United States District Court, D. Oregon, Medford Division
MARK D. CLARKE, Magistrate Judge.
On February 14, 2013, Plaintiff Rogue Truck Body, LLC ("Rogue") filed a complaint against the United States of America ("Government") claiming it erroneously or illegally assessed an excise tax on Rogue's sales of heavy truck equipment in the 2005 and 2006 calendar years. After Rogue filed an amended complaint (#11), the Government filed an answer (#12), which includes a counterclaim to reduce to judgment the tax assessments at issue. Full consent by all parties to jurisdiction by a United States Magistrate Judge was filed on April 25, 2014 (#9). This case comes before the Court on a motion for summary judgment (#20) filed by the Government. For the reasons below, this motion is GRANTED.
Rogue Truck Body, LLC, was founded in 1990 by Keith and Lana Hill, and initially it began as a company that did repair work on heavy duty trucks. Sometime in the late 1990s, Rogue began manufacturing truck bodies and trailers for the heavy duty truck market. A truck body is the big box part of a dump truck; Rogue builds the boxes and mounts these boxes on new trucks. Rogue also builds the trailers with boxes, which go behind dump trucks and are referred to as transfer sets. Finally, Rogue builds "super dumps, " which are the dump bodies for a very large single dump truck. For most transactions, Rogue works with a dealer who procures a truck to match a Rogue transfer set, and that dealer then makes a bid package to a customer. Occasionally, a customer buys a truck from a dealer and approaches Rogue directly to install a body on the truck.
Rogue's compliance with the statutes and applicable treasury regulations concerning the excise tax was audited by the IRS on three occasions prior to the audit at issue in this case. According to Rogue, its procedures regarding the retail sales, and corresponding excise tax practices, were a result of the prior audits and directions given by the IRS agents during those audits. According to Lana Hill, during the audit in the late 1990's, Rogue was told by IRS Agent Thomas Booher that if Rogue received a form 637 from a dealer, sales to that dealer were exempt from excise tax. L. Hill Decl. 2. Thus, Rogue began collecting form 637 from dealers "in order to verify the sale was not subject to excise tax." Plf. Resp. 4; L. Hill decl. 2.
After that, Rogue would request form 637 from a dealer on the first occasion Rogue dealt with that dealer, but did not request an additional form 637 for each subsequent transaction with the same dealer. Id . According to Rogue, during the years 2005 and 2006, if Rogue received an order from a dealer who did not provide a form 637, Rogue charged excise tax on that transaction and paid the excise tax to the United States.
Additionally, Rogue claims that it received a written report from an audit conducted in 2003 that indicated that Rogue's practices and procedures were in compliance with the law and regulations concerning collection and payment of excise tax. Rogue claims that it viewed this "no change" report as confirmation that a form 637 would cause a sale to a dealer to be exempt from excise tax.
Finally, as a result of the IRS audit of Rogue's excise tax practices for 2005 and 2006, IRS Agent Curtis advised Rogue that form 637 was no longer acceptable to exempt a transaction with a dealer. L. Hill Decl. 4. However, during the administrative appeal of this excise tax issue, IRS Agent Gary Hiracki told Rogue that the IRS did not intend to collect the excise tax because that would be "collecting the same excise tax a second time." Id . Agent Hiraki told Lana Hill that the excise tax claimed due would be abated and not collected from Rogue. Id.
Summary judgment shall be granted when the record shows that there is no genuine dispute as to any material of fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247 (1986). The moving party has the initial burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986); Devereaux v. Abbey , 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc). The court cannot weigh the evidence or determine the truth but may only determine whether there is a genuine issue of fact. Playboy Enters., Inc. v. Welles , 279 F.3d 796, 800 (9th Cir. 2002). An issue of fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson , 477 U.S. at 248.
When a properly supported motion for summary judgment is made, the burden shifts to the opposing party to set forth specific facts showing that there is a genuine issue for trial. Id. at 250. Conclusory allegations, unsupported by factual material, are insufficient to defeat a motion for summary judgment. Taylor v. List , 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposing party must, by affidavit or as otherwise provided by Rule 56, designate specific facts which show there is a genuine issue for trial. Devereaux , 263 F.3d at 1076. In assessing whether a party has met its burden, the court views the evidence in the light most favorable to the non-moving party. Allen v. City of Los Angeles , 66 F.3d 1052, 1056 (9th Cir. 1995).
I. Rogue did not strictly comply with the treasury regulations
Congress has imposed a 12% excise tax upon the first retail sale of (a) automobile truck chassis, (b) automobile truck bodies, (c) truck trailer and semitrailer chassis, (d) truck trailer and semitrailer bodies, and (e) tractors used for highway transportation. 26 U.S.C. § 4051(a). Treasury ...