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            Publication 510
            (Rev. February 2023)                                                 Contents
            Cat. No. 15014I                                                      Future Developments         . . . . . . . . . . . . 2
Department 
of the                                                                           Reminders . . . . . . . . . . . . . . . . . . . 2
Treasury
Internal    Excise Taxes                                                         Introduction . . . . . . . . . . . . . . . . . . 3
Revenue 
Service                                                                          Excise Taxes Not Covered          . . . . . . . . . 3
            (Including Fuel Tax                                                  Chapter  1.  Fuel Taxes       . . . . . . . . . . . 4
            Credits and Refunds)                                                 Definitions . . . . . . . . . . . . . . . . . 4
                                                                                 Information Returns           . . . . . . . . . . . 5
                                                                                 Registration Requirements             . . . . . . . 5
                                                                                 Gasoline and Aviation Gasoline              . . . . 5
            Section references are to the Internal Revenue Code unless otherwise Diesel Fuel and Kerosene . . . . . . . . 7
            noted.                                                               Diesel-Water Fuel Emulsion            . . . . . .   10
                                                                                 Kerosene for Use in Aviation            . . . . .   10
                                                                                 Surtax on Any Liquid Used in a 
                                                                                             Fractional Ownership 
                                                                                             Program Aircraft as Fuel . . . . . .    11
                                                                                 Certificate for Commercial 
                                                                                             Aviation or Nontaxable Uses     . . .   12
                                                                                 Other Fuels (Including 
                                                                                             Alternative Fuels). . . . . . . . . .   12
                                                                                 Compressed Natural Gas (CNG) . . .                  13
                                                                                 Fuels Used on Inland Waterways              . . .   13
                                                                                 Second Generation Biofuel Not 
                                                                                             Used as Fuel  . . . . . . . . . . . .   14
                                                                                 Biodiesel Sold as But Not Used 
                                                                                             as Fuel. . . . . . . . . . . . . . . .  14
                                                                                 Chapter  2.  Fuel Tax Credits 
                                                                                 and Refunds . . . . . . . . . . . . . .             14
                                                                                 Gasoline and Aviation Gasoline              . . .   14
                                                                                 Undyed Diesel Fuel and 
                                                                                             Undyed Kerosene (Other 
                                                                                             Than Kerosene Used in 
                                                                                             Aviation) . . . . . . . . . . . . . . . 15
                                                                                 Diesel-Water Fuel Emulsion            . . . . . .   16
                                                                                 Kerosene for Use in Aviation            . . . . .   16
                                                                                 Other Fuels (Including 
                                                                                             Alternative Fuels). . . . . . . . . .   17
                                                                                 Refunds of Second Tax             . . . . . . . .   17
                                                                                 Definitions of Nontaxable Uses . . . .              18
                                                                                 Filing Claims         . . . . . . . . . . . . . .   21
                                                                                 Chapter  3.  Environmental Taxes . . . .            25
                                                                                 Oil Spill Liability Tax       . . . . . . . . . .   25
                                                                                 Ozone-Depleting Chemicals 
                                                                                             (ODCs) . . . . . . . . . . . . . . .    25
                                                                                 Chapter  4.  Communications and 
                                                                                 Air Transportation Taxes . . . . . .                27
                                                                                 Uncollected Tax Report . . . . . . . .              27
                                                                                 Communications Tax              . . . . . . . . .   27
                                                                                 Air Transportation Taxes            . . . . . . .   29
                                                                                 Chapter  5.  Manufacturers Taxes . . . .            31
                                                                                 Taxable Event           . . . . . . . . . . . . .   32
                                                                                 Exemptions . . . . . . . . . . . . . . .            32
                                                                                 Sport Fishing Equipment             . . . . . . .   33
                                                                                 Bows, Quivers, Broadheads, 
                                                                                             and Points . . . . . . . . . . . . . .  33
                                                                                 Arrow Shafts          . . . . . . . . . . . . . .   33
                                                                                 Coal        . . . . . . . . . . . . . . . . . . .   33
                                                                                 Taxable Tires . . . . . . . . . . . . . .           34
              Get forms and other information faster and easier at:              Gas Guzzler Tax           . . . . . . . . . . . .   35
              • IRS.gov (English)         • IRS.gov/Korean (한국어)                 Vaccines           . . . . . . . . . . . . . . . .  35
              • IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) 
              • IRS.gov/Chinese (中文)      • IRS.gov/Vietnamese (Tiếng Việt) 

Feb 28, 2023

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Chapter 6. Retail Tax on Heavy rate (petroleum Superfund tax rate) on do- Form 8864; Form 4136; or Schedule 3
Trucks, Trailers, and Tractors . . . 36 mestic crude oil and imported petroleum (Form 8849) .
products (the taxes previously expired on • Termination of alternative fuel credits
Chapter 7. Ship Passenger Tax . . . . . 39 December 31,1995). This makes the total for liquefied hydrogen. The Act removed
section 4611 tax rate on domestic crude oil liquefied hydrogen from the definition of al-
Chapter 8. Foreign and imported petroleum products the sum ternative fuel under section 6426(d)(2) for
Insurance Taxes . . . . . . . . . . . 39 of this reinstated Hazardous Substance purposes of the alternative fuel credit and
Superfund financing rate (for 2023, $.164 alternative fuel mixture credit for fuel sold
Chapter 9. Obligations Not in per barrel, to be indexed annually for infla- or used after 2022.
Registered Form . . . . . . . . . . . 40 tion) and the Oil Spill Liability Trust Fund fi- • Coal: The Act made permanent higher tax
nancing rate ($.09 per barrel). See the In- rates funding the Black Lung Disability
Chapter 10. Indoor Tanning structions for Form 6627. Trust Fund. The increased tax rates are as
Services Tax . . . . . . . . . . . . . . 40 • Renewable diesel and kerosene follows for sales and uses after September
changes. The Act made the following 30, 2022.
Chapter 11. Patient-Centered changes effective for fuel sold or used after a) Underground mined coal.
Outcomes Research Fee . . . . . . 40 2022. The rate of tax on coal from under-
Chapter 12. Filing Form 720 . . . . . . . 41 a) Renewable diesel. ground mines is increased to the
Renewable diesel no longer in- lower of $1.10 per ton or 4.4% of the
Chapter 13. Payment of Taxes . . . . . 41 cludes fuel derived from biomass that sale price (was $.50 per ton or 2% of
How To Make Deposits . . . . . . . . 41 meets the requirements of a Depart- sales price before October 1, 2022).
When To Make Deposits . . . . . . . 42 ment of Defense specification for mili- b) Surfaced mined coal.
tary jet fuel or an American Society of The rate of tax on coal from sur-
Amount of Deposits . . . . . . . . . . 42 Testing Materials (ASTM) specifica- face mines is increased to the lower of
Chapter 14. Penalties and Interest . . . 42 tion for aviation turbine fuel. $.55 per ton or 4.4% of the sale price
b) Kerosene. (was $.25 per ton or 2% of sales price
Chapter 15. Examination and Kerosene is no longer treated as beforel October 1, 2022).
Appeal Procedures . . . . . . . . . . 43 diesel fuel for purposes of the renewa- • Stock repurchase tax under section
ble diesel mixture credit. 4501. The Act established a stock re-
Chapter 16. Rulings Program . . . . . . 43 • Extension of alternative fuel credits. purchase excise tax under section 4501
The Act retroactively reinstates the al- equal to 1% of the fair market value of
Chapter 17. How To Get Tax Help . . . 43 ternative fuel and alternative fuel mixture stock repurchased during the tax year by
credits for fuel sold or used through 2024. certain publicly traded corporations or their
Chapter 18. Appendix . . . . . . . . . . 45 The credits previously expired in 2021. specified affiliates, effective for repurcha-
You can claim the alternative fuel mixture ses occurring after 2022. This will be re-
Index . . . . . . . . . . . . . . . . . . . . . 61 credit for the 2022 third calendar quarter ported on Form 7208, Stock Repurchase
on Form 720. Excise Tax, and attached to Form 720. For
You can’t claim the alternative fuel more information, go to IRB2023-3 .
credit for the 2022 first, second, and third Inflation Adjustments for 2023.
Future Developments calendar quarters on Form 720. Instead, • Transportation of persons by air (IRS
you must follow the instructions in Notice No. 26). The section 4261 tax on the
For the latest information about developments 2022–39. amount paid for each domestic segment of
related to Pub. 510, such as legislation enacted In addition, you can’t claim the alterna- taxable air transportation is increased to
after it was published, go to IRS.gov/Pub510. tive fuel mixture credit for the 2022 first and $4.80.
second calendar quarters on Form 720. In- • Use of international air travel facilities
stead, you must follow the instructions in (IRS No. 27). The section 4261 tax on the
Notice 2022–39. amount paid for international flights is in-
What’s New For the purpose of 2022 alternative fuel creased to $21.10 per person for flights
Pub. 510 updates. Pub. 510 isn't updated an- mixture claims, "alternative fuel mixture" that begin or end in the United States. The
nually; instead it's only updated when there are means a mixture of taxable fuel and alter- tax is increased to $10.60 per person for
major changes in the tax law. If you need further native fuel other than liquefied petroleum domestic segments that begin or end in
assistance see the Instructions for Forms 720, gas (LPG), compressed natural gas Alaska or Hawaii (applies only to depar-
8864, 4136, 6478, or Schedule 3 (Form 8849) (CNG), liquefied natural gas (LNG), lique- tures).
for the most recent updates. fied gas derived from biomass, and com- • Arrow shafts (IRS No. 106). The section
pressed gas derived from biomass. See 4161 tax on arrow shafts is increased to
Don’t claim the credits or payments for fuel the Instructions for Form 720. $.59 per arrow shaft. See Revenue
sold or used after the year they expire unless • Retroactive extension of income tax Procedure 2022-38.
they’re extended again. Only one credit may be credits:
taken for each amount of any fuel type. The Act retroactively extended the sec-
Note. “IRS Nos.” refers to pre-printed numbers tion 40 biofuel producer credit (it had ex-
on Form 720. pired at the end of 2021) and extends the
The Infrastructure Investment and Jobs section 40A biodiesel and renewable die- Reminders
Act. Effective July 1, 2022, the Infrastructure sel fuels credit. Reducing your excise tax liability. For fed-
Investment and Jobs Act reinstates the section Generally, for information on fuel cred- eral income tax purposes, reduce your section
4661 excise tax on chemicals (other than its against income tax, see the instructions 4081 excise tax liability by the amount of excise
ODCs) (IRS No. 54) and the section 4671 tax for Form 4136, Credit for Federal Tax Paid tax credit allowable under section 6426(c) or (e)
on imported chemical substances (IRS No. 17) on Fuels; Form 6478, Biofuel Producer and your section 4041 excise tax liability by the
(they previously expired on December Credit; and Form 8864, Biodiesel and Re- amount of your excise tax credit allowable un-
31,1995). See the Instructions for Form 6627, newable Diesel Fuels Credit. der section 6426(d), in determining your deduc-
and Environmental Taxes, later. • Sustainable aviation fuel credit. The Act tion for those excise taxes or your cost of goods
The Inflation Reduction Act of 2022 (the created a sustainable aviation fuel (SAF) sold deduction attributable to those excise
Act) made the following changes. credit under section 40B and 6426(k) for taxes.
• Superfund tax. Effective January 1, 2023, sales or uses in aviation, effective January
the Act reinstates and increases the 1, 2023. The new SAF mixture credit is Butane mixture doesn’t qualify for a credit.
Hazardous Substance Superfund financing claimed either on Form 720, Schedule C; A mixture of butane (or other gasoline
Page 2 Publication 510 (February 2023)

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blendstock) and gasoline is a mixture of two Although we can't respond individually to IRS.gov/PUB/IRB/
taxable fuels. Therefore, it isn’t an alternative each comment received, we do appreciate your IRB2010-44#NOT2010-68.
fuel mixture and doesn’t qualify for the section feedback and will consider your comments as • Notice 2012-27 (fractional aircraft fuel sur-
6426 alternative fuel mixture credit. See Reve- we revise our tax products. tax), I.R.B. 2012-17, at IRS.gov/PUB/IRB/
nue Ruling 2018-02 at IRS.gov/ IRB2012-17#NOT2012-27.
IRB#RR2018-02. Useful Items • Revenue Ruling 2016-03 (foreign reinsur-
Disregarded entities and qualified subchap- You may want to see: ance), I.R.B. 282, at IRS.gov/PUB/IRS-
ter S subsidiaries. Qualified subchapter S Drop#RR2016-02.
subsidiaries (QSubs) and eligible single-owner • T.D. 9621 (indoor tanning), I.R.B. 2013-28,
disregarded entities are treated as separate en- Publication at IRS.gov/PUB/IRB/IRB2013-28#TD9621.
tities for excise tax and reporting purposes. 509 509 Tax Calendars • Revenue Procedure 2022–38 (inflation ad-
QSubs and eligible single-owner disregarded justments) at IRS.gov//RP2022-38.
entities must pay and report excise taxes (other Form (and Instructions) • Revenue Ruling 2018-02 (butane mixture)
at IRS.govIRB#RR2018.02.
than IRS Nos. 31, 51, and 117) register for most 11-C 11-C Occupational Tax and Registration • Notice 2023-6 (Sustainable Aviation Fuel
excise tax activities; and claim any refunds,
credits, and payments under the entity's em- Return for Wagering Credit) at Notice 2023-06
ployer identification number (EIN). These ac- 637 637 Application for Registration (For
tions can't take place under the owner's tax- Certain Excise Tax Activities)
payer identification number (TIN). Some QSubs 720 720 Quarterly Federal Excise Tax Return Excise Taxes
and disregarded entities may already have an
EIN. However, if you're unsure, please call the 720-X 720-X Amended Quarterly Federal Excise Not Covered
IRS Business and Specialty Tax line at Tax Return
In addition to the taxes discussed in this publi-
800-829-4933. 730 730 Monthly Tax Return for Wagers cation, you may have to report certain other ex-
Generally, QSubs and eligible single-owner
disregarded entities will continue to be treated 1363 1363 Export Exemption Certificate cise taxes.
as disregarded entities for other federal tax pur- 2290 2290 Heavy Highway Vehicle Use Tax For tax forms relating to alcohol, firearms,
poses (other than employment taxes). and tobacco, visit the Alcohol and Tobacco Tax
Return
For more information on these regulations, and Trade Bureau website at www.ttb.gov.
see Treasury Decisions (T.D.) 9356, T.D. 9462, 2290(SP) 2290(SP) Declaración del Impuesto
and T.D. 9596. You can find T.D. 9356 of Inter- sobre el Uso de Vehículos Pesados Heavy highway vehicle use tax. You report
nal Revenue Bulletin (I.R.B.) 2007-39 at en las Carreteras the federal excise tax on the use of certain
IRS.gov/Pub/IRB/2007-39_IRB#TD9356; 4136 4136 Credit for Federal Tax Paid on Fuels trucks, truck tractors, and buses used on public
T.D. 9462, I.R.B. 2009-42, at highways on Form 2290, Heavy Highway Vehi-
IRS.gov/Pub/IRB/2009-42_IRB#TD9462; 6197 6197 Gas Guzzler Tax cle Use Tax Return. The tax applies to highway
and T.D. 9596, I.R.B. 2012-30, at 6478 6478 Biofuel Producer Credit motor vehicles with a taxable gross weight of
IRS.gov/Pub/IRB/2012-30_IRB#TD9596. 55,000 pounds or more. Vans, pickup trucks,
Photographs of missing children. The Inter- 6627 6627 Environmental Taxes panel trucks, and similar trucks generally aren’t
nal Revenue Service is a proud partner with the 8849 8849 Claim for Refund of Excise Taxes, subject to this tax.
National Center for Missing & Exploited and Schedules 1–3, 5, 6, and 8
Children (NCMEC). Photographs of missing Note. A Spanish version (Formulario
children selected by the Center may appear in 8864 8864 Biodiesel and Renewable Diesel 2290(SP)) is also available.
this publication on pages that would otherwise Fuels Credit
be blank. You can help bring these children Registration of vehicles. Generally, you must
home by looking at the photographs and calling Information Returns prove that you paid your heavy highway vehicle
1-800-THE-LOST (1-800-843-5678) if you rec- • Form 720-TO, Terminal Operator Report use tax to register your taxable vehicle with your
ognize a child. • Form 720-CS, Carrier Summary Report state motor vehicle department or to enter the
See How To Get Tax Help in chapter 17 for United States in a Canadian or Mexican regis-
Introduction information about ordering forms and publica- tered taxable vehicle. Generally, a copy of
tions. Schedule 1 (Form 2290) is stamped by the IRS
This publication covers the excise taxes for and returned to you as proof of payment.
which you may be liable and which are reported Guidance If you have questions on Form 2290,
on Form 720 and other forms. It also covers fuel • Notice 2005-4 (fuel tax), I.R.B. 2005-2, at TIP see its separate instructions, or you
tax credits and refunds. For information on fuel IRS.gov/Pub/IRB/IRB2005-2#NOT2005-4. can call the Form 2290 call site at
credits against income tax see the instructions • Notice 2005-62 (biodiesel and avia- 1-866-699-4096 (toll free) from the United
for Forms 4136, 6478, 8864. Only one credit tion-grade kerosene), I.R.B. 2005-35, at States, and 1-859-669-5733 (not toll free) from
may be taken for each amount of any fuel type. IRS.gov/Pub/IRB/ Canada and Mexico. The hours of service are
IRB2005-35#NOT2005-62. 8:00 a.m. to 6:00 p.m. Eastern time.
Comments and suggestions. We welcome • Notice 2005-80 (LUST, kerosene, credit
your comments about this publication and your card issuers, mechanical dye injection),
suggestions for future editions. I.R.B. 2005-46, at IRS.gov/PUB/IRB/ Wagering tax and occupational tax. The in-
You can send us comments from IRS.gov/ IRB2005-46#NOT2005-80. formation on wagering tax can be found in the
FormsPubs. Click on “More Information,” then • Notice 2006-92 (alternative fuels mixtures), Instructions for Form 730, and Form 11-C.
on “Give Us Feedback.” I.R.B. 2006-43, at IRS.gov/PUB/IRB/
Or you can write to: IRB2006-43#NOT2006-92.
• Notice 2008-110 (biodiesel, cellulosic bio-
Internal Revenue Service fuel), I.R.B. 2008-51, at IRS.gov/PUB/IRB/
Tax Forms and Publications IRB2008-51#NOT2008-110
1111 Constitution Ave. NW, IR-6526 • Notice 2010-68 (Alaska dyed diesel ex-
Washington, DC 20224 emption), I.R.B. 2010-44, at

Publication 510 (February 2023) Page 3

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Part One.

