Pro Energy, LLC v. United States of America

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No.: 23-cv-21705-JB
PRO ENERGY LLC,
Plaintiff,
v.
UNITED STATES OF AMERICA,
Defendant.
________________________________/
OMNIBUS ORDER ON
CROSS MOTIONS FOR SUMMARY JUDGMENT
THIS 	CAUSE 	comes 	before 	the 	Court 	on 	Defendant 	United 	States 	of
America’s Motion for Summary Judgment (“Government’s Motion”), ECF No. [42],
and accompanying Statement of Material Facts, ECF No. [41], and Plaintiff, Pro
Energy LLC’s Motion for Summary Judgment (“Plaintiff’s Motion”), ECF No. [43],
and accompanying Statement of Material Facts, ECF No. [40]. 	Plaintiff filed a
Response in Opposition to the Government’s Motion, ECF No. [50], and a Response
to the Government’s Statement of Material Facts, ECF No. [49], to which Defendant
replied. 	ECF Nos. [51], [52]. 	Defendant also responded to Plaintiff’s Motion, ECF
No. [48], and to Plaintiff’s Statement of Material Facts, ECF No. [47], to which
Plaintiff replied. ECF Nos. [53], [54]. The Court held oral argument on the Motion
(the “Oral Argument”), ECF No. [66].
On September 17, 2025, the Government filed a Notice of Supplemental
Authority, ECF No. [67]. 	The Court ordered Plaintiff to respond to the Notice, and
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stayed consideration of the Motion pending such response. 	ECF No. [68]. 	Plaintiff
has now filed its response. ECF No. [69].
Upon review of the Motions, the arguments of the parties, the pertinent
portions of the record, and the relevant authorities, and for the reasons stated below,
it is hereby ORDERED AND ADJUDGED that the Government’s Motion is
DENIED, and Plaintiff’s Motion is GRANTED.
I. 	FACTUAL BACKGROUND
The Internal Revenue Code (“IRC”) allows certain taxpayers to recover federal
excise taxes paid for diesel and gasoline fuel sold to customers that are tax-exempt.
See 26 U.S.C. §§ 6416, 6427; see also ECF No. [42] at 1; ECF No. [43] at 5. 	The
scheme, at its core, is simple. Fuel distributors buy fuel in large quantities and pay
the corresponding tax at the time of purchase. When a fuel distributor sells fuel to a
tax-exempt entity, the fuel distributor can file a form 8849 for a refund of the tax they
paid when they purchased the fuel. See ECF No. [42] at 2; see also Pl. Statement of
Material Facts (“Plaintiff’s SOMF” or “ECF No. [43]”), ECF No. [43] at 2. To request
and receive the refund, the fuel distributor must be registered as an “ultimate vendor”
(“UV”) and must procure and maintain proper and unexpired exemption certificates
(“Exemption Certificates”) verifying that the purchaser meets the requirements for
the sale to be tax free (i.e., that the purchaser is, indeed, a tax-exempt entity). See
id.; see also Treas. Reg. § 48.6416(b)(2)-3(b)(1)(i) and (ii) (for gasoline sales); Treas.
Reg. § 48.6427-9(e)(2) (for sales of diesel fuel).
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Plaintiff is a fuel distributor based in Florida that provides energy and fuel-
related services. 	ECF No. [40] ¶2; ECF No. [47] ¶2. 	Plaintiff first applied and
registered with the IRS as an UV in 2006. 	ECF No. [40] ¶6; ECF No. [47] ¶6.
Although the parties do not dispute that Plaintiff was regularly engaged in the
characteristic activity of an UV, ECF No. [40] ¶15; ECF No. [47] ¶15, they do dispute
whether its UV registration for certain tax periods was valid after the IRS cancelled
Plaintiff’s UV registration due to Plaintiff’s failure to communicate with the IRS.
The 	IRS 	cancelled 	Plaintiff’s 	UV 	status 	in 	connection 	with 	Plaintiff’s
application for a different IRS license. On January 10, 2020, Plaintiff applied for an
“M” registration (“M Registration”), which would have allowed Plaintiff to blend
certain fuels for sale. ECF No. [40] ¶7; ECF No. [47] ¶6. According to the IRS’ Case
Level Activity Record, on February 19, 2020, the IRS conducted an initial review of
the 	M 	Registration 	application, 	and 	called 	Chas 	Defelice, 	the 	designated
representative of Pro Energy, to follow up on the application. See generally, ECF No.
[39], (the “Administrative Record”); ECF No. [39-8] at 1. 	According to the IRS’ call
log, Mr. Defelice was out of the country when the IRS called but would be back the
following week. Id. The log indicates the IRS representative called Mr. Defelice again
on February 26, 2020, did not reach him, but left a message. Id. Again, on March 5,
2020, the IRS representative called Mr. Defelice, and was told to call back on Monday,
March 9, 2020. Id. The call log notes that the IRS representative indicated that he
would send a letter. Id.
