Valero Marketing and Supply Company v. United States of America

Western District of Texas, txwd-5:2019-cv-00328

ANSWER to 1 Complaint by UNITED STATES OF AMERICA.

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0 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO VALERO MARKETING AND SUPPLY CO.,)) Case No. 5:19-cv-328-DAE Plaintiff,)) v.)) UNITED STATES OF AMERICA,)) Defendant.) _______________________________________) ANSWER The United States answers Plaintiff's Complaint (ECF No. 1) as follows: DEFENSE The Court lacks jurisdiction over Plaintiff's complaint. Plaintiff failed to file an adequate administrative claim for refund under 26 U.S.C. § 6511 and Treas. Reg. § 301.6402-2 and then wait at least six months as required by 26 U.S.C. § 6532 before filing this refund suit under 26 U.S.C. § 7422. Plaintiff's Form 720X also failed to identify sufficient facts enabling the IRS to compute any credit or refund, the amounts of credits being sought, the amount of refund being sought or the number of gallons of each product Plaintiff contends gave rise to the alternative fuel mixture credits it seeks. Therefore, this suit is barred by a lack of subject matter jurisdiction, a lack of a waiver of sovereign immunity, and the doctrine of variance. RESPONSES TO ENUMERATED PARAGRAPHS Subject to the above defense, the United States responds as follows to the allegations contained in Plaintiff's Complaint using the same headings and numbering scheme as the Complaint but without admitting any allegations contained in any heading. 0 The unnumbered paragraph at the beginning of the complaint is introductory and requires no response. To the extent that paragraph contains allegations that require a response, the United States denies the Internal Revenue Service erroneously assessed and collected from VMSC, and lacks sufficient information to admit or deny any other allegations. I. NATURE OF THE CASE 1. Paragraph 1 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. The United States also denies that the government failed to abide by any unambiguous definition in the referenced statute. The United States lacks sufficient information to admit or deny any other allegations contained in paragraph 1. 2. The United States admits that VMSC sues to recover excise tax and interest for the first quarter of 2015, but denies that it is entitled to the recovery it seeks because it is not entitled to the alternative fuel mixture credit it has claimed for that period. The United States also denies the allegations in the second sentence of the paragraph. The remaining allegations are Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 3. The United States denies that butane is included in the definition of alternative fuel in section 6426(d). The United States also denies that VMSC is entitled to the Alternative Fuel Mixture Credit it seeks by this suit. The United States lacks sufficient information to admit or deny all other allegations in paragraph 3. 2 0 II. PARTIES 4. The United States lacks sufficient information to admit or deny whether VMSC manufactures and sells alternative fuel mixtures for use as fuel. The United States admits all other allegations in paragraph 4. 5. The United States denies that service of process by personal service on the Attorney General of the United States is proper, as Federal Rule of Civil Procedure 4(i) requires sending a copy to him by registered or certified mail. The United States admits all other allegations in paragraph 5. III. JURISDICTION AND VENUE Jurisdiction 6. The United States denies that the Court has jurisdiction over Plaintiff's Complaint. 7. The United States denies that the amount of section 4081 fuel excise tax stated is correct, but admits all other allegations in paragraph 7. 8. The United States admits that VMSC filed a Form 720X for the Disputed Tax Period with the amounts set forth in paragraph 8. The United States denies the allegations in footnote 2 of paragraph 8 and denies that VMSC has made a proper claim for refund for the Disputed Tax Period. The United States lacks sufficient information to admit or deny the other allegations in paragraph 8. 9. The United States admits. 10. The United States denies that VMSC has made a proper claim for refund for the Disputed Tax Period. The United States admits that six months elapsed after VMSC submitted its form 720X before it filed the Complaint and that the IRS neither paid nor denied any claim for that period. 3 0 11. The United States denies that the Court has jurisdiction because VMSC has not filed a proper claim for refund for the Disputed Tax Period. Venue 12. The United States admits. IV. FACTUAL AND STATUTORY BACKGROUND The Section 4081 Excise Tax on "Taxable Fuel" 13. Paragraph 13 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 14. Paragraph 14 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 15. Paragraph 15 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 16. Paragraph 16 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. "Alternative Fuels" and the Alternative Fuel Mixture Credit 17. The United States admits that Pub. L. 109-59 enacted 26 U.S.C. § 6426(e) which provides a credit for certain periods to taxpayers who use an alternative fuel to produce an alternative fuel mixture. The remainder of Paragraph 17 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the 4 0 United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 18. The United States admits that a Form 720X is an appropriate form on which to claim the AFMC for the Disputed Tax Period. The remainder of paragraph 18 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 19. Paragraph 19 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 20. Paragraph 20 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 21. Paragraph 21 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 22. The United States admits that animal fats, used cooking oil, and inedible cooking oil may be or may be derived from organic material. The remainder of Paragraph 22 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 5 0 23. Paragraph 23 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law.. 24. The United States admits. 