Reynolds Metal Co. v. United States
U.S. District Court, E.D. Virginia
389 F. Supp. 2d 692 (2005)
From 1940 to 1987, Reynolds Metal Company (Reynolds) (plaintiff) properly disposed of manufacturing waste under the law then in effect. Decades later, CERCLA required Reynolds to redispose of that waste and remediate the sites, costing over $110 million between 1992 and 1995 -- years when tax rates were lower than they had been from 1940 to 1987. Reynolds sued the government (defendant) for a refund, arguing it should be allowed to treat the CERCLA payments as deductions attributable to the earlier, higher-tax years under the claim-of-right doctrine. Both sides moved for partial summary judgment.
Whether a federal taxpayer may seek a tax credit for returning income previously held by the taxpayer under a claim of right.