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Plaintiff denied having received any letter from the IRS in connection with
their request for information. See ECF No. [40] ¶10; ECF No. [47] ¶10. On April 7,
2020, the IRS call log entry read as follows:
4/7-Out of the office from 3/09 – 4/6. Out of the office from 3/11-4/6. As
of today no[ ] response for applicant. Pull Current IDRA they are not in
compliance 2290/ 201107 – 201707 has not filed. Deny this application
the Applicant failed to provide[ ] additional Information from the L 3682
sent on 3/5. Deny, application not in compliance.
ECF No. [39-8] at 1. 	Despite this conclusion from the IRS representative, the
application was given to another IRS representative, William Javier Terron, on April
10, 2020. 	See id. 	(entry on April 10, 2020, indicating “New Application assigned to
W. Terron.”). 	The first entry in Mr. Terron’s Examining Officer’s Activity Record
states that the IRS was now requesting that Plaintiff’s other tax filings be verified.
See ECF No. [39-9] at 1. 	On April 29, 2020, Mr. Terron’s log indicates that he
contacted Plaintiff and left a message requesting to schedule an interview. 	See id.
Plaintiff returned the call and scheduled an interview for May 26, 2020. See id.
On May 26, 2020, Plaintiff requested that the appointment be rescheduled for
another day, noting that it was “the first day for all employees to be back in the office
and they were really busy and disorganized . . . .”1 	Id. 	The parties rescheduled for
May 28, 2020. 	See id. 	On May 28, 2020, Plaintiff explained that they were having
system issues, and asked to reschedule again. 	Id. 	According to the Examining
Officer’s Activity Record, Mr. Terron indicated to Plaintiff that this would be their
“last chance”; that Mr. Terron would “not accommodate them anymore and will move
1 Plaintiff’s office had apparently been closed due to the COVID-19 pandemic.
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the case to closure denying the new application and revoking the one they have.” Id.
Mr. Terron indicates in his log that he contacted Plaintiff on June 29, 2020, July 7,
2020, and July 30, 2020, in attempts to follow up with Plaintiff to determine whether
they would withdraw the application for the M Registration or reschedule the
appointment. See id. at 2.
On August 11, 2020, the examining officers recommended that the IRS deny
the M Registration application and revoke Plaintiff’s UV status on the grounds that
Plaintiff was “not communicating with [the IRS].” 	Id. 	On August 31, 2020, the log
indicates that Mr. Terron called Plaintiff’s office and left a voicemail message
explaining that if they do not return the call within five business days, they will be
denied the M Registration and revoke “the one that they already have,” a reference
the Government contents was to Plaintiff’s existing UV registration. 	Id. at 2. 	On
September 19, 2020, Mr. Terron’s log ends by indicating that Plaintiff has not
responded to any of the IRS communications, that they did respond at first but then
“all [of a] sudden [Plaintiff] stops all communications.” 	Id. 	The case was then
forwarded for final closure. 	Id. 	On September 29, 2020, Mr. Daryl M. Gilliam
reviewed the file and concurred with the decision to deny Plaintiff’s M Registration
and revoke Plaintiff’s UV registration. 	On October 6, 2020, the IRS revoked
Plaintiff’s UV status.
On October 16, 2020, the IRS claims it mailed Plaintiff a letter explaining that
Plaintiff’s 	application 	for 	M 	registration 	was 	denied, 	and 	that 	Plaintiff’s 	UV
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registration had been revoked. ECF No. [41] ¶33; ECF No. [47] ¶¶8–9. The pertinent
portions of the letter read as follows:
You 	failed 	to 	respond 	and/or 	provide 	information 	required 	to
establish you meet the Activity, Adequate Security and Acceptable
Risk Registration Tests as outlined in Treasury Regulation 48.4101.
This includes names and SSN/EIN of all officers, related entities,
partners, etc. Therefore, your Form 637 “UV” Activity Letter has
been revoked.
ECF No. [39-7], ECF No. [41] ¶33; ECF No. [47] ¶¶11–12. 	Despite the language in
the letter, it is undisputed that only the Activity Test and the “satisfactory tax”
portion of the Adequate Security Test are required for UV registrations. 	ECF No.
[40] ¶¶13–14; ECF No. [47] ¶¶13–14. Plaintiff disputes that it received this letter.
Between 2021 and 2022, Plaintiff filed quarterly claims for a refund of excise
taxes by submitting Form 8849 for the following periods: (i) July 1, 2021 to September
30, 2021 (“Q3 2021”); (ii) October 1, 2021 to December 31, 2021 (“Q4 2021”); (iii) April
1, 2022 to July 31, 2022 (“Q2 2022”); and (iv) July 1, 2022 to September 30, 2022 (“Q3
2022”) (the “Quarters at Issue”). ECF No. [47] ¶¶22–26. With each submission, as it
had done before, Plaintiff included Florida state sales tax exemption certificates to
document the exempt sales, also referred to as D-14 forms (“D-14 Forms”). ECF No.
[47] ¶37.2 	Notably, Plaintiff received refunds for certain of the above quarters, but
not for the Quarters at Issue. ECF No. [66] at 6:5–18.3
2 Plaintiff has received refunds for the first two quarters of 2021, the first and fourth
quarters of 2022, the first, third and fourth quarters of 2023, and the first two
quarters of 2024. ECF No. [41] ¶¶27–28; ECF No. [47] ¶¶27–28.
