, marked another in a long line of administrative and regulatory overreaching by current Executive branch offices, said Shannon L Goessling, SLF executive director and chief legal counsel.
Counsel of record for the joint amicus brief is Steven G. Bradbury, a Washington, DC- based partner of Dechert LLP and former head of the Office of Legal Counsel for the U.S. Justice Department.
PPL Corp. and Subsidiaries v. Commissioner of Internal Revenue, Case No. 12-43.