25. The United States lacks sufficient information to admit or deny. 26. Paragraph 26 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 27. The United States lacks sufficient information to admit or deny. VMSC is Entitled to the AFMC for Using Liquefied Gas Derived from Biomass and Liquid Fuel Derived from Biomass in Producing an Alternative Fuel Mixture 28. Paragraph 28 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 29. Paragraph 29 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 30. Paragraph 30 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 31. Paragraph 31 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 6 0 32. Paragraph 32 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 33. The United States lacks sufficient information to admit or deny. 34. The United States lacks sufficient information to admit or deny. 35. The United States lacks sufficient information to admit or deny. 36. The United States lacks sufficient information to admit or deny. 37. The United States denies that VMSC is entitled to the AFMC for the Disputed Tax Period. 38. The United States admits the allegations in the first sentence of paragraph 38. The United States denies the allegations in the second sentence of paragraph 38. The United States lacks sufficient knowledge or information to admit or deny the allegations in the third sentence of paragraph 38. The United States denies that VMSC is entitled to any AFMC for the Disputed Tax Period pertaining to any blending of liquefied gas derived from biomass or liquid fuel derived from biomass. VMSC Is Entitled to the AFMC for Using Butane in Producing an Alternative Fuel Mixture 39. Paragraph 39 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 40. Paragraph 40 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 7 0 41. Paragraph 41 is Plaintiff's characterization of certain provisions of law not requiring a response; however, to the extent a response is required, the United States denies the Plaintiff's characterization is a complete and accurate statement of the applicable law. 42. The United States lacks sufficient information to admit or deny. 43. The United States lacks sufficient information to admit or deny. 44. The United States lacks sufficient information to admit or deny. 45. The United States denies that VMSC is entitled to the AFMC for the Disputed Tax Period. 46. The United States admits the allegation in the first sentence of paragraph 46. The United States denies the allegations in the second sentence of paragraph 46. The United States lacks sufficient knowledge or information to admit or deny the allegations in the third sentence of paragraph 46. The United States denies that VMSC is entitled to any AFMC for the Disputed Tax Period for any butane blending activities. V. CLAIMS FOR RELIEF COUNT I OVERPAYMENT OF SECTION 4081 FUEL EXCISE TAX – AFMC WITH RESPECT TO BIOMASS-DERIVED SUBSTANCES 47. The United States incorporates by reference its response to paragraphs 1 through 46. 48. The United States denies that VMSC has made a proper claim for refund for the Disputed Tax Period with respect to any liquefied gas derived from biomass or liquid fuel derived from biomass, but admits that the IRS has not taken action to grant or deny any purported claim for refund that might arise from allegations of biomass or liquid derived from biomass on Plaintiff's Form720X for the first quarter of 2015. 8 0 49. The United States denies. 50. The United States lacks sufficient information to admit or deny. COUNT II OVERPAYMENT OF SECTION 4081 FUEL EXCISE TAX – AFMC WITH RESPECT TO BUTANE 51. The United States incorporates by reference its response to paragraphs 1 through 50. 52. The United States denies that VMSC has made a proper claim for refund for the Disputed Tax Period with respect to any butane, but admits that the IRS has not taken action to grant or deny any purported claim for refund that might arise from allegations of butane on Plaintiff's Form720X for the first quarter of 2015. 53. The United States denies. 54. The United States lacks sufficient information to admit or deny. VI. PRAYER FOR RELIEF The United States denies that Plaintiff is entitled to the relief sought in its Prayer for Relief. WHEREFORE, the United States respectfully request the Court deny Plaintiff's claims and grant the United States such relief to which it is justly entitled. Date: November 15, 2019 RICHARD E. ZUCKERMAN Principal Deputy Assistant Attorney General /s/ Michael W. May MICHAEL W. MAY State Bar No. 24054882 ANDREW L. SOBOTKA Texas Bar No. 18819900 JONATHAN L. BLACKER 9 0 Texas Bar No. 00796215 Trial Attorney, Tax Division U.S. Department of Justice 717 N. Harwood, Suite 400 Dallas, Texas 75201 (214) 880-9730 (214) 880-9741 (fax) michael.w.may@usdoj.gov ATTORNEYS FOR UNITED STATES CERTIFICATE OF SERVICE On November 15, 2019, I electronically filed the foregoing document with the Clerk of the Court using the ECF system, which will send a filing notification. /s/ Michael W. May MICHAEL W. MAY 10