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Thompson Truck & Trailer, Inc. v. United States

United States Court of Appeals, Eighth Circuit

August 23, 2018

Thompson Truck & Trailer, Inc. Plaintiff- Appellant
v.
United States of America Defendant-Appellee

          Submitted: June 12, 2018

          Appeal from United States District Court for the Northern District of Iowa - Cedar Rapids

          Before WOLLMAN, ARNOLD, and STRAS, Circuit Judges.

          WOLLMAN, Circuit Judge.

         Thompson Truck & Trailer, Inc. (Thompson), appeals the dismissal of its complaint, arguing that the district court[1] erred in interpreting 26 U.S.C. § 4051(a)(1). We affirm.

         Thompson is a semitruck dealership, whose principal offices are located in Cedar Rapids, Iowa. Thompson sells trucks equipped with diesel particulate filters (filters). The filters collect particulate matter from a truck's exhaust and turn it into a less harmful substance. Each filter increases a truck's retail sales price by approximately $8, 000. Under Internal Revenue Code § 4051(a)(1), Thompson must pay a twelve percent excise tax on the trucks it sells. From April 1, 2011, to September 30, 2011, Thompson paid the excise tax on the full retail sales price of each truck sold, which included tax on the $8, 000 value of each filter. On July 30, 2014, Thompson sought a refund of $387, 840 from the Internal Revenue Service, arguing that-based on its interpretation of a federal regulation-the filters should not have been taxed. The Internal Revenue Service denied Thompson's claim.

         We review "de novo the grant of a motion to dismiss, taking all facts alleged in the complaint as true." Owen v. Gen. Motors Corp., 533 F.3d 913, 918 (8th Cir. 2008). We also review de novo the district court's interpretation of a statute. In re Racing Servs., Inc., 779 F.3d 498, 502 (8th Cir. 2015).

         Thompson argues that the district court erred in its application of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). When conducting a Chevron-based review of an agency's construction of a statute, we consider two questions: (1) "whether Congress has 'directly addressed the precise question at issue, '" and (2) if Congress has not directly addressed the question at issue, whether the agency's rule is "arbitrary or capricious in substance, or manifestly contrary to the statute." Mayo Found. for Med. Educ. & Research v. United States, 562 U.S. 44, 52-53 (2011) (quoting Chevron, 467 U.S. at 842-43; Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 242 (2004)).

         Thompson argues that the district court erred at step one of the Chevron analysis by concluding that under 26 U.S.C. § 4051(a)(1) Congress had directly addressed the precise question at issue-whether the filters qualified as a "part or accessory." The text of § 4051 states:

         (a) Imposition of tax.-

(1) In general.-There is hereby imposed on the first retail sale of the following articles (including in each case parts or accessories sold on or in connection therewith or with the sale thereof) a tax of 12 percent of the amount for which the article is so sold:
(A) Automobile truck chassis.
(B) Automobile truck bodies.
(C) Truck trailer and semitrailer chassis. ...

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