American Power LLC



On September 17, 2018, the Department issued an assessment to the Taxpayer for weight distance tax, penalty, interest, and underreporting penalty. On September 25, 2018, the Taxpayer submitted a letter of protest with support for the grounds of the protest. On March 6, 2019, the Department filed a motion for a summary judgement with the deadline for the Taxpayer to respond by March 21, 2019. As there was no response from the Taxpayer, and there was no dispute of the material facts of the case, the Hearing Officer granted the request to submit a summary judgement in the case. The key issue in the protest was whether the Department could abate penalty and interest when the contractor the Taxpayer used to report the International Fuel Tax Agreement (IFTA) returns failed to report the mileage. The Taxpayer later paid the tax but argued that the penalty should be abated because its contractor, SWX Cleveland, LLC, filed fraudulent returns. The Department did not dispute this and based on the evidence provided agreed to abate the civil penalty portion of the assessment shortly after receiving the protest. The underreporting portion of the penalty, though, was not abated. In reviewing the request for abatement the Hearing Officer noted that under statute civil penalty may be abated by “a mistake of law made in good faith and on reasonable grounds,” but that underreporting penalty does not have this same provision. The statute governing underreporting penalty does not require negligence on the part of the Taxpayer, only that the mileage has not been reported properly. It allows for abatement only if the Department has acted “incorrectly, erroneously, or illegally.” Since this was not the case, ultimately the Hearing Officer found that there was nothing in statute that would allow for the abatement of this portion of the penalty. This having been decided, the Hearing Officer ordered that the underreporting penalty be paid and the protest was denied.