Appeal from a judgment of the United States District Court for the Southern District of New York, Motley, Chief Judge, dismissing the complaint in two consolidated actions brought by appellant for refund of certain highway use taxes applied to utility trucks equipped to tow heavy trailers. Affirmed.
Before PIERCE, WINTER, and DAVIS,*fn* Circuit Judges.
The Consolidated Edison Company of New York (Con Ed) appeals from a judgment of the United States District Court for the Southern District of New York, Motley, Chief Judge, dismissing its complaints in two taxable years from July 1, 1972 through June 30, 1977 and July 1, 1979 through June 30, 1982. The district court ruled that sections 4481 and 4482 of the Internal Revenue Code (I.R.C.), 26 U.S.C. §§ 4481, 4482, permit the Internal Revenue Service (IRS) to tax Con Ed's utility trucks as truck-trailer combinations, for federal highway use tax purposes, merely because the trucks are equipped with pintle hooks capable of attachment to heavy trailers.*fn1 Con Ed contends that its trucks pull heavy trailers only during emergencies and that it was entitled to a factual determination by the IRS as to whether heavy trailers are "customarily used" with its trucks. 84 Civ. 1167 (April 9, 1985).
Con Ed argues that the classification of a vehicle as a truck-trailer combination merely because the vehicle is "equipped for use" in combination with heavyweight trailers, without a factual determination as to "customary use," is inconsistent with I.R.C. §§ 4481 and 4482. However, the Highway Revenue Act of 1956, Pub. L. 84-627, 70 Stat. 374, expressly delegated broad authority to the Treasury Department to prescribe "formulas or other methods for determining the taxable gross weight of vehicles by classes, specifications or otherwise." I.R.C. § 4482(b). Congress envisioned and approved of the IRS's determining "taxable gross weight" by reference to the vehicle and any trailer that the vehicle is "equipped" to pull, "whether or not [the trailer is] so used in connection with a particular vehicle with respect to which the tax is imposed." S. Rep. No. 2054, 84th Cong., 2d Sess. 8, reprinted in 1956-2 C.B. 1308, 1313; H.R. Rep. No. 2022, 84th Cong., 2d Sess. 43, reprinted in 1956 C.B. 1285, 1290. Further, the adoption by the Commissioner of Internal Revenue (Commissioner) of the "equipped for use" standard pursuant to a 1956 regulation,T.D. 6216 § 41.4482(b)-1(c), 1956 C.B. 895, 902, shortly after Congress enacted the Highway Revenue Act of 1956, constitutes a "substantially contemporaneous construction of the statute" and is therefore entitled to particular weight. See National Muffler Dealers Ass'n. v. United States, 440 U.S. 472, 477, 59 L. Ed. 2d 519, 99 S. Ct. 1304 (1979). Since the 1956 promulgation of the "equipped for use" regulation, the Commissioner has made clear that utility trucks equipped to pull lightweight trailers are taxed as single units, see Revenue Ruling 57-547, 1957-2 C.B. 789, while those equipped to pull heavyweight trailers are more highly taxed as truck-trailer combinations, see Revenue Ruling 76-294, 1976-2 C.B. 364. Under this lightweight-heavyweight distinction, the IRS will classify a utility truck that is equipped to pull a lightweight trailer as a single unit, even though the truck may often pull that trailer; the utility company thereby enjoys some non-assessed highway use benefit. Conversely, the IRS will classify a utility truck that is equipped to pull a heavyweight trailer as a truck-trailer combination, even though the truck may pull such a trailer only infrequently; the utility company thereby endures some over-assessed highway use liability. In our view, this distinction is not "unreasonable" or "plainly inconsistent" with the broad authority that Congress delegated to the Treasury Department for the calculation of taxable gross weight under I.R.C. § 4482(b). Cf. Fulman v. United States, 434 U.S. 528, 55 L. Ed. 2d 1, 98 S. Ct. 841 (1978). It is evident to us that Congress wanted the Commissioner to be free to devise administratively efficient means of rationally and approximately correlating tax liability with estimated highway use. Congress understood that an exact determination of the extent of a taxpayer's use of our national highways could not be undertaken. The lightweight-heavyweight distinction is not an unreasonable method of administering a tax that strives to approximately correlate liability with use.*fn2
Con Ed also argues that the Commissioner abused his discretion under I.R.C. § 7805(B) in applyingRevenue Ruling 76-294 retroactively to its 1972 through 1976 taxes. We disagree.Revenue Ruling 76-294 does not modify the tax law as it had existed in 1972. First, the lightweight-heavyweight distinction had already been presaged by the 1957 Revenue Ruling, supra, which by expressly premising single unit treatment on the fact that the utility truck's trailer was lightweight thereby effectively put utility companies on notice that heavyweight trailers might well be treated as truck-trailer combinations. Second, during the interim between the IRS Revenue Rulings of 1957 and 1976, supra, both of which involved utility trucks, the IRS applied the lightweight-heavyweight distinction in cases that involved other vehicles and that preceded Con Ed's 1972-77 tax payments. See, e.g., Revenue Ruling 72-109, 1972-2 C.B. 351 (dump trucks equipped to tow lightweight trailers are "single unit" vehicles, but those equipped to tow "pup" or similar heavier trailers are "equipped for use in combination").*fn3 Thus, the 1976 Revenue Rule was merely declarative of an evolving body of law relating to the highway use tax, and its application to Con Ed was not unwarranted. Cf. Dunn v. United States, 468 F. Supp. 991, 995 (S.D.N.Y. 1979). Finally, even if the 1976 ruling could be construed as some discernible modification of the tax law, such modification would still properly apply to Con Ed's 1972-76 taxes, given the Commissioner's broad authority to apply correct rulings retroactively. Cf. Dickman v. Commissioner, 465 U.S. 330, 104 S. Ct. 1086, 1094, 79 L. Ed. 2d 343 (1984), reh'g. denied, 466 U.S. 945, 104 S. Ct. 1932, 80 L. Ed. 2d 477; Dixon v. United States, 381 U.S. 68, 75-80, 14 L. Ed. 2d 223, 85 S. Ct. 1301 (1965).