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Ammex Argues Fuel Excise Taxes Improperly Assessed

MAY 20, 2003

Ammex, Inc. v. United States et al.

DATED MAY 20, 2003
DOCUMENT ATTRIBUTES
  • Case Name
    AMMEX, INC., Plaintiff-Appellant, v. UNITED STATES and INTERNAL REVENUE SERVICE, Defendants-Appellees.
  • Court
    United States Court of Appeals for the Sixth Circuit
  • Docket
    No. 02-2375
  • Authors
    John, Craig L.
    Sutton, Mark H.
    Olson, Christopher S.
  • Institutional Authors
    Dykema Gossett PLLC
  • Cross-Reference
    Ammex Inc. v. United States, No. 99-338T; No. 99-778T (10 Apr

    2002) (For a summary, see Tax Notes, May 13, 2002, p. 1020; for

    the full text, see Doc 2002-8861 (24 original pages) [PDF], or

    2002 TNT 88-24 Database 'Tax Notes Today 2002', View '(Number'.)

    Ammex Inc. v. United States, No. 99-338T; No. 99-778T (20 May

    2002)(For a summary, see Tax Notes, May 27, 2002, p. 1338; for

    the full text, see Doc 2002-12270 (9 original pages) [PDF], or

    2002 TNT 99-9 Database 'Tax Notes Today 2002', View '(Number'.)
  • Code Sections
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2003-16829 (50 original pages)
  • Tax Analysts Electronic Citation
    2003 TNT 167-21

Ammex, Inc. v. United States et al.

 

UNITED STATES COURT OF APPEALS

 

FOR THE SIXTH CIRCUIT

 

 

PROOF REPLY BRIEF OF PLAINTIFF-APPELLANT.,

 

AMMEX, INC.

 

 

ORAL ARGUMENT REQUESTED

 

 

Appeal from the United States District Court

 

for the Eastern District of Michigan, Southern Division

 

(The Hon. George Caram Steeh)

 

 

Craig L. John

 

Mark H. Sutton

 

Christopher S. Olson

 

Dykema Gossett PLLC

 

39577 Woodward Avenue, Suite 300

 

Bloomfield Hills, MI 48304-5086

 

(248) 203-0700

 

Attorneys for Plaintiff-

 

Appellant Ammex, Inc.

 

Dated: May 20, 2003

 

March 20, 2003

 

 

Federal Express

 

Clerk of the Court

 

United States Court of Appeals for the Sixth Circuit

 

100 East Fifth Street, Room 532

 

Potter Stewart U.S. Courthouse

 

Cincinnati, OH 45202-3988

 

Re: Ammex, Inc. v. United States Of America Sixth Circuit Appeal Case No. 02-2375
Dear Clerk:

[1] Please accept for filing the enclosed Proof Reply Brief Of Plaintiff-Appellant Ammex, Inc., Certificate Of Compliance, Proof Reply Brief Of Plaintiff-Appellant, Ammex, Inc. F.R.A.P 28(f) Addendum and a Certificate Of Service. Please return a time-stamped copy to the undersigned in the enclosed stamped, self-addressed envelope.

[2] Thank you for your attention to this matter.

Sincerely,

 

 

DYKEMA GOSSETT PLLC

 

Mark H. Sutton

 

MHS/kem

 

Enclosures

 

cc: Stephen T. Lyons, Esq. (w/encls)

 

Judith A. Hagley, Esq. (w/encls)

 

TABLE OF CONTENTS

 

 

INDEX OF AUTHORITIES

STATEMENT OF CASE IN REPLY

REPLY TO JURISDICTIONAL STATEMENT

REPLY AS TO FACTS

REPLY TO GOVERNMENT SUMMARY

ARGUMENT IN REPLY

I. THE OPINION BELOW AND THE GOVERNMENT'S ARGUMENT UNDULY RESTRICT THE CONCEPT OF STANDING TO RECOVER FOR TAX ILLEGALLY LAID ON EXPORTS

 

A. THE GOVERNMENT'S ARGUMENT THAT "NON-TAXPAYERS" BURDENED BY AN ILLEGAL TAX ON EXPORTS NEVER CAN HAVE CONSTITUTIONAL STANDING TO RECOVER MISCONSTRUES THE "FAIRLY TRACEABLE" STANDARD

B. THE GOVERNMENT'S ARGUMENT THAT "PURCHASERS OF GOODS ON A TAX- INCLUDED BASIS" WHO ARE BURDENED BY ILLEGAL TAX ON EXPORTS CANNOT HAVE STATUTORY STANDING TO RECOVER IS INCONSISTENT WITH INTERNAL REVENUE CODE STRUCTURE

C. NEITHER THE CONSTITUTION, CODE, NOR TITLE 28 SUPPORTS THE GOVERNMENT'S ERRONEOUS "SOVEREIGN IMMUNITY" SUGGESTION

 

II. CONTRARY TO GOVERNMENT ARGUMENT, THE TAX IN THIS CASE VIOLATES THE EXPORT CLAUSE

III. THE GOVERNMENT'S ARGUMENT THAT MOTOR FUEL IN A TANK NEVER CAN BE EXPORTED -- EITHER UNDER THE EXPORT CLAUSE OR § 6421(C) AND § 4221(A)(2) -- ERRS IN FACT AND LAW

 

A. REVENUE RULINGS AND ADMINISTRATIVE PRACTICE CANNOT INSULATE AN UNCONSTITUTIONAL TAX ON EXPORTS

B. THE GOVERNMENT'S ARGUMENT THAT REV. RULING 69-150 IS ENTITLED TO CHEVRON DEFERENCE IS AN INAPPROPRIATE REQUEST TO OVERRULE THE LIMITED

C. REVENUE RULING 69-150 FAILS TO CONSIDER FACTS AT ISSUE AND IS NOT ENTITLED TO SKIDMORE RESPECT

 

IV. THIS COURT MUST REJECT THE GOVERNMENT'S UNSUPPORTED SUGGESTION THAT THE DUTY-FREE OPERATOR OF A STERILE FACILITY CANNOT BE AN "EXPORTER" MERELY BECAUSE IT DOES NOT ISSUE BILLS OF LADING

CONCLUSION

 

INDEX OF AUTHORITIES

 

 

Cases

Allen v. Wright, 468 U.S. 737 (1984)

Ammex v United States, 52 Fed Cl 303, 311-312 (2002)

Ammex Warehouse Co. v. Dep't of Alcoholic Beverage Control, 224 F. Supp. 546 (S.D. Cal. 1963)

Bankers Life & Cas. Co. v. United States, 142 F.3d 973 (7th Cir. 1998)

Bennett v. Spear, 520 U.S. 154 (1997)

Boston Stock Exchange v. State Taxation Comm'n, 429 U.S. 318 (1977)

Brown v. Houston, 114 U.S. 622 (1985)

Chevron, U.S.A. Inc. v. Nat'l Resources Defense Council, Inc., 467 U.S. 837 (1984)

Clinton v. City of New York, 524 U.S. 417 (1998)

Constantino v. TRW, Inc., 13 F.3d 969 (6th Cir. 1994)

Cornell v. Coyne, 192 U.S. 418 (1904)

Cyprus Amax Coal Co. v. United States, 205 F.3d 1369 (Fed. Cir. 2000)

Dominion Nat'l Bank v. Olsen, 771 F.2d 108 (6th Cir. 1985)

Emerald Int'l Corp. v. United States, 54 Fed. C1. 674 (2002)

Estate of Fink v. United States, 852 F.2d. 153 (6th Cir. 1988)

Fairbank v. United States, 181 U.S. 283 (1900)

First Chicago NBD Corp. v. Commissioner, 135 F.3d 457 (7th Cir. 1998)

Gurley v. Rhoden, 421 U.S. 200 (1975)

Kosow v. Commissioner (Estate of Kosow), 45 F.3d 1524 (11th Cir. 1995)

Kosydar v Nat'l Cash Register Co., 417 U.S. 62 (1974)

McGoldrick v. Gulf Oil Corp., 309 U.S. 414 (1940)

McKesson Corp. v. Div'n of Alcoholic Beverages & Tobacco, 496 U.S. 18 (1990)

Ranger Fuel Corp., 33 F. Supp. 2d 466 (E.D. Va. 1998)

Reich v. Georgia, 513 U.S. 106 (1994)

Sac & Fox Nation v. Pierce, 213 F.3d 566 (10th Cir. 2000)

Skidmore v. United States, 323 U.S. 134 (1944)

Spang Industries, Inc. v. United States, 791 F.2d 906 (Fed. Cir. 1986)

St. Joe Title Services v. United States, 88 AFTR2d 2001, 2001- 2 USTC P50, 598 (2001 W.L. 1022516, M.D. Fla.)

