Court Overturns $101M Tax Refund To Texaco

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The 9th Circuit rejected Texaco's bid for a $101 million tax refund on the $1.25 billion settlement it paid the government for selling oil and gas above the price ceilings set by federal regulations.

The judges reversed judgment for Texaco, now a subsidiary of ChevronTexaco Corp., ruing that the tax benefit on repayment applies to public utilities only, not private companies such as Texaco.

Texaco had overcharged for crude oil and oil products from 1973 to 1981. After a series of administrative actions, the Department of Energy agreed to the settlement. Texaco made the payments and deducted the settlement amount on its federal income tax returns for those years, then filed refund claims for 1988, 1990, 1991 and 1992.

The appellate judges reinstated the government's denial of the refund claims on the grounds that federal tax law "plainly precludes" Texaco from recouping some of the money.

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