Chapter 1 defines the types of fuel, taxable events, and exemptions or
Fuel Taxes and exceptions to the fuel taxes. Chapter 2 provides information on, and
definitions of, the nontaxable uses and explains how to make a claim.
Fuel Tax Credits

and Refunds

This doesn't include a mixture removed or sold Other fuels. See Other Fuels (Including Alter-
during the calendar quarter if all such mixtures native Fuels), later.
removed or sold by the blender contain less
1. than 400 gallons of a liquid on which the tax Pipeline operator. This is the person that op-
hasn’t been imposed. erates a pipeline within the bulk transfer/termi-
nal system.
Blender. This is the person that produces
Fuel Taxes blended taxable fuel. Position holder. This is the person that holds
the inventory position in the taxable fuel in the
Bulk transfer. This is the transfer of taxable terminal, as reflected in the records of the termi-
fuel by pipeline or vessel. nal operator. You hold the inventory position
Definitions when you have a contractual agreement with
Bulk transfer/terminal system. This is the the terminal operator for the use of the storage
Excise taxes are imposed on all the following taxable fuel distribution system consisting of re- facilities and terminaling services for the taxable
fuels. fineries, pipelines, vessels, and terminals. Fuel fuel. A terminal operator that owns taxable fuel
• Gasoline, including aviation gasoline and in the supply tank of any engine, or in any tank in its terminal is a position holder.
gasoline blendstocks. car, railcar, trailer, truck, or other equipment
• Diesel fuel, including dyed diesel fuel. suitable for ground transportation isn't in the Rack. This is a mechanism capable of deliver-
• Diesel-water fuel emulsion. bulk transfer/terminal system. ing fuel into a means of transport other than a
• Kerosene, including dyed kerosene and pipeline or vessel.
kerosene used in aviation. Diesel-water fuel emulsion. A diesel-water
• Other fuels (including alternative fuels). fuel emulsion means an emulsion at least 14% Refiner. This is any person that owns, oper-
• Compressed natural gas (CNG). of which is water. The emulsion additive used to ates, or otherwise controls a refinery.
• Fuels used in commercial transportation produce the fuel must be registered by a U.S.
on inland waterways. manufacturer with the EPA under section 211 of Refinery. This is a facility used to produce tax-
• Any liquid used in a fractional ownership the Clean Air Act as in effect on March 31, able fuel and from which taxable fuel may be re-
program aircraft as fuel. 2003. moved by pipeline, by vessel, or at a rack. How-
ever, this term doesn't include a facility where
The following terms are used throughout the Dry lease aircraft exchange. See Surtax on only blended fuel, and no other type of fuel, is
discussion of fuel taxes. Other terms are de- Any Liquid Used in a Fractional Ownership Pro- produced. For this purpose, blended fuel is any
fined in the discussion of the specific fuels to gram Aircraft as Fuel, later. mixture that would be blended taxable fuel if
which they pertain. produced outside the bulk transfer/terminal sys-
Enterer. This is the importer of record (under tem.
Agri-biodiesel. Agri-biodiesel means biodiesel customs law) for the taxable fuel. However, if
derived solely from virgin oils, including esters the importer of record is acting as an agent, Registrant. This is a taxable fuel registrant
derived from virgin vegetable oils from corn, such as a customs broker, the person for whom (see Registration Requirements, later).
soybeans, sunflower seeds, cottonseeds, can- the agent is acting is the enterer. If there is no
ola, crambe, rapeseeds, safflowers, flaxseeds, importer of record, the owner at the time of en- Removal. This is any physical transfer of taxa-
rice bran, mustard seeds, and camelina, and try into the United States is the enterer. ble fuel. It also means any use of taxable fuel
from animal fats. other than as a material in the production of tax-
Entry. Taxable fuel is entered into the United able fuel or other fuels. However, taxable fuel
Approved terminal or refinery. This is a ter- States when it's brought into the United States isn't removed when it evaporates or is other-
minal operated by a registrant that is a terminal and applicable customs law requires that it be wise lost or destroyed.
operator or a refinery operated by a registrant entered for consumption, use, or warehousing.
that is a refiner. This doesn't apply to fuel brought into Puerto Renewable diesel. See Renewable Diesel
Rico (which is part of the U.S. customs terri- Credits in chapter 2.
Biodiesel. Biodiesel means the monoalkyl es- tory), but does apply to fuel brought into the
ters of long chain fatty acids derived from plant United States from Puerto Rico. Sale. For taxable fuel not in a terminal, this is
or animal matter that meet the registration re- the transfer of title to, or substantial incidents of
quirements for fuels and fuel additives estab- Fractional ownership aircraft program and ownership in, taxable fuel to the buyer for
lished by the Environmental Protection Agency fractional program aircraft. See Surtax on money, services, or other property. For taxable
(EPA) under section 211 of the Clean Air Act, any liquid used in a fractional ownership pro- fuel in a terminal, this is the transfer of the in-
and the requirements of the American Society gram aircraft as fuel, later. ventory position if the transferee becomes the
of Testing Materials (ASTM) D6751. position holder for that taxable fuel.
Measurement of taxable fuel. Volumes of
Blended taxable fuel. This means any taxa- taxable fuel can be measured on the basis of Second generation biofuel. This is any liquid
ble fuel produced outside the bulk transfer/ actual volumetric gallons or gallons adjusted to fuel derived by, or from, qualified feedstocks,
terminal system by mixing taxable fuel on which 60 degrees Fahrenheit. and meets the registration requirements for
excise tax has been imposed and any other liq- fuels and fuel additives established by the EPA
uid on which excise tax hasn’t been imposed. under section 211 of the Clean Air Act (42
Page 4 Chapter 1 Fuel Taxes

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U.S.C. 7545). It also includes certain liquid fuel • Partially exempt ethanol and methanol fuel
that is derived by, or from, any cultivated algae, (at least 85% of the blend consists of alco-
cyanobacteria, or lemna. It isn't alcohol of less Registration hol produced from natural gas; or
than 150 proof (disregard any added denatur- • Denatured alcohol.
ants). See Form 6478 for more information. Requirements
Gasoline also includes gasoline blendstocks,
State. This includes any state, any of its politi- The following discussion applies to excise tax discussed later.
cal subdivisions, the District of Columbia, and registration requirements for activities relating
the American Red Cross. An Indian tribal gov- to fuels only. See Form 637 for other persons Aviation gasoline. This means all special
ernment is treated as a state only if transactions who must register and for more information grades of gasoline suitable for use in aviation
involve the exercise of an essential tribal gov- about registration. reciprocating engines and covered by ASTM
specification D910 or military specification
ernment function. MIL-G-5572.
Persons that are required to be registered.
Taxable fuel. This means gasoline, diesel fuel, you're required to be registered if you're a:
and kerosene. • Blender; Taxable Events
• Enterer;
Terminal. This is a storage and distribution fa- • Pipeline operator; The tax on gasoline is $.184 per gallon. The tax
cility supplied by pipeline or vessel, and from • Position holder; on aviation gasoline is $.194 per gallon. When
which taxable fuel may be removed at a rack. It • Refiner; used in a fractional ownership program aircraft,
doesn't include a facility at which gasoline • Terminal operator; gasoline is also subject to a surtax of $.141 per
blendstocks are used in the manufacture of • Vessel operator; gallon. See Surtax on Any Liquid Used in a
products other than finished gasoline if no gas- • Producer or importer of alcohol, biodiesel, Fractional Ownership Program Aircraft as Fuel,
oline is removed from the facility. A terminal agri-biodiesel, and renewable diesel; or later.
doesn't include any facility where finished gaso- • Producer of cellulosic or second genera-
line, diesel fuel, or kerosene is stored if the fa- tion biofuel. Tax is imposed on the removal, entry, or
cility is operated by a registrant and all such tax- sale of gasoline. Each of these events is dis-
able fuel stored at the facility has been Persons that may register. You may, but cussed later. Also, see the special rules that ap-
previously taxed upon removal from a refinery aren’t required to, register if you're a: ply to Gasoline Blendstocks, later.
or terminal. • Feedstock user,
• Industrial user, If the tax is paid on the gasoline in more than
Terminal operator. This is any person that • Throughputter that isn't a position holder, one event, a refund may be allowed for the
owns, operates, or otherwise controls a termi- • Ultimate vendor, “second” tax paid. See Refunds of Second Tax
nal. • Diesel-water fuel emulsion producer, in chapter 2.
• Credit card issuer, or
Throughputter. This is any person that is a • Alternative fuel claimant. Removal from terminal. All removals of gaso-
line at a terminal rack are taxable. The position
position holder or that owns taxable fuel within Ultimate vendors, credit card issuers, and alter- holder for that gasoline is liable for the tax.
the bulk transfer/terminal system (other than in native fuel claimants don’t need to be registered
a terminal). to buy or sell fuel. However, they must be regis- Two-party exchanges. In a two-party ex-
tered to file claims for certain sales and uses of change, the receiving person, not the delivering
Vessel operator. This is the person that oper- fuel. See Form 637 for more information. person, is liable for the tax imposed on the re-
ates a vessel within the bulk transfer/terminal moval of taxable fuel from the terminal at the
system. However, vessel doesn't include a Taxable fuel registrant. This is an enterer, an terminal rack. A two-party exchange means a
deep-draft ocean-going vessel. industrial user, a refiner, a terminal operator, or transaction (other than a sale) where the deliv-
a throughputter who received a letter of regis- ering person and receiving person are both tax-
tration under the excise tax registration provi- able fuel registrants and all of the following ap-
Information Returns sions and whose registration hasn’t been re- ply.
voked or suspended. The term “registrant” as • The transaction includes a transfer from
Form 720-TO and Form 720-CS are information used in the discussions of these fuels means a the delivering person, who holds the inven-
returns used to report monthly receipts and dis- taxable fuel registrant. tory position for the taxable fuel in the ter-
minal as reflected in the records of the ter-
bursements of liquid products. A liquid product Additional information. See Form 637 in- minal operator.
is any liquid transported into storage at a termi- structions for the information you must submit • The exchange transaction occurs before or
nal or delivered out of a terminal. For a list of when you apply for registration. at the same time as removal across the
products, see the product code table in the In-
rack by the receiving person.
structions for Forms 720-TO and 720-CS. Failure to register. The penalty for failure to • The terminal operator in its records treats
The returns are due the last day of the register if you must register, unless due to rea- the receiving person as the person that re-
month following the month in which the transac- sonable cause, is $10,000 for the initial failure, moves the product across the terminal
tion occurs. Generally, these returns can be and then $1,000 each day thereafter you fail to rack for purposes of reporting the transac-
filed on paper or electronically. For information register. tion on Form 720-TO.
on filing electronically, see Publication 3536, • The transaction is subject to a written con-
Motor Fuel Excise Tax EDI Guide. Publication tract.
3536 is only available on the IRS website. Gasoline and Aviation
Terminal operator's liability. The terminal
Form 720-TO. This information return is used Gasoline operator is jointly and severally liable for the tax
by terminal operators to report receipts and dis- if the position holder is a person other than the
bursements of all liquid products to and from all Gasoline. Gasoline means all products com- terminal operator and isn't a registrant.
approved terminals. Each terminal operator monly or commercially known or sold as gaso- However, a terminal operator meeting all the
must file a separate form for each approved ter- line with an octane rating of 75 or more that are following conditions at the time of the removal
minal. suitable for use as a motor fuel. Gasoline in- won’t be liable for the tax.
cludes any gasoline blend other than: • The terminal operator is a registrant.
Form 720-CS. This information return must be • Qualified ethanol and methanol fuel (at • The terminal operator has an unexpired
filed by bulk transport carriers (barges, vessels, least 85% of the blend consists of alcohol notification certificate (discussed later)
and pipelines) who receive liquid product from produced from coal, including peat); from the position holder.
an approved terminal or deliver liquid product to
an approved terminal.
Chapter 1 Fuel Taxes Page 5

