Judge Wood Meets International Tax

There is always a danger in having courts of general jurisdiction rule on issues involving the application of technical pieces of specialized legislation. Judges in these courts generally lack the background necessary to understand the interactions between the particular issue(s) under scrutiny and the larger legislative or regulatory picture. And unfortunately, the parties, usually operating under strict space constraints in their briefs, often fail to educate the judges about that larger picture. That is the situation Judge Diane Wood found herself in twenty-two years ago when it fell to her to write the opinion in Amoco Corp v Commissioner of Internal Revenue.1 The question raised in the case was whether Amoco Corporation could claim foreign tax credits for taxes it “paid”2 to a corporation owned and controlled by the Egyptian government,3 the Egyptian General Petroleum Corporation (EGPC). Although EGPC passed Amoco Egypt Oil Company’s (Amoco Egypt) tax payment on to the Egyptian treasury, EGPC then claimed Amoco Egypt’s taxes as a credit against its own Egyptian income tax liability.4 The Internal Revenue Service (IRS) took the position that this tax credit constituted an “indirect subsidy”5 to Amoco Egypt, negating Amoco Egypt’s original tax payment and its associated (US) foreign tax credits.6 As a technical matter, the case turned on the question whether EGPC should be treated “as part of the Egyptian government” since “it made no sense to say that the Egyptian government was providing a subsidy to itself.”7 Although Judge Wood did an admirable job of confronting this narrow technical question, the opinion gives no hint that she understood the larger context surrounding the case. If she had, she likely would have found it far more interesting.8