Court Opinion

ID: 4333095
Source: CourtListenerOpinion
Date Created: 2018-11-14 01:02:23.998879+00
Date Added: 2024-06-11T14:46:37.799016
License: Public Domain

116 T.C. No. 7

                UNITED STATES TAX COURT

    FPL GROUP, INC. AND SUBSIDIARIES, Petitioner v.
      COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5271-96.                    Filed February 1, 2001.

     On its consolidated Federal income tax returns for
the years in issue, F claimed a credit for Federal
taxes on fuels. F now seeks credits in addition to
amounts claimed on F’s original Federal income tax
returns. R argues that the so-called “one claim” rule
contained in sec. 6427(i)(1), I.R.C., acts as a bar to
F’s additional claims for credit under sec. 34, I.R.C.

     Held: F is not barred by the so-called “one
claim” rule of sec. 6427(i)(1), I.R.C., from obtaining
additional credits under sec. 34, I.R.C.

Robert Thomas Carney, for petitioner.

James F. Kearney, for respondent.
                                - 2 -

                               OPINION

     RUWE, Judge:   This matter is before the Court on

respondent’s motion for partial summary judgment filed pursuant

to Rule 121.1   The sole issue presented is whether petitioner is

barred by the so-called “one claim” rule of section 6427(i)(1)

from obtaining a credit under section 34 for amounts of Federal

excise taxes paid on fuels.

                              Background

     FPL Group, Inc., is a corporation organized and existing

under the laws of the State of Florida with its principal office

located in Juno Beach, Florida.    FPL Group, Inc. and Subsidiaries

(petitioner) filed consolidated Federal income tax returns for

the years 1988 through 1992.    Petitioner attached to each return

a Form 4136, Computation of Credit for Federal Tax on Fuels.

Form 4136 is used to claim credit for Federal excise tax paid on

fuels sold or used during the period of the claim.   On its

Federal income tax returns for those years, petitioner claimed

credits for Federal taxes on fuels as follows:

                Year                     Credit
                1988                    $279,732
                1989                     233,053
                1990                     275,303
                1991                     391,516
                1992                     332,568

     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                               - 3 -

      In its second amended petition, petitioner alleged that

respondent erred in failing to allow additional fuel tax credits

for vehicles which are not “highway use” vehicles in the

following amounts:

                Year                    Credit
                1988                   $135,194
                1989                    136,840
                1990                    143,340
                1991                    202,096
                1992                    215,649

These amounts are in addition to the amounts claimed as credits

on petitioner’s original Federal income tax returns for those

years.

                            Discussion

I.   Summary Judgment

      Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials.     See Northern Ind. Pub.

Serv. Co. v. Commissioner, 101 T.C. 294, 295 (1993); Shiosaki v.

Commissioner, 61 T.C. 861, 862 (1974).     Rule 121(a) provides that

either party may move for summary judgment upon all or any part

of the legal issues in controversy.     Full or partial summary

judgment is appropriate where there is no genuine issue as to any

material fact and a decision may be rendered as a matter of law.

See Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518,

520 (1992), affd. 17 F.3d 965 (7th Cir. 1994).     Respondent, as

the moving party, bears the burden of proving that no genuine

issue exists as to any material fact and that he is entitled to
                               - 4 -

judgment as a matter of law.   See Bond v. Commissioner, 100 T.C.
32, 36 (1993); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).

In deciding whether to grant summary judgment, the factual

materials and the inferences drawn from them must be considered

in the light most favorable to the nonmoving party.   See Bond v.

Commissioner, supra at 36; Naftel v. Commissioner, supra at 529.

In the instant case, there is no genuine issue as to any of the

material facts that we have set forth in the background section

of this opinion.

II.   Sections 6427 and 34

      Respondent argues that petitioner is making a second claim

under section 6427 and that the so-called “one claim” rule

contained in section 6427(i)(1) acts as a bar to petitioner’s

claim for credit.   Petitioner argues that its claim for credit is

being made under section 34 and that the “one claim” rule in

section 6427(i)(1) has no application.