The Limited, Inc. v. Comm'r, 286 F.3d 324 (6th Cir. 2002)

United States v Cleveland Indians Baseball Club, 532 U.S. 200 (2001)

United States v Commodities Export Co., 733 F. Supp 109 (Ct Int'l Trade, 1990)

United States v. Cooper, 302 F.3d 592 (6th Cir. 2002)

United States v. Dalm, 494 U.S. 596 (1990)

United States v. IBM Corp., 517 U.S. 843 (1996)

United States v. Mitchell, 463 U.S. 206 (1983)

United States v. Nordic Village, 503 U.S. 30 (1992)

United States v. U.S. Shoe Corp., 523 U.S. 360 (1998)

United States v. Williams, 514 U.S. 527 (1995)

Warth v. Seldin, 422 U.S. 490 (1975)

Statutes

19 C.F.R. § 19.35(d)

19 U.S.C. § 1551

19 U.S.C. § 1555(b)(3)(A)

26 U.S.C. § 4081

26 U.S.C. § 4091

26 U.S.C. § 4121

26 U. S.C. § 4221(a)

26 U.S.C. § 4221(a)(2)

26 U.S.C. § 6416

26 U.S.C. § 6416(c)

26 U.S.C. § 6421

26 U.S.C. § 6421(c)

26 U.S.C. § 6427

26 U.S.C. § 7421(a)

26 U.S.C. § 7422

26 U.S.C. § 4221

28 U.S.C. § 1291

28 U.S.C. § 1295(a)(2)

28 U.S.C. § 1346

28 U.S.C. § 1346 (a)(2)

28 U.S.C. § 1346(a)

28 U.S.C. § 1346(a)(1)

28 U.S.C. § 1346(a)(2)

28 U.S.C. § 2201

Other Authorities

IRS Notice 2000-1-CB 1116; 2000-21 IRB-1116 (May 22, 2000)

IRS Notice 2000-1-CB 1116; 2000-21 IRB-1116 (May 22, 2000)

Notice 2000-28; 2000-1 C.B. 1116

Pub. L. 100-203, § 10502(d)(4)

Rev. Proc. 86-15; 1986-1 C.B. 544

Rev. Ruling 69-150

Tariff Act of 1930 § 309(b)

Title 28

Regulations

19 C.F.R. § 19.39(c)(1)

Treas. Reg. § 48.0-2(a)(9)

Treas. Reg. § 601.601(d)(v)(a)(d)

Treas. Reg. § 601.601(d)(v)(e)

 

STATEMENT OF CASE IN REPLY

 

 

[3] Far from an ordinary gas station, Ammex is an export machine, governed by federal law, that sells fuel from a "sterile" facility designed and required by Customs to assure that all customers go to Canada. (Ammex Opening Brief, pp. 8-19.) See 19 C.F.R. § 19.39(c)(1). (Statutes cited are in Addendum to Opening Brief) Ammex's Complaint alleged that the IRS had imposed excise taxes violating the Export Clause and that Ammex's fuel purchases for export sale were exempt from fuel taxes (R. 1, Complaint, ¶ 21; Apx. __); sought recovery under the Export Clause and 26 U.S.C. §§ 4221, 6416, 6421 and 6427 ("Internal Revenue Code," "IRC" or "Code"1(Id. ¶ 23); and alleged jurisdiction under 28 U.S.C. § 1346(a)(1) and 26 U.S.C. § 7422 (Id., ¶ 1).

 

REPLY TO JURISDICTIONAL STATEMENT

 

 

[4] The Government's Brief ("Brief") argues -- and erroneously suggests that the district court held -- that to the extent Ammex bases its claim on the Export Clause, the district court lacked jurisdiction. (Brief, pp. 2, 31-30.) Ammex replies that the district court correctly ruled that it had jurisdiction over Ammex's Export Clause claim under 28 § 1346(a)(1) (R. 63, Opinion at 9; Apx. __) ("Opinion"). Ammex's claim seeks "recovery of any internal- revenue tax alleged to have been erroneously or illegally assessed or collected or . . . or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws," 28 U.S.C. § 1346(a)(1), i.e., recovery of taxes or sums assessed and collected in violation of the Export Clause.2 The district court correctly found that Ammex had filed pre-suit administrative tax refund claims based on its Export Clause theory; that Ammex's Export Clause claim was not subject to the $10,000 limit of 28 U.S.C. § 1346(a)(2); and that it "falls under 28 U.S.C. § 1346(a)(1)." (Opinion, p. 9)

[5] The Government states that this Court's appellate jurisdiction rests on 28 U.S.C. § 1291 (Brief, p. 2), but later suggests that, because this case involves an Export Clause claim, it may be appealed only to the Federal Circuit (Brief, p. 31). However, 28 U.S.C. § 1295(a)(2) does not provide for exclusive Federal Circuit jurisdiction when the claim is brought under 28 U.S.C. § 1346(a)(1), or under § 1346(a)(2) and is based on tax laws. It confers exclusive jurisdiction in the Federal Circuit if jurisdiction was based on 28 U.S.C. § 1346, "except that:"

 

jurisdiction of an appeal in a case brought in a district court under section 1346(a) (1) . . . or under section 1346(a)(2) when the claim is founded upon an Act of Congress or a regulation of an executive department providing for internal revenue shall be governed by sections 1291, 1292, and 1294 of this title. . . .

 

28 U.S.C. § 1295(a)(2). Because (as the district court recognized) Ammex brought its claim under 28 U.S.C. § 1346(a)(1), this Court has jurisdiction under 28 U.S.C. § 1291.

 

REPLY AS TO FACTS

 

 

[6] The Government admits that everything Ammex sells leaves the country (Brief, p. 4.), and, as the district court found, that "the physical design of the facility guarantees that all customers, when they exit, will proceed across the bridge into Canada." (Brief, p. 4.) The Government admits, as the district court found, that Ammex's duty-free facility is also a sterile facility that legally assures that departing customers must leave the United States:

 

. . . [B]ecause Ammex operates a sterile duty-free shop, its customers, as a practical matter, must leave the United States after purchasing goods at the duty-free facility, and . . . their departure effects an exportation of duty-free merchandise.

 

(Brief, p. 52 ) The Government also admits that, "in such circumstances [leaving with duty-free merchandise], there truly is a severance of the article from the mass of things belonging within the United States with the intention of joining the article with the mass of things belonging within Canada." (Brief, p. 52.)

