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NORTHERN ILLINOIS GAS CO. v. UNITED STATES

January 13, 1983

NORTHERN ILLINOIS GAS COMPANY, PLAINTIFF,
v.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Bua, District Judge.

MEMORANDUM

The instant matter was brought by plaintiff, Northern Illinois Gas Company (Ni-Gas), for a refund in the amount of $483 in taxes paid. Defendant has countersued for $93,205.25 plus interest which it claims is still owing for tax assessments made against plaintiff on August 30, 1977.

This Court has jurisdiction over the instant matter pursuant to 28 U.S.C. § 1346(a)(1) and (c).

The issue in this case revolves around the validity of certain Treasury Regulations and Revenue Rulings which resulted in the plaintiff being taxed, pursuant to 26 U.S.C. § 4481(a), at a higher rate than it contends is appropriate. Under Revenue Ruling 76-294, trucks which are "equipped for use in combinations" with twin-axle trailers or with single-axle trailers which weigh in excess of 6,000 pounds are taxed at a higher rate than trucks which tow single-axle trailers weighing less than 6,000 pounds. Plaintiff contends that such a ruling is invalid insofar as it ignores the "customary use" standard set out in 26 U.S.C. § 4481 and 4482(b)(1) which, it is argued, require the taxing body to consider not whether the trucks are merely equipped for the heavier duty use, but whether such vehicles are actually used in such a manner.

FINDINGS OF FACT*fn1

1. Plaintiff is a utility company incorporated in Illinois and has its principal place of business in Aurora, Illinois.

2. During the years July 1, 1971 to June 30, 1972, July 1, 1972 to June 30, 1973, and July 1, 1973 to June 30, 1974, plaintiff used certain highway motor vehicles, namely, two-axled utility trucks having an unloaded weight of 10,100 pounds, for transporting personnel, tools, and equipment in connection with its maintenance or installation of public utility property.

3. These trucks were equipped with a coupling device, known as a "pintle hook," for pulling a trailer with two or more axles or a one-axled trailer with a gross vehicle weight of 6,000 pounds or more.*fn2

4. Plaintiff filed Federal Highway Use Tax Returns (Form 2290) for the years in question. An audit of these returns resulted in assessments in the sum of $93,684.28 being made against plaintiff on August 30, 1977 due to a determination that the trucks in question were "equipped for use in combinations" and thus were taxable under 26 U.S.C. § 4481(a).

5. Notice of the assessments and demand for payment thereof were duly given to plaintiff.

6. In September, 1977, plaintiff paid a portion of the amount ($483.03), then filed a Claim for Refund (Form 843).

7. After being advised that its claim would be disallowed, plaintiff filed a Waiver of Notice of Claim Disallowance (Form 2297) and subsequently instituted this action.

8. Defendant denies that plaintiff is entitled to a refund and has counterclaimed for the balance of the amount assessed against it ...


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