3 	On January 9, 2024, Plaintiff applied for and received a new UV registration
number. 	See ECF No. [40] ¶45; ECF No. [47] ¶45. 	Mr. Terron also participated in
the review of this application. ECF No. [40] ¶33; ECF No. [47] ¶33.
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According to Plaintiff, it first learned that its UV registration was revoked
when it failed to receive refunds for the Quarters at Issue. See ECF No. [66] at 5:23–
6:4. Plaintiff reached out to the Taxpayer Advocate Service and then-Senator Marco
Rubio’s office to find out why they were not being paid for the Quarters at Issue, and
discovered that their UV registration had been revoked. 	Id. at 6:1–4. 	Plaintiff
promptly reapplied for the UV registration and, using the same D-14 certificates as
before, was approved with a new UV registration on January 24, 2024. Id. at 7:2–19.
II. 	THE INSTANT MOTIONS
Plaintiff filed a single count Complaint on May 5, 2023, for a refund of taxes
under 26 U.S.C. § 7422. The parties have now cross-moved for summary judgment.
Defendant 	argues 	that 	the 	Court 	should 	grant 	summary 	judgment 	in 	the
Government’s favor because (1) Plaintiff is not entitled to the refund because it lacked
a UV registration for the Quarters at Issue; and that in any event, (2) Plaintiff failed
to maintain regulatory compliant Exemption Certificates from its tax-exempt buyers.
First, the Government argues that Plaintiff lacked a UV registration for the Quarters
at Issue because Plaintiff’s UV registration had been properly revoked in October
2020 for Plaintiff’s failure to respond to IRS communications. See ECF No. [42] at 3–
14. The Government also argues that notwithstanding its UV certification, Plaintiff
is not entitled to the refund for the Quarters at Issue because: (i) Plaintiff failed to
maintain the required Exemption Certificates, and (ii) Plaintiff cannot rely on the D-
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14 forms because they do not comply with the substantive requirements of the
Exemption Certificates for gasoline and diesel fuel sales. See ECF No. [42] at 15–20.
Plaintiff argues that the Court should grant summary judgment in its favor
because the revocation of Plaintiff’s UV registration was arbitrary and capricious
given that: (1) there is insufficient evidence to demonstrate that the letter was mailed
to Pro Energy, (2) the IRS violated its own regulations when it post-marked the
revocation letter as of October 16, 2020, but included the effective date as of October
6, 2020, and (3) the basis on which the IRS revoked Plaintiff’s UV status violated its
own regulations because it listed an incorrect standard for UV registrations.4 	See
ECF No. [43]. In response to Defendant’s alternative argument, Plaintiff argues that
the regulation requiring Exemption Certificates are not entitled to deference under
Loper Bright, and do not bar Pro Energy’s refund claim because it is common practice
for tax-payers in Florida to use the D-14 forms provided in place of the relevant
Exemption 	Certificates, 	and 	that 	such 	forms 	substantially 	comply 	with 	the
regulation. See ECF No. [40] ¶¶36–37; ECF No. [43] at 14–16. Plaintiff also argues
that the regulation requiring Exemption Certificates is invalid for its failure to
adhere 	to 	the 	notice 	and 	comment 	rulemaking 	procedure 	set 	forth 	in 	the
Administrative Procedure Act (“APA”). See ECF No. [43] at 16.
4 Plaintiff also challenges the validity of the regulation that requires the exemption
certificates under the Administrative Procedure Act.
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III. 	LEGAL STANDARD
Summary judgment is proper when there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law. Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986). A genuine issue of material fact is one with “‘a
real basis in the record,’” such that “a reasonable jury could return a verdict for the
nonmoving party.” 	Mann v. Taser Int’l, Inc., 588 F.3d 1291, 1303 (11th Cir. 2009)
(quoting Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 919 (11th Cir. 1993));
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Speculation cannot create
a genuine issue of material fact sufficient to defeat a well-supported motion for
summary judgment. Cordoba v. Dillards, 419 F.3d 1169, 1181 (11th Cir. 2005).
The movant has the initial burden of showing the absence of a genuine issue
of material fact. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). The
movant must support its assertion that there is no genuine dispute as to any material
fact by “citing to particular parts of materials in the record, including depositions,
documents, electronically stored information, affidavits or declarations, stipulations
(including those made for purposes of the motion only), admissions, interrogatory
answers, or other materials. 	Fed. R. Civ. P. 56(c)(1)(A). 	To determine whether the
movant satisfied this burden, courts view the movant’s evidence and all factual
inferences arising therefrom in the light most favorable to the non-movant. Denney
v. City of Albany, 247 F.3d 1172, 1181 (11th Cir. 2001) (quoting Burton v. City of Belle
Glade, 178 F.3d 1175, 1187 (11th Cir. 1999)). As to issues on which the non-moving
party would bear the burden of proof at trial, it is sufficient for the movant to
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highlight a failure of proof concerning an essential element of the non-movant’s case.
