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Coal Excise Tax Refunds: United States v. Clintwood Elkhorn Mining Co., Date: May 16, 2008 1 (May 16, 2008)

handle is hein.tera/crstax0163 and id is 1 raw text is: Order Code RS22881 May 16, 2008 CRS Repo for Congress Coal Excise Tax Refunds: United States v. Clintwood Elkhorn Mining Co. Erika Lunder Legislative Attorney American Law Division Summary In 1998, a U.S. district court held that the imposition of the coal excise tax, or black lung excise tax, on coal destined for export was unconstitutional. The process of refunding the tax has been controversial. This is because some coal producers and exporters have attempted to bypass the limitations in the Internal Revenue Code's refund scheme by bringing suit under the Export Clause in the Court of Federal Claims, seeking damages from the United States in the amount of coal excise taxes paid. The Federal Circuit Court of Appeals held the court had jurisdiction under the Tucker Act to hear the suits and allowed them as an alternative to the Code's refund process. However, in a 2008 decision, United States v. Clintwood Elkhorn Mining Co., the Supreme Court unanimously held that taxpayers must comply with the Code's administrative refund process before bringing suit. Meanwhile, H.R. 1762 and S. 373 would provide an alternative method for taxpayers to receive coal excise tax refunds. Internal Revenue Code (IRC) § 4121 imposes an excise tax on domestically-mined coal when it is sold by the producer to the first purchaser. The producer is liable for the tax, but may pass it along to others through an increase in the coal's purchase price; thus, it is possible that the producer does not actually bear the burden of the tax. The Constitution's Export Clause states that No Tax or Duty shall be laid on Articles exported from any State.'2 Nonetheless, the coal excise tax was imposed on coal destined for export. In 1998, a federal district court held that the tax on such coal clearly violated the Export Clause.3 In 2000, the IRS acquiesced and stopped imposing the tax on coal that was in the stream of export when sold by the producer and actually exported.4 See CRS Report RS21935, The Black Lung Excise Tax on Coal, by Salvatore Lazzari. 2 U.S. CONST. art. I, § 9, cl. 5. ' Ranger Fuel Corp. v. United States, 33 F. Supp. 2d 466 (E.D. Va. 1998). 4 See IRS Notice 2000-28, 2000-1 C.B. 1116. Congressional Research Service The Library of Congress Prepared for Members and Committees of Congress

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