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• The terminal operator has no reason to be- 1. Gasoline is removed by bulk transfer from used to produce blended taxable fuel, the per-
lieve any information on the certificate is a terminal or refinery, or entered by bulk son that sold the untaxed liquid is jointly and
false. transfer into the United States. severally liable for the tax imposed on the
Removal from refinery. The removal of gaso- 2. No tax was previously imposed (as dis- blender's sale or removal of the blended taxa-
line from a refinery is taxable if the removal cussed earlier). ble fuel.
meets either of the following conditions. 3. Upon removal from the pipeline or vessel, Notification certificate. The notification certif-
• It's made by bulk transfer and the refiner, the gasoline isn't received at an approved icate is used to notify a person of the registra-
the owner of the gasoline immediately be- terminal or refinery (or at another pipeline tion status of the registrant. A copy of the regis-
fore the removal, or the operator of the or vessel). trant's letter of registration can't be used as a
pipeline or vessel isn't a registrant. notification certificate. A model notification cer-
• It's made at the refinery rack. The owner of the gasoline when it's re- tificate is shown in the Appendix as Model Cer-
moved from the pipeline or vessel is liable for tificate C. A notification certificate must contain
The refiner is liable for the tax. the tax. However, an owner meeting all the fol- all information necessary to complete the
Exception. The tax doesn't apply to a re- lowing conditions at the time of the removal model.
moval of gasoline at the refinery rack if all the won’t be liable for the tax. The certificate may be included as part of
following requirements are met. • The owner is a registrant. any business records normally used for a sale.
• The gasoline is removed from an approved • The owner has an unexpired notification A certificate expires on the earlier of the date
refinery not served by pipeline (other than certificate (discussed later) from the opera- the registrant provides a new certificate, or the
for receiving crude oil) or vessel. tor of the terminal or refinery where the date the recipient of the certificate is notified
• The gasoline is received at a facility oper- gasoline is received. that the registrant's registration has been re-
ated by a registrant and located within the • The owner has no reason to believe any in- voked or suspended. The registrant must pro-
bulk transfer/terminal system. formation on the certificate is false. vide a new certificate if any information on a
• The removal from the refinery is by railcar. The operator of the facility where the gasoline is certificate has changed.
• The same person operates the refinery received is liable for the tax if the owner meets
and the facility at which the gasoline is re- these conditions. The operator is jointly and Additional persons liable. When the person
ceived. severally liable if the owner doesn't meet these liable for the tax willfully fails to pay the tax, joint
conditions. and several liability for the tax is imposed on:
Entry into the United States. The entry of • Any officer, employee, or agent of the per-
gasoline into the United States is taxable if the Sales to unregistered person. The sale of son who is under a duty to ensure the pay-
entry meets either of the following conditions. gasoline located within the bulk transfer/termi- ment of the tax and who willfully fails to
• It's made by bulk transfer and the enterer nal system to a person that isn't a registrant is perform that duty; or
or the operator of the pipeline or vessel taxable if tax wasn't previously imposed under • Anyone who willfully causes the person to
isn't a registrant. any of the events discussed earlier. fail to pay the tax.
• It isn't made by bulk transfer. The seller is liable for the tax. However, a
The enterer is liable for the tax. seller meeting all the following conditions at the Gasoline Blendstocks
time of the sale won’t be liable for the tax.
Importer of record's liability. The im- • The seller is a registrant. Gasoline blendstocks may be subject
porter of record is jointly and severally liable for • The seller has an unexpired notification ! to $.001 per gallon LUST tax as dis-
the tax with the enterer if the importer of record certificate (discussed later) from the buyer. CAUTION cussed below.
isn't the enterer of the taxable fuel and the en- • The seller has no reason to believe any in-
terer isn't a taxable fuel registrant. formation on the certificate is false. Gasoline includes gasoline blendstocks.
However, an importer of record meeting The previous discussions apply to these blend-
both of the following conditions at the time of The buyer of the gasoline is liable for the tax if
the entry won’t be liable for the tax. the seller meets these conditions. The buyer is stocks. However, if certain conditions are met,
• The importer of record has an unexpired jointly and severally liable if the seller doesn't the removal, entry, or sale of gasoline blend-
notification certificate (discussed in Cus- meet these conditions. stocks are taxed at $.001 per gallon or aren’t
subject to the excise tax. Transmix containing
toms bond below) from the enterer. Exception. The tax doesn't apply to a sale gasoline is taxed as a diesel fuel. See Diesel
• The importer of record has no reason to if all of the following apply. Fuel and Kerosene, later.
believe any information in the certificate is • The buyer's principal place of business
false. isn't in the United States. Blendstocks. Gasoline blendstocks are:
Customs bond. The customs bond won’t • The sale occurs as the fuel is delivered into • Alkylate,
be charged for the tax imposed on the entry of a transport vessel with a capacity of at • Butane,
the gasoline if at the time of entry the surety has least 20,000 barrels of fuel. • Butene,
an unexpired notification certificate from the en- • The seller is a registrant and the exporter • Catalytically cracked gasoline,
terer and has no reason to believe any informa- of record. • Coker gasoline,
tion in the certificate is false. • The fuel was exported. • Ethyl tertiary butyl ether (ETBE),
• Hexane,
Removal from a terminal by unregistered Removal or sale of blended gasoline. The • Hydrocrackate,
position holder or unregistered pipeline or removal or sale of blended gasoline by the blen- • Isomerate,
vessel operator. The removal by bulk transfer der is taxable. See Blended taxable fuel under • Methyl tertiary butyl ether (MTBE),
of gasoline from a terminal is taxable if the posi- Definitions, earlier. • Mixed xylene (not including any separated
tion holder for the gasoline or the operator of The blender is liable for the tax. The tax is isomer of xylene),
the pipeline or vessel isn't a registrant. The po- figured on the number of gallons not previously • Natural gasoline,
sition holder is liable for the tax. The terminal subject to the tax on gasoline. • Pentane,
operator is jointly and severally liable for the tax Persons who blend alcohol with gasoline to • Pentane mixture,
if the position holder is a person other than the produce an alcohol fuel mixture outside the bulk • Polymer gasoline,
terminal operator. transfer/terminal system must pay the gasoline • Raffinate,
tax on the volume of alcohol in the mixture. See • Reformate,
Bulk transfers not received at approved ter- Form 720 to report this tax. You must also be • Straight-run gasoline,
minal or refinery. Tax is imposed if: registered with the IRS as a blender. See Form • Straight-run naphtha,
637. • Tertiary amyl methyl ether (TAME),
However, if an untaxed liquid is sold as • Tertiary butyl alcohol (gasoline grade)
taxed taxable fuel and that untaxed liquid is (TBA),
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• Thermally cracked gasoline, for the tax (position holder, refiner, or enterer) Transmix. Transmix means a by-product of
• Toluene, and meets all the following requirements. refined products created by the mixing of differ-
• Transmix containing gasoline. • The person is a registrant. ent specification products during pipeline trans-
However, gasoline blendstocks don't in- • The person has an unexpired notification portation.
clude any product that can't be used without fur- certificate from the operator of the terminal
ther processing in the production of finished or refinery where the gasoline blendstocks Kerosene. This means any of the following liq-
gasoline. are received. uids.
• The person has no reason to believe any • One of the two grades of kerosene (No.
Not used to produce finished gasoline. information on the certificate is false. 1-K and No. 2-K) covered by ASTM speci-
Gasoline blendstocks not used to produce fin- fication D3699.
ished gasoline aren’t taxable (other than LUST) Bulk transfers to registered industrial user. • Kerosene-type jet fuel covered by ASTM
if the following conditions are met. The removal of gasoline blendstocks from a specification D1655 or military specifica-
pipeline or vessel isn't taxable (other than tion MIL-DTL-5624T (Grade JP-5) or
Removals and entries not connected to LUST) if the blendstocks are received by a reg- MIL-DTL-83133E (Grade JP-8). See Kero-
sale. Nonbulk removals and entries aren’t tax- istrant that is an industrial user. An industrial sene for Use in Aviation, later.
able if the person otherwise liable for the tax user is any person that receives gasoline blend- However, kerosene doesn't include exclu-
(position holder, refiner, or enterer) is a regis- stocks by bulk transfer for its own use in the ded liquid, discussed earlier.
trant. manufacture of any product other than finished
gasoline. Kerosene also includes any liquid that would
Removals and entries connected to sale. be described above but for the presence of a
Nonbulk removals and entries aren’t taxable if Credits or refunds. A credit or refund of the dye of the type used to dye kerosene for a non-
the person otherwise liable for the tax (position gasoline tax may be allowable if gasoline is taxable use.
holder, refiner, or enterer) is a registrant, and at used for a nontaxable purpose or exempt use.
the time of the sale, meets the following require- For more information, see Fuel Tax Credits and Diesel-powered highway vehicle. This is any
ments. Refunds in chapter 2. self-propelled vehicle designed to carry a load
• The person has an unexpired certificate over public highways (whether or not also de-
from the buyer. signed to perform other functions) and propel-
• The person has no reason to believe any led by a diesel-powered engine. Specially de-
information in the certificate is false. Diesel Fuel and signed mobile machinery for nontransportation
Sales after removal or entry. The sale of Kerosene functions and vehicles specially designed for
off-highway transportation aren’t generally con-
a gasoline blendstock that wasn't subject to tax sidered diesel-powered highway vehicles. For
on its nonbulk removal or entry, as discussed Generally, diesel fuel and kerosene are taxed in
earlier, is taxable. The seller is liable for the tax. the same manner as gasoline (discussed ear- more information about these vehicles and for
However, the sale isn't taxable if, at the time of lier). However, special rules (discussed under information about vehicles not considered high-
the sale, the seller meets the following require- Alaska and Feedstocks) apply to dyed diesel way vehicles, see Off-highway business use
ments. fuel and dyed kerosene, and to undyed diesel (No. 2) in chapter 2.
• The seller has an unexpired certificate fuel and undyed kerosene sold or used in
(discussed below) from the buyer. Alaska for certain nontaxable uses and undyed Diesel-powered train. This is any diesel-pow-
• The seller has no reason to believe any in- kerosene used for a feedstock purpose. ered equipment or machinery that rides on rails.
The term includes a locomotive, work train,
formation in the certificate is false. switching engine, and track maintenance ma-
Diesel fuel. Diesel fuel means:
Certificate of buyer. The certificate from the • Any liquid that without further processing chine.
buyer certifies the gasoline blendstocks won’t or blending is suitable for use as a fuel in a
be used to produce finished gasoline. The cer- diesel-powered highway vehicle or train; or Taxable Events
tificate may be included as part of any business • Transmix.
records normally used for a sale. A model certif- The tax on diesel fuel and kerosene is $.244
icate is shown in the Appendix as Model Certifi- A liquid is suitable for this use if the liquid per gallon. It's imposed on the removal, entry,
cate D. The certificate must contain all informa- has practical and commercial fitness for use in or sale of diesel fuel and kerosene. Each of
tion necessary to complete the model. the propulsion engine of a diesel-powered high- these events is discussed later. Only the $.001
way vehicle or diesel-powered train. A liquid LUST tax applies to dyed diesel fuel and dyed
A certificate expires on the earliest of the fol- may possess this practical and commercial fit- kerosene, discussed later.
lowing dates. ness even though the specified use isn't the
• The date 1 year after the effective date (not predominant use of the liquid. However, a liquid If the tax is paid on the diesel fuel or kero-
earlier than the date signed) of the certifi- doesn't possess this practical and commercial sene in more than one event, a refund may be
cate. fitness solely by reason of its possible or rare allowed for the “second” tax paid. See Refunds
• The date a new certificate is provided to use as a fuel in the propulsion engine of a die- of Second Tax in chapter 2.
the seller. sel-powered highway vehicle or diesel-powered
• The date the seller is notified that the buy- train. Diesel fuel doesn't include gasoline, kero- Use in certain intercity and local buses.
er's right to provide a certificate has been sene, excluded liquid, No. 5 and No. 6 fuel oils Dyed diesel fuel and dyed kerosene can't be
withdrawn. covered by ASTM specification D396, or F-76 used in certain intercity and local buses. A claim
The buyer must provide a new certificate if any (Fuel Naval Distillate) covered by military speci- for $.17 per gallon may be made by the regis-
information on a certificate has changed. fication MIL-F-16884. tered ultimate vendor (under certain conditions)
The IRS may withdraw the buyer's right to or the ultimate purchaser for undyed diesel fuel
provide a certificate if that buyer uses the gaso- Excluded liquid. An excluded liquid is either or undyed kerosene sold for use in certain inter-
line blendstocks in the production of finished of the following: city or local buses. An intercity or local bus is a
gasoline or resells the blendstocks without get- 1. A liquid that contains less than 4% normal bus engaged in furnishing (for compensation)
ting a certificate from its buyer. paraffins. passenger land transportation available to the
general public. The bus must be engaged in
Received at approved terminal or refinery. 2. A liquid with all the following properties. one of the following activities.
The nonbulk removal or entry of gasoline blend- a. Distillation range of 125 degrees Fah- • Scheduled transportation along regular
stocks received at an approved terminal or re- renheit or less. routes regardless of the size of the bus.
finery isn't taxable if the person otherwise liable • Nonscheduled transportation if the seating
b. Sulfur content of 10 ppm or less. capacity of the bus is at least 20 adults (not
c. Minimum color of +27 Saybolt. including the driver).