Celotex, 477 U.S. at 322–23.
Once the movant carries its burden, the non-movant must offer specific
evidence showing a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986). 	“If reasonable minds could differ on the
inferences 	arising 	from 	undisputed 	facts, 	then 	a 	court 	should 	deny 	summary
judgment.” 	Miranda v. B & B Cash Grocery Store, Inc., 975 F.2d 1518, 1534 (11th
Cir. 1992). 	If the record, taken as a whole, could not lead a rational trier of fact to
find for the non-movant, there is no genuine issue for trial, and summary judgment
is proper. Matsushita, 475 U.S. at 587.
“The standard of review for cross-motions for summary judgment does not
differ from the standard applied when only one party filed a motion” Torres v. Rock
River Food Inc., 244 F. Supp. 3d 1320, 1327 (S.D. Fla. 2016) (citing Am. Bankers Inc.
Grp. V. United States, 408 F.3d 1328, 1331 (11th Cir. 2005)). The Court reviews each
individual motion on its own merits, taking the facts on each motion in the light most
favorable to the respective nonmovant. See Adega v. State Farm Fire & Cas. Ins. Co.,
No. 07-cv-20696, 2009 WL 3387689, at *3 (S.D. Fla. Oct. 16, 2009). Cross-motions for
summary judgment do not, in themselves, warrant a court in granting summary
judgment “unless one of the parties is entitled to judgment as a matter of law on facts
that are not genuinely disputed.” Purcell v. City of Fort Lauderdale, 753 F. Supp. 3d
1308, 1324 (S.D. Fla. 2024) (quoting United States v. Oakley, 744 F.2d 1553, 1555
(11th Cir. 1984)).
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IV. 	ANALYSIS
A. The 	Revocation 	of 	Plaintiff’s 	UV 	Status 	Was 	Arbitrary 	and
Capricious.
This Court reviews the agency’s decision to revoke Plaintiff’s UV status for
“abuse of discretion” and may set aside such decision if it is found to be “arbitrary,
capricious, or an abuse of discretion[.]” 5 U.S.C. § 706(2)(A). 	Under this review, a
court is not generally empowered to conduct a de novo review of the matter but must
review the agency’s decision based on the record the agency presents to the reviewing
court. 	See Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743–44 (1985) (citing to
Camp v. Pitts, 411 U.S. 138, 142 (1973)).5
Section 48.4101-1 of the Treasury Regulations allows the IRS to revoke or
suspend the UV registration of any registrant “if the district director determines that
the registrant, at any time . . . does not meet one or more of the applicable registration
tests under paragraph (f) of this section and has not corrected the deficiency within a
reasonable period of time after notification by the district director.” 	Treas. Reg. §
48.4101-1(i)(1)(i). The same section also states that if the IRS revokes or suspends a
UV registration, it “must notify the registrant in writing and state the basis for the
revocation and suspension . . . [and] [t]he effective date of the revocation or
suspension may not be earlier than the date on which the district director notifies the
registrant.” Treas. Reg. § 48.4101-1(i)(3).
5 The parties do not dispute that the review of the UV revocation should be set aside
only if it is “arbitrary, capricious or an abuse of discretion.” See ECF No. [42] at 8–9,
and ECF No. [43] at 7.
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Defendant argues that the revocation of Plaintiff’s UV registration was proper
because the agency mailed a revocation letter to Plaintiff in accordance with the
relevant IRC regulations. 	See ECF No. [43] at 6. 	Plaintiff challenges both (i) the
letter itself, arguing that the letter was not mailed and did not comply with the IRC
regulations such that it should be set aside as arbitrary and capricious, and (ii) the
basis on which the IRS issued the revocation of its UV status. For the reasons below,
although the Government has shown the letter was sent and its inaccuracies do not
rise to arbitrary and capricious, the Court agrees that the revocation of Plaintiff’s UV
status should still be set aside as arbitrary and capricious.
i. 	The Revocation Letter Is Deemed Mailed.
First, the Court considers whether the letter advising Plaintiff of the UV
revocation was mailed. In its Motion, Plaintiff argues that the letter was not mailed
to Plaintiff, depriving it of fundamental due process rights of notice and opportunity
to respond, and that Defendant failed to put forth sufficient evidence to meet its
burden of proving that the revocation letter was mailed. 	ECF No. [43] at 6.
Defendant argues that Plaintiff’s arguments do not rebut the presumption in favor of
the IRS that the letter was mailed. ECF No. [52] at 9.
The IRS bears the burden of proving, by competent and persuasive evidence,
that notice was mailed. See Belagio Fine Jewelry, Inc. v. Comm’r of Internal Revenue,
162 T.C. 243, 246 (2024) (citing to Lander v. Comm’r of Internal Revenue, 154 T.C.
104, 117-118 (March 12, 2020); Coleman v. Comm’r, 94 T.C. 82, 90 (1990); Magazine
v. Commissioner, 89 T.C. 321, 324 (1987); see also August v. Comm’r, 54 T.C. 1535,
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1537 (1970) (detailed evidence of office procedures, which included the steps mail
clerks take when reviewing the notices against the USPS form 3877s, was sufficient
to meet its burden). The Eleventh Circuit has held that “the Government need only
show that it mailed a notice of deficiency; it need not make any showing that a notice
mailed to the taxpayer’s last-known address was actually received by the taxpayer.”