 

REPLY TO GOVERNMENT SUMMARY

 

 

[7] Ammex has repeatedly emphasized that its "sterile" facility designation by Customs requires all goods sold to be physically exported. (Ammex Opening Brief, pp. 8-18.) The Government mischaracterizes Ammex's argument in asserting that Ammex premises all its arguments on its duty-free status. (Brief, pp. 6, 15.) Ammex bases its claim on the fact that it is a sterile facility that in physical fact (by design and by law) exports everything it sells -- by selling only to persons required to travel immediately to Canada. The designation "sterile" means that the physical design and operation guarantees the exportation of products sold. 19 C.F.R. § 19.39(c)(1). Although Ammex has argued that duty-free status of goods sold by Ammex is sufficient for Export Clause immunity (which the Government admits, Brief, p. 52), Ammex has not argued that duty-free status is necessary to invoke the Export Clause prohibition. Under the Export Clause, goods physically in the export transit stream cannot be taxed, whether or not they are duty free.

 

ARGUMENT IN REPLY

 

 

I. THE OPINION BELOW AND THE GOVERNMENT'S ARGUMENT UNDULY RESTRICT THE CONCEPT OF STANDING TO RECOVER FOR TAX ILLEGALLY LAID ON EXPORTS.

[8] On this record, this Court should hold that Ammex, as the party that bore the burden of § 4081 tax, has Article III standing to recover excise tax imposed on fuel in the stream of exportation in violation of the Export Clause.

 

A. The Government's Argument That "Non-Taxpayers" Burdened By An Illegal Tax On Exports Never Can Have Constitutional Standing To Recover Misconstrues The "Fairly Traceable" Standard.

 

[9] Ammex and the district court agreed that, under Cyprus Amax Coal Co. v. United States, 205 F.3d 1369 (Fed. Cir. 2000), an Export Clause violation provides a cause of action for recovery of money illegally obtained (Opinion, p. 9), and that Ammex bore an economic burden that included the amount of tax (Opinion, p. 11). Nonetheless, the Government argues, Ammex lacks constitutional standing because its tax burden was not "caused" by the Government and therefore cannot "fairly . . . be traced" to the challenged Government action. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Contrary to Government assertion (Brief, pp. 21, 25.), the district court did not find "that Ammex's higher fuel cost was caused by the 'independent action' of its suppliers. The district court found "no injury," but made no independent finding of "no proximate cause".

[10] The Government's argument differs from its "no legally protected interest, thus no injury" argument, which the district court adopted (Opinion, pp. 11, 16, 17), and from which the Government now retreats. The district court's "no injury" holding erred. For constitutional standing purposes, Ammex alleged economic burden and invasion of a legally protected interest that was "concrete" and "particularized," and traced its economic injury to the penny.3Maryland v. Louisiana, 451 U.S. 725, 736- 737 (1981) (burden of passed-on tax is injury).

[11] The Government's "no causation" argument disregards both the record and Supreme Court case law. The Government argues that standing analysis in tax recovery suits under 28 U.S.C. § 1346(a)(1) begins with "whether . . . plaintiff in fact paid the taxes in issue" (Brief, p. 21), meaning whether plaintiff remitted the tax to the IRS. It then ends its analysis there. Under Lujan, supra, and later Supreme Court decisions, constitutional standing analysis is not so simplistic.

[12] Based on Emerald Int'l Corp. v. United States, 54 Fed. Cl. 674, 681-682 (2002), the Government argues that a non- remitter's tax burden cannot be "caused" by the Government if an intermediate party that remitted the tax has "discretion" whether to pass it along (Brief, p. 25). Emerald fails to consider application of the "fairly traceable" standard in Maryland, supra. Similar argument was also rejected in Bennett v. Spear, 520 U.S. 154 (1997), because: "[the argument] wrongly equates injury 'fairly traceable' to the defendant with injury as to which the defendant's actions are the very last step in the chain of causation." 520 U.S. at 168-169. Ammex can show its injury was caused by the tax, which had a "determinative and coercive effect" on its suppliers. See Bennett; Maryland, supra.

[13] Clinton v. City of New York, 524 U.S. 417 (1998), illustrates that for standing, a party need not be the immediate direct object of the illegal government conduct. In Clinton, the State of New York had been deprived of a benefit by Presidential veto; the Court held that plaintiffs City of New York and healthcare organizations nonetheless could challenge the President's veto of the State benefit because federal recoupment from the State would be assessed by the State against plaintiffs. Id. at 431. The Court rejected the Government's argument that claimants were the wrong parties to bring suit, Id. at 431, and distinguished Warth v. Seldin, 422 U.S. 490 (1975), as turning on the "prospective" actions of third parties. Three Justices agreed with the majority that the "New York appellees have standing because . . . the tax liability they will incur under New York law is a concrete and particularized injury, fairly traceable to the President's [veto] . . . ." Id, at 463.

[14] In consolidated cases, the Court found standing ("immediate injury") for plaintiff farmer co-operatives that proposed to purchase processing facilities. The same veto had eliminated a tax benefit for potential sellers. Plaintiffs had standing because (i) the vetoed legislation intended to provide proposed purchasers bargaining chip incentives; (ii) the President's veto had singled out this tax benefit for cancellation; and (iii) the plaintiffs had been formed for the very purpose of acquiring such facilities. The Court distinguished Allen v. Wright, 468 U.S. 737 (1984), and Simon v. Eastern Kentucky, 426 U.S. 26 (1976), as cases involving a "speculative chain of causation." Id, at 434, note 23. The Court likened plaintiff co-operatives' injury to "injury comparable to . . . repeal of a law granting a subsidy to sellers of plants if, and only if, they sell to farmer's co-operatives. Every farmer's co-operative seeking to buy a processing plant is harmed by that repeal." Two Justices dissented concerning the co-operatives' standing because the co-operatives failed to establish that they had, in fact, suffered economic harm in their bargaining position. Id. Here, of course, there is no speculative chain and no question but that Government imposition of tax on Ammex's purchases in fact increased Ammex's costs, albeit unconstitutionally. (See R. 44, UMF ¶¶ 25, 27; Apx. __.)

[15] Under these applications of the "fairly traceable" standard, the Government's concept that the economic burden of § 4081 excise tax -- imposed and required to be paid by the Code, and required by a specific IRS Field Bulletin (R. 45, Government Motion, Exhibit C; Apx.__) to be collected on sales to Ammex -- cannot "fairly . . . be traced" to the Government for constitutional standing purposes should be rejected.

[16] The Government's causation argument contradicts the holding in Maryland, supra, 451 U.S. at 736-737, which the Government attempts to distinguish (Brief, p. 28) without even referencing its explicit "fairly traceable" and "Independent action" analysis.4Maryland rejects the same argument, holding that States onto which a tax was passed could "fairly trace" their injury to the tax:

 

Standing to sue . . . exists for constitutional purposes if the injury alleged 'fairly can be traced to the challenged action of the defendant, and not injury that results from the independent action of some third party not before the court.' This is clearly the case here. The plaintiff States are substantial consumers of natural gas . . . . [A]lthough the tax is collected from the pipelines, it is really a burden on consumers. It is clear that the plaintiff States, as major purchasers of natural gas whose cost has increased as a direct result of Louisiana's imposition of the First-Use Tax, are directly affected in a 'substantial and real' way so as to justify their exercise of this Court's original jurisdiction.

 

Id. at 736-37 (citation and quotation marks omitted).

[17] The Government's argument, like the Emerald opinion, fails to acknowledge Maryland's explicit holding that gas consumers, who did not remit tax, but onto whom the tax had been passed, had established for standing purposes that their unconstitutional tax burden could "fairly . . . be traced" to levy of unconstitutional tax on their suppliers. Id.

[18] For constitutional standing, the "incidence" of tax is not outcome-determinative. Gurley v. Rhoden, 421 U.S. 200 (1975), cited by the Government (Brief, pp. 19-20), illustrates that the "legal incidence" of the § 4081 tax does not mean that the producer bears its economic burden. "[T]he reality is that users bear the economic burden of the tax." Gurley, 421 U.S. at 207. The Government admits that Ammex bears the burden of the tax. (Brief., at 25).

[19] The Government further attempts to distinguish Maryland on the grounds that there the Louisiana taxing authority "specifically directed" that the tax could be considered in the price and another (federal) agency had approved a "passing along" of the tax to consumers as part of the price. (Brief, p. 28.) These are distinctions without a difference. Here, the IRS could have exempted Ammex's purchases from tax, just as it has exempted coal purchases for export after Ranger Fuel Corp. v. United States, 33 F. Supp. 2d 466 (E.D. Va. 1998); instead, the IRS "specifically directed" that Ammex's sales be taxed, albeit unconstitutionally. (R. 45, Government Motion, Ex. C.; Apx. __.)

[20] Further, the Government does not contest Article III standing for Ammex's statutory claims; it admits that non-taxpayers can recover (Brief, p. 15). If directly remitting tax were required for constitutional standing, no one would have standing for a § 6421(c) or § 6416(c) claim. The statutory cases cited by the Government (Brief, p. 23) are distinguishable. E.g., Muhammed v. United States, 43 Fed. Cl. 742 (1999), actually indicates that the "ultimate purchaser" (as opposed to the tax remitter) is the party to claim a refund under § 6427(1). (See Opinion, p. 10.) Muhammed did not involve exports, and cannot be applied generally to bar recovery by Ammex merely because Ammex was not the remitter. Valley Ice & Fuel Co. v. United States, 30 F.3d 635 (5th Cir. 1994) also denies recovery of the diesel tax because claimant was not the "ultimate purchaser," not for the reason that claimant was not the remitter. JAT Oil & Supply, Inc., 80 A.F.T.R. 2d 976137 (E.D. Tenn. 1994), not an export case, denies recovery because claimant was not the "position holder" assessed tax, but does not consider Maryland, supra. Amigo Enterprises, Inc. v. United States, 41 Fed. Cl. 462 (1998), denies recovery because claimant was not the "producer."

[21] Ammex's causation argument is supported by the Code's express contemplation that § 4081 excise taxes will be passed on to certain user groups, but recovered by or repaid to them. See, e.g., § 6421(c) and § 6416(c). For taxes falling illegally on exports, such a result is mandated by the Export Clause. Cyprus Amax, supra, 205 F.3d at 1373. As Gurley, supra, explicitly states, Congress relieves from tax burden certain purchasers who buy fuel and on whom fuel tax is passed along. 421 U.S. at 206. The same is true of persons who purchase for export, see § 6421(c) and § 4221(a)(2), or who are "exporters," see § 6416(c). The payments/refunds authorized by these sections reflect a congressional determination that parties bearing the burden of fuel tax imposed on goods sold for export should be relieved of that burden.

[22] Thus, Ammex's injury is fairly traceable to the Government.

 

B. The Government's Argument That "Purchasers Of Goods On A Tax Included Basis" Who Are Burdened By Illegal Tax On Exports Cannot Have Statutory Standing To Recover Is Inconsistent With Internal Revenue Code Structure.

 

[23] The district court's holding and the Government's argument disregard the Code's structure, which contemplates that excise taxes may fall erroneously or illegally on exports, but provides for their recovery by non tax-remitters. Thus, from a prudential standing analysis, the holding is in error.

[24] In compliance with the Constitution's prohibition on taxation of exports, Congress generally prohibits imposing excise taxes on exports. See § 4221(a) (most excise taxes are not imposed on "the sale by the manufacturer . . . of an article . . . (2) for export, or for resale . . . for export.")5 Since 1987, however, § 4221(a)(2) has provided exceptions for excise taxes "under sections 4121, 4081 or 4091 . . . ." Thus, § 4081 fuel taxes are carved out from the general rule barring imposition of excise tax on "sales for export or for resale . . . for export." § 4221(a)(2).

[25] In permitting excise taxes to fall on exports, § 4221 (a) specifically contravenes the Export Clause. Ranger Fuel Corp., supra, 33 F. Supp. 2d at 468 (holding § 4121 coal tax unconstitutional under Export Clause). Conceding to Ranger Fuel, the IRS has acknowledged that "[u]nder the Export Clause . . . this [coal ] tax does not apply" to the producer's sale of coal for export if the coal is in the stream of export commerce when sold and actually is exported. It has exempted such "non- taxable" sales. See IRS Notice 2000-1-CB 1116; 2000-21 IRB- 1116 (May 22, 2000).6 Similarly, under the Export Clause, the § 4081 tax should be held not to apply to the supplier's sale of motor fuel for export if the fuel is in the export stream when sold and actually is exported.

[26] The Code acknowledges that taxing exports is impermissible. An [excise] tax "erroneously or illegally collected in respect of any article exported to a foreign country" must be refunded to the "exporter" by the Government, § 6416(c). The Code also provides for return of gasoline excise taxes permitted to fall on sales to persons who are "sold" articles for export. See 26 U.S.C. §§ 6421(c) and 4221(a)(2). While contending these sections operate only "in very limited circumstances" (Brief, p. 15), the Government admits that these sections permit non-taxpayers to recover excise taxes paid by others. Id.7 The district court thus erred in ruling (i) that Ammex did not have a "legally protected interest" under the general provisions of the Code (Opinion, p. 11) and (ii) that the Code restricts standing to recover excise taxes on exports generally to payers or remitters of tax. (Id.) The Code does not so limit standing when excise taxes fall on exports.

 

C. Neither The Constitution, Code, Nor Title 28 Supports The Government's Erroneous "Sovereign Immunity" Suggestion.

 

[27] The Government's sweeping assertion that "waiver of sovereign immunity for tax refund suits applies only if the plaintiff is the party against whom the tax in question was assessed, or, at the outermost limit, plaintiff is a person who has been coerced by the IRS into paying another person's taxes" (Brief, p. 22) is unsupported by authority. Estate of Fink v. United States, 852 F.2d 153 (6th Cir. 1988), on which the Government chiefly relies, involved a statutory interpretation of a different tax refund statute (I.R.C. § 6402(a)), and said nothing about sovereign immunity or 28 U.S.C. § 1346(a)(1). United States v. Dalm, 494 U.S. 596 (1990), and United States v. Nordic Village, 503 U.S. 30 (1992), are equally inapplicable. Dalm turned on a statute of limitations, not on who brought suit, 494 U.S. at 608, while Nordic Village interpreted the Bankruptcy Code, and had nothing to do with a suit to recover illegally collected taxes. 503 U.S. at 31.

[28] The one Supreme Court case interpreting who falls within the 28 U.S.C. § 1346(a)(1) waiver, United States v. Williams, 514 U.S. 527 (1995), is unmentioned in the Government's sovereign immunity argument. That case explicitly rejected the Government's "taxpayer" argument that one must be the person liable for and assessed tax to be able to sue under 28 U.S.C. § 1346(a)(1). Id. at 533-34. Instead, the Court emphasized the breadth of 28 U.S.C. § 1346(a)(1)'s language, noting that it covers "[a]ny civil action . . . for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected." The Court concluded that a plea (like Ammex's) to recover a tax "erroneously . . . collected," even if brought by one not assessed the tax, "falls squarely within this language." Id. at 532 (emphasis in original).