Chapter 1 Fuel Taxes Page 7

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A bus is available to the general public if the 2. The diesel fuel or kerosene is received at b. The entry into the United States.
bus is available for hire to more than a limited a facility operated by a registrant and loca- c. The removal from a terminal by an un-
number of persons, groups, or organizations. ted within the bulk transfer/terminal sys- registered position holder.
tem.
Removal from terminal. All removals of diesel 2. Upon removal from the pipeline or vessel,
fuel and kerosene at a terminal rack are taxa- 3. The removal from the refinery is by: the diesel fuel or kerosene isn't received at
ble. The position holder for that fuel is liable for a. Railcar and the same person operates an approved terminal or refinery (or at an-
the tax. the refinery and the facility at which other pipeline or vessel).
the diesel fuel or kerosene is re-
Two-party exchanges. In a two-party ex- ceived; or The owner of the diesel fuel or kerosene
change, the receiving person, not the delivering when it's removed from the pipeline or vessel is
person, is liable for the tax imposed on the re- b. For diesel fuel only, a trailer or semi- liable for the tax. However, an owner meeting
moval of taxable fuel from the terminal at the trailer used exclusively to transport all the following conditions at the time of the re-
terminal rack. A two-party exchange means a the diesel fuel from a refinery (descri- moval won’t be liable for the tax.
transaction (other than a sale) where the deliv- bed in (1)) to a facility (described in • The owner is a registrant.
ering person and receiving person are both tax- (2)) less than 20 miles from the refin- • The owner has an unexpired notification
able fuel registrants and all of the following ap- ery. certificate (discussed under Gasoline) from
ply. the operator of the terminal or refinery
• The transaction includes a transfer from Entry into the United States. The entry of where the diesel fuel or kerosene is re-
the delivering person, who holds the inven- diesel fuel or kerosene into the United States is ceived.
tory position for the taxable fuel in the ter- taxable if the entry meets either of the following • The owner has no reason to believe any in-
minal as reflected in the records of the ter- conditions. formation on the certificate is false.
minal operator. • It's made by bulk transfer and the enterer
• The exchange transaction occurs before or or the operator of the pipeline or vessel The operator of the facility where the diesel fuel
at the same time as completion of removal isn't a registrant. or kerosene is received is liable for the tax if the
across the rack by the receiving person. • It isn't made by bulk transfer. owner meets these conditions. The operator is
jointly and severally liable if the owner doesn't
• The terminal operator in its records treats The enterer is liable for the tax. meet these conditions.
the receiving person as the person that re-
moves the product across the terminal Importer of record's liability. The im- Sales to unregistered person. The sale of
rack for purposes of reporting the transac- porter of record is jointly and severally liable for diesel fuel or kerosene located within the bulk
tion on Form 720-TO. the tax with the enterer if the importer of record transfer/terminal system to a person that isn't a
• The transaction is subject to a written con- isn't the enterer of the taxable fuel and the en- registrant is taxable if tax wasn't previously im-
tract. terer isn't a taxable fuel registrant. posed under any of the events discussed ear-
However, an importer of record meeting
Terminal operator's liability. The terminal both of the following conditions at the time of lier.
operator is jointly and severally liable for the tax the entry won’t be liable for the tax. The seller is liable for the tax. However, a
if the terminal operator provides any person seller meeting all the following conditions at the
with any bill of lading, shipping paper, or similar 1. The importer of record has an unexpired time of the sale won’t be liable for the tax.
document indicating that diesel fuel or kerosene notification certificate (discussed under • The seller is a registrant.
is dyed, (see Dyed Diesel Fuel and Dyed Kero- Gasoline) from the enterer. • The seller has an unexpired notification
sene, later). 2. The importer of record has no reason to certificate from the buyer.
The terminal operator is jointly and severally believe any information in the certificate is • The seller has no reason to believe any in-
liable for the tax if the position holder is a per- false. formation on the certificate is false.
son other than the terminal operator and isn't a The buyer of the diesel fuel or kerosene is liable
registrant. However, a terminal operator won’t Customs bond. The customs bond won’t for the tax if the seller meets these conditions.
be liable for the tax in this situation if, at the time be charged for the tax imposed on the entry of The buyer is jointly and severally liable if the
of the removal, the following conditions are met. the diesel fuel or kerosene if at the time of entry seller doesn't meet these conditions.
• The terminal operator is a registrant. the surety has an unexpired notification certifi-
• The terminal operator has an unexpired cate from the enterer and has no reason to be- Exception. The tax doesn't apply to a sale
notification certificate (discussed under lieve any information in the certificate is false. if all of the following apply.
Gasoline) from the position holder. • The buyer's principal place of business
• The terminal operator has no reason to be- Removal from a terminal by unregistered isn't in the United States.
lieve any information on the certificate is position holder or unregistered pipeline or • The sale occurs as the fuel is delivered into
false. vessel operator. The removal by bulk transfer a transport vessel with a capacity of at
of diesel fuel or kerosene from a terminal is tax- least 20,000 barrels of fuel.
Removal from refinery. The removal of diesel able if the position holder for that fuel or the op- • The seller is a registrant and the exporter
fuel or kerosene from a refinery is taxable if the erator of the pipeline or vessel isn't a registrant. of record.
removal meets either of the following condi- The position holder is liable for the tax. The ter- • The fuel was exported.
tions. minal operator is jointly and severally liable for
• It's made by bulk transfer and the refiner, the tax if the position holder is a person other Removal or sale of blended diesel fuel or
the owner of the fuel immediately before than the terminal operator. See Terminal opera- kerosene. The removal or sale of blended die-
the removal, or the operator of the pipeline tor's liability under Removal from terminal, ear- sel fuel or blended kerosene by the blender is
or vessel isn't a registrant. lier, for an exception. taxable. Blended taxable fuel produced using
• It's made at the refinery rack. biodiesel is subject to the tax. See Blended tax-
Bulk transfers not received at approved ter- able fuel under Definitions, earlier.
The refiner is liable for the tax. minal or refinery. The removal by bulk trans- The blender is liable for the tax. The tax is
Exception. The tax doesn't apply to a re- fer of diesel fuel or kerosene from a terminal or figured on the number of gallons not previously
moval of diesel fuel or kerosene at the refinery refinery or the entry of diesel fuel or kerosene subject to the tax.
rack if all the following conditions are met. by bulk transfer into the United States is taxable Persons who blend biodiesel with undyed
if the following conditions apply.
1. The diesel fuel or kerosene is removed diesel fuel to produce and sell or use a biodie-
from an approved refinery not served by 1. No tax was previously imposed (as dis- sel mixture outside the bulk transfer/terminal
pipeline (other than for receiving crude oil) cussed earlier) on any of the following system must pay the diesel fuel tax on the vol-
or vessel. events. ume of biodiesel in the mixture. Generally, the
biodiesel mixture must be diesel fuel. See Form
a. The removal from the refinery. 720 to report this tax. You must also be
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registered by the IRS as a blender. See Form The notice under item (1) must be provided • The alteration or attempted alteration oc-
637 for more information. by the time of the removal and must appear on curs in an exempt area of Alaska. See Re-
However, if an untaxed liquid is sold as taxa- all shipping papers, bills of lading, and similar moval for sale or use in Alaska, later.
ble fuel and that untaxed liquid is used to pro- documents accompanying the removal of the • Diesel fuel or kerosene meeting the dyeing
duce blended taxable fuel, the person that sold fuel. requirements is blended with diesel fuel or
the untaxed liquid is jointly and severally liable Any seller that fails to post the required no- kerosene not meeting the dyeing require-
for the tax imposed on the blender's sale or re- tice under item (2) is presumed to know that the ments and the blending occurs as part of a
moval of the blended taxable fuel. fuel will be used for a taxable use (a use other nontaxable use (other than export), dis-
than a nontaxable use listed later). That seller is cussed later.
Additional persons liable. When the person subject to the penalty described next.
liable for the tax willfully fails to pay the tax, joint
and several liability for the tax applies to: Penalty. A penalty is imposed on a person if Alaska and Feedstocks
• Any officer, employee, or agent of the per- any of the following situations apply. Tax of $.001 per gallon is imposed on:
son who is under a duty to ensure the pay- 1. Any dyed fuel is sold or held for sale by • Undyed diesel fuel or undyed kerosene
ment of the tax and who willfully fails to the person for a use the person knows or sold or used in Alaska for certain nontaxa-
perform that duty; or has reason to know isn't a nontaxable use ble uses (see Later sales, later).
• Anyone who willfully causes the person to of the fuel. • Undyed kerosene used for feedstock pur-
fail to pay the tax. poses.
2. Any dyed fuel is held for use or used by
Credits or refunds. A credit or refund is allow- the person for a use other than a nontaxa- Removal for sale or use in Alaska. No tax is
able for the tax on undyed diesel fuel or undyed ble use and the person knew, or had rea- imposed on the removal, entry, or sale of diesel
kerosene used for a nontaxable use. For more son to know, that the fuel was dyed. fuel or kerosene in Alaska for ultimate sale or
information, see chapter 2. use in certain areas of Alaska for certain non-
3. The person willfully alters, chemically or
otherwise, or attempts to so alter, the taxable uses. The removal or entry of any diesel
Dyed Diesel Fuel and Dyed strength or composition of any dye in dyed fuel or kerosene isn't taxed if all the following re-
Kerosene fuel. quirements are satisfied.
Dyed diesel fuel and dyed kerosene 4. The person has knowledge that a dyed 1. The person otherwise liable for the tax
fuel that has been altered, as described in (position holder, refiner, or enterer):
CAUTION tax as discussed below, unless the fuel
! are subject to $.001 per gallon LUST (3) above, sells or holds for sale such fuel a. Is a registrant,
is for export. for any use for which the person knows or
has reason to know isn't a nontaxable use b. Can show satisfactory evidence of the
of the fuel. nontaxable nature of the transaction,
The excise tax isn't imposed on the removal, and
entry, or sale of diesel fuel or kerosene (other The penalty is the greater of $1,000 or $10
than the LUST tax) if all the following tests are per gallon of the dyed diesel fuel or dyed kero- c. Has no reason to believe the evi-
met. sene involved. After the first violation, the dence is false.
• The person otherwise liable for tax (for ex- $1,000 portion of the penalty increases depend- 2. In the case of a removal from a terminal,
ample, the position holder) is a registrant. ing on the number of violations. the terminal is an approved terminal.
• In the case of a removal from a terminal, This penalty is in addition to any tax im- 3. The owner of the fuel immediately after the
the terminal is an approved terminal. posed on the fuel. removal or entry holds the fuel for its own
• The diesel fuel or kerosene satisfies the If the penalty is imposed, each officer, em- use in a nontaxable use (discussed later)
dyeing requirements. ployee, or agent of a business entity who will- or is a qualified dealer.
fully participated in any act giving rise to the
Dyeing requirements. Diesel fuel or kerosene penalty is jointly and severally liable with that If all three of the requirements above aren’t
satisfies the dyeing requirements only if it satis- entity for the penalty. met, then tax is imposed at $.244 per gallon.
fies the following requirements. There is no administrative appeal or review
• It contains the dye Solvent Red 164 (and allowed for the third and subsequent penalty Qualified dealer. A qualified dealer is any per-
no other dye) at a concentration spectrally imposed by section 6715 on any person except son that holds a qualified dealer license from
equivalent to at least 3.9 pounds of the for: the state of Alaska or has been registered by
solid dye standard Solvent Red 26 per • Fraud or a mistake in the chemical analy- the IRS as a qualified retailer. Satisfactory evi-
thousand barrels of fuel or any dye of a sis, or dence may include copies of qualified dealer li-
type and in a concentration that has been • Mathematical calculation of the penalty. censes or exemption certificates obtained for
approved by the Commissioner. state tax purposes.
• Is indelibly dyed by mechanical injection. If you're liable for the penalty, you may also
See Notice 2005-80 section 6 for transition be liable for the back-up tax, discussed later. Later sales. The excise tax applies to die-
rules that apply until final regulations are However, the penalty applies only to dyed die- sel fuel or kerosene sold by a qualified dealer
issued by the IRS. sel fuel and dyed kerosene, while the back-up after the removal or entry. The tax is imposed at
tax may apply to other fuels. The penalty may the time of the sale and the qualified dealer is li-
Notice required. A legible and conspicuous apply if the fuel is held for sale or use for a taxa- able for the tax. However, the sale isn't taxable
notice stating either: DYED DIESEL FUEL, ble use while the back-up tax doesn't apply un- (other than the LUST tax at $.001 per gallon) if
NONTAXABLE USE ONLY, PENALTY FOR less the fuel is delivered into a fuel supply tank. all the following requirements are met.
TAXABLE USE or DYED KEROSENE, NON- Exception to penalty. The penalty under • The fuel is sold in Alaska for certain non-
taxable uses.
TAXABLE USE ONLY, PENALTY FOR TAXA- item (3) won’t apply in any of the following situa- • The buyer buys the fuel for its own use in a
BLE USE must be: tions. nontaxable use or is a qualified dealer.
1. Provided by the terminal operator to any • Diesel fuel or kerosene meeting the dyeing • The seller can show satisfactory evidence
person that receives dyed diesel fuel or requirements is blended with any undyed of the nontaxable nature of the transaction
dyed kerosene at a terminal rack of that liquid and the resulting product meets the and has no reason to believe the evidence
operator, and dyeing requirements. is false.
2. Posted by a seller on any retail pump or • Diesel fuel or kerosene meeting the dyeing
other delivery facility where it sells dyed requirements is blended with any other liq- Feedstock purposes. The $.001 per gallon
diesel fuel or dyed kerosene for use by its uid (other than diesel fuel or kerosene) that LUST tax is imposed on the removal or entry of
buyer. contains the type and amount of dye re- undyed kerosene if all the following conditions
quired to meet the dyeing requirements. are met.
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1. The person otherwise liable for tax (posi- • Any undyed diesel fuel or undyed kero- filiated corporations under Special Rules
tion holder, refiner, or enterer) is a regis- sene on which a credit or refund (for fuel on Transportation Taxes.
trant. used for a nontaxable purpose) has been • Any use of an aircraft that has a maximum
2. In the case of a removal from a terminal, allowed. certificated takeoff weight of 6,000 pounds
the terminal is an approved terminal. • Any liquid other than gasoline, diesel fuel, or less, unless the aircraft is operated on
or kerosene. an established line. For more information,
3. Either: see Small aircraft under Special Rules on
Generally, this back-up tax is imposed at a Transportation Taxes.
a. The person otherwise liable for tax rate of $.244 per gallon. • Any use where the surtax on fuel used in a
uses the kerosene for a feedstock fractional ownership program aircraft is im-
purpose; or Liability for tax. Generally, the operator of the posed. See Surtax on fuel used in a frac-
b. The kerosene is sold for use by the vehicle into which the fuel is delivered is liable tional ownership program aircraft, later.
buyer for a feedstock purpose and, at for the tax. In addition, the seller of the diesel
the time of the sale, the person other- fuel or kerosene is jointly and severally liable for Foreign trade. Foreign trade means fuel used
wise liable for tax has an unexpired the tax if the seller knows or has reason to know in civil aircraft employed in foreign trade or
certificate from the buyer and has no that the fuel will be used for other than a nontax- trade between the United States and any of its
reason to believe any information on able use. possessions. The term “trade” includes the
the certificate is false. transportation of persons or property for hire
Exemptions from the back-up tax. The and the making of the necessary preparations
If all of the requirements above aren’t met, back-up tax doesn't apply to a delivery of diesel for such transportation. In the case of aircraft
then tax is imposed at $.244 per gallon. fuel or kerosene for uses 1, 2, 6, 7, 12, 13, 14, registered in a foreign country, the country must
Kerosene is used for a feedstock purpose and 15 listed under Definitions of Nontaxable allow reciprocal benefits for aircraft registered in
when it's used for nonfuel purposes in the man- Uses in chapter 2. the United States.
ufacture or production of any substance other In addition, since the back-up tax is imposed
than gasoline, diesel fuel, or other fuels. For ex- only on the delivery into the fuel supply tank of a Noncommercial aviation. Noncommercial
ample, kerosene is used for a feedstock pur- diesel-powered vehicle or train, the tax doesn't aviation means any use of an aircraft not descri-
pose when it's used as an ingredient in the pro- apply to diesel fuel or kerosene used as heating bed as commercial aviation.
duction of paint, but isn't used for a feedstock oil or in stationary engines.
purpose when it's used to power machinery at a Nontaxable use. Nontaxable use means a
factory where paint is produced. A feedstock use that is exempt from federal excise tax, ex-
user is a person that uses kerosene for a feed- Diesel-Water Fuel cluding LUST tax. Aviation fuel used in foreign
stock purpose. A registered feedstock user is a trade is exempt from federal excise tax, includ-
person that has been registered by the IRS as a Emulsion ing LUST tax. Nontaxable uses include the fol-
feedstock user. See Registration Require- lowing.
ments, earlier. Diesel-water fuel emulsion means diesel fuel at • For use on a farm for farming purposes.
Later sales. The excise tax ($.244 per gal- least 14% of which is water and for which the • For use in certain helicopter and fixed-wing
lon) applies to kerosene sold for use by the emulsion additive is registered by a U.S. manu- air ambulance.
buyer for a feedstock purpose if the buyer in facturer with the EPA under section 211 of the • For use other than as a fuel in the propul-
that sale later sells the kerosene. The tax is im- Clean Air Act as in effect on March 31, 2003. sion engine of an aircraft.
• For the exclusive use of a qualified blood
posed at the time of the later sale and that seller A reduced tax rate of $.198 per gallon is im- collector organization.
is liable for the tax. posed on a diesel-water fuel emulsion. To be el- • For the exclusive use of a nonprofit educa-
Certificate. The certificate from the buyer igible for the reduced rate, the person who tional organization.
certifies the buyer is a registered feedstock user sells, removes, or uses the diesel-water fuel • For the exclusive use of a state.
and the kerosene will be used by the buyer for a emulsion must be registered by the IRS. If the • For use in an aircraft owned by an aircraft
feedstock purpose. The certificate may be in- diesel-water fuel emulsion doesn't meet the re- museum.
cluded as part of any business records normally quirements above, or if the person who sells, • For use in military aircraft.
used for a sale. A model certificate is shown in removes, or uses the fuel isn't registered, the • For use in foreign trade.
the Appendix as Model Certificate G. Your cer- diesel-water fuel emulsion is taxed at $.244 per
tificate must contain all information necessary gallon. Registered commercial aviation operator.
to complete the model. Registered commercial aviation operator
A certificate expires on the earliest of the fol- Credits or refunds. The allowance for a credit means a commercial aviation operator that is
lowing dates. or refund on a diesel-water fuel emulsion is dis- registered with the IRS with Form 637 activity
• The date 1 year after the effective date (not cussed in chapter 2. letter “Y” that buys kerosene for its use in com-
earlier than the date signed) of the certifi- mercial aviation (other than foreign trade).
cate.
• The date the seller is provided a new certif- Kerosene for Use in Secured airport terminal (SAT). SAT means
icate or notice that the current certificate is a terminal located within a secured area of an
invalid. Aviation airport. Notice 2016-15 contains the criteria for
• The date the seller is notified the buyer's a SAT designation. A list of SATs can be found
registration has been revoked or suspen- Commercial aviation. Commercial aviation at Terminal Control Locations Directory. A SAT
ded. means any use of an aircraft in the business of designation relates only to fueling operations at
transporting persons or property for compensa- airport terminals for purposes of federal excise
The buyer must provide a new certificate if tion or hire by air, unless one of the following taxes on kerosene for use in commercial avia-
any information on a certificate has changed. exemptions apply. tion. The SAT designation doesn’t relate to, and
• Any use exclusively for the purpose of sky- isn’t based on, the general security of the air-
Back-up Tax diving. ports or associated fuel terminals, regardless of
• Certain air transportation by seaplane. See whether the facility is included (or not included)
Tax is imposed on the delivery of any of the fol- Seaplanes under Transportation of Per- in the list.
lowing into the fuel supply tank of a diesel-pow- sons by Air.
ered highway vehicle. • Any use of an aircraft owned or leased by Qualified refueler trucks, tankers, and tank
• Any dyed diesel fuel or dyed kerosene for a member of an affiliated group and un- wagons treated as terminals (qualifying re-
other than a nontaxable use. available for hire by nonmembers. For fueler). For purposes of the tax imposed on
more information, see Aircraft used by af- kerosene for use in aviation, which is removed

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directly into the fuel tank of an aircraft for use in operator, earlier. For the lower rate to apply, the 1. Either:
aviation, qualifying refuelers are treated as part operator must be a registered commercial avia- (A) Meets the specifications of one of
of a terminal if all the following conditions are tion operator and must provide the position the ASTM D7566 Annexes, or
met: holder with a certificate similar to Model Certifi- (B) Meets the specifications of ASTM
1. Such terminal is located within an area of cate K in the Appendix. See Certificate for D1655 Annex A1, and
an airport; Commercial Aviation or Nontaxable Uses, later.
In addition, for the registered commercial 2. Isn’t derived from coprocessing an appli-
2. Any kerosene for use in aviation that is aviation operator to be liable at the $.044 tax cable material (or materials derived from
loaded in a refueler truck, tanker, or tank rate instead of the position holder, the position an applicable material) with a feedstock
wagon at a terminal is for delivery into air- holder must meet the following requirements: that isn’t biomass,
craft at the airport in which the terminal is • Is a taxable fuel registrant; 3. Isn’t derived from palm fatty acid distillates
located; • Has an unexpired certificate (a model cer- or petroleum, and
3. Except in exigent circumstances, such as tificate is shown in the Appendix as Model
those identified in Notice 2005-80, no ve- Certificate K) from the operator of the air- 4. Has been certified in accordance with
hicle registered for highway use is loaded craft; and I.R.C. section 40B(e) as having a lifecycle
with kerosene for use in aviation at the ter- • Has no reason to believe any of the infor- greenhouse gas emissions reduction per-
minal; and mation in the certificate is false. centage of at least 50%.