United States v. O’Callaghan, 500 F. App’x. 843, 847 (11th Cir. 2012) (citing United
States v. Dixon, 672 F. Supp. 503, 506 (M.D.Ala.1987), aff’d, 849 F.2d 1478 (11th
Cir.1988)). Testimony regarding specific office procedures for preparing and mailing
notices is sufficient to raise a presumption of a properly mailed document. See Kerr
v. McDonald’s Corp., 427 F.3d 947, 951-52 (11th Cir. 2005). 	Indeed, once the
Government satisfies its burden of proving compliance with its procedures for
mailing, the burden then shifts to the receiving party to rebut that presumption.
O’Callaghan, 	500 	F. 	App’x. 	at 	848 	(“In 	the 	absence 	of 	any 	direct 	evidence
contradicting the Government’s position, the presumption of official regularity
controls.”).
Defendant notes that the letter was mailed during the COVID-19 pandemic,
and 	though 	office 	procedures 	had 	been 	adjusted 	to 	accommodate 	quarantine
restrictions, the agency followed the relevant procedures for mailing letters that was
appropriate for that time. See ECF No. [53-2] at 10–13. During her deposition, the
IRS representative in charge of mailing letters, Felicia Walker, testified to the
COVID-era restrictions and policies. See F. Walker Dep., 9:24–11:22., ECF No. [53-
2]. 	Ms. Walker testified to how she would print, fold, and place the letters into a
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windowed envelope, and take the letters to the mailroom in the building where letters
are processed for posting and mailing by two mailroom employees who, as far as Ms.
Walker was aware, were employed full-time despite the COVID-19 office restrictions.
Id. 	She also explained that because of the COVID-19 in-office restrictions, the date
of the letter would reflect the date that she was authorized to go into the office to mail
the letter. Id.
In its Response to the Government’s Motion, Plaintiff explains its process for
receiving mail at length, arguing that its processes do not allow for such a letter to go
unnoticed or lost. Plaintiff also contends that Ms. Walker’s testimony is not enough
to demonstrate that the revocation letter was mailed because it did not explain how
the letter actually ends up in circulation. ECF No. [50] at 9.
In United States v. Dixon, the Eleventh Circuit upheld the trial court’s finding
that the Government’s submission of a copy of the notice of deficiency addressed to
the taxpayer, and the absence of any other evidence, was sufficient to demonstrate
that the notice was mailed. 	Dixon, 672 F. Supp. at 506. 	“The presumption of
regularity supports the official acts of public officers and, in the absence of clear
evidence to the contrary, courts presume that they have properly discharged their
official duties.” 	Id. at 506–07 (emphasis in original). 	Here, the presumption of
regularity has not been rebutted. 	Indeed, evidence of how the receiving party
processes mail does not rebut the presumption that the IRS followed the IRS’ mailing
process. 	O’Callaghan, 500 F. App’x. at 848. 	Because Plaintiff offers nothing more,
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Plaintiff has not overcome the presumption that the letter was mailed. See Kerr, 427
F.3d at 952.6
ii. 	The 	Discrepancies 	As 	To 	The 	Date 	Of 	The 	Letter 	Are
Harmless And Do Not Invalidate The Letter.
Next, the Court considers whether the discrepancy in the letter’s effective
revocation date invalidates the revocation letter. The letter of revocation was dated
October 16, 2020, but listed the effective date of revocation as October 6, 2020. ECF
No. [39-7]. 	Plaintiff argues that the revocation letter should be set aside since the
letter did not conform to the agency’s own regulation, and that such non-conformity
is, by law, “arbitrary and capricious.” 	See ECF No. [43] at 8–9. 	Defendant argues
that the date the letter was mailed is the controlling date on such notice, not the
listed effective date, and that Plaintiff did not suffer any harm based on the
discrepancies between the date of the letter and the effective date of the revocation
listed therein, because Plaintiff did not appeal the revocation in the nine months
between the mailing of the revocation letter and the filing of its Form 8849s. See ECF
No. [39-7].
Section 4101-1(i)(3) of the Treasury Regulations state that “the effective date
of the revocation or suspension may not be earlier than the date on which the district
6 The Court does not take issue with Plaintiff’s representation that they did not
receive the letter. 	Indeed, when Plaintiff did not receive the regularly received
refunds, Plaintiff made several inquiries to the Tax Advocate Service and to then
Florida Senator Marco Rubio’s office to inquire why they were not receiving the
relevant refunds for the financial quarters at issue. 	See ECF No. [66] at 5:23–6:4.
That said, the issue before the Court is not whether they received the letter, but
whether there is sufficient evidence that it was mailed.
