FPL Group, Inc. and Subsidiaries v. Commissioner , 116 T.C. No. 7 ( 2001 )

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.
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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.
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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
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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
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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).
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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...)
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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.
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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
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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.
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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.