[29] The Court further noted that even if (arguendo) suits under 28 U.S.C. § 1346(a)(1) were restricted to those brought by the "taxpayer," that term would be given a broad, common- sense construction that included any party whom the Government had "subjected to" the tax. Eschewing the Government's technical statutory arguments about who was a qualifying "taxpayer," the Court adopted a functional, substance-over-form approach, that recognized that liability for tax is a matter not of the tax's legal incidence, but rather of who ultimately must pay it. Id. at 535-36. Here, where the IRS has expressly instructed Ammex's suppliers that sales to Ammex are "taxable event[s]" (R. 45, Government Motion, Ex. C, Apx. __), the Government has plainly "subjected" Ammex's fuel purchases to tax. Ammex's claim thus falls squarely within 28 U.S.C. § 1346(a)(1)'s waiver of sovereign immunity.8

[30] The immunity argument also ignores that, as to fuel taxes on exports, the United States has consented to repayment claims against itself by tax-burdened parties other than "taxpayers," see § 6416(c), § 6421(c), § 6427(1)), and to claims against itself for taxes "erroneously or illegally collected in respect of articles exported," see § 6416(c). In view of the express consent to recovery of gasoline tax on exports by "persons sold" fuel for export or for resale for export, § 6421(c) and § 4221(a)(2), and by "exporters," § 6416(c), the Government's assertion that one must have remitted tax to fall within the 28 U.S.C. § 1346(a)(1) sovereign immunity waiver is plainly wrong.

[31] Alternatively, had the United States not provided by statute for recovery of unconstitutional tax on exports, it still would be subject to suit on these facts. Due process requires that, if a tax scheme forces a party to pay an unconstitutional tax and relegates him to a post-payment refund action, then it must afford adequate post-deprivation relief. McKesson Corp. v. Div'n of Alcoholic Beverages & Tobacco, 496 U.S. 18, 31 (1990). Such remedy must be "clear and certain." See id., at 32; and Reich v. Georgia, 513 U.S. 106, 108 (1994), both citing Atchinson,. supra. Otherwise, there is a violation of due process:

 

Florida does not . . . provide taxpayers . . . with a meaningful opportunity to withhold payment and to obtain a predeprivation determination of the tax assessment's validity; . . . . To satisfy the requirements of the Due Process Clause, therefore, in this refund action the State must provide taxpayers with, not only a fair opportunity to challenge the accuracy and legal validity of their tax obligation, but also a "clear and certain remedy," O'Connor, 223 U.S., at 285, 32 S.Ct., at 217, for any erroneous or unlawful tax collection to ensure that the opportunity to contest the tax is a meaningful one.

 

McKesson, 496 U.S. at 38. That conclusion should not differ under the 5th Amendment Due Process Clause. Federal law generally forbids a party from seeking to declare a federal tax invalid, 28 U.S.C. § 2201, and forbids enjoining collection of federal tax, 26 U.S.C. § 7421(a). Bob Jones University v. Simon, 416 U.S. 725 (1974). Due process requires the United States to provide a clear and certain post-deprivation remedy to recover an unconstitutional tax.

[32] This Court should not adopt a construction of sovereign immunity that shields the IRS and permits it to levy and hold a tax that the Constitution forbids. The Export Clause is supreme. Fairbank v. United States, 181 U.S. 283, 285-293 (1900). See Cyprus Amax Coal Co. supra, at 1373 (Fed. Cir. 2000) ("The necessary implication of the Export Clause's unqualified proscription is that the remedy for its violation entails a return of money unlawfully extracted" . . . "[T]he Export Clause's restriction on taxing power requires Congress to refund money obtained in contravention of the clause"). Since immunity for tax recovery claims is broadly waived, 28 U.S.C. § 1346(a)(1), and the Export Clause mandates compensation, a second statutory waiver is not required. United States v. Mitchell, 463 U.S. 206, 218-219 (1983).

[33] The district court's holding errs in permitting the IRS not only to levy, but also to keep, an unconstitutional tax on exports. See St. Joe Title Services v. United States, 88 AFTR 2d 2001, 2001-2 USTC P50, 598 (2001 W.L. 1022516, M.D. Fla.) (unreported, copy attached). The Government's argument implies that no one can achieve post-collection recoupment:

  • Ammex's suppliers cannot because they "passed on" tax to Ammex (see Government Brief, p. 25, note 10; and page 53)

  • Ammex cannot because Ammex did not remit the tax to the IRS (Brief, passim) (Brief, pp. 25 and 53); by logical extension,

  • Others cannot because they also did not remit tax to the IRS.

 

[34] The Government's argument resembles that rejected in McKesson, supra, where the State refused to provide refund of unconstitutional tax already paid, arguing that petitioners had no status to recover illegal excise tax because they had "passed it on." The Supreme Court gave short shrift to that argument:

 

The State cannot persuasively claim that "equity" entitles it to retain tax moneys taken unlawfully from petitioner due to its pass-on of the tax where the pass-on itself furthers the very competitive disadvantage constituting the Commerce Clause violation that rendered the deprivation unlawful in the first place.

 

496 U.S. 48-49.

[35] The standing obstacles erected by the Government's arguments not only exceed the limits imposed by the Constitution, case law, and Code; they also suggest that the Court permit an unconstitutional tax to operate permanently. None of the Government's arguments for denying standing should survive.

II. CONTRARY TO GOVERNMENT ARGUMENT, THE TAX IN THIS CASE VIOLATES THE EXPORT CLAUSE.

[36] The Government's Brief argues that § 4081 tax is not unconstitutional as applied here because "Ammex sold fuel as a domestic retailer and not for exportation" and even if it sold fuel for export, the tax "occurred prior to any exportation." (Brief, p. 33-38.) Both assertions are factually and legally incorrect.

[37] In fact, Ammex is anything but an ordinary "domestic retailer." Ammex is a unique sterile, duty-free enterprise authorized by federal law, 19 U.S.C. § 1551, et. seq., to sell merchandise for export to persons who are required by U.S. Customs to leave the United States. (Ammex Opening Brief, pp. 4-18.) Located beyond the 64 "exit point," Ammex can sell only to persons who must travel to Canada.

[38] The Government admits and the district court found that "[t]he physical design of [Ammex's duty-free] facility guarantees that all customers, when they exit, must travel to Canada (Brief, p. 4). Also, that "[t]he designation 'sterile' means that the physical design and operation of the facility guarantees [sic] the exportation of products sold therein" and that "[c]ustomers entering Ammex's facility have necessarily proceeded beyond the 'point of no return' exiting from the United States." (Opinion, p. 2; Brief, p. 52.) If Ammex were a "domestic retailer," Ammex could not enjoy sterile facility status. Thus, both the district court and the Government agreed that all goods Ammex sells are physically bound for Canada; it follows that no goods Ammex sells are sold for domestic use. They all leave the country; they are all exported.

[39] The Government, partly conceding, argues that customer departure from the United States "effects an exportation only of duty-free merchandise due to the legal compulsion requiring that such merchandise be sold for use outside the United States," because "in such circumstances there truly is a severance of the article from the mass of things belonging within the United States with the intention of joining the article with the mass of things belonging within Canada." (Brief, p. 52.) The Government then contends that such departure does not effect an exportation of merchandise physically in the export stream but not designated "duty free," because there is no "legal duty to use the fuel (which is not duty-free) outside the United States." (Brief, p. 52)

[40] The Government's contention that "there is no exportation when . . . nonduty-free fuel is taken outside of the United States" is absurd. (Br., p. 52.) Although a duty-free operator's legal duty to assure exportation of goods9 is certainly sufficient to establish exportation, by no means is it necessary. Goods are exported every day by persons other than duty-free sales enterprises. See, e.g. United States v. IBM, 517 U.S. 843 (1996).10 Exportation turns simply on whether the goods leave the country. The inquiry as to export stream entry is "inherently factual." Infra, pp. 22-23.

