Medical Transportation Management Corporation v. Commissioner

127 T.C. No. 7
CourtUnited States Tax Court
DecidedSeptember 19, 2006
Docket10699-04, 10700-04
StatusUnknown

This text of 127 T.C. No. 7 (Medical Transportation Management Corporation v. Commissioner) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Medical Transportation Management Corporation v. Commissioner, 127 T.C. No. 7 (tax 2006).

Opinion

127 T.C. No. 7

UNITED STATES TAX COURT

MEDICAL TRANSPORTATION MANAGEMENT CORPORATION, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

ZUNI TRANSPORTATION, INC., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 10699-04, 10700-04. Filed September 19, 2006.

Ps operated paratransit services during the taxable years in question. Ps used sedans and vans to provide transportation to their clients. Ps’ service was exclusively provided to disabled persons. The routes Ps’ drivers traveled were determined with respect to daily manifests generated every evening that accommodated the transportation needs of their clients. Ps claimed a credit under sec. 34, I.R.C., for gasoline taxes paid under sec. 4081, I.R.C. R asserted deficiencies denying them the sec. 34, I.R.C. credit. R denied the credit because according to R’s notice of deficiency, Ps’ service did not meet the requirements under sec. 6421, I.R.C., which sec. 34, I.R.C. cross- references. In order to qualify for the credit, Ps must demonstrate under sec. 6421, I.R.C., that (1) Ps provided transportation in an “automobile bus”, (2) Ps’ transportation was available to the general public, and (3) Ps’ transportation was scheduled along regular routes. - 2 -

Held: Ps fail to meet the requirements under section 6421, I.R.C. Ps’ sedans do not qualify as a “bus”. Even though Ps’ vans may potentially qualify, Ps were unable to produce any evidence that quantifies how many gallons of gasoline are attributable to each type of vehicle.

Held, further, Ps’ service was not scheduled along regular routes.

Jose A. Saavedra, for petitioners.

Justin L. Campolieta, for respondent.

OPINION

GOEKE, Judge: Respondent determined the following

deficiencies in petitioners’ Federal income tax:

Medical Transportation Management Corp. - docket No. 10699-04

Year Deficiency

1998 $58,673 1999 62,000

Zuni Transportation, Inc. - docket No. 10700-04

1998 $32,758 1999 21,852 - 3 -

The issue in this case is petitioners’ entitlement to an

income tax credit under section 34(a)(2) for gasoline excise tax

refundable with respect to certain uses under section 6421.1 We

hold that petitioners are not entitled to the credit.

Background

Petitioners are for-profit Florida corporations with their

principal places of business and mailing addresses in Miami,

Florida, at the time their petitions were filed. During the 1998

and 1999 taxable years, petitioners provided paratransit services

for the physically and mentally disabled within Miami-Dade

County, Florida, and portions of southern Broward County,

Florida. The services petitioners provided were in fulfillment

of their duties under a contract with Cosmis Mobility Services,

Inc. (Cosmis). Cosmis is the transportation services broker for

Miami-Dade County. Cosmis was under contract with the Metro-Dade

Transit Authority (Transit Authority) to obtain transportation

for the physically and mentally disabled to meet the requirements

of the Americans With Disabilities Act of 1990 (ADA), Pub. L.

101-336, 104 Stat. 327. Petitioners had no contractual

relationship with the Transit Authority.

Petitioners provided paratransit services exclusively

through the use of vans and sedans with seating capacities of

1 Unless otherwise indicated, all section references are to the Internal Revenue Code, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 4 -

fewer than 20 adults, including the driver. Petitioners provided

no evidence which permits the allocation of their gasoline usage

between sedans and vans.

Petitioners’ paratransit services were only available to

members of the general public who were certified as disabled

under the ADA. The vast majority of petitioners’ passengers were

individuals requiring transportation within Miami-Dade County.

Disabled passengers requiring paratransit services within

Miami-Dade County could either make a reservation or set up a

subscription. A reservation entailed a one-time ride between two

points. Passengers were required to place the reservation at

least 24 hours in advance, as well as designate the pickup and

dropoff locations, and request a date and time for travel. A

subscription service was available if the same trip was taken at

the same day and time, at least once a week, week after week.

For example, an individual who worked at a particular site for

set days and times would obtain a subscription to be picked up

and dropped off at the worksite, and picked up and dropped off at

home, for the days of the week he or she selected, for the weeks

he or she selected. Once a subscription was in place, it was no

longer necessary for passengers to phone ahead and reserve

transportation. Subscription service riders were also initially

required to designate the initial pickup and dropoff locations

and times. On any given day of travel, petitioners might have - 5 -

been required to provide “on-demand service” to passengers who

were not listed in the original manifest but for medical reasons

required immediate transportation.

Prior to each day’s operation, Cosmis would obtain the

necessary pickup information for each prospective passenger.

Petitioners’ contract with Cosmis required that petitioners

maintain a listing of every trip dispatched and delivered.

Cosmis would schedule these rides at least the night before the

ride and download the information to petitioners before the

travel day. The information was set out in a daily travel

manifest containing the specified schedule to be followed and

used exclusively for that specific day. A new daily manifest was

generated for each new travel day. Typical daily manifests would

contain both reservation and subscription passengers. For each

travel day, the daily manifest would contain the specific

locations and times of the pickups and dropoffs. The information

on daily manifests was subject to change from day-to-day based on

daily passenger reservations and subscriptions. A daily manifest

might or might not have included a stop that had been included on

a previous or subsequent daily manifest. The specific routes

traveled and schedules followed by petitioners’ sedans and vans

were derived from passenger subscriptions and daily reservations.

The manifests did not contain the specific routes to be followed;

the manifests only listed the names of the passengers and the - 6 -

times and locations of passengers’ pickups and dropoffs. The

drivers of the paratransit vehicles were not required to follow

any particular route in servicing a run.

For the 1998 and 1999 taxable years, petitioner Medical

Transportation Management Corp. (MTMC) claimed income tax credits

of $58,673 and $62,000, respectively, for excise taxes it paid on

gasoline. For the same taxable years, petitioner Zuni

Transportation, Inc. (Zuni), claimed income tax credits of

$32,758 and $21,852, respectively. On March 25, 2004, respondent

timely mailed separate notices of deficiency denying petitioners

the entire gasoline credit amount, and provided the following

identical explanation:

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