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director notifies the registrant.” Treas. Reg. § 4101-1(i)(3). Here, the revocation letter
sent by Plaintiff contained two dates: a date at the top of the letter and an “effective
date of revocation.” 	See ECF No. [39-7]. 	According to Ms. Walker’s deposition, the
date of the letter reflected the date that she was authorized to go into the office to
mail the letter. 	See F. Walker Dep 9:24–11:22, ECF No. [53-2]. 	Ms. Walker also
explained that the effective date of the IRS revocation letter is automatically
generated once the IRS makes the decision to revoke the registration status. See id.
The Court finds that the discrepancy in the dates is, at most, a procedural error
that does not rise to the level of “abuse of discretion.” Ala. Hosp. Ass’n v. Beasley, 702
F.2d 955, 958 nn. 6, 8 (11th Cir.1983) (“Under the formulation used by most courts,
procedural errors are deemed harmless unless the court has a ‘substantial doubt’ that
the agency would not have reached the result it did.”). 	As a result, the discrepancy
in dates does not rise to abuse of discretion.
iii. 	Defendant’s UV Revocation was Arbitrary and Capricious.
The 	remaining 	issue 	is 	whether 	the 	IRS’s 	revocation 	was 	nevertheless
arbitrary and capricious. For the reasons below, this Court finds that it was.
“An agency’s decision is reasonable “so long as ‘it is not arbitrary, capricious,
or clearly contrary to law.’” Cook v. Wiley, 208 F.3d 1314, 1319 (11th Cir. 2000)
(quoting U.S. Mosaic Tile Co. v. NLRB, 935 F.2d 1249, 1255 (11th Cir. 1991)). Courts
should “set aside [an] agency action” only when it is “arbitrary, capricious, an abuse
of discretion, or otherwise not accordance with law.” 5 U.S.C. § 706(2)(A).
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According to the Administrative Record, ECF No. [39], the revocation of
Plaintiff’s 	UV 	registration 	was 	based 	on 	Plaintiff’s 	lack 	of 	responsiveness 	in
connection with its M registration application. 	See ECF Nos. [39-8] and [39-9].
Indeed, on September 28, 2020, IRS representative Daryl M. Gillam notes the
following:
I have reviewed this file and concur with the decision to deny this ‘M’
application. 	The 	T/P 	has 	failed 	to 	respond 	to 	numerous 	calls 	and
correspondence 	requesting 	information 	regarding 	the 	application
process.
In addition, I concur with the decision to revoke the ‘UV’ Registration. As
above, the Registrant has not responded to numerous attempts to contact
the Agent. The case will now be closed out to the 637 Team for issuance
of both the Denial and Revocation Letters.
ECF No. [39-8] at 1. 	That said, nothing in the record supports the UV revocation.
The only rationale in the Administrative Record is Plaintiff’s failure to respond to the
questions the IRS was posing regarding its M registration—a registration wholly
separate from the UV registration. 	See ECF Nos. [39-7]; [39-8]; [39-9]; and [47] at
15–16. 	As stated above, Section 48.4101-1 of the Treasury Regulations allows the
agency to revoke or suspend the UV registration of any registrant “if the district
director determines that the registrant, at any time . . . does not meet one or more of
the applicable registration tests under paragraph (f) of this section and has not
corrected the deficiency within a reasonable period of time after notification by the
district director.” Treas. Reg. § 48.4101-1(i)(1)(i). At any rate, nothing in the record
suggests that Plaintiffs could not meet the applicable registration tests.
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What the record shows is that the agency included the threat of canceling the
UV registration to try to get Plaintiff to respond to the IRS’s questions with respect
to the M registration. 	See [39-9] at 2. 	In the “one fax, three letters, six phone
conversations and seven voicemails” from the IRS, and according to the agency’s notes
from the Administrative Record, only one voicemail to Plaintiff made a vague
reference to the revocation of “another registration.” 	ECF No. [52] at p.8; see also
ECF Nos. [39-7] and [39-8]. 	The note about the voicemail read: “[c]alled [Plaintiff]
since they have not respond[ed] to any email and or phone message. [IRS] left voice
mail and explained that if they do not contact [IRS] back, [IRS] will deny[sic] the new
application and revoke the one that they already have.” 	ECF No. [39-9] at 2. 	That
one voicemail message did not give Plaintiff notice that its UV registration was being
called into question.
Here, had Plaintiff not filed for an M registration, the IRS would not have
reviewed Plaintiff’s UV registration at all, nor is there anything in the record to
suggest that their UV registration had previously been improvidently granted or
deficient in any way. Nothing in the record suggests that Plaintiff’s UV registration
was being questioned for any deficiency. 	Indeed, when Plaintiff reapplied for its
registration—using the same documents and D-14 certificates as it has always used—
it was again awarded the UV registration. See ECF No. [66] at 7:2-19. In short, the
IRS’ only reason for revoking the UV registration was that Plaintiff was not
responding to questions regarding an entirely different process. 	See Motor Vehicle
Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, (1983)
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(“[A]n agency rule would be arbitrary and capricious if the agency ... offered an
explanation for its decision that runs counter to the evidence before the agency ....”).
Put simply, the IRS threatened the revocation of and then actually revoked the UV
registration because of Plaintiff’s failure to respond to questions regarding its M
application. 	The cancellation had nothing to do with the requirements of the UV
certification.