      A.   Section 6427

      Section 6427 provides a mechanism whereby a purchaser of

fuel can obtain payment from the Secretary of taxes previously

imposed on fuel which was not used for taxable purposes by the
                                - 5 -

purchaser.   See sec. 6427(a),2 (l).3   Subsections (a) and (l) of

section 6427 specifically pertain to nontaxable uses of diesel

fuel previously taxed under sections 40414 and 4091.5

     Limitations on filing a claim for payment under section 6427

are addressed in section 6427(i).   The general rule of limitation

for payment of claims filed under section 6427 is that not more

than one claim may be filed by any person with respect to fuel

used during the taxable year.   Section 6427(i) provides:

     SEC. 6427(i). Time for Filing Claims; Period Covered.--

          (1) General rule.--Except as provided in
     paragraphs (2),(3), and (4), not more than one claim
     may be filed under subsection (a),(b),(d), [e in 1988

     2
      SEC. 6427(a). Nontaxable uses.--Except as provided in
subsection (k), if tax has been imposed under section 4041(a) or
(c) on the sale of any fuel and the purchaser uses such fuel
other than for the use for which sold, or resells such fuel, the
Secretary shall pay (without interest) to him an amount equal to
* * *
     3
      SEC. 6427(l). Nontaxable uses of diesel fuel and aviation
fuel taxed under section 4091.-–

          (1) In general.--Except as provided in subsection
     (k), * * * if any fuel on which tax has been imposed by
     section 4091 is used by any person in a nontaxable use,
     the Secretary shall pay (without interest) to the
     ultimate purchaser of such fuel an amount equal to the
     aggregate amount of tax imposed on such fuel under
     section 4091.
     4
      Sec. 4041 imposes a tax on fuel sold for use or used in a
diesel-powered highway vehicle. Sec. 4041 does not apply if tax
was already imposed under sec. 4091. See sec. 4041(a)(1).
     5
      Sec. 4091 imposes a tax on the sale of any taxable diesel
fuel by the producer or importer thereof. See sec. 4091(a).
Taxable diesel fuel is that which is suitable for use in a
highway vehicle. See sec. 4092(a).
                                  - 6 -

     and 1989],(g),(h),(l), or (q)[(p) in 1988] by any
     person with respect to fuel used * * * during his
     taxable year; * * *[6]

     Section 6427(i) does not refer to any claims filed under

subsection (k).   Section 6427(k) makes the following reference to

an income tax credit in lieu of payment:

     SEC. 6427(k). Income Tax Credit in Lieu of Payment.--

                   *   *     *     *      *    *      *

          (3) Allowance of credit against income tax.--

               For allowances of credit against the income
          tax imposed by subtitle A for fuel used or resold
          by the purchaser, see section 34.

     B.   Section 34

     Section 34 allows a credit against income tax imposed under

subtitle A for the taxable year equal to the sum of the amounts

payable to the taxpayer under section 6427.         See sec. 34(a)(3).7

     6
      The exceptions provided in paragraphs (2),(3), and (4) of
sec. 6427(i) are not relevant to this case.
     7
      Sec. 34(a) provides:

          SEC. 34(a). General rule.-– There shall be allowed as a
     credit against the tax imposed by this subtitle for the
     taxable year an amount equal to the sum of the amounts
     payable to the taxpayer–-

                   *    *     *     *      *    *      *

          (3) under section 6427-–

               (A) with respect to fuels used for
          nontaxable purposes or resold, or

               (B) with respect to any qualified
          diesel-powered highway vehicle purchased (or
                                                   (continued...)
                               - 7 -

However, credit is not allowed under section 34(a) for an amount

payable under section 6427, if a claim for such amount is timely

filed and is “payable” under such section.8   Sec. 34(b).

     C.   Analysis

     The Court of Federal Claims has recently held that the “one

claim” rule under section 6427(i) does not bar timely claims for

tax credit under section 34.   See Schlumberger Tech. Corp. &

Subs. v. United States, 47 Fed. Cl. 298 (2000).    We agree with

the Court of Federal Claims and its reasoning.

     Section 34(a)(3) provides:   “There shall be allowed as a

credit * * * an amount equal to the sum of the amounts payable to

the taxpayer * * * under section 6427”.   The text of section 34

does not suggest that the credit it affords is limited by any of

the procedural provisions of section 6427.    Rather, the reference

to section 6427 contained in section 34 appears merely to be a

convenient measure of the amount of the credit to be afforded.

