A tax bill that the U.S. government claims is owed by Fitzgerald Glider Kits has ballooned to $83 million as the company continues to dispute the original charges.
Crossville, Tennessee-based Fitzgerald, one of the country’s largest manufacturers of refurbished highway tractors, took the government to the U.S. District Court for the Middle District of Tennessee in February after being notified it owed more than $64 million in tax assessments spanning three years, from 2012-14.
Fitzgerald argued before the court that because its costs and profits in assembling a glider kit (typically consisting of, among other things, a cab, frame, steering gear, front axle, front wheels and tires) doesn’t exceed 75 percent of the retail price of a new highway tractor, it is entitled to a “safe harbor” exception to a federal 12 percent excise tax imposed on new highway tractors.
The company based that assertion on the results of multiple prior tax audits on Fitzgerald by the U.S. Internal Revenue Service (IRS) beginning in 1991.
“After decades of telling [Fitzgerald] and other taxpayers that gliders can qualify for the safe harbor…in 2014 the IRS decided to target the glider industry, and specifically [Fitzgerald], and reversed its position in secret, without any public announcement,” the company alleged in its complaint. “Rather than revoke or modify those prior rulings and other published guidance which contradict its new position, the IRS waited until 2017 to inform the public of its new position in a nonbinding and cryptic notice.”
Fitzgerald also claimed it had mediated a settlement in October 2016 for the back taxes, but that government officials later withdrew the settlement.
In a response and counterclaim filed with the district court on July 29, however, attorneys with the U.S. Justice Department’s tax division maintained that for most of Fitzgerald’s allegations, the government lacked “information sufficient to form a belief about the truth” of them or denied them outright.
The government also asserted that the amount owed by Fitzgerald had increased to $83,007,547.47 as of February 18, 2019, based on interest accrued since the IRS assessed its tax bill in April 2017. But Fitzgerald claims it is no position to pay the disputed bill because it had not been collecting the excise tax from its customers to cover it.
“The IRS’ assessments for the relevant tax periods represent amounts that [Fitzgerald] never charged to its customers because it reasonably believed (and was induced to believe) that the 75 percent safe harbor math test applied,” the company stated in its complaint.
“Under the circumstances, requiring [Fitzgerald] to pay almost $65 million in excise taxes, penalties and interest would cause [Fitzgerald] to suffer an unconscionable injury and undue hardship.”
When contacted for a response, a lawyer for Fitzgerald cited an opinion filed in the case by district judge Waverly Crenshaw denying previous motions by the government to dismiss Fitzgerald’s complaint.
Many of the glider trucks manufactured by Fitzgerald and its competitors are purchased by smaller carriers and independent owner-operators that can’t afford the cost of a new truck, which can cost up to $200,000 or more.
Fitzgerald had commissioned a study in 2017 with Tennessee Technological University that found glider engines do not pollute any more than modern systems from original equipment manufacturers. However, a government watchdog recently concluded that the U.S Environmental Protection Agency used valid testing procedures in finding that glider kits do pollute more than new trucks.
Michael J Moore
Unreal this is how the leftist IRS targets a company that provides a valuable service to people who want to haul freight! And not have to go spend 200.00
I would contact Trump let him take them on
He has experience
Truckers
I think that the government should be quiet and not shut the glider company’s down cause the new engines are not reliable enough than the old engines
Robert long
Government thiefs …. go figure
Charles Ball
What a way to force an entire industry out of business because Volvo wants people to buy new trucks. (They were the ones who paid the EPA to conduct that study)
Ken weckwerth
Your right Charles, let’s hope after this all plays out Trump will get wind of this and step in and fix this.Right now I don’t think he even knows this shit is going down. I hope he does and not like oboma telling Fitzgerald that can only make 300 units ayear when he was in office,
JEFF ROGERS
Well here is proof that if you work hard for something and build a highly sought after product someone will not like your success. Fitzgerald has built trucks legaly and it works why not bust the people that delete new trucks that is a crime .
David Capetillo
I will buy a truck from you. THEY LOOK GREAT. The engines. Are reliable. What more do you need.
Mark Coffey
Ive been in business as a commercial steel erector and fabricator for 30 years now. We run our own trucks for our own business and have trucks bringing in steel for our jobs on a regular basis. That said, i got in trouble with the IRS over a simple mistake and my reliance on an accountant who was wrong. I run and fought with them for 25 of my 30 years in business. I can only hope Fitzgerald can bear up under such a huge number. Let me tell you, it costs a lot of money to get sideways with the Government. Almost impossible to win. I got out, but it was stressful….for years!
Steven
IRS doesn’t require me as a business owner to collect taxes on my customers and later in time they change their view and they want my business to pay taxes that I never collected….this is one of the biggest IRS bullshit I ever heard in my lifetime.