For these reasons, the Court finds that the revocation of Plaintiff’s UV
registration was arbitrary and capricious.
B. Exemption 	Certificates 	Provided 	by 	Plaintiff 	Substantially
Complied with Requirements.
Doubling down on its decision to deny Plaintiff its refund, Defendant argues
that there is a separate reason to deny Plaintiff’s refund claim as a matter of law—
that Plaintiff did not maintain the relevant exemption certificates from their buyers
under the regulations for both gasoline and diesel fuel, and that the certificates
provided do not meet the requirements set forth in the relevant regulations. See ECF
No. [42] at p.15–16. This, the Government argues, the Court may review de novo. See
id. 	In Plaintiff’s Motion, and in its Response to the Government’s Motion, Plaintiff
argues that the certificates provided by Plaintiff substantially comply with the
relevant 	Exemption 	Certificates, 	and, 	in 	the 	alternative, 	that 	the 	regulation
requiring the Exemption Certificates is invalid for its failure to adhere to the
Administrative Procedure Act’s Notice and Comment Rulemaking. See ECF No. [43]
at 14–20; ECF No. [50] at 18–20.
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According 	to 	the 	Treasury 	Regulations, 	a 	UV 	is 	required 	to 	maintain
certificates that (i) are signed by the ultimate purchaser, (ii) include both the name
and address of the UV and the ultimate purchaser, (iii) describe the what the gasoline
is actually used for or what it will be actually used for, and (iv) contain a statement
that “the ultimate purchaser understands that the ultimate purchaser and any other
party may, for fraudulent use of the certificate, be subject under section 7201 to a fine
of not more than $10,000, or imprisonment for not more than five years, or both,
together with the costs of protection.” See Treas. Reg. § 48.6416(b)(2)-3(b)(l)(ii). For
diesel fuels, Section 48.6427-9(e)(2) of the Treasury Regulations require that an UV
provide a certificate that includes:
A statement that is signed under penalties of perjury by a person with
authority to bind the buyer, is in substantially the same form as the
model certificate provided in paragraph (e)(2)(ii) of this section, and
contains all information necessary to complete such model certificate. A
new 	certificate 	must 	be 	given 	if 	any 	information 	in 	the 	current
certificate changes.
Treas. Reg. § 48.6427-9(e)(2). The same section also notes that the certificate expires
“on the earlier of . . . (A) the date one year after the effective date of the certificate or
(B) the date a new certificate is provided to the seller.” Id.
The D-14 forms provided in connection with refund requests are a Consumer’s
Certificate of Exemption—a state certificate issued by the Florida Department of
Revenue. See ECF Nos. [41-3], [41-4]. 	The Certificates include both the name and
address of the ultimate purchaser and confirm that the entity is exempt from the
payment of Florida sales and use taxes. 	Deposition testimony provided by Chas
DeFelice, the representative of Pro Energy who was in charge of collecting the
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relevant exemption certificates, confirms that the D-14 forms received are the forms
provided by purchasers if and/or when Plaintiff wins a bid for the sale of gas or diesel
fuels to tax exempt entities. 	See C. DeFelice Dep., 89:12–93: 4, ECF No. [41-5]; see
also C. Cruz Dep. 46:1-8, ECF No. [41-6]. DeFelice noted that these certificates are
the only certificates provided by purchasers in Florida and that such certificates have
their own expiry dates because they are provided at the time of an execution of the
bid. See id.
The Court recognizes that the D-14 forms lack the minutiae of the sample form
provided in the diesel regulation and as described in the gasoline regulation. 	See
ECF No. [41-5] at 31. 	Indeed, Plaintiff does not dispute this. 	The D-14 forms that
Plaintiff submitted for the Quarters at Issue are not signed by Plaintiff, do not include
the purpose for which the fuel will be used and, in the case of diesel fuels, are not
identical to the form proposed as a model certificate in the regulation. See ECF Nos.
[41-3], [41-4]. The question, then, is whether the D-14 forms provided substantially
comply with the regulation. This Court finds that they do.
The Eleventh Circuit has recognized the doctrine of substantial compliance as
applied in similar tax requirements. Indeed, although a taxpayer may have failed to
meet literal requirements, the taxpayer substantially complies when the materials
provided comply with the “specific requirements related to the ‘essence’ of the
statutory and regulatory scheme. 	See Tipps v. Commissioner, 74 T.C. 458 (1980)
(finding 	that 	the 	partnerships 	substantially 	complied 	with 	the 	statute 	and
regulations and that petitioners were entitled to the relevant deductions); Columbia
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Iron & Metal v. Commissioner, 61 T.C. 5 (1973) (“[W]e are convinced that the
petitioner has substantially complied with the requirements of both the statute and
the regulation.”); Hewlett-Packard v. Commissioner, 67 T.C. 736 (1977) (finding that
the statement and material provided complied with the applicable regulation and was
legally sufficient to comply with the applicable regulation); see also J.J. Powell, Inc.