4. The qualifying refueler meets the following Note. The $.044 rate is only applicable to Liability For Tax
requirements: the registered commercial aviation operator. If
• Has storage tanks, hose, and cou- the conditions above aren’t met, the position
pling equipment designed and used holder is liable for tax at the $.244 or $.219 rate If the kerosene is removed directly into the fuel
for fueling aircraft; and a claim may be filed by either the ultimate tank of an aircraft for use in commercial avia-
• Isn’t registered for highway use; and purchaser or the registered ultimate vendor. tion, then the registered commercial aviation
• Is operated by the terminal operator operator of the aircraft in commercial aviation is
or a person that makes a daily ac- Kerosene for use in aviation, nontaxable liable for the tax on the removal at the rate of
counting to the terminal operator of uses. The tax rate for kerosene removed di- $.044 per gallon. If the kerosene is removed di-
each delivery of fuel from the qualify- rectly from a terminal, such as through a hy- rectly into the fuel tank of an aircraft for a use
ing refueler. drant system or by a qualifying refueler, into the that is exempt from tax under section 4041(c)
fuel tank of an aircraft for nontaxable use (other (except foreign trade), then the position holder
than foreign trade) is $.001 per gallon. The po- is liable for the $.001 LUST tax for kerosene for
Taxable Events sition holder is liable for the tax. For this rate to use in aviation. For example, for kerosene re-
Generally, kerosene is taxed at $.244 per gallon apply, the operator must provide the position moved directly into the aircraft for use in military
unless a reduced rate applies (see Diesel Fuel holder with a certificate similar to Model Certifi- aircraft, the position holder is liable for the tax.
and Kerosene, earlier). A reduced rate applies cate K in the Appendix. See Certificate for
to kerosene used in aviation if certain condi- Commercial Aviation or Nontaxable Uses, later. For the registered commercial aviation oper-
tions are met. The airport terminal doesn't need to be a SAT ator to be liable for the $.044 tax rate, the posi-
for this rate to apply to hydrant removals. How- tion holder must meet the following require-
The tax rate for kerosene removed directly ever, in the case of a qualifying refueler, the air- ments:
from a terminal, such as through a hydrant sys- port terminal must be a SAT and the qualifying • Is a taxable fuel registrant;
tem or by a qualifying refueler, into the fuel tank refueler must meet the requirements discussed • Has an unexpired certificate (a model cer-
of an aircraft for use in aviation is $.219 per gal- under Qualified refueler trucks, tankers, and tificate is shown in the Appendix as Model
lon. This rate applies if the requirements for a tank wagons treated as terminals (qualifying re- Certificate K) from the operator of the air-
further reduced rate aren’t met (see Kerosene fueler), earlier. craft; and
for Use in Aviation Kerosene for use in aviation, , • Has no reason to believe any of the infor-
nontaxable uses, and Kerosene for use in for- Kerosene for use in foreign trade. There is mation in the certificate is false.
eign trade, later). The position holder is liable no tax for kerosene removed directly from a ter-
for the tax. The airport terminal doesn't need to minal, such as through a hydrant system or by a
be a secured airport terminal for this rate to ap- qualifying refueler, into the fuel tank of an air- Surtax on Any Liquid
ply. The qualifying refueler must meet the re- craft for use in foreign trade. The airport termi-
quirements discussed under Qualified refueler nal doesn't need to be a SAT for this rate to ap- Used in a Fractional
trucks, tankers, and tank wagons treated as ter- ply to hydrant removals. However, in the case Ownership Program
minals (qualifying refueler), earlier. of a qualifying refueler, the airport terminal must
be a SAT and the qualifying refueler must meet Aircraft as Fuel
Fuel used in a fractional ownership program the requirements discussed under Qualified re-
aircraft is subject to a surtax of $.141 per gallon. fueler trucks, tankers, and tank wagons treated Fuel used in a fractional ownership program air-
For more information, see Surtax on Any Liquid as terminals (qualifying refueler), earlier. For craft is subject to a surtax of $.141 per gallon.
Used in a Fractional Ownership Program Air- this rate to apply, the operator must provide the The fractional ownership program manager is li-
craft as Fuel, later. position holder with a certificate similar to Model able for the tax. The surtax applies in addition to
Kerosene for use in commercial aviation. Certificate K in the Appendix. See Certificate for any other taxes imposed on the removal, entry,
The tax rate for kerosene removed directly from Commercial Aviation or Nontaxable Uses, later. use, or sale of the fuel. If the surtax is imposed,
the following air transportation taxes don't ap-
a terminal, such as through a hydrant system or Sustainable aviation fuel (SAF) mixtures. ply.
by a qualifying refueler, into the fuel tank of an The claimant produced a qualified mixture by • Transportation of persons by air.
aircraft for use in commercial aviation is $.044 mixing an SAF with kerosene. The qualified • Transportation of property by air.
per gallon. For kerosene removed into an air- mixture was produced in the United States and • Use of international air travel facilities.
craft from a qualifying refueler, this rate only ap- was used (or sold for use) by the claimant in an
plies if the qualifying refueler is loaded at a aircraft, such sale or use was in the ordinary These taxes are described under Air Trans-
SAT. See Secured airport terminal (SAT), ear- course of a trade or business of the claimant, portation Taxes, later.
lier. The qualifying refuelers must meet the re- and the transfer of such mixture to the fuel tank
quirements discussed under Qualified refueler of such aircraft occurred in the United States. A fractional ownership program aircraft flight
trucks, tankers, and tank wagons treated as ter- is considered noncommercial aviation; for the
minals (qualifying refueler), earlier. The regis- The SAF used to produce the qualified mix-
tered commercial aviation operator is liable for ture is the portion of liquid fuel that isn’t kero- rules for kerosene used in noncommercial avia-
the tax. See Registered commercial aviation sene and: tion, see Kerosene for Use in Aviation, earlier.

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A fractional ownership program is one under • For exempt uses. tain sales if the ultimate purchaser waives its
which: right to make a claim. For more information, see
• A single fractional ownership program Certificate. The certificate may be included as Kerosene for Use in Aviation, later.
manager provides fractional ownership part of any business records normally used for
program management services on behalf a sale. See Model Certificate K in the Appendix.
of the fractional owners; A certificate expires on the earliest of the fol- Other Fuels (Including
• There are one or more fractional owners lowing dates.
per fractional program aircraft, with at least • The date 1 year after the effective date (not Alternative Fuels)
one fractional program aircraft having earlier than the date signed) of the certifi-
more than one owner; cate. Other Fuels means any liquid except gas oil,
• For at least two fractional program aircraft, • The date the buyer provides the seller a fuel oil, or any product taxable under section
none of the ownership interests in the air- new certificate or notice that the current 4081. Other Fuels include alternative fuels. Al-
craft are less than the minimum fractional certificate is invalid. ternative fuels are:
ownership interest or held by the program • The date the IRS or the buyer notifies the • Liquefied petroleum gas (LPG),
manager; seller that the buyer's right to provide a • “P Series” fuels,
• There exists a dry-lease aircraft exchange certificate has been withdrawn. • Compressed natural gas (CNG),
arrangement among all of the fractional The buyer must provide a new certificate if • Liquefied hydrogen,
owners; and any information on a certificate has changed. • Any liquid fuel derived from coal (including
• There are multi-year program agreements peat) through the Fischer-Tropsch proc-
covering the fractional ownership, frac- The IRS may withdraw the buyer's right to ess,
tional ownership program management provide a certificate if the buyer uses the kero- • Liquid fuel derived from biomass,
services, and dry-lease aircraft exchange sene for use in aviation to which a certificate re- • Liquefied natural gas (LNG), and
aspects of the program. lates other than as stated in the certificate. • Liquefied gas derived from biomass.
Nontaxable use. The rate on kerosene for Liquefied petroleum gas includes propane, pen-
Fractional program aircraft. Any aircraft that, use in aviation is $.001 (LUST tax) if it's re- tane, or mixtures of those products.
in any fractional ownership aircraft program, is moved from any refinery or terminal directly into
listed as a fractional program aircraft in the the fuel tank of an aircraft for a nontaxable use. Qualified methanol and ethanol fuels.
management specifications issued to the man- A nontaxable use includes kerosene for the ex- Qualified ethanol and methanol means any liq-
ager of such program by the Federal Aviation clusive use of a state or local government. uid at least 85% of which consists of alcohol
Administration under subpart K of part 91, title There is no tax on kerosene removed directly produced from coal, including peat. The tax
14, Code of Federal Regulations, and is regis- into the fuel tank of an aircraft for use in foreign rates are listed in the Instructions for Form 720.
tered in the United States. trade.
Fractional program aircraft aren’t considered Partially exempt methanol and ethanol
used for transportation of a qualified fractional Flash title transaction. In a "flash title trans- fuels. A reduced tax rate applies to these
owner or on account of such qualified fractional action," the position holder sells the kerosene to fuels. Partially exempt ethanol and methanol
owner, when they're used for flight demonstra- a wholesale distributor (reseller) that in turn means any liquid at least 85% of which consists
tion, maintenance, or crew training. In such sit- sells the kerosene to the aircraft operator as the of alcohol produced from natural gas. The tax
uations, the flight isn't commercial aviation. In- kerosene is being removed from a terminal into rates are listed in the Instructions for Form 720.
stead, the tax on the fuel used in the flight is the fuel tank of an aircraft. A position holder isn't
imposed at the non-commercial aviation rate. liable for tax if, among other conditions, it ob- Motor vehicles. Motor vehicles include all
tains a certificate from the operator of the air- types of vehicles, whether or not registered (or
Fractional owner. Any person owning any in- craft into which the kerosene is delivered. In this required to be registered) for highway use, that
terest (including the entire interest) in a frac- case, the position holder will be treated as hav- have both the following characteristics.
tional program aircraft. ing a certificate from the operator of the aircraft • They're propelled by a motor.
if: • They’re designed for carrying or towing
Dry lease aircraft exchange. An agreement, • The aircraft operator puts the reseller's loads from one place to another, regard-
documented by the written program agree- name, address, and EIN on the certificate less of the type of material or load carried
ments, under which the fractional program air- in place of the position holder's informa- or towed.
craft are available, on an as-needed basis with- tion; and Motor vehicles don’t include any vehicle that
out crew, to each fractional owner. • The reseller provides the position holder moves exclusively on rails, or any of the follow-
with a statement of the kerosene reseller.
Special rule relating to deadhead service. ing items: farm tractors, trench diggers, power
A fractional program aircraft won’t be consid- Reseller statement. This is a statement shovels, bulldozers, road graders, road rollers,
ered to be used on account of a qualified frac- that is signed under penalties of perjury by a and similar equipment that doesn't carry or tow
tional owner when it's used in deadhead service person with authority to bind the reseller; is pro- a load.
and a person other than a qualified fractional vided at the bottom or on the back of the certifi-
owner is separately charged for such service. cate (or in an attached document); and con- Taxable Events
tains:
More information. See section 4043 for more • The reseller's name, address, and EIN;
information on the surtax. • The position holder's name, address, and Tax is imposed on the delivery of other fuels
EIN; and into the fuel supply tank of the propulsion en-
• A statement that the reseller has no reason gine of a motor vehicle or motorboat. However,
Certificate for to believe that any information in the ac- there is no tax on the delivery if tax was im-
companying aircraft operator's certificate is posed under the bulk sales rule, discussed
Commercial Aviation or false. next, or the delivery is for a nontaxable use. If
the delivery is in connection with a sale, the
Nontaxable Uses Credits or payments. If the aircraft operator seller is liable for the tax. If it isn't in connection
doesn’t provide a certificate to the position with a sale, the operator of the vehicle or boat is
A certificate is required from the aircraft opera- holder, then the ultimate purchaser (the opera- liable for the tax.
tor: tor) may make a claim for the kerosene it uses
• To support aircraft operator liability for tax in commercial aviation (other than foreign trade) Bulk sales. Tax is imposed on the sale of
on removal of kerosene for use in aviation and for nontaxable use (other than for exclusive other fuels that isn't in connection with delivery
directly into the fuel tank of an aircraft in use by a state or local government). A regis- into the fuel supply tank of the propulsion en-
commercial aviation, or tered ultimate vendor may make a claim for cer- gine of a motor vehicle or motorboat if the buyer
furnishes a written statement to the seller
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stating the entire quantity of the fuel covered by Nontaxable uses. The nontaxable uses of the fuel used in the engine both to operate an
the sale is for other than a nontaxable use listed CNG are discussed under Other Fuels (Includ- alternator, generator, or pumps and to propel
in chapter 2. The seller is liable for this tax. ing Alternative Fuels) in chapter 2. the vessel is taxable.
The tax doesn't apply to fuel consumed in
Tax rate. See Form 720 and the Instructions engines not used to propel the vessel.
for Form 720 for the tax rates. Fuels Used on Inland If you draw liquid fuel from the same tank to
operate both a propulsion engine and a nonpro-
Nontaxable uses. See the nontaxable uses of Waterways pulsion engine, determine the fuel used in the
Other Fuels (Including Alternative Fuels) in nonpropulsion engine and exclude that fuel
chapter 2. The tax on inland waterways fuel use
from the tax. The IRS will accept a reasonable
! applies at the rate listed on Form 720. estimate of the fuel based on your operating ex-
CAUTION This is in addition to all other taxes im-
posed on the sale or use of the fuel. perience, but you must keep records to support
Compressed Natural your allocation.
Gas (CNG) Tax applies to liquid fuel used in the propul- Voyages crossing boundaries of the speci-
sion system of commercial transportation ves- fied waterways. The tax applies to fuel con-
sels while traveling on certain inland and intra- sumed by a vessel crossing the boundaries of
Taxable Events coastal waterways in the United States. The tax the specified waterways only to the extent of
Tax is imposed on the delivery of compressed generally applies to such use of a liquid fuel in fuel consumed for propulsion while on those
natural gas (CNG) into the fuel supply tank of all types of vessels, including ships, barges, waterways. Generally, the operator may figure
the propulsion engine of a motor vehicle or mo- and tugboats. The LUST tax must be paid on the fuel so used during a particular voyage by
torboat. The tax is based on the gasoline gallon any liquid fuel used on inland waterways that multiplying total fuel consumed in the propul-
equivalent of CNG. See Form 720 for the tax isn't subject to LUST tax under section 4041(d) sion engine by a fraction. The numerator of the
rate. or 4081(a)(2)(B). For example, Bunker C resid- fraction is the time spent operating on the speci-
ual fuel oil is subject to the LUST tax. fied waterways and the denominator is the total
However, there is no tax on the delivery if time spent on the voyage. This calculation can't
tax was imposed under the bulk sales rule, or Inland and intracoastal waterways. Inland be used where it's found to be unreasonable.
the delivery is for a nontaxable use, listed in and intracoastal waterways on which fuel con-
chapter 2. If the delivery is in connection with a sumption is subject to tax are specified in sec- Taxable event. Tax is imposed on liquid fuel
sale, the seller is liable for the tax. If it isn't in tion 206 of the Inland Waterways Revenue Act used in the propulsion system of a vessel.
connection with a sale, the operator of the boat of 1978, as amended. See Regulations section The person who operates (or whose em-
or vehicle is liable for the tax. 48.4042-1(g) for a list of these waterways. ployees operate) the vessel in which the fuel is
consumed is liable for the tax. If a vessel owner
If CNG is delivered into the fuel supply tank Commercial waterway transportation. Com- (or lessee) contracts with an independent con-
by the seller in connection with the sale of CNG mercial waterway transportation is the use of a tractor to operate the vessel, the independent
for a nontaxable use, the seller is liable for the vessel on inland or intracoastal waterways for contractor is the person liable for tax, regard-
tax unless, at the time of the sale, the seller has either of the following purposes. less of who purchases the fuel. The tax is paid
an exemption certificate from the buyer. The • The use is in the business of transporting with Form 720. No tax deposits are required.
seller must have no reason to believe any infor- property for compensation or hire.
mation in the certificate is false. • The use is in transporting property in the Exemptions. Certain types of commercial wa-
business of the owner, lessee, or operator terway transportation are excluded from the tax.
Certificate. The certificate from the buyer cer- of the vessel (other than fish or aquatic ani-
tifies the CNG will be used in a nontaxable use. mal life caught on the voyage), whether or Fishing vessels. Fuel isn't taxable when
The certificate may be included as part of any not a fee is charged. used by a fishing vessel while traveling to a fish-
business records normally used for a sale. A ing site, while engaged in fishing, or while re-
model certificate is shown in the Appendix as The operation of all vessels meeting either
Model Certificate J. of these requirements is commercial waterway turning from the fishing site with its catch. A
A certificate expires on the earliest of the fol- transportation regardless of whether the vessel vessel isn't transporting property in the busi-
lowing dates. is actually transporting property on a particular ness of the owner, lessee, or operator by
• The date 1 year after the effective date voyage. However, see Exemptions, later. The merely transporting fish or other aquatic animal
(which may be no earlier than the date tax is imposed on fuel consumed in vessels life caught on the voyage.
signed) of the certificate. while engaged in any of the following activities. However, the tax does apply to fuel used by
• The date a new certificate is provided to • Moving without cargo. a commercial vessel along the specified water-
the seller. • Awaiting passage through locks. ways while traveling to pick up aquatic animal
• The date the seller is notified the buyer's • Moving to or from a repair facility. life caught by another vessel and while trans-
right to provide a certificate has been with- • Dislodging vessels grounded on a sand porting the catch of that other vessel.
drawn. bar. Deep-draft ocean-going vessels. Fuel
• Fleeting barges into a single tow. isn't taxable when used by a vessel designed
Bulk sales. Tax is imposed on the sale of CNG • Maneuvering around loading and unload- primarily for use on the high seas and that has a
that isn't in connection with delivery into the fuel ing docks. draft of more than 12 feet on the voyage. For
supply tank of the propulsion engine of a motor each voyage, figure the draft when the vessel
vehicle or motorboat if the buyer furnishes a Liquid fuel. Liquid fuel includes diesel fuel, has its greatest load of cargo and fuel. A voy-
written statement to the seller that the entire Bunker C residual fuel oil, gasoline, and other age is a round trip. If a vessel has a draft of
quantity of the CNG covered by the sale is for fuels. The tax is imposed on liquid fuel actually more than 12 feet on at least one way of the
use as a fuel in a motor vehicle or motorboat consumed by a vessel's propulsion engine and voyage, the vessel satisfies the 12-foot draft re-
and the seller has given the buyer a written ac- not on the unconsumed fuel in a vessel's tank. quirement for the entire voyage.
knowledgment of receipt of the statement. The Dual use of liquid fuels. The tax applies to all Passenger vessels. Fuel isn't taxable
seller of the CNG is liable for the tax. taxable liquid used as a fuel in the propulsion when used by vessels primarily for the transpor-
Motor vehicle. For this purpose, motor vehicle system of the vessel, regardless of whether the tation of persons. The tax doesn't apply to fuel
has the same meaning as given under Other engine (or other propulsion system) is used for used in commercial passenger vessels while
Fuels (Including Alternative Fuels), earlier. another purpose. The tax applies to all liquid being operated as passenger vessels, even if
fuel consumed by the propulsion engine even if such vessels also transport property. Nor does
it operates special equipment by means of a it apply to ferryboats carrying passengers and
power take-off or power transfer. For example, their cars.

