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 ($93,204.25), plus interest thereon.
CONCLUSIONS OF LAW
The issue central to the case at bar is whether the
Secretary of the Treasury has the power to issue a Regulation
which imposes the 26 U.S.C. § 4481 tax upon vehicles which are
merely equipped to tow so-called heavy trailers in lieu of a
specific factual finding concerning the actual use of such
vehicles. Correspondingly, the Revenue Rulings under which such
tax has been imposed following the "equipped for use" standard
are also here challenged. See, e.g., Revenue Ruling 76-294,
1976-2 Cum. Bull. 364.
The issue here at bar has been squarely dealt with in two
instances with conflicting results. In Pacific Gas and Electric
Co. v. United States, 664 F.2d 1133 (9th Cir. 1981), the Court
held that the statute and the regulations make it clear that
trailers are only to be included in the gross taxable weight of
such a truck if the trailer is actually customarily used with
the vehicle. Consistent therewith, the Court required that a
finding of fact be made as to the actual use of the vehicle.
By contrast, the Eighth Circuit has held that no factual
determination is required. In Northern States Power Co. v.
United States, 663 F.2d 55 (8th Cir. 1981), the Court of
Appeals adopted the opinion of the district court which had
held that promulgation of the "equipped for use" standard in
the Treasury Regulations and in the Revenue Rulings was within
the discretion specifically given to the Secretary of the
Treasury in the statute. Accordingly, under this standard, no
factual determination need be made. Northern States Power,
supra, aff'g. 503 F. Supp. 1182 (D.Minn. 1981).
The Court concedes that determination of which is the better
rule is a difficult task. Although both rules are certainly
logical and rational, this Court is of the opinion that, in
light of the discretion given to the Secretary of the Treasury
and in view of necessary administrative ease, the rule adopted
by the Eighth Circuit is preferable and is hereby adopted by
The statutory scheme in question delegates to the Secretary
of the Treasury the power to determine, through regulations,
the taxable gross weight of a vehicle through the use of
"formulas or other methods." Such methods may be used to
determine the taxable weights by classes, specifications, or
otherwise. 26 U.S.C. § 4482(b). Pursuant to this authorization,
Treasury Regulation 41.4482(b)-1(d)3 was promulgated under
which vehicles "equipped for use in combinations" are taxable
under 26 U.S.C. § 4481. Revenue Ruling 76-294 is in accord with
The Treasury Regulation and the Revenue Ruling are not in
conflict with the statute. As the District Court noted in
Northern States Power:
The "customary use" (language used) in the
statute defines the type of trailer which may be
included in the weight computation for the
vehicle. The statute does not specify that the
trailer actually be customarily used with the
taxable vehicle, but only that the trailers be of
the kind customarily used with that type of
vehicle. No evidentiary showing that a particular
taxpayer's vehicles are so used is required.
Section 4482 allows the Secretary to prescribe
regulations to determine the gross weight of a
vehicle. That determination obviously includes a
decision whether to classify a vehicle as the type
customarily used in combination with trailers.
503 F. Supp. at 1183-84. The classification that the trailers
were used with the type of vehicle owned by Ni-Gas was
properly made in the case at bar. No other factual
determination was required.
The opinion of the Ninth Circuit in Pacific Gas and Electric
Co. v. United States, 664 F.2d 1133 (9th Cir. 1981) held that
the classification of a vehicle as a "truck trailer"
combination merely because the vehicle is "equipped for use in
combination" with trailers was inconsistent with the language
of the statute and the intent of Congress. However, viewed in
light of the language of the statute as noted in the opinion of
the District Court in Northern States Power, this Court does
not concur in that conclusion. As noted, the "customary use"
language is only for limited application. More important is the
determination that the vehicle is of the general type used in
combination. Once that determination has been made, as it was
in the case at bar, actual or customary use is immaterial.
The Ninth Circuit's opinion is further flawed in that it
ignores the broad discretion clearly given to the Secretary of
the Treasury in the statute. Of necessity, the entity charged
with the administration of a statutory scheme such as that
before the Court must be given broad discretion so that the
scheme may be properly effectuated. To require, as plaintiff
seeks, that a factual determination be made as to the actual
use of each vehicle of each potential taxpayer would prove a
costly and onerous burden and would undermine the very
rationale for the statutory delegation of authority to the
Secretary of the Treasury. The rule of the Ninth Circuit
clearly invades this statutory province.
In light of the foregoing, the Court cannot concur that the
agency's interpretation supersedes the language chosen by
Congress in the passage of the statute. See, Mohasco Corp. v.
Silver, 447 U.S. 807, 100 S.Ct. 2486, 65 L.Ed.2d 532 (1980).
Such interpretation, in the opinion of this Court, merely
carries into effect the will of Congress as expressed by the
Under 26 U.S.C. § 4481 and the Treasury Regulations
promulgated thereunder, the defendant has properly assessed the
plaintiff's tax liability for the years in question. Judgment
is therefore entered in favor of defendant on the counterclaim
in the amount of $93,204.25. Because the issues in this case
are not entirely without merit, the request for interest and
costs is denied. The Complaint of the plaintiff is hereby
dismissed with prejudice.
IT IS SO ORDERED.