[41] With respect to physical travel in the export stream, there are no differences factually between the courses traveled by classes of goods sold from Ammex's sterile facility. As the Government admits, and as the district court found, all goods Ammex sells must leave the United States and must go to Canada over the Bridge.

[42] It follows that fuel purchased by Ammex for resale is, at the moment of purchase, put in the stream of export to Canada the moment Ammex takes it "off the rack." The IRS concedes that when coal is purchased as a "step in exportation" and is exported, it cannot constitutionally be taxed:

 

(B) . . . Coal is in the stream of export when sold by the producer if the sale is a step in the exportation of the coal to its ultimate destination in a foreign country. For example, coal is placed into the stream of export when . . . 2) the producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country.

 

IRS Notice 2000-I-CB1116; 2000-21 IRB-1116 (May 22, 2000). That fuel is being sold to a sterile facility selling for export instead of coal being sold to an export broker selling to a foreign country should not change the result.

[43] On this record, the fuel entered the stream of export commerce at the fuel terminal, where Ammex's agent accepted immediate possession and delivery for Ammex and the fuel was immediately transported to Ammex's fuel dispensing tanks within its sterile facility (i.e., moved to a location beyond the point at which a purchaser must proceed to Canada). (R. 44, UMF, Ex. 14, A. Levesque Decl., ¶ 8; Ex. 12, F. Levesque Decl., ¶¶ 15, 16, 23, 27; Apx. __.) In physical fact, the purchase and acceptance of the fuel constituted the first step in exportation because, when the fuel left the rack in Ammex's possession, it could go only immediately to Ammex's facility beyond the exit point and from there only to Canada. See also Opinion, p. 3.

[44] That fuel tax was imposed "the same moment the [fuel] enters the stream of export commerce," means that the fuel cannot be taxed under the Export Clause, United States v. IBM Corp., 517 U.S. 843, 849 (1996); A.G. Spalding Bros. v. Edwards, 262 U.S. 66, 60-70 (1923). That is the moment that Ammex's fuel is put on its inexorable course to the sterile facility beyond the exit point and to Canada, and is not, as the Government would have it, a moment "prior to any exportation" (Brief, pp. 34-35).

[45] The cases principally cited by the Government (Brief, p. 34) involve goods that, although perhaps intended for eventual foreign delivery, had not yet in fact been physically committed to move to a foreign destination at the time of tax levy, and were decided before the Export Clause cases of United States v. U.S. Shoe Corp., 523 U.S. 360 (1998) and IBM, supra, on which Ammex relies.11 In U.S. Shoe, supra, the tax declared unconstitutional as a federal tax on exports was imposed at the time of loading. See 523 US at 363. By contrast, in Kosydar v. Nat'l Cash Register Co., 417 U.S. 62 (1974), relied on by the Government, there had been no transfer or movement of the machines -- they were still in the manufacturer's possession, sitting unfinished in a Dayton warehouse awaiting shipment, no purchase had been made, no export license had been issued, and the export process not commenced. The Court recognized that the inquiry as to entry into the export stream was "inherently factual," and found, in Kosydar, there had been no physical entry of the machines into the export stream of commerce. Id. at 71.

[46] Similarly distinguishable are Brown v. Houston, 114 U.S. 622 (1985), where coal was still being held for sale when tax was imposed and had not yet been sold to the exporter; and Cornell v. Coyne, 192 U.S. 418 (1904), where cheese was merely "under contract" for export when tax was imposed. Neither resembles this case, where the incident that triggers fuel tax is the same incident that begins fuel moving in exportation to Canada.

III. THE GOVERNMENTS' ARGUMENT THAT MOTOR FUEL IN A TANK NEVER CAN BE EXPORTED -- EITHER UNDER THE EXPORT CLAUSE OR § 6421(C) AND § 4221(A)(2) -- ERRS IN FACT AND LAW.

[47] In its § 6421(c) argument that fuel in a vehicle gas tank never can be exported, (Brief, pp. 38-50), the Government claims that this Court must defer to IRS practice and Revenue Ruling 69-150, saying that a "long standing administrative practice" excludes motor fuel in a fuel tank from being an export (Brief, pp. 39-42), and that Revenue Ruling 69-150 so declares. (Id., pp. 42-50).

 

A. Revenue Rulings And Administrative Practice Cannot Insulate An Unconstitutional Tax On Exports

 

[48] The IRS practice and Revenue Ruling 69-150 cannot apply to Ammex's Export Clause claim. The IRS cannot enjoy judicial power to interpret or limit the reach of the Constitution. Fairbank, supra. The Export Clause flatly forbids Congress from laying a tax on "articles exported" from any State; IBM, supra. Its prohibition does not depend on how articles leave the country. If fuel sold by Ammex is an "article exported" under the Export Clause, then any contrary administrative practice or revenue ruling is a nullity.

[49] Under the Constitution, the fact that fuel is to be used in export travel as well as taken abroad does not render such fuel not an export. Instead, it serves to insulate it from tax. See McGoldrick v. Gulf Oil Corp., 309 U.S. 414, 425 (1940) (under foreign commerce clause, fuel withdrawn from a bonded warehouse for delivery as fuel to foreign-bound vessels cannot be taxed by New York; federal statutes exempted such sales from tax; "the Tariff Act of 1930 § 309(b)) provide[d] that articles . . . laden for use on vessels engaged in foreign commerce . . . are to be duty free and considered or held as export[s] . . . ."). Thus the IRS may not simply declare that an export is not an export under the Constitution.

 

B. The Government's Argument That Rev. Ruling 69-150 Is Entitled To Chevron Deference Is An Inappropriate Request To Overrule The Limited.

 

[50] By arguing that Revenue Ruling 69-150 should be given Chevron deference, the Government has asked this Court, in effect, to reconsider and to overrule its decision in The Limited, Inc. v. Comm'r, 286 F.3d 324, 337-38 (6th Cir. 2002) (See Brief, p. 45, urging this Court to "re-examine its approach.").

[51] There is no legal basis for this panel of this Circuit to do so. See United States v. Cooper, 302 F.3d 592, 597, note 2 (6th Cir. 2002) following Circuit Rule 206(c).

[52] The Limited is controlling precedent, decided after United States v. Mead Corp., 533 U.S. 218 (2001), and carefully considers the most recent Supreme Court cases, including United States v Cleveland Indians Baseball Club., 532 U.S. 200 (2001), where the Court expressly "refrain[ed] from deciding the level of deference due revenue rulings." 286 F.3d at 338. See also Christensen v. Harris County, 529 U.S. 576, 587 (2000), holding that interpretations in agency opinion letters, adopted without adjudication or formal rule-making, "lack the force of law" and are entitled to "respect" but "do not warrant Chevron-style deference." 219 F.3d at 366.

[53] The Limited's treatment of revenue rulings as non-binding but persuasive authority that should not be extended beyond the scope of the hypothetical situation presented, 286 F.3d at 337-338, fully accords with Mead, supra, holding that customs classifications adopted without formal rule making procedure are not entitled to Chevron deference. 533 U.S. at 221, 234.

[54] The Limited is in accord with the Federal and other Circuits that have held that Chevron deference is not required.12 The Government's contention that revenue rulings have the "force of law" (Brief, pp. 43-44) contradicts Christensen, supra; The Limited; Constantino v. TRW, Inc., 13 F.3d 969, 981 (6th Cir. 1994); and its own historic regulations. See, e.g., Treas. Reg. § 601.601(d)(v)(a)(d); Rev. Proc. 86-15; 1986-1 C.B. 544 (revenue rulings do not have even the force of Treasury Department regulations).

