Prime sues IRS for $11 million over excise tax paid on reefer diesel
Prime Inc. wants $11 million back from the IRS, and the argument it is making in federal court is one a lot smaller refrigerated carriers could borrow.
The Springfield, Missouri carrier runs about 9,000 trucks and ranks among the largest refrigerated fleets in the country. Its complaint turns on a fact every reefer operator already knows. A refrigerated load burns diesel twice. One burn moves the truck down the road. The other runs the reefer unit on the trailer that keeps the freight cold, and that fuel does nothing to push the truck anywhere.
Federal fuel excise tax is built to fund highways, so the diesel that never touches the highway has a credit claim behind it. Prime says it overpaid on the reefer portion and wants the money back. The IRS so far disagrees.
Why it matters past Prime: the distinction between propulsion diesel and reefer diesel is the same on a 12-truck produce hauler as it is on a 9,000-truck fleet. If Prime wins, the refund math scales down to anyone running refrigerated freight who has been paying excise tax on both burns. Worth checking your own filings before the case resolves.
Diesel stays
A Transport Topics survey of large and midsize for-hire carriers landed where most of the industry already sits. Diesel remains the fuel of choice well into the future, and the carriers said so plainly.
The backdrop helps explain the confidence. Federal and state greenhouse gas rules and EV mandates have been rolled back over the past year, which takes pressure off fleets to plan around electric. The exception is NOx. Stricter nitrogen oxide limits are still set for 2027, so the engine cost story is not finished even if the fuel question looks settled.
Diesel pricing did not sit still. Prices climbed during the U.S. military conflict with Iran, which is the kind of move that hits fuel surcharges before it hits anything else on a carrier's P&L.
Around the world
Prices moved in different directions depending on where you fuel. VOCM reported gas and diesel jumping overnight in its market. Taiwan's CPC said it will cut domestic gasoline and diesel next week. Pakistan held petrol and diesel flat for the coming week.
Business Insider Africa published its June ranking of the 10 African countries paying the most for diesel, a reminder that the spread between the cheapest and priciest pumps stays wide.
What to watch
Watch the IRS response in the Prime case and whether the court treats reefer diesel as off-highway use. A ruling for Prime opens a refund path for smaller refrigerated carriers. And keep an eye on diesel if the Iran situation flares again, since the surcharge follows the crude.