Chapter 1 Fuel Taxes Page 13

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Ocean-going barges. Fuel isn't taxable b. For use by the buyer as a fuel in a the alternative fuel mixture and alternative fuel
when used in tugs to move LASH (Lighter trade or business, or credits.
Aboard Ship) and SEABEE ocean-going barges c. Who sells the second generation bio- Information on how to make a claim for credit or
released by their ocean-going carriers solely to fuel at retail to another person and refund is included in this chapter and in the in-
pick up or deliver international cargoes. puts the second generation biofuel in structions for:
However, it's taxable when any of the follow- the retail buyer’s fuel tank; or • Form 720,
ing conditions apply.
• One or more of the barges in the tow isn't a 2. Is used or sold by the producer for any • Form 4136,
LASH barge, SEABEE barge, or other purpose described in (1) above. • Form 8849, and
ocean-going barge carried aboard an • Form 8864.
ocean-going vessel. Qualified second generation biofuel production
• One or more of the barges isn't on an inter- doesn't include purchasing alcohol and increas- Exported taxable fuel. The claim rates for ex-
national voyage. ing the proof of the alcohol through additional ported taxable fuel are listed on Form 720,
• Part of the cargo carried isn't being trans- distillation. Nor does it include second genera- Schedule C, Schedule 1 (Form 8849), Form
ported internationally. tion biofuel that isn't both produced and used as 8864, and Form 4136. Taxpayers making a
a fuel in the United States or a U.S. possession. claim for exported taxable fuel must include
State or local governments. No tax is im- A qualified second generation biofuel mixture with their records proof of exportation. Proof of
posed on the fuel used in a vessel operated by combines second generation biofuel with gaso- exportation includes:
a state or local government in transporting line or a special fuel. The producer of the mix- • A copy of the export bill of lading issued by
property on official business. The ultimate use ture either: the delivering carrier,
of the cargo must be for a function ordinarily • Used it as a fuel, or • A certificate by the agent or representative
carried out by governmental units. An Indian • Sold it as fuel to another person. of the export carrier showing actual expor-
tribal government is treated as a state only if the Report the tax on Form 720. The rate of tax tation of the fuel,
fuel is used in the exercise of an essential tribal depends on the applicable rate used to figure • A certificate of lading signed by a customs
government function. the credit. No deposits are required. officer of the foreign country to which the
All operators of vessels used in com- fuel is exported, or
mercial waterway transportation who • A statement of the foreign consignee
RECORDS acquire liquid fuel must keep adequate Biodiesel Sold as But showing receipt of the fuel.
records of all fuel used for taxable purposes.
Operators who are seeking an exclusion from Not Used as Fuel
the tax must keep records that will support any Gasoline and Aviation
exclusion claimed. You must pay a tax (recapture) on each gallon
of biodiesel or renewable diesel on which a Gasoline
Your records should include all of the follow- credit was claimed at the rate used to figure the
ing information. credit if you: Ultimate purchasers. The following are the
• The acquisition date and quantity of fuel • Use it (including a mixture) other than as a uses of gasoline for which a credit or refund
delivered into storage tanks or the tanks on fuel; may be allowable to an ultimate purchaser.
your vessel. • Buy it at retail and use it to create a mix- • On a farm for farming purposes (credit
• The identification number or name of each ture; only).
vessel using the fuel. • Separate it from a mixture; or • Off-highway business use.
• The departure time, departure point, route • Use agri-biodiesel on which the small • Export.
traveled, destination, and arrival time for agri-biodiesel producer credit was claimed • In a boat engaged in commercial fishing.
each vessel. for a use not described under Qualified • In certain intercity and local buses.
Agri-Biodiesel Production in the Instruc- • In a school bus.
If you claim an exemption from the tax, in- tions for Form 8864. • Exclusive use by a qualified blood collector
clude in your records the following additional in- organization.
formation as it pertains to you. The tax is $1.00 per gallon of biodiesel, • In a highway vehicle owned by the United
• The draft of the vessel on each voyage. agri-diesel, and renewable diesel. An additional States that isn't used on a highway.
• The type of vessel in which you used the $.10 is added if the agri-biodiesel producer • Exclusive use by a nonprofit educational
fuel. credit. Report the tax on Form 720. The rate of organization.
• The ultimate use of the cargo (for vessels tax depends on the applicable rate used to fig- • Exclusive use by a state, political subdivi-
operated by state or local governments). ure the credit. No deposits are required. sion of a state, or the District of Columbia
(see Sales by Registered Ultimate Ven-
dors (Other Than State or Local Govern-
Second Generation ment Purchases), later).
• In an aircraft or vehicle owned by an air-
Biofuel Not Used as Fuel craft museum.
If you claimed the section 40 second generation The following are the uses of aviation gaso-
biofuel producer credit, you're liable for an ex- 2. line for which a credit or refund may be allowa-
cise tax on each gallon of second generation bi- ble to an ultimate purchaser.
ofuel if you don't use the fuel for the purposes • On a farm for farming purposes (credit
only).
described under Qualified Second Generation Fuel Tax Credits • Export.
Biofuel Production next.
• In foreign trade.
Qualified second generation biofuel pro- and Refunds • Certain helicopter and fixed-wing air ambu-
duction. This is second generation biofuel that lance uses.
during the tax year: Federal excise taxes are imposed on certain • In commercial aviation (other than foreign
1. Is sold by the producer to another person: fuels as discussed in chapter 1. This chapter trade).
lists the nontaxable uses of each fuel and de- • Exclusive use by a qualified blood collector
a. For use by the buyer in the buyer’s fines the nontaxable uses. Information on the organization.
trade or business to produce a quali- refund of the second tax is included. This chap- • Exclusive use by a nonprofit education or-
fied second generation biofuel mixture ter also explains credits and refunds for the bio- ganization.
(other than casual off-farm produc- diesel or renewable diesel mixture credits, and • Exclusive use by a state, political subdivi-
tion), sion of a state, or the District of Columbia
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(see Sales by Registered Ultimate Ven- How to make the claim. If the claim is made Registered ultimate vendor (blocked
dors (Other Than State or Local Govern- by the credit card issuer see Form 720 Sched- pump). This is an ultimate vendor that sells
ment Purchases), later). ule C; Form 8864; or Schedule 8 (Form 8849). undyed kerosene from a blocked pump.
• In an aircraft owned by an aircraft mu- A credit or refund may be allowable to a reg-
seum. istered ultimate vendor (blocked pump) if the
• In military aircraft. Undyed Diesel Fuel and vendor sold to a buyer undyed kerosene from a
blocked pump for use other than as a fuel in a
Claims by persons who paid the tax to the Undyed Kerosene (Other diesel-powered highway vehicle and the vendor
government. Except for sales to nonprofit ed- had no reason to believe the kerosene wouldn’t
ucational organizations and states and local Than Kerosene Used in be used in that manner.
governments, a credit or refund is allowable to Aviation) Blocked pump. A blocked pump is a fuel
the person that paid the tax to the government if
pump that meets all the following requirements.
the gasoline was sold to the ultimate purchaser For conditions to an allowance of a credit or re-
(including an exporter) by either that person or fund on exported dyed diesel fuel and dyed ker- 1. It's used to make retail sales of undyed
by a retailer and the fuel was exported; used or osene, see Exported taxable fuel, earlier. kerosene for use by the buyer in any non-
sold for use as a supply for vessels or aircraft, taxable use.
including military aircraft, commercial fishing, Ultimate purchasers. The following are non- 2. It's at a fixed location.
and foreign trade; sold to a qualified blood col- taxable uses of diesel fuel and kerosene (de-
lector organization; or used or sold for use in fined earlier) for which a credit or refund may be 3. It's identified with a legible and conspicu-
the production of other fuels. See Filing Claims, allowable to an ultimate purchaser. ous notice stating, UNDYED UNTAXED
later. • On a farm for farming purposes. KEROSENE, NONTAXABLE USE ONLY.
• Off-highway business use.
Sales by registered ultimate vendors. This • Export. 4. It meets either of the following conditions.
is an ultimate vendor that sells gasoline or avia- • In a qualified local bus. a. It can't reasonably be used to dis-
tion gasoline to any of the following and that is • In a school bus. pense fuel directly into the fuel supply
purchased without the use of a credit card. • Other than as a fuel in a propulsion engine tank of a diesel-powered highway ve-
• A state or local government for its exclu- of a diesel-powered highway vehicle (such hicle or train.
sive use (including essential government as home heating oil). b. It's locked by the vendor after each
use by an Indian tribal government). • Exclusive use by a qualified blood collector sale and unlocked by the vendor only
• A nonprofit educational organization for its organization. in response to a buyer's request for
exclusive use. • In a highway vehicle owned by the United undyed kerosene for use other than
The registered ultimate vendor may make States that isn't used on a highway. as a fuel in a diesel-powered highway
the claim if the ultimate purchaser didn’t use a • Exclusive use by a nonprofit educational vehicle or train.
credit card and waives its right to the credit or organization.
refund by providing the registered ultimate ven- • Exclusive use by a state, political subdivi- Registered ultimate vendor (certain inter-
dor with a certificate. A sample certificate is in- sion of a state, or the District of Columbia city and local buses). This is an ultimate ven-
cluded as Model Certificate M in the Appendix. (see Sales by Registered Ultimate Ven- dor that sells undyed diesel fuel or undyed ker-
The registered ultimate vendor must have the dors (Other Than State or Local Govern- osene to the ultimate purchaser for use in
certificate at the time the credit or refund is ment Purchases), later). certain intercity and local buses.
claimed. • In a vehicle owned by an aircraft museum.
The ultimate vendor must be registered by • As a fuel in a propulsion engine of a die- The registered ultimate vendor may make
the IRS. See Registration Requirements, ear- sel-powered train. the claim if the ultimate purchaser waives its
right to the credit or refund by providing the reg-
lier. istered ultimate vendor with a waiver. A sample
Credit card purchases. If gasoline and avia- Sales by Registered Ultimate waiver is included as Model Waiver N in the Ap-
tion gasoline are purchased with a credit card Vendors pendix. The registered ultimate vendor must
have the waiver at the time the credit or pay-
issued to a state or local government for its ex- ment is claimed.
clusive use (including essential government use The following are the sales for which a credit or
by an Indian tribal government), or a nonprofit refund may be allowable to the registered ulti-
educational organization for its exclusive use, mate vendor only. Credit card purchases. If undyed diesel fuel
the person who extended credit to the ultimate • Undyed diesel fuel or undyed kerosene or kerosene is purchased with a credit card is-
purchaser (the credit card issuer) is treated as sold for the exclusive use by a state or lo- sued to a state, the person who extended credit
the person that paid the tax and makes the cal government (if credit card rules (don't to the state (the credit card issuer) is treated as
claim if the credit card issuer: apply); the person that paid the tax and makes the
• Is registered by the IRS; • Undyed kerosene sold from a blocked claim if the credit card issuer:
• Has established that the amount of tax pump; or • Is registered by the IRS;
hasn’t been collected from the person who • Undyed diesel fuel or undyed kerosene • Has established that the amount of tax
purchased the gasoline or has obtained used in certain intercity and local buses, hasn’t been collected from the person who
written consent from the ultimate pur- only if the ultimate purchaser waives its purchased the diesel fuel or kerosene, or
chaser to the allowance of the credit or re- right to the credit or refund by providing the has obtained written consent from the ulti-
fund; and registered ultimate vendor with a waiver. mate purchaser to the allowance of the
credit or refund; and
• Has repaid or agreed to repay the amount • Has repaid or agreed to repay the amount
of the tax to the ultimate vendor, has ob- Registered ultimate vendor (state use).
tained the written consent of the ultimate This is a person that sells undyed diesel fuel or of the tax to the ultimate vendor, has ob-
vendor to the allowance of the credit or re- undyed kerosene to a state or local government tained the written consent of the ultimate
fund, or has made arrangements that pro- for its exclusive use (including essential govern- vendor to the allowance of the credit or re-
vide the ultimate vendor with reimburse- ment use by an Indian tribal government). The fund, or has made arrangements that pro-
ment of the tax. diesel fuel or kerosene must be purchased by vide the ultimate vendor with reimburse-
the state without the use of a credit card, issued ment of the tax.
If the requirements above aren’t met by the to the state by the credit card issuer, in order for If the requirements above aren’t met by the
credit card issuer, the credit card issuer must the ultimate vendor to make the claim. The ulti- credit card issuer, the credit card issuer must
collect the tax from the ultimate purchaser and mate vendor must be registered by the IRS. collect the tax from the ultimate purchaser and
only the ultimate purchaser may make the See Registration Requirements, earlier. only the ultimate purchaser may make the
claim. claim.

