Bulk Petroleum Corp. v. Ky. Dep't of Revenue, No. 13-1870 (7th Cir. 2015)
Annotate this CaseBulk, a gasoline distributor with gas stations in Kentucky, Indiana, and Tennessee, leases stations and equipment to tenant-operators. Bulk receives monthly rent plus payment for gasoline. The Kentucky Department of Revenue (KDOR) revoked Bulk’s license as a gasoline and special fuels dealer after it asked Bulk to post additional security and Bulk failed to do so. The change affected only the way in which Kentucky collected its fuel tax. Bulk kept track of the separate line-item for the tax in the invoices it received from its suppliers (Marathon and BP) and sought refunds from KDOR for those payments. A KDOR employee emailed Bulk that “only a licensed dealer is allowed to purchase product without the Kentucky tax for export. If your license is reinstated and all outstanding tax liabilities are satisfied, consideration will be given to your refund request.” Bulk regained its license, then sought Chapter 11 bankruptcy protection. Bulk filed an adversary proceeding, seeking refund of the taxes. Kentucky filed a proof of claim. The bankruptcy court ruled in favor of Bulk, finding that Bulk had paid the taxes, which were not appropriately collected for gasoline that was consigned to destinations outside Kentucky. The district court disagreed, concluding that Bulk just paid a higher price to its suppliers. The Seventh Circuit reinstated the decision in favor of Bulk.
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