Reefer carriers could be leaving money on the table through a federal fuel tax credit that Prime Inc. is now fighting for in court — and the same refund opportunity applies to small fleets and owner-operators running refrigerated trailers.
The Lawsuit
Prime Inc., the Springfield, Missouri-based carrier operating roughly 9,000 trucks and one of the largest refrigerated carriers in the U.S., filed a complaint on June 16, 2026, in the U.S. District Court for the Western District of Missouri. According to the complaint, Prime is petitioning the IRS for a refund of $11,016,644 in federal fuel excise tax paid between 2018 and 2021 on diesel used exclusively to power refrigeration units on its trailers.
Per the article from FreightWaves, Prime argues that diesel used to run reefer units — fuel that never propels a vehicle — constitutes an off-highway, nontaxable business use. The federal fuel excise tax, currently 24.3 cents per gallon on undyed diesel, is designed to fund highway infrastructure. Prime contends that taxing fuel burned for refrigeration as highway fuel was improper.
This is not Prime's first attempt. The company previously filed for refunds covering periods ending March 31, 2018 through December 31, 2020, and the IRS denied all those claims. Prime then filed an additional claim on September 12, 2025, covering 2021; as of the complaint, it had received neither a refund nor a denial notice. Now, Prime is seeking litigation costs, attorney fees, and prejudgment and post-judgment interest in addition to the $11 million.
The Tax Credit Explained
The IRS Fuel Tax Credit covers federal excise tax paid on undyed diesel used for qualifying nontaxable purposes. Reefer fuel is a textbook example, as is fuel burned by auxiliary equipment — such as generators, APUs, and power take-off (PTO) applications — that does not propel the truck. The credit refunds the federal excise tax at 24.3 cents per gallon on undyed diesel and 18.3 cents on gasoline.
| Fuel Type | Federal Excise Tax Rate |
|---|---|
| Undyed diesel | 24.3 cents/gal |
| Gasoline | 18.3 cents/gal |
According to FreightWaves, a refrigeration unit can burn between half a gallon and a gallon of diesel per hour, depending on the unit, load, ambient temperature, and workload. An operator running a reefer hard across a year can easily burn well over 1,000 gallons of diesel just in the refrigeration unit. At 24.3 cents per gallon, that represents a potential refund of more than $243 per year per reefer — and for large fleets, the numbers add up quickly.
What This Means for Small Carriers
Crucially, the tax credit Prime is fighting for is not an exotic provision available only to large fleets. FreightWaves reports that it is a standard, established credit available to any business burning taxed fuel for a nontaxable off-highway use, including an owner-operator pulling a single reefer trailer.
Small carriers and independent owner-operators who have been paying the highway tax on diesel used exclusively for reefer units may be eligible for refunds. However, as Prime’s experience shows, securing the refund may require persistence through the administrative process and possibly litigation if claims are denied.
Operational Implications and Recommended Actions
For logistics managers, freight forwarders, and reefer operators, this story serves as a reminder to review fuel tax filings. Carriers should:
- Identify all diesel consumed by reefer units, APUs, and other non-propulsion equipment.
- Keep detailed records of fuel purchases and usage by equipment type.
- File IRS Form 8849 (Claim for Refund of Excise Taxes) for eligible quarters.
- Monitor the Prime lawsuit for its outcome, which could set a precedent for future claims.
Watch List
The case—Prime Inc. v. United States—is in its early stages. Key developments to watch include the IRS’s response to the 2021 claim still pending as of the complaint, and the court’s ruling on whether reefer diesel qualifies as off-highway use. If Prime wins, it may encourage more carriers to pursue similar refunds. A loss could discourage filings but does not change the underlying statute — the credit remains available to those who can substantiate their claims.
Sources:
