Sunoco Loses Appeal to Reduce NY Oil Transfer Taxes

New York state argues Sunoco subsidiary improperly sought tax refund on 'buy/sell' oil transactions.

Published on Feb. 24, 2026

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A New York appeals court should reject a Sunoco LP subsidiary's attempt to reduce the amount of income from oil transfers that's taxable in the state, the New York tax department argued. At issue are 'buy/sell transactions' where Sunoco would buy inventory from another oil company to fulfill a customer order, and then sell the same amount of oil back to the other company in a different location, in order to reduce transportation costs.

Why it matters

This case highlights the ongoing disputes between oil companies and state tax authorities over how to properly account for and tax complex supply chain transactions. The outcome could set a precedent for how 'buy/sell' oil trades are treated for tax purposes in New York and potentially other states.

The details

A divided New York Tax Appeals Tribunal panel ruled in 2024 that these 'buy/sell' transactions were exchanges of inventory and not taxable income. However, the state tax department is now arguing the transactions should be considered taxable income in New York.

  • The New York Tax Appeals Tribunal ruled on this case in 2024.
  • The state tax department is now appealing the 2024 ruling.

The players

Sunoco LP

A major oil and gas company that operates refineries, pipelines, and retail gas stations across the United States.

New York State Department of Taxation and Finance

The state agency responsible for administering and enforcing New York's tax laws.

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What’s next

The case is now before a New York appeals court, which will decide whether to uphold or overturn the previous ruling in favor of Sunoco.

The takeaway

This dispute highlights the complex tax issues surrounding oil and gas supply chain transactions, and the ongoing tensions between energy companies and state tax authorities over how to properly account for and tax these types of business activities.