Nelson wants Finance Committee probe of $10 billion BP tax write-off

Sen. Bill Nelson (D-Fla.) is asking Finance Committee leaders to investigate BP’s intent to claim a $10 billion tax deduction for costs related to the massive Gulf of Mexico oil spill.

“I was appalled upon learning that BP intends to shift nearly $10 billion of the costs related to the Gulf oil spill to the backs of American taxpayers, including the very taxpayers whose lives have been devastated by the spill. Simply put, that would be unacceptable,” Nelson said in a letter Wednesday to Committee Chairman Max Baucus (D-Mont.) and Sen. Chuck Grassley (R-Iowa), the panel’s top Republican.

The deduction stems from a pre-tax charge of $32.2 billion that BP is taking, which covers spill response costs of almost $3 billion thus far and more than $29 billion in future costs, including the $20 billion escrow fund for spill victims’ claims.

BP announced the financial plan Tuesday. Nelson, a member of the committee, calls for “an investigation into the federal tax treatment of the various costs and expenses incurred by BP as a result of the Deepwater Horizon oil spill.” The Finance panel oversees tax policy.

The letter says the probe should explore several questions, such as “How would BP be able to generate $10 billion in tax savings, when $12.2 billion of BP’s $32.2 billion charge on its financial results appears to be for nondeductible statutory penalties and fines?”  

Nelson also said the committee should review whether BP will be able to claim deductions for compensatory damages paid to the federal government and state governments, among other areas.