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Registered ultimate vendor. Registered ulti- Kerosene for use in aviation by a state or
mate vendor means a person who sells kero- local government. A state or local govern-
Diesel-Water Fuel sene for use in aviation to the ultimate pur- ment may generally not file an ultimate pur-
chaser and is registered as an ultimate vendor chaser claim for nontaxable use of kerosene
Emulsion with an IRS Form 637 activity letter "UA," or used in aviation. Generally, only a registered
"UV" for sales to a state or local government for credit card issuer or a registered ultimate ven-
A claim for credit or refund may be made for the its exclusive use. dor may file a claim for kerosene sold for use in
nontaxable use of a diesel-water fuel emulsion aviation to a state or local government for its ex-
and for undyed diesel fuel used to produce a Registered credit card issuer. Registered clusive use (including essential government use
diesel-water fuel emulsion. The claim rate for credit card issuer means a person that issues by an Indian tribal government).
nontaxable use of a diesel-water fuel emulsion credit cards for sales of taxable fuel to a state or
taxed at $.198 per gallon is $.197 (if exported, local government for its exclusive use and is State or local government credit card pur-
the claim rate is $.198). The following are the registered as a credit card issuer with the IRS chases. If taxed kerosene for use in aviation is
nontaxable uses for a diesel-water fuel emul- Form 637 activity letter "CC." purchased with a credit card issued to a state or
sion for which a credit or refund may be allowa- local government, then the person who exten-
ble to an ultimate purchaser. Kerosene for use in commercial aviation ded credit to the state or local government (the
• On a farm for farming purposes. (other than foreign trade). An ultimate pur- credit card issuer) is treated as the person that
• Off-highway business use. chaser that purchases kerosene for use in com- paid the tax and may make the claim. In order
• Export. mercial aviation on which tax was imposed at a for the credit card issuer to make the claim, the
• In a qualified local bus. rate higher than the commercial aviation rate of credit card issuer must be registered by the IRS
• In a school bus. $.044 per gallon may make a claim for the dif- with Form 637 activity letter "CC" and have the
• Other than as fuel in the propulsion engine ference between the rate that was imposed (ei- required certificate from the ultimate purchaser.
of a train or diesel-powered highway vehi- ther $.244 per gallon or $.219 per gallon) and A sample certificate is included as Model Certif-
cle (but not off-highway use). $.044 per gallon. icate R in the Appendix. The credit card issuer
• Exclusive use by a qualified blood collector The ultimate purchaser may file a claim for must have the certificate at the time the claim is
organization. kerosene used in commercial aviation in which filed.
• In a highway vehicle owned by the United tax was originally imposed at a higher rate if the If the requirements above aren't met by the
States that isn't used on a highway. ultimate purchaser didn't provide a waiver to the credit card issuer, then the credit card issuer
• Exclusive use by a nonprofit educational ultimate vendor with respect to the claim. An ul- must collect the tax from the ultimate purchaser
organization. timate purchaser doesn't need to be registered (state or local government) and only the ulti-
• Exclusive use by a state, political subdivi- to support an ultimate purchaser claim for com- mate purchaser may make the claim.
sion of a state, or the District of Columbia. mercial aviation use. See Kerosene for use in
• In an aircraft or vehicle owned by an air- aviation, nontaxable use (other than use by State or local government purchases not
craft museum. state or local government), later, for information made with a credit card. If a state or local
Blender claims. The claim rate for undyed about registered ultimate vendor claims. government purchases kerosene for use in avi-
ation without the use of a credit card, the ulti-
diesel fuel taxed at $.244 and used to produce Kerosene for use in aviation, nontaxable mate vendor is the only person that may make a
a diesel-water fuel emulsion is $.046 per gallon use (other than use by state or local gov- claim. In order for the ultimate vendor to make
of diesel fuel so used. The blender must be reg- ernment). An ultimate purchaser, other than a the claim, the ultimate vendor must be regis-
istered by the IRS in order to make the claim. state or local government, that purchases kero- tered by the IRS with Form 637 activity letter
The blender must attach a statement to the sene used in aviation for a nontaxable use, on "UV" and have the required certificate from the
claim certifying that: which tax was imposed at a rate higher than the ultimate purchaser. A sample certificate is inclu-
• The diesel-water fuel emulsion contains at nontaxable use rate of $.001 per gallon (or $0 in ded as Model Certificate P in the Appendix. The
least 14% water, the case of foreign trade), may make a claim for registered ultimate vendor must have the certifi-
• The emulsion additive is registered by a the difference between the rate that was im- cate at the time the claim is filed.
U.S. manufacturer with the EPA under sec- posed (either $.244 per gallon or $.219 per gal-
tion 211 of the Clean Air Act as in effect on lon) and $.001 per gallon (or $0 in the case of
March 31, 2003, foreign trade). The ultimate purchaser may file a Sales by Registered Ultimate
• Undyed diesel fuel taxed at $.244 was claim for nontaxable use of kerosene used in Vendors (Other Than State
used to produce the diesel-water fuel aviation if the ultimate purchaser didn't provide or Local Government
emulsion, and a waiver to the ultimate vendor with respect to Purchases)
• The diesel-water fuel emulsion was used the claim.
or sold for use in the blender's trade or
business. The following are the nontaxable uses of Kerosene for use in commercial aviation or
kerosene used in aviation for which an ultimate noncommercial aviation. The registered ulti-
purchaser may make a claim. mate vendor of kerosene for use in commercial
• On a farm for farming purposes. aviation (other than foreign trade) or noncom-
Kerosene for Use in • In foreign trade. mercial aviation (other than nonexempt, non-
Aviation • Certain helicopter and fixed-wing aircraft commercial aviation and exclusive use by a
uses. state, political subdivision of a state, or the Dis-
A credit or payment of the tax on kerosene used • For use other than as a fuel in the propul- trict of Columbia) may make this claim if the ulti-
in aviation may be allowed if the rate of tax on sion engine of an aircraft. mate purchaser waives its right to the credit or
the use is less than the rate of tax that was • Exclusive use by a qualified blood collector payment by providing the registered ultimate
charged on the kerosene. The credit or pay- organization. vendor with a waiver. A sample waiver is inclu-
ment is allowable to the ultimate purchaser, reg- • Exclusive use by a nonprofit educational ded as Model Waiver L in the Appendix. The
istered ultimate vendor, or registered credit organization. registered ultimate vendor must have the waiver
card issuer, depending on the how the kero- • In an aircraft owned by an aircraft mu- at the time the credit or payment is claimed.
sene was acquired and if certain conditions are seum. Noncommercial aviation means any use of
satisfied. • In military aircraft. an aircraft not described as commercial avia-
See Kerosene for use in aviation, nontaxa- tion. For the definition of commercial aviation,
Ultimate purchasers. Ultimate purchaser ble use (other than use by state or local govern- see Commercial aviation, earlier.
means a person who purchases kerosene for ment), later, for information about registered ul-
use in aviation. Generally, the ultimate pur- timate vendor claims. Kerosene for use in nonexempt, noncom-
chaser is the aircraft operator. mercial aviation. Only the registered ultimate
vendor may claim a credit or payment for sales
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of kerosene for use in nonexempt, noncommer- vide the ultimate vendor with reimburse- monoglycerides, diglycerides, triglycer-
cial aviation. The ultimate vendor must be regis- ment of the tax. ides, free fatty acids, and fatty acid esters.
tered by the IRS (activity letter“ UA”) and have If the requirements above aren’t met by the Lifecycle greenhouse gas emissions re-
the required certificate from the ultimate pur- credit card issuer, the credit card issuer must duction percentage means the percentage
chaser. A sample certificate is included as collect the tax from the ultimate purchaser and reduction in lifecycle greenhouse gas
Model Certificate Q in the Appendix. The regis- only the ultimate purchaser may make the emissions achieved by such fuel as com-
tered ultimate vendor must have the certificate claim. pared with petroleum-based jet fuel, as
at the time the credit or payment is claimed. defined in accordance with the most re-
cent Carbon Offsetting and Reduction
Kerosene for use partly in commercial avia- Scheme for International Aviation, which
tion and partly in nonexempt, noncommer- Sustainable Aviation has been adopted by the International
cial aviation. If the fuel is used partly for use in Fuel (SAF) Mixture Civil Aviation Organization with the agree-
commercial aviation and partly for use in non- ment of the United States, or any similar
exempt, noncommercial aviation, the operator SAF mixture credit. The person that pro- methodology that satisfies the criteria un-
may identify, either at the time of purchase or duced and sold or used a qualified mixture (a der section 211(o)(1)(H) of the Clean Air
after the kerosene has been used, the amount mixture of SAF synthetic blending component Act.
that will be (or has been) used in commercial and kerosene) is the only person eligible to 4. For qualified mixtures produced with a
aviation. At the same time, the operator would make this claim. The credit is based on the gal- SAF synthetic blending component, the
either make the claim or waive the right to make lons of SAF mixture in the qualified mixture. Any Certificate for SAF Synthetic Blending
the claim for credit or refund of the kerosene for SAF mixture credit must first be claimed on Component, Statement of SAF Synthetic
use in commercial and nonexempt, noncom- Form 720, Schedule C, to reduce your taxable Blending Component Reseller (if applica-
mercial aviation. fuel liability reported on Form 720. Any excess ble), and Declaration for SAF Qualified
If the operator doesn't identify the amount of credit must be claimed on Form 720, Sched- Mixture must be attached to the first claim
kerosene that will be (or has been) used in ule C; Schedule 3 (Form 8849); Form 4136; or filed that is supported by the certificate or
commercial aviation, the operator may provide Form 8864. statement. See the Instructions for Forms
a certificate to the ultimate vendor similar to 720; 8849; 8864; or 4136 for more claim
Model Certificate Q in the Appendix. For kero- How to file a claim. Only one credit may be information.
sene purchased with the certificate, used in taken for each amount of SAF. The qualified
commercial aviation, and taxed at $.244 per mixture must be used (or sold, in the ordinary
gallon, use of the certificate will be treated as a course of a trade or business) in an aircraft.
waiver of the right to claim a credit or refund for The SAF credit can't be claimed for qualified Other Fuels (Including
the $.025 per gallon part of the tax. The ultimate mixtures produced outside of the United States Alternative Fuels)
vendor may make this claim. The operator may or if the transfer of such mixture to the fuel tank
make a claim for the $.175 tax per gallon of the of an aircraft occurs outside of the United Credit or refund for nontaxable use of taxed
kerosene, but can't waive the right to make the States. Requirements 1 and 2 must be met only Other Fuels may be allowable to an ultimate
claim for the $.175 tax per gallon. if the credit exceeds the amount of taxable fuel purchaser. While tax is generally imposed on
liability reported. Requirements 3 and 4 must be delivery, Other Fuels are taxed prior to delivery
Kerosene for use in aviation by a state or met for all claims. in the case of certain bulk sales described in
local government. Only the registered ulti-
mate vendor may claim a credit or payment for 1. The claim must be for a qualified mixture chapter 1. The following are the nontaxable
sales of kerosene for use in aviation to a state sold or used during a period that is at least uses of Other Fuels for which a credit or refund
or local government for its exclusive use (in- 1 week. may be allowable to the ultimate purchaser.
• On a farm for farming purposes.
cluding essential government use by an Indian 2. The amount of the claim must be at least • Off-highway business use.
tribal government). The kerosene for use in avi- $200. To meet this minimum, amounts • In a boat engaged in commercial fishing.
ation must be purchased by the state without from lines 12 and 13 may be combined. • In certain intercity and local buses.
the use of a credit card in order for the ultimate
vendor to make the claim. The ultimate vendor 3. The SAF used to produce the qualified • In a school bus.
must be registered by the IRS (activity letter mixture is the portion of liquid fuel that isn’t • In a qualified local bus.
“UV”) and have the required certificate from the kerosene that: • Exclusive use by a qualified blood collector
organization.
ultimate purchaser. A sample certificate is inclu- (i) Either: • Exclusive use by a nonprofit educational
ded as Model Certificate P in the Appendix. The
registered ultimate vendor must have the certifi- (A) Meets the specifications of one organization.
cate at the time the credit or payment is of the ASTM D7566 Annexes, or • Exclusive use by a state, political subdivi-
claimed. (B) Meets the specifications of sion of a state, or the District of Columbia.
ASTM D1655 Annex A1, • In an aircraft or vehicle owned by an air-
Credit card purchases. If taxed kerosene for (ii) Isn’t derived from coprocessing an craft museum.
use in aviation is purchased with a credit card applicable material (or materials de- • In any boat operated by the United States
issued to a state, the person who extended rived from an applicable material) with for its exclusive use or any vessel of war of
credit to the state (the credit card issuer) is trea- a feedstock that isn’t biomass, any foreign nation.
ted as the person that paid the tax and makes (iii) Isn’t derived from palm fatty acid
the claim if the credit card issuer: distillates or petroleum, and See Biodiesel or Renewable Diesel Mixture
• Is registered by the IRS; (iv) Has been certified in accordance Credit, Alternative Fuel Credit, and Alternative
• Has established that the amount of tax with I.R.C. section 40B(e) as having a Fuel Mixture Credit, later.
hasn’t been collected from the person who lifecycle greenhouse gas emissions
purchased the kerosene, or has obtained reduction percentage of at least 50%.
written consent from the ultimate pur- The SAF must not be derived from Refunds of Second Tax
chaser to the allowance of the credit or re- coprocessing an applicable material (or The tax on dyed diesel fuel for inland
fund; materials derived from applicable material) ! waterways fuel use applies at the rate
• Has repaid or agreed to repay the amount with a feedstock that isn't biomass, must CAUTION listed on Form 720. This is in addition
of the tax to the ultimate vendor, has ob- not be derived from palm fatty acid distil- to all other taxes imposed on the sale or use of
tained the written consent of the ultimate lates or petroleum, and must have been the fuel. The section 4081(e) refund can't be
vendor to the allowance of the credit or re- certified as having a lifecycle greenhouse claimed.
fund, or has made arrangements that pro- gas emissions reduction percentage of at
least 50%. Applicable material means

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If the tax is paid and reported to the govern- Optional reporting. A first taxpayer's re- must submit the following information with your
ment on more than one taxable event for a taxa- port isn't required for the tax imposed on: claim.
ble fuel under section 4081, the person paying • Removal at a terminal rack, • A copy of the first taxpayer's report.
the “second tax” may claim a refund (without in- • Nonbulk entries into the United States, and • A copy of the statement of the subsequent
terest) of that tax if certain conditions and re- • Removals or sales by blenders. seller if the fuel was bought from someone
porting requirements are met. No credit against However, if the person liable for the tax expects other than the first taxpayer.
any tax is allowed for this tax. For information that another tax will be imposed on that fuel,
about taxable events, see the discussions un- that person should (but isn't required to) file a
der Gasoline Diesel Fuel and Kerosene, , and first taxpayer's report. Definitions of
Kerosene for Use in Aviation in chapter 1.
Providing information. The first taxpayer Nontaxable Uses
Conditions to allowance of refund. A claim must give a copy of the report to the buyer of
for refund of the tax is allowed only if all the fol- the fuel within the bulk transfer/terminal system This section provides definitions of the terms
lowing conditions are met. or to the owner of the fuel immediately before used in Table 2-1 for nontaxable uses. If appli-
1. A tax on the fuel was paid to the govern- the first tax was imposed, if the first taxpayer cable, the type of use number from Table 2-1 is
ment and not credited or refunded (the isn't the owner at that time. If an optional report indicated in each heading.
“first tax”). is filed, a copy should (but isn't required to) be
given to the buyer or owner. Type of use table. The first column of the ta-
2. After the first tax was imposed, another tax A person that receives a copy of the first tax- ble is the number you enter on Form 4136,
was imposed on the same fuel and was payer's report and later sells the fuel within the Form 8849, or Form 720, Schedule C, for that
paid to the government (the “second tax”). bulk transfer/terminal system must give the type of use. For type of use 2, the mobile ma-
3. The person that paid the second tax filed a copy and a “Statement of Subsequent Seller” to chinery parenthetical applies only to Form 8849
timely claim for refund containing the infor- the buyer. If the later sale is outside the bulk and Form 720.
mation required (see Refund claim, later). transfer/terminal system and that person ex-
pects that another tax will be imposed, that per- On a farm for farming purposes (No. 1). On
4. The person that paid the first tax has met son should (but isn't required to) give the copy a farm for farming purposes means fuel used in
the reporting requirements. and the statement to the buyer. A model state- carrying on a trade or business of farming, on a
ment of subsequent seller is shown in the Ap- farm in the United States, and for farming pur-
Reporting requirements. Generally, the per- pendix as Model Certificate A. The statement poses.
son that paid the first tax must file a “First Tax- must contain all information necessary to com-
payer's Report” with its Form 720 for the quarter plete the model. Farm. A farm includes livestock, dairy, fish,
to which the report relates. A model first taxpay- If the first taxpayer's report relates to fuel poultry, fruit, fur-bearing animals, and truck
er's report is shown in the Appendix as Model sold to more than one buyer, copies of that re- farms; orchards; plantations; ranches; nurser-
Certificate B. The report must contain all infor- port must be made when the fuel is divided. ies; ranges; and feed yards for fattening cattle.
mation needed to complete the model. Each buyer must be given a copy of the report. It also includes structures such as greenhouses
By the due date for filing the Form 720, you used primarily for the raising of agricultural or
must also send a separate copy of the report to Refund claim. You must have filed Form 720 horticultural commodities. A fish farm is an area
the following address. and paid the second tax before you file for a re- where fish are grown or raised — not merely
fund of that tax. You must make your claim for caught or harvested.
Department of the Treasury refund on Form 8849. Complete Schedule 5
Internal Revenue Service (Form 8849) and attach it to your Form 8849. Farming purposes. As an owner, tenant, or
Cincinnati, OH 45999-0555 Don't include this claim with a claim under an- operator, you use fuel on a farm for farming pur-
other tax provision. You must not have included poses if you use it in any of the following ways.
Write “EXCISE – FIRST TAXPAYER'S RE- the second tax in the price of the fuel and must 1. To cultivate the soil or to raise or harvest
PORT” across the top of that copy. not have collected it from the purchaser. You any agricultural or horticultural commodity.
2. To raise, shear, feed, care for, train, or
manage livestock, bees, poultry, fur-bear-
Table 2-1. Type of Use Table ing animals, or wildlife.
3. To operate, manage, conserve, improve,
No. Type of Use or maintain your farm and its tools and
1 On a farm for farming purposes equipment.
2 Off-highway business use (for business use other than in a highway vehicle 4. To handle, dry, pack, grade, or store any
registered or required to be registered for highway use) (other than use in mobile raw agricultural or horticultural commodity.
machinery) For this use to qualify, you must have pro-
3 Export duced more than half the commodity so
4 In a boat engaged in commercial fishing treated during the tax year. Commodity
5 In certain intercity and local buses means a single raw product. For example,
6 In a qualified local bus apples and peaches are two separate
7 In a bus transporting students and employees of schools (school buses) commodities.
8 For diesel fuel and kerosene (other than kerosene used in aviation) used other 5. To plant, cultivate, care for, or cut trees or
than as a fuel in the propulsion engine of a train or diesel-powered highway to prepare (other than sawing logs into
vehicle (but not off-highway business use) lumber, chipping, or other milling) trees for
9 In foreign trade market, but only if the planting, etc., is inci-
10 Certain helicopter and fixed-wing aircraft uses dental to your farming operations. Your
11 Exclusive use by a qualified blood collector organization tree operations will be incidental only if
12 In a highway vehicle owned by the United States that isn't used on a highway they're minor in nature when compared to
13 Exclusive use by a nonprofit educational organization the total farming operations.
14 Exclusive use by a state, political subdivision of a state, or the District of If any other person, such as a neighbor or
Columbia custom operator, performs a service for you on
15 In an aircraft or vehicle owned by an aircraft museum your farm for any of the purposes listed in (1) or
16 In military aircraft (2), you're considered to be the ultimate