Section 6427(k) does not purport to control or limit the rights

     7
      (...continued)
          deemed purchased under section 6427(g)(6)),

     during the taxable year (determined without regard to
section 6427(k)).
     8
      Sec. 34(b) provides:

          SEC. 34(b). Exception.--Credit shall not be
     allowed under subsection (a) for any amount payable
     under section 6421 or 6427, if a claim for such amount
     is timely filed and, under section 6421(j) or 6427(k),
     is payable under such section.
                                 - 8 -

afforded petitioner under section 34.    Section 6427(k)(3)

provides:   “For allowances of credit against the income tax

imposed by subtitle A for fuel used or resold by the purchaser,

see section 34.”   The plain language of section 6427(k)(3)

indicates that credits are provided in section 34, not section

6427.   Indeed, section 34(b) contemplates that a taxpayer may

have made claims for payment under section 6427 and disallows

credit only to the extent it duplicates such claims.

     Respondent argues that section 6427(i), which generally

prohibits the filing of more than one claim for payment,

prohibits any credit if the taxpayer has made a prior claim for

credit under section 6427(k).    But section 6427(i) imposes the

“one claim” rule only with respect to claims for payment made

under specified subsections.    Subsection (k) is not one of the

specified subsections in subsection (i).    And as previously

explained, claims for credit are made under section 34, not

section 6427(k).

     The legislative history of the Airport and Airway Revenue

Act of 1970, Pub. L. 91-258, sec. 207, 84 Stat. 246, which added

section 6427 to the Code, supports our view that sections 34 and

6427 are parallel authorities.    Section 207(a) of that act added

section 6427 to the Code, while section 207(c) of the act, 84

Stat. 248, amended the existing section 39 (which is now section
                              - 9 -

34) by adding the language now found in section 34(a)(3).9

     The text of the conference report provides, in part, as

follows:

     This amendment provides procedures for the payment of
     amounts (under a new section 6427 of the Code) or for
     the crediting against income tax (under the existing
     section 39 of the Code) in the case of the retailers
     excise taxes on gasoline and special fuels. * * *

          The amendment also provides that, in general, the
     time for filing claims for credit under section 39, and
     the time for filing full-year claims by government
     bodies or exempt organizations for excise tax payments
     under specified sections of the Code, will be
     comparable to the time in which claim for credit or
     refund of income taxes may be filed.

          The House recedes with technical changes. [Conf.
     Rept. 91-1074, at 51 (1970), 1970-1 C.B. 401, 407.]

     The conference report speaks of “procedures” to be made

available, in a parallel structure of relief by “payment”

(section 6427) or by “crediting against income tax” (section 39).

The conference report does not suggest that section 6427 provides

the exclusive or otherwise controlling authority.

     The Senate report confirms our conclusion that sections 39

and 6427 were viewed by Congress as parallel authorities.    The

Senate report provides the following discussion regarding the

different treatments of credits against income tax and payments

under the excise tax provisions:

          Under the committee amendments, credits against
     income tax for gasoline, diesel fuels, special fuels,
     or lubricating oil tax (sec. 39) are to give rise to

     9
      See supra note 7.
                                - 10 -

     interest on overpayments as in the case of other income
     tax credits. On the other hand, payments under the
     excise tax provisions (secs. 6420, 6421, 6424, and
     6427) for the gasoline, diesel fuels, special fuels, or
     lubricating oil taxes, as the case generally with
     regard to excise taxes (and as under present law), are
     made without interest being paid to the taxpayer. [S.
     Rept. 91-706, at 23 (1970), 1970-1 C.B. 386, 399.]

     The Senate report does not suggest that the credits

available under section 39 were created or limited by section

6427.     The Senate report also notes the extension of the time

within which a section 6427 claim may be made “will make the

filing of full-year claims (but not the quarterly claims) for

refunds (under secs. * * * 6427) similar to the new rule for

claims for credits against income tax (under sec. 39).”     S. Rept.

91-706, supra at 23, 1970-1 C.B. at 399.     Thus, the relief

afforded by sections 39 and 6427 appears to have been intended to

be equal in authority and effect.

III. Conclusion

        For the foregoing reasons, we deny respondent’s motion for

partial summary judgment, and we hold that petitioner is not

barred by the so-called “one claim” rule of section 6427(i)(1)

from obtaining a credit for fuel tax under section 34(a)(3).

                                      An appropriate order will be

                                 issued denying respondent’s motion

                                 for partial summary judgment.