A divided D.C. Circuit today, in its third decision dealing with the Riggs National Bank tax credit case, affirmed the Tax Court’s decision in favor of the IRS’s position reducing the foreign tax credit for taxes paid to Brazil by the amount of the indirect subsidy that the bank received from the Brazilian government. PNC Financial Services Group, Inc. v. Commissioner, No. 06-1034 (8/24/07). Judge Griffith wrote a biting 15-page dissent:
I share the majority’s frustration with this, the latest of what seems to have become a judicial mini-series, “Riggs VI: Return of the Subsidy.” We are unanimous in the hope that it is the last of the sequels. We disagree, however, about what our role in this case should be, and I think it a disagreement worthy of some discussion. While I share my colleagues’ unease over PNC’s “stratagem for avoiding U.S. taxes,” such discomfort alone cannot determine the outcome of a case. Both facts and law are fundamental to our conclusions, and although the facts of this case are complicated, the law is simple. This case turns entirely on the plain language of controlling U.S. tax regulations. That language is clear, unambiguous, and dispositive. Its effects—whatever they may be—are not within our power to forestall, and its neutral application does not, as the majority suggests, create any inconsistency. On the contrary, our abandonment of a textual approach creates inconsistencies galore, putting us conspicuously at odds with the text of both U.S. and relevant Brazilian law, our own precedent, and the reasoned decision of a sister circuit. The court’s analysis also obscures two important principles it seeks to clarify: the act of state doctrine and the law-of-the-case doctrine. Accordingly, I dissent.
For the prior opinions in the case, see:
- Riggs Nat’l Corp. & Subsidiaries v. Commissioner, 107 T.C. 301 (1996)
- Riggs Nat’l Corp. & Subsidiaries v. Commissioner, 163 F.3d 1363 (D.C. Cir. 1999)
- Riggs Nat’l Corp. & Subsidiaries v. Commissioner, T.C. Memo. 2001-12
- Riggs Nat’l Corp. v. Commissioner, 295 F.3d 16 (D.C. Cir. 2002)
- Riggs Nat’l Corp. & Subsidiaries v. Commissioner, T.C. Memo. 2004-110
