South Dakota manufacturing company sues IRS over reneged tax exemption
Millions of dollars at stake over tax exemption that was revoked 15 years later
A Mitchell-based manufacturing company is taking the IRS to court after the nation’s federal tax machine reneged on a previous ruling that exempted the company from paying a federal excise tax.
The dispute could cost Trail King Industries 15 years of back taxes on the excise fee, even though the company was given a waiver in 2004.
Trail King manufactures about 40 different types of trailers used in various industries, including construction, agriculture and specialized hauling, such as waste and recycling hauling. One of those trailers is known as an OLB trailer.
In 2003, both Trail King and the IRS sought an opinion from the Office of Associate Chief Counsel on whether the company was liable to pay a federal excise tax applicable to a certain type of industrial trailer. According to the company’s complaint against the IRS, the chief counsel’s office gave Trail King a favorable ruling in 2004, deciding that the OLB trailer was exempt from the excise tax, issuing what’s known as a Technical Advice Memorandum, or TAM, in 2004.
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