Update on the Mixture Credit Exclusion from Income

Oct 08, 2019

Supreme Court Denies Sunoco’s Petition of Certiorari

On October 7, 2019,  the Supreme Court declined to hear Sunoco, Inc.’s (Sunoco) petition (or writ) of certiorari appealing the decision of the United States Court of Appeals for the Federal Circuit in Sunoco, Inc. v. The United States (2017-1402). While other cases are still pending in the lower courts for other taxpayers, this brings to an end Sunoco’s efforts to exclude the alcohol mixture tax credit from gross income. This means that while other blenders who claimed the mixture credit as a payment pursuant to 26 USC 6427(e) are able to exclude that payment from gross income, Sunoco – simply because it had excise tax liability and therefore took an offsetting credit in 26 USAC 6426 – is not. The lower courts determined that the manner in which Sunoco claimed the credit was simply a reduction in excise tax liability and not a payment of the credit like those taxpayers with no excise tax liability.

When the Supreme Court denies to hear a case, it does not have to issue a decision as to why. All a denial really means is that four of the nine justices did not agree to hear the case; it does not mean that the Court necessarily agrees with the lower court decision. The denial of a petition of certiorari does not affect any other cases that may be pending on the same issue; taxpayers with cases pending in a circuit other than the federal circuit may get a different result.