v. United States, 125 Fed. Cl. 73 (2016) (“although the government insists that the
dates on these exemption certificates are invalid because they were not signed on the
effective start date of the certificates, the court cannot find any regulatory provision
that is violated by this practice. In sum, the court finds that Powell’s certificates
substantially complied with both IRC § 6416(a)(1) and Treas. Reg. § 48.6416(b)(2)–
3(b)(1)(ii) so as to properly establish plaintiff’s refund claims for gasoline excise taxes
in this suit.”). 	More specifically, a court should examine the regulation’s “purpose,
its relationship to other provisions, the terms of the underlying statute, and the
consequences of failure to comply with the provision in question.” 	Hewlett-Packard
Co. v. Commissioner of Internal Revenue, 67 T.C. 736 (1977) (“We also think that, in
view of the regulatory scheme, the consequences of imprecise compliance . . .
petitioner's filing of the statement and schedule . . . substantially complied with the
applicable regulation.”).
Defendant argues that substantial compliance cannot be applied in this case
because “verifying the tax-exempt nature of the sales is the very essence of the
regulation’s requirements,” and that the certificates provided by Plaintiff cannot
satisfy the rules set forth by the IRC regulations. ECF No. [48] at 18. Defendant also
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argues that the regulatory requirements for the certificates are very clear, and that
the period that such certificates are effective is critical to the IRS’ ability to prevent
fraud. 	See id. 	Lastly, Defendant argues that the opinions of the IRS Agents are
irrelevant to the Court’s decision under its de novo review of this issue. See id.
Defendant is correct in identifying the essence of the regulation’s requirements
as the ability to verify the tax-exempt nature of the sale. 	Even so, based on the
Administrative Record, this Court fails to see how the D-14 forms that Plaintiff
provided do not achieve that goal. 	Congress empowered the agency to provide tax
refunds to taxpayers who sell fuel to tax exempt entities. 	The D-14 forms Plaintiff
provided confirm that the entity purchasing the fuel are tax exempt entities, and the
full 	transaction 	receipts 	attached 	thereto 	further 	specify 	the 	details 	of 	each
transaction. See, e.g., ECF Nos. [40-24], [40-25] (2016-2021 Exemption Certificates).
Indeed, the IRS has before and since the Quarters at Issue, accepted the D-14 forms.
As a result, the Court finds that the D-14 forms, together with Pro Energy’s full
package of filings for the tax refunds at issue here, are substantially compliant with
the essential purpose of the IRC regulations.
Plaintiff—for the past decade—has bought and sold fuel to tax exempt clients
throughout the state of Florida and received the relevant tax refunds for the relevant
sales, and continued to do so between, and after the quarters at issue here. Indeed,
Plaintiff has received those refunds while providing the IRS with the very same
unsigned D-14 Forms deemed insufficient for the Quarters at Issue. 	When asked
about his review of Plaintiff’s tax return documents, IRS representative William
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Terron testified that there were no issues with the documentation provided by
Plaintiff. See W. Terron Dep., 62:15–24, ECF No. [53-5]. Terron confirmed from the
documentation provided that “the sales that Pro Energy was making to various
governmental entities in Florida[] were indeed tax exempt.” 	Id. 62:15–24, ECF No.
[53-5]. Even further, when asked specifically about Plaintiff’s exemption certificates,
Mr. 	Terron 	confirmed 	again 	that 	there 	was 	no 	issue 	with 	Pro 	Energy’s
documentation, confirming that there was never a need to do anything other. 	Id.
67:19–68:9, ECF No. [53-5]. The Court finds no reason to discredit the testimony of
the agent tasked with reviewing Plaintiff’s refund application.7
7 In the alternative to the substantial compliance argument, Plaintiff’s Motion
challenges the validity of the Treasury Regulation requiring exemption certificates.
See ECF No. [43] at 16–20. In its Response, the Government argues that challenges
to the validity of this regulation are barred and otherwise fail on the merits. 	ECF
No. [48] at 15. The Government also filed a Notice of Supplemental Authority on this
issue, apprising the Court of a recent decision regarding challenges to the validity of
certain tax regulations. See ECF No. [67]. Plaintiff argues that the case is factually
distinct from the facts at hand, and distinguishes Plaintiff’s position from the position
of the taxpayer in that decision. See generally, ECF No. [69]. Given that the Court
has found Plaintiff’s Exemption Certificates substantially comply with the relevant
regulation, it does not reach the issue whether the regulation is valid.
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V. CONCLUSION
For the above reasons, it is hereby ORDERED AND ADUDGED that
Plaintiff’s Motion for Summary Judgment, 	ECF No. 	[43], 	is GRANTED, 	and
Defendant’s Motion for Summary Judgment, ECF No. [42], is DENIED.
Pursuant to Rule 58(a) of the Federal Rules of Civil Procedure, Final Judgment
will be entered by separate order.
The Clerk is directed to CLOSE this case, and all pending motions are
DENIED AS MOOT.
DONE AND ORDERED in Miami, Florida, this 10th day of April, 2026.
_______________________________________
JACQUELINE BECERRA
UNITED STATES DISTRICT JUDGE
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