[55] Code provisions that apply only to gasoline (§ 6421(c)), or diesel fuel 6427(l), contemplate that such fuels may be sold for export, or for resale for export. § 4221(a)(2). Where Congress has defined "export," § 4221(d)(2), it has not legislated that "persons sold" gasoline for export or for resale for export (§ 6421(c)) cannot include persons who resold fuel to foreign travelers who put it into their fuel tanks. Revenue Ruling 69-150 announces a position reached largely for administrative reasons. There is no reason for this Court to defer to the IRS position, not supported by statutory language, that gasoline in a fuel tank cannot be an export, merely because that position is published.

[56] Accordingly, there is no reason to give Revenue Ruling 69- 150 any deference in this case. The Government errs in suggesting the panel can change the law of the Circuit to approve such deference.

 

C. Revenue Ruling 69-150 Fails To Consider Facts At Issue And Is Not Entitled To Skidmore Respect.

 

[57] Nor is Revenue Ruling 69-150 entitled to "respect" under Skidmore v. United States, 323 U.S. 134 (1944). Revenue rulings are "conclusions of the Service" on an "entire set of facts," and parties are "cautioned against reaching the same conclusion in other cases" not the same. See Treas. Reg. § 601.601 (d)(v)(e). The Limited, supra, establishes that it is error to extend a revenue ruling beyond the hypothetical facts on which it is based. 286 F.3d at 338. Revenue Ruling 69-150 fails to address Ammex's situation. It does not (i) deal with a sterile facility, (ii) consider that such a facility must guarantee that customers depart for Canada, or (iii) consider that fuel was immediately taken to and delivered "at a . . . location at or beyond the exit point." Revenue Ruling 69-150 does not address the situation where all merchandise must be and is taken out of the country. All these factors are present here, yet Revenue Ruling 69-150 does not take any such factors into account.13 There is no "thoroughness" as to Ammex's situation in the consideration of the ruling, or "validity in its reasoning" that give it any power to persuade in these circumstances. Skidmore, supra. Thus neither deference nor respect is due.

IV. THIS COURT MUST REJECT THE GOVERNMENT'S UNSUPPORTED SUGGESTION THAT THE DUTY-FREE OPERATOR OF A STERILE FACILITY CANNOT BE AN "EXPORTER" MERELY BECAUSE IT DOES NOT ISSUE BILLS OF LADING.

[58] The Government's Brief (pp. 53-57) argues that the Treas. Reg. § 48.02(a)(9) definition of "exporter" applies to refund claims under § 6416(c), and that thereunder, a claimant can be an "exporter" only if so named in an "export bill of lading." This simply manufactures another artificial technical barrier, unsupported by law. Neither § 6416(c) nor the regulations specifically thereunder define "exporter." Cf. § 4221(d)(2). Applying the Treasury definition as advocated by the Government not only extends the definition beyond its intended scope, but results in constitutionally impermissible taxation.

[59] This Court's duty is to interpret statutes in conformity with their plain language. The Limited, supra, 286 F.2d at 338. "Exporter" is a commonly understood word. It is commonly understood that duty-free stores are "exporters." See United States v. Commodities Export Co., 733 F. Supp 109, 114 (Ct Int'l Trade, 1990) ("a duty-free store sells goods for immediate export"). In Ammex Warehouse Co. v. Dep't of Alcoholic Beverage Control, 224 F. Supp. 546 (S.D. Cal. 1963), the court repeatedly refers to an entity similar to Ammex as an "exporter;" notes that when a duty free store (such as Ammex) sells an article, Customs retains legal possession of articles sent to the border until they cross the international boundary (Id. at 549); and states, "the procedure of exportation is accomplished in part by . . . plaintiffs." (Id. at 548).

[60] The Government's definition also should be rejected as according no effect to Code words clearly invoking the Export Clause. Section 6416(c) provides a refund to the exporter in the amount of an (excise) tax "erroneously or illegally collected in respect of an article exported." (Emphasis added.) The phrase "article exported" is taken directly from the Export Clause. Thus, § 6416(c) helps ensure that the Export Clause's prohibition on taxing exports is not violated.

[61] Limiting eligibility for refund claims to persons who literally satisfy the Treas. Reg. § 48.0-2(a)(9) definition of "exporter" would limit § 6416(c) and Export Clause protection to only those persons named in bills of lading, and thereby block refunds in export transactions in which no bills of lading are issued.14 In many export transactions -- including Ammex's fuel sales -- no bill of lading is issued ( although equivalent documents and guarantees of exportation are present). The IRS does not expressly require a bill of lading for a coal exporter claim. See Notice 2000-28; 2000-1 C.B. 1116. If under § 6416(c), an exporter can obtain a refund of excise tax illegally collected only if named in an export bill of lading, the Export Clause inevitably will be violated, as here. The Treasury Regulation cannot reasonably be interpreted as limiting the Constitutional reach of the Export Clause by limiting § 6416(c) claimants to those named in a bill of lading.

[62] In summary, Ammex, the "exporter" of an "article exported" for purposes of the Export Clause, it is entitled to the refund of the amount of tax "illegally collected."

 

CONCLUSION

 

 

[63] Ammex's other arguments, set forth in its Opening Brief, that it satisfies the requirements for the Export Clause, § 6421(c) and § 6416(c) recovery are incorporated by reference. Ammex requests that this Court reverse the district court's decision.
Respectfully submitted,

 

 

Craig L. John (P27146)

 

Mark H. Sutton (P21182)

 

Christopher S. Olson (P58780)

 

Dykema Gossett PLLC

 

39577 Woodward Avenue, Suite 300

 

Bloomfield Hills, MI 48304-5086

 

(248) 203-0700

 

Attorneys for Plaintiff-

 

Appellant

 

Ammex, Inc.

 

CERTIFICATE OF COMPLIANCE

 

 

[64] Pursuant to 6th Cir.R.32(a)(7)(c), the undersigned certifies this brief complies with the type-volume limitations of 6th Cir.R.32(a)(7)(B).

 

1. EXCLUSIVE OF THE EXEMPTED PORTIONS IN 6TH CIR.R.32(a)(7)(B)(iii), THE BRIEF CONTAINS 6997 WORDS.

2. THE BRIEF HAS BEEN PREPARED IN PROPORTIONATELY SPACED TYPEFACE USING WORD 2000 IN TIMES NEW ROMAN, 14 POINT.

3. IF THE COURT SO REQUESTS, THE UNDERSIGNED WILL PROVIDE AN ELECTRONIC VERSION OF THE BRIEF AND/OR A COPY OF THE WORK OR LINE PRINTOUT.

4. THE UNDERSIGNED UNDERSTANDS A MATERIAL MISREPRESENTATION IN COMPLETING THIS CERTIFICATE, OR CIRCUMVENTION OF THE TYPE-VOLUME LIMITS IN 6TH CIR. R.32(A)(7), MAY RESULT IN THE COURT'S STRIKING THE BRIEF AND IMPOSING SANCTIONS AGAINST THE PERSON SIGNING THE BRIEF.

Mark H. Sutton

 

Craig L. John

 

Christopher S. Olson

 

Dykema Gossett PLLC

 

Attorneys for Plaintiff-Appellant

 

CERTIFICATE OF SERVICE

 

 

[65] Karen Martin, an employee of Dykema Gossett PLLC, being first duly sworn, deposes and says that on May 20, 2003, she served a copy of a Proof Reply Brief Of Plaintiff-Appellant Ammex, Inc., Certificate Of Compliance, Proof Reply Brief Of Plaintiff-Appellant, Ammex, Inc. -- F.R.A.P 28(f) Addendum and this Certificate Of Service via Federal Express to:
Stephen T. Lyons, Esq.