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purchaser that used the fuel on a farm for farm-       the personal lawn mower at home doesn't qual-              heavier loads off highway than it's allowed 
ing purposes.                                          ify.                                                       to carry over the highway.
If  doubt  exists  whether  the  owner,  the  ten-                                                             3. Nontransportation trailers and semi-
ant, or the operator of the farm bought the fuel,      Highway  vehicle. A  highway  vehicle  is  any 
determine who bore the cost of the fuel. For ex-       self-propelled vehicle designed to carry a load            trailers. A trailer or semitrailer isn't treated 
ample,  if  the  owner  of  a  farm  and  the  tenant  over  public  highways,  whether  or  not  it's  also      as a highway vehicle if it's specially de-
equally share the cost of gasoline that is used        designed to perform other functions. Examples              signed to function only as an enclosed sta-
on a farm for farming purposes, each can claim         of vehicles designed to carry a load over public           tionary shelter for carrying on a nontrans-
a credit for the tax on one-half of the fuel used.     highways are passenger automobiles, motorcy-               portation function at an off-highway site. 
                                                       cles, buses, and highway-type trucks and truck             For example, a trailer that is capable only 
Custom application of fertilizer and pes-              tractors.  A  vehicle  is  a  highway  vehicle  even       of functioning as an office for an off-high-
ticide. Fuel used on a farm for farming purpo-         though the vehicle's design allows it to perform           way construction operation isn't a highway 
ses includes fuel used in the application of fertil-   a highway transportation function for only one of          vehicle.
izer, pesticides, or other substances, including       the following.                                        Public  highway. A  public  highway  includes 
aerial  applications.  Generally,  the  applicator  is •    A particular type of load, such as passen-       any road in the United States that isn't a private 
treated  as  having  used  the  fuel  on  a  farm  for      gers, furnishings, and personal effects (as      roadway.  This  includes  federal,  state,  county, 
farming  purposes.  For  aviation  gasoline,  the           in a house, office, or utility trailer).         and city roads and streets.
aerial  applicator  makes  the  claim  as  the  ulti-  •    A special kind of cargo, goods, supplies, or 
mate purchaser. For kerosene used in aviation,              materials.                                       Registered.   A vehicle is considered registered 
the  ultimate  purchaser  may  make  the  claim  or    •    Some off-highway task unrelated to high-         when it's registered or required to be registered 
waive their right to make the claim to the regis-           way transportation, except as discussed          for highway use under the law of any state, the 
tered ultimate vendor.                                      next.                                            District  of  Columbia,  or  any  foreign  country  in 
Fuel  used  between  airfield  and  farm.              Vehicles  not  considered  highway  vehi-             which it's operated or situated. Any highway ve-
Fuel used by an aerial applicator for the direct       cles. Generally, the following kinds of vehicles      hicle operated under a dealer's tag, license, or 
flight  between  the  airfield  and  one  or  more     aren’t  considered  highway  vehicles  for  purpo-    permit is considered registered. A highway ve-
farms is treated as a farming purpose.                 ses of the credit or refund of fuel taxes.            hicle isn't considered registered solely because 
                                                                                                             a special permit allows the vehicle to be oper-
Fuel not used for farming. Fuel isn't used             1.   Specially designed mobile machinery              ated  at  particular  times  and  under  specified 
on a farm for farming purposes if it's used in any          for nontransportation functions. A               conditions.
of the following ways.                                      self-propelled vehicle isn't a highway vehi-
• Off the farm, such as on the highway or in                cle if all the following apply.                  Dual  use  of  propulsion  motor. Off-highway 
  noncommercial aviation, other than fuel                                                                    business  use  doesn't  include  any  fuel  used  in 
  used between the airfield and farm descri-                 a. The chassis has permanently moun-
  bed above, even if the fuel is used in trans-              ted to it machinery or equipment used           the  propulsion  motor  of  a  registered  highway 
  porting livestock, feed, crops, or equip-                  to perform certain operations (con-             vehicle  even  though  that  motor  also  operates 
  ment.                                                      struction, manufacturing, drilling, min-        special equipment by means of a power take-off 
• For personal use, such as mowing the                       ing, timbering, processing, farming, or         or power transfer. It doesn't matter if the special 
  lawn.                                                      similar operations) if the operation of         equipment is mounted on the vehicle.
• In processing, packaging, freezing, or can-                the machinery or equipment is unrela-
  ning operations.                                           ted to transportation on or off the pub-          Example.    The  motor  of  a  registered  con-
• In processing crude gum into gum spirits of                lic highways.                                   crete-mixer truck operates both the engine and 
                                                                                                             the  mixing  unit  by  means  of  a  power  take-off. 
  turpentine or gum resin or in processing                   b. The chassis has been specially de-           The fuel used in the motor to run the mixer isn't 
  maple sap into maple syrup or maple                        signed to serve only as a mobile car-           off-highway business use.
  sugar.                                                     riage and mount (and power source, if 
                                                             applicable) for the machinery or                Use in separate motor.   Off-highway business 
Off-highway business use (No. 2).      Off-high-             equipment, whether or not the machi-            use  includes  fuel  used  in  a  separate  motor  to 
way business use means fuel used in a trade or               nery or equipment is in operation.              operate special equipment, such as a refrigera-
business  or  in  an  income-producing  activity                                                             tion unit, pump, generator, or mixing unit. If you 
other than as a fuel in a highway vehicle regis-             c. The chassis couldn’t, because of its 
tered  or  required  to  be  registered  for  use  on        special design and without substantial          draw fuel from the same tank that supplies fuel 
public  highways.  The  terms  “highway  vehicle,”           structural modification, be used as             to  the  propulsion  motor,  you  must  figure  the 
“public  highway,”  and  “registered”  are  defined          part of a vehicle designed to carry any         quantity  used  in  the  separate  motor  operating 
below. Don't consider any use in a boat as an                other load.                                     the  special  equipment.  You  may  make  a  rea-
                                                                                                             sonable  estimate  based  on  your  operating  ex-
off-highway business use.                                    d. The vehicle must have traveled less          perience and supported by your records.
Off-highway  business  use  includes  fuels                  than 7,500 miles on public highways               You can use devices that measure the miles 
used in any of the following ways.                           during the taxable year.                        the vehicle has traveled (such as hubometers) 
• In stationary machines such as generators,                                                                 to figure the gallons of fuel used to propel the 
  compressors, power saws, and similar                 2.   Vehicles specially designed for 
  equipment.                                                off-highway transportation. A vehicle            vehicle. Add to this amount the fuel consumed 
• For cleaning purposes.                                    isn't treated as a highway vehicle if the ve-    while idling or warming up the motor before pro-
• In forklift trucks, bulldozers, and earthmov-             hicle is specially designed for the primary      pelling the vehicle. The difference between your 
  ers.                                                      function of transporting a particular type of    total fuel used and the fuel used to propel the 
                                                            load other than over the public highway          vehicle is the fuel used in the separate motor.
Generally, this use doesn't include nonbusi-                and because of this special design, the ve-
ness  use  of  fuel,  such  as  use  by  minibikes,         hicle's capability to transport a load over a      Example.    Hazel  owns  a  refrigerated  truck. 
snowmobiles, power lawn mowers, chain saws,                 public highway is substantially limited or       It has a separate motor for the refrigeration unit. 
and other yard equipment.                                   impaired.                                        The same tank supplies both motors. Using the 
                                                             To  make  this  determination,  you  can        truck's  hubometer,  Hazel  figures  that  90%  of 
Example.      Shannon  owns  a  landscaping                 take  into  account  the  vehicle's  size,       the fuel was used to propel the truck. Therefore, 
business.  Shannon  uses  power  lawn  mowers               whether the vehicle is subject to licensing,     10% of the fuel is used in an off-highway busi-
and  chain  saws  in  the  landscaping  business.           safety, or other requirements, and whether       ness use.
The  gasoline  used  in  the  power  lawn  mowers           the vehicle can transport a load at a sus-
and  chain  saws  qualifies  as  fuel  used  in  an         tained speed of at least 25 miles per hour.      Fuel  lost  or  destroyed. You  can't  treat  fuel 
off-highway business use. The gasoline used in              It doesn't matter that the vehicle can carry     lost or destroyed through spillage, fire, or other 

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casualty as fuel used in an off-highway busi- poses a bona fide obligation on the bus opera- Fixed-wing aircraft uses. Fixed-wing air-
ness use. tor to furnish the transportation. craft uses means fuel used by a fixed-wing air-
craft for any of the following purposes.
Export (No. 3). Export means fuel transported More than a nominal subsidy. A subsidy is
from the United States with the intention that the more than nominal if it's reasonably expected to 1. Planting, cultivating, cutting, transporting,
fuel remain in a foreign country or possession of exceed an amount equal to 3 cents multiplied or caring for trees (including logging oper-
the United States. Fuel isn't exported if it's in the by the number of gallons of fuel used in buses ations).
fuel supply tank of a vehicle or aircraft. on subsidized routes. A company that operates 2. Providing emergency medical transporta-
its buses along subsidized and unsubsidized in- tion. The aircraft must be equipped for,
In a boat engaged in commercial fishing tracity routes may consider its buses qualified and exclusively dedicated on that flight to,
(No. 4). In a boat engaged in commercial fish- local buses only when the buses are used on acute care emergency medical services.
ing means fuel used in taking, catching, pro- the subsidized intracity routes.
cessing, or transporting fish, shellfish, or other During a use described in item (1), the aircraft
aquatic life for commercial purposes, such as In a school bus (No. 7). In a school bus must not take off from, or land at, a facility eligi-
selling or processing the catch, on a specific trip means fuel used in a bus engaged in the trans- ble for assistance under the Airport and Airway
basis. They include boats used in both fresh portation of students or employees of schools. Development Act of 1970, or otherwise use
and saltwater fishing. They don't include boats A school is an educational organization with a services provided pursuant to section 44509 or
used for both sport fishing and commercial fish- regular faculty and curriculum and a regularly 44913(b) or subchapter I of chapter 471 of title
ing on the same trip. enrolled body of students who attend the place 49, United States Code.
where the educational activities occur.
In certain intercity and local buses (No. 5). Exclusive use by a qualified blood collector
In certain intercity and local buses means fuel For diesel fuel and kerosene (other than organization (No. 11). Exclusive use by a
used in a bus engaged in furnishing (for com- kerosene used in aviation) used other than qualified blood collector organization means
pensation) passenger land transportation avail- as a fuel (No. 8). Diesel fuel and kerosene fuel used by the qualified blood collector organi-
able to the general public. The bus must be en- (other than kerosene used in aviation) used zation for its exclusive use in the collection,
gaged in one of the following activities. other than as a fuel in the propulsion engine of a storage, or transportation of blood.
• Scheduled transportation along regular diesel-powered highway vehicle or diesel-pow- Qualified blood collector organization.
routes. ered train (not including off-highway business A qualified blood collector organization is one
• Nonscheduled operations if the seating ca- use) means undyed diesel fuel and undyed ker- that is:
pacity of the bus is at least 20 adults, not osene used: • Described in section 501(c)(3) and exempt
including the driver. Vans and similar vehi- • For home heating, lighting, and cooking; from tax under section 501(a),
cles used for van-pooling or taxi service • In boats; • Primarily engaged in the activity of collect-
don't qualify. • In stationary machines, such as generators ing human blood,
and compressors; • Registered by the IRS, and
Available to the general public. This means • For cleaning purposes; or • Registered by the Food and Drug Adminis-
you offer service to more than a limited number • In minibikes and snowmobiles. tration to collect blood.
of persons or organizations. If a bus operator
normally provides charter operations through In foreign trade (No. 9). In foreign trade In a highway vehicle owned by the United
travel agencies but has buses available for means fuel used in civil aircraft employed in for- States that isn't used on a highway (No.
chartering by the general public, this service is eign trade or trade between the United States 12). In a highway vehicle owned by the United
available to the general public. A bus doesn't and any of its possessions. The term trade in- States that isn't used on a highway means fuel
qualify when its operator uses it to provide ex- cludes the transportation of persons or property used in a vehicle that wasn't used on public
clusive services to only one person, group, or for hire and the making of the necessary prepa- highways during the period covered by the
organization. Also, intercity bus transportation rations for such transportation. In the case of claim. This use applies whether or not the vehi-
doesn't include transporting students and em- aircraft registered in a foreign country, the coun- cle is registered or required to be registered for
ployees of schools or intercity transportation in try must allow reciprocal benefits for aircraft highway use.
a qualified local bus. registered in the United States.
Exclusive use by a nonprofit educational
In a qualified local bus (No. 6). In a qualified Certain helicopter and fixed-wing aircraft organization (No. 13). Exclusive use by a
local bus means fuel used in a bus meeting all uses (No. 10). Includes: nonprofit educational organization means fuel
the following requirements. used by an organization exempt from income
• It's engaged in furnishing (for compensa- Certain helicopter uses. Certain helicop-
tion) intracity passenger land transporta- ter uses means fuel used by a helicopter for any tax under section 501(a) that meets both of the
tion available to the general public. of the following purposes. following requirements.
• It has a regular faculty and curriculum.
• It operates along scheduled, regular 1. Transporting individuals, equipment, or • It has a regularly enrolled body of students
routes. supplies in the exploration for, or the de- who attend the place where the instruction
• It has a seating capacity of at least 20 velopment or removal of, hard minerals, normally occurs.
adults (excluding the driver). oil, or gas.
• It's under contract with (or is receiving A nonprofit educational organization also in-
more than a nominal subsidy from) any 2. Planting, cultivating, cutting, transporting, cludes a school operated by a church or other
state or local government to furnish the or caring for trees (including logging oper- organization described in section 501(c)(3) if
transportation. ations). the school meets the above requirements.
3. Providing emergency medical transporta-
Intracity passenger land transportation. tion. Exclusive use by a state, political subdivi-
This is the land transportation of passengers sion of a state, or the District of Columbia
between points located within the same metro- During a use described in items (1) and (2), (No. 14). Exclusive use by a state, political
politan area. It includes transportation along the helicopter must not take off from, or land at, subdivision of a state, or the District of Colum-
routes that cross state, city, or county bounda- a facility eligible for assistance under the Airport bia means fuel purchased by the state or local
ries if the routes remain within the metropolitan and Airway Development Act of 1970, or other- government