Article Summary
Prime Inc. sued the IRS for $11 million in denied tax refunds for diesel used in refrigerated trailers.
- Tax code allows fuel tax credits for diesel purchased for off-highway, nontaxable business uses
- Prime seeks a judgment of $11,016,644 plus litigation costs, interest, and expenses in the U.S. District Court for the Western District of Missouri
Prime Inc. (CCJ Top 250, No. 15) is suing the Internal Revenue Service for more than $11 million that the carrier claims it is owed in tax refunds for diesel fuel purchased for off-highway, nontaxable business use.
The company, which owns more than 13,000 trailers according to CCJ Top 250 data, said in its lawsuit that the IRS has denied a claim for refunds of diesel fuel taxes from fuel used to power the fleet’s refrigeration units on trailers for the period of March 31, 2018, through Dec. 18, 2020.
“These claims were denied administratively by the IRS by letter dated June 18, 2024, and subsequently denied by the IRS Office of Appeals by letter received by Prime on June 11, 2026,” the company said in its complaint filed in the U.S. District Court for the Western District of Missouri.
Prime also claims that it filed a claim for a refund of taxes on fuel bought and used in Prime’s trailers in 2021 on Sept. 12, 2025. “Prime has not received any refund for 2021, nor has it received a notice from the IRS indicating that its refund claim for 2021 has been disallowed,” the lawsuit added.
Tax code allows for credits for the fuel tax on the purchase of diesel and some other fuels used in off-highway and other nontaxable uses. The purchaser of the fuel is then entitled to receive a tax credit or payment for the amount of tax paid on the fuel.
During the period outlined by Prime, the company said its use of diesel fuel to operate the reefer units on its trailers “is an off-highway, nontaxable business use,” according to the court filing. The company's independent contractors and employee drivers use a company-issued credit card at the pump to purchase the fuel for reefer units, separate from fuel purchased for the trucks.
“As the holder of the credit card, Prime is ultimately responsible for the charges thereon, including the fuel excise imposed upon the purchase price of the diesel,” Prime said in the lawsuit.
Mike Hosted, vice president at trucking business services firm ATBS -- co-producer of Overdrive’s Partners in Business manual for owner-operators -- said his firm routinely works with all manner of owner-operator clients to file Form 4136, Credit for Federal Tax Paid on Fuels, to obtain a tax credit for fuel purchased for reefer units and auxiliary power units (APUs).
A typical credit amount for a single reefer trailer for a tax year ranges between $1,200 and $2,000, he said, $200-$500 for diesel used in an APU.
Prime in its lawsuit is seeking a judgement of $11,016,644, plus litigation costs and expenses, and prejudgment and post-judgment interest.