 

U.S. Department of Justice

 

Tax Division

 

Ben Franklin Station

 

555 4th Street N.W., Room 7818

 

Washington, DC 20001

 

 

Judith A. Hagley, Esq.

 

Tax Division

 

Department of Justice

 

601 D St. NW, Room 7426

 

Washington, DC 20004

 

[66] I declare that the statements above are true to the best of my information, knowledge, and belief.
Karen Martin

 

ADDENDUM OF STATUTES AND REGULATIONS

 

 

A. The Statutes and Regulations cited are contained in the Addendum To Opening Brief.

B. St. Joe Title Services, Inc. v. United States, 88 AFTR 2d 2001-5610 -- 2 USTC P50, 598 (2001 W.L. 1022516 (M.D. Fla.)).

FOOTNOTES

 

 

1Unless otherwise indicated all "§" or statutory references are to the Internal Revenue Code in effect in 1999 (26 U.S.C.).

2Ammex also sought recovery under 6416(c) as "an exporter" and the special return payment under § 6421(c), as a person sold gasoline "for export or for resale . . . to a second purchaser for export" under § 4221(a)(2).

3Ammex also alleged legally protected interests under 19 U.S.C. § 1551, et. seq.; and 26 U.S.C. §§ 6416(c); and 6421(c).

4The Government also shied away from discussing three other cases in which non-remitting parties who bore the economic burdens of taxes wrongfully imposed were held to have standing to recover or challenge them. All of the Government's strained distinctions -- in a footnote -- of Sac & Fox Nation v. Pierce, 213 F.3d 566 (10th Cir. 2000), Boston Stock Exchange v. State Taxation Comm'n, 429 U.S. 318 320 n. 3 (1977), and Dominion Nat'l Bank v. Olsen, 771 F.2d 108 (6th Cir. 1985), are on grounds that make no difference here. In those cases, standing was accorded burdened parties other than tax remitters, even absent statutory provisions, such as § 6424(c) and 4221(a)(2), expressly according recovery to non-remitters. See Ammex Opening Brief at 32-34.

5Before 1987, § 4221(a)(2) prohibited all excise taxes on articles sold for export. See former 26 U.S. § 4221(a)(2); P.L. 85-859 (September 2, 1958) § 119. After 1987, when Congress made § 4081 one of the exceptions to § 4221(A)(2), excise taxes imposed on motor fuel were permitted to fall on export sales of motor fuel. See Pub. L. 100-203, § 10502(d)(4).

6The IRS Notice declared export sales "non-taxable" on constitutional gounds:

 

(A) . . . Section 4121 imposes a tax on the producer's sale of coal from mines in the United States. Under the Export Clause of the United States Constitution, art. 1, §9, cl. 5, this tax does not apply to the producer's sale of coal if (1) the coal was in the stream of export when sold by the producer and (2) the coal is actually exported. See A.G. Spalding & Bros. v. Edwards, 262 U.S. 66 (1923)9 II-1 C.B. 263, United States v. IBM, 517 U.S. 843 (1996), 1996-2 C.B. 163, and Ranger Fuel Corp. v. United States, 33 F. Supp. 2d 466 (E.D. Va. 1998).

 

7It does not contest Article III jurisdiction over these claims.

8See also Atchison, T. & S.F.R. Co. v. O'Connor, 223 U.S. 280, 287 (1912):

 

The other question is whether the defendant is liable to the suit. The defendant collected the money, and it is alleged that he still has it. . . . If he had no right, as he had not, to collect the money, his doing so in the name of the state cannot protect him. (Citations omitted.)

 

223 U.S. at 287.

919 U.S.C. § 1555(b)(3)(A); 19 C.F.R. § 19.35(d).

10IBM's business machines shipped to its foreign subsidiaries were "exported" within the meaning of the Export Clause, although IBM certainly had no legal duty to export them, Id. at 845-46.

11The Supreme Court has ruled explicitly that Import/Export Clause analysis does not control Export Clause analysis. IBM, supra, 517 U.S. 843, 859.

12In Spang Industries, Inc. v. United States, 791 F.2d 906, 913 (Fed. Cir. 1986) ("revenue ruling is entitled to some weight . . . but does not have the same force as a regulation."); Dominion Resources, Inc. v. United States, 219 F.3d 359, 366 (4th Cir. 2000) revenue rulings entitled to considerably less deference than . . . regulations."); Bankers Life & Cas. Co. v. United States, 142 F.3d 973, 978 (7th Cir. 1998) ("IRS does not follow notice and comment procedures for revenue rulings. Revenue rulings . . . contain the IRS's interpretation of how the law applies to a set of hypothetical facts. Revenue rulings do not have broad application like regulations . . . Revenue rulings receive the lowest degree of deference--"); First Chicago NBD Corp. v. Commissioner, 135 F.3d 457 459 (7th Cir. 1998) ("revenue rulings "not entitled to Chevron deference."); Kosow v. Commissioner (Estate of Kosow), 45 F.3d 1524, 1529 (11th Cir. 1995) ("An IRS ruling is not the product of notice and comment procedures, but is merely an opinion of an IRS attorney.")

13Although Ammex disagrees with the Court of Federal Claims regarding standing to recover a tax that violates the Export Clause, that Court correctly ruled on the inapplicability of Revenue Ruling 69-150 as follows:

 

While those rulings [69-150] may otherwise have proper application, they are clearly inapplicable to a sterile duty-free enterprise.
. . .

 

 

[g]asoline and diesel fuel sold by a duty-free store logically will be sold to individuals, that is, it will be delivered into the fuel tanks of motor vehicles, and not into storage containers of large transport vessels intended for wholesale or bulk quantities. Therefore, under the peculiar circumstance of the duty-free store, the IRS ruling letters are inapposite inasmuch as they do not contemplate the duty-free enterprise scenario.

 

Ammex v United States, 52 Fed. Cl. 303, 311-312 (2002).

14Thus. a more reasonable alternative would be to read the Treas. Reg. 48.0-2(a)(9) definition of exporter to apply only in situations in which a bill of lading actually is issued.

 

END OF FOOTNOTES
DOCUMENT ATTRIBUTES
  • Case Name
    AMMEX, INC., Plaintiff-Appellant, v. UNITED STATES and INTERNAL REVENUE SERVICE, Defendants-Appellees.
  • Court
    United States Court of Appeals for the Sixth Circuit
  • Docket
    No. 02-2375
  • Authors
    John, Craig L.
    Sutton, Mark H.
    Olson, Christopher S.
  • Institutional Authors
    Dykema Gossett PLLC
  • Cross-Reference
    Ammex Inc. v. United States, No. 99-338T; No. 99-778T (10 Apr

    2002) (For a summary, see Tax Notes, May 13, 2002, p. 1020; for

    the full text, see Doc 2002-8861 (24 original pages) [PDF], or

    2002 TNT 88-24 Database 'Tax Notes Today 2002', View '(Number'.)

    Ammex Inc. v. United States, No. 99-338T; No. 99-778T (20 May

    2002)(For a summary, see Tax Notes, May 27, 2002, p. 1338; for

    the full text, see Doc 2002-12270 (9 original pages) [PDF], or

    2002 TNT 99-9 Database 'Tax Notes Today 2002', View '(Number'.)
  • Code Sections
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2003-16829 (50 original pages)
  • Tax Analysts Electronic Citation
    2003 TNT 167-21
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