BB&T's last stab at preserving $500 million in foreign tax credits has been denied by the U.S. Supreme Court.
The court declined to hear BB&T's bid to extend its fight with the Internal Revenue Service over the credits. Previous rulings in lower courts had upheld the IRS' rejection of the credits, and the bank in September had asked the Supreme Court to consider its appeal. The Triad Business Journal reported the latest development in the case on Tuesday.
BB&T declined to comment beyond a statement it shared with American Banker and other media.
"We are disappointed at the Supreme Court's decision, but we do understand that only a fraction of the cases presented can be heard each year," said Brian Davis, a spokesman for the Winston-Salem, N.C., bank. "BB&T continues to firmly believe that this was a legitimate financing transaction and in compliance with the rules of the day."
The IRS had said BB&T and other banks were taking improper tax deductions through an investment vehicle known as STARS, or structured trust advantaged repackaged securities. The transactions allowed U.S. companies to do business with foreign banks — in this case, Barclays Bank in the U.K. — and realize savings provided by foreign tax laws.
BB&T was able to lower its tax bill before the IRS moved to bar the practice, costing the bank about $500 million in credits it had claimed from 2002 and 2007.
The Supreme Court previously rejected a similar case from Wells Fargo, saying the tax shelter in question lacked any economic benefit other than to reduce the company's tax liability.