BP’s nearly $20 billion settlement with the federal government over damage caused by the 2010 Gulf of Mexico oil spill has been billed as the biggest deal of its kind in U.S. history.
But one national consumer advocacy group says U.S. taxpayers are indirectly footing a chunk of the bill because the federal government is allowing the oil company to claim most of the payment as a tax deduction, The Courier reports.
“Though we are glad that the protracted settlement to address BP’s actions in relation to the 2010 Gulf oil spill has finally concluded, and injured parties can begin to be made whole again, we are disappointed that BP will yet again be able to claim its settlement payments as ordinary cost of doing business tax deductions,” Michelle Surka, a campaign organizer for the U.S. Public Interest Research Group, says in a written statement.
“$15.3 billion of the settlement qualifies as a tax deduction, earning the oil giant a tax windfall for what amounts to gross negligence,” her statement reads. “Despite thousands of comments from ordinary Americans calling on the Department of Justice to deny these tax write-offs, BP will still be able to claim the settlement as business as usual. This not only shifts the burden of the deal onto ordinary taxpayers, but it also sends the wrong message.”
A tax deduction does not let BP off the hook for the entire $15.3 billion, but the company will not pay federal taxes on that amount.
The research group has long decried the federal government’s and Congress’ willingness to allow businesses to use such penalties as tax deductions and has asked the Justice Department to disallow it for the BP settlement.
In a December report, the group said it had studied hundreds of settlements in cases involving corporate wrongdoing and found that “some agencies consistently act to limit tax deductibility for settlements they negotiate, while others rarely address the issue.”
