Eversheds Sutherland Successfully Defends Fitzgerald Truck Parts and Sales in $400M Excise Tax Suit against IRS 

Eversheds Sutherland is pleased to share that it successfully represented Fitzgerald Truck Parts and Sales, LLC (Fitzgerald) against claims by the Internal Revenue Service (IRS) on the treatment of repaired highway trucks sales in a suit to recover $400 million in federal excise taxes.

On Friday, July 14, a jury returned a verdict in favor of the plaintiff Fitzgerald in a case involving over $400 million in excise taxes, penalties and interest that the IRS claimed were owed by the company. Fitzgerald filed tax refund suits in 2019 and 2020 against the United States for a refund of excise taxes paid for the years 2012 through 2017. The government file a counterclaim for additional taxes, penalties and interest that the IRS asserted were owed. A one-week jury trial was held in the United States District Court for the Middle District of Tennessee (Northeastern Division), in Cookeville, Tennessee.  

The IRS claimed that Fitzgerald owed excise taxes, penalties and interest on over 12,000 worn or wrecked highway tractors that the company repaired and sold to small businesses. Big-rig highway tractors are subject to a 12 percent excise tax when they are manufactured, but a safe harbor statute allows significant repairs to be made to highway trucks that need major repairs without incurring additional excise taxes. If the safe harbor is met, then no excise taxes are owed.  

In a May 2, 2023 opinion, the court rejected the government’s primary contentions and ruled that the jury would decide whether Fitzgerald had met the safe harbor. On July 14, the jury found that every worn or wrecked tractor that Fitzgerald repaired met the safe harbor and that the IRS was wrong to have imposed any excise taxes. Fitzgerald also asserted a claim for estoppel based on the fact that the IRS had repeatedly audited the business since 1991 and had consistently found that it met the safe harbor rule, but that claim was not reached by the jury because it found that Fitzgerald met the safe harbor. 

Fitzgerald was represented by Eversheds Sutherland Senior Counsel Kendall C. Jones, Associate Zachariah W. Lindsey and Paralegal Jaime Lane, and was assisted by local counsel Grace Fox with Sims Funk.

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