United States District Court, D. Nevada
ADVANCED REFINING CONCEPTS, LLC, a Nevada Limited Liability Company, Plaintiff,
THE UNITED STATES OF AMERICA; DAVID J. KAUTTER, acting Commissioner of Internal Revenue, and DOES I through X, Defendants.
R. HICKS, UNITED STATES DISTRICT JUDGE.
the United States of America (“the Government), moves
this court for summary judgment on plaintiff's second
cause of action. ECF No. 34. Plaintiff Advanced Refining
Concepts, LLC (“ARC”) opposed the motion, and
defendants replied. ECF Nos. 35 & 37. Because the court
lacks subject matter jurisdiction, it grants the
Government's motion for summary judgment.
created a new fuel that combines compressed natural gas with
diesel fuel-what ARC calls GDiesel. ECF No. 36 ¶ 4.
Beginning in 2009, ARC applied to the IRS to be a taxable
fuel registrant and was granted both a “UV” and
“S” designation. Id. ¶¶ 5-8.
This allowed plaintiff to claim and receive tax refunds.
Id. ¶ 11.
on these designations, on April 12, 2013, ARC filed a Form
8849 Claim for Refund of Excise Taxes for the quarter ending
March 31, 2013, in the amount of $14, 986.78. ECF No. 34-2.
The IRS disallowed the entire claimed amount. Id. On
July 2, 2013 and October 7, 2013, ARC again filed Form 8849
Claims for Refund of Excise Taxes, this time for the quarters
ending June 30, 2013 (for $25, 160.95), and September 30,
2013 (for $20, 063.78), respectively. ECF No. 34-4.
paid ARC the total claimed, $45, 224.73. ECF No. 34-5.
However, in 2014, IRS representative Craig Hall informed ARC
that its “S” registration would be revoked and
that ARC would need to repay the tax credits issued for the
June and September 2013 quarters. ECF No. 36 ¶13; ECF
representative and managing member, Peter Gunnerman,
Mr. Hall offered to give ARC the ‘AM'
classification if it agreed to give up three quarters of
refunds for excise tax paid on the dyed GDiesel, which would
involve paying back to the IRS certain amounts previously
refunded. He further explained that this would benefit ARC
because it would be able to claim the Alternative Fuel
Mixtures Credit both going forward and retroactively, which,
at $0.05 per gallon of GDiesel sold, would be a substantial
ECF No. 36 ¶ 15. ARC therefore agreed and on February
20, 2014, it signed (1) a Form 2297 Waiver of Statutory
Notification of Claim Disallowance for its claimed refund for
the March 2013 quarter (ECF No. 34-3); and (2) a Form 5384
Excise Tax Examination Changes and Consent to Assessment and
Collection for its claimed refunds for the June and September
2013 quarters (ECF No. 34-5). ARC then repaid the assessed
taxes for the June 2013 quarter on November 23, 2015
(see ECF No. 34-6), and for the September 2013
quarter on September 28, 2016 (see ECF No. 34-7).
issued the “AM” designation in January 2015, and
filed amended tax returns for 2012 through 2014 to receive
its tax credit under the new designation. ECF No. 36
¶¶ 19-20. After review, ARC was informed that the
“AM” designation was improper, and the IRS was
denying ARC's claims for tax credit. Id.
¶¶ 22-23. ARC appealed this decision through the
Fast Track Settlement process in October 2015. Id.
¶ 27. During the mediation, the parties reached a
settlement, but ARC was later informed on November 2, 2015,
that it had not been approved. Id. ¶¶
29-33. ARC's claim was then sent to IRS Appeals in
February 2016, where it was denied two months later.
Id. ¶¶ 35-36.
filed this Complaint on April 17, 2018, alleging five causes
of action: (1) Refund of Federal Excise Tax pursuant to 26
U.S.C. § 7422 for denial of the “AM” tax
credit; (2) Refund of Federal Excise Tax pursuant to 26
U.S.C. § 7422 for revocation of the “S”
designation and subsequent tax penalties; (3) declaratory
relief as to ARC's registration status and qualification
of “AM” tax credit designation; (4) injunctive
relief to enforce the terms of the Fast Track Settlement
Session Report; and (5) breach of contract for denying the
settlement after the Territory Manager had approved it.
See ECF No. 1. On January 2, 2019, the court
dismissed plaintiff's third, fourth, and fifth claims
with prejudice for lack of subject matter jurisdiction and
denied plaintiff's request to amend the complaint because
any amendment could not cure the jurisdictional defects. ECF
No. 29. The parties filed a Joint Case Management Report on
November 28, 2018 which provided:
After discussion between the parties, ARC agreed that it
would withdraw its first cause of action which seeks refund
of $779, 890.50 due to the alternative fuel mixture credit.
To accomplish this, ARC plans to amend the complaint and
replace the withdrawn cause of action with a new cause of
action seeking relief on a different factual basis. If the
parties cannot agree to permit the amendment, ARC will file a
motion for leave to amend.
ECF No. 25 at 2. On February 25, 2019, the parties again
filed a Joint Case Management Report which provided:
“ARC intends to proceed with its remaining claim, its
second cause of action, as efficiently as possible and no
longer plan[s] to seek amendment of its complaint.” ECF
No. 31 at 2. No. amended complaint nor motion were filed
regarding withdrawal of plaintiff's first cause of
action. However, given that plaintiff has made no argument to
the contrary, the court shall treat defendant's motion
for summary judgment as addressing all remaining claims in
this suit, and only analyze plaintiff's second cause of
action for refund of Federal Excise Tax pursuant to 26 U.S.C.
§ 7422 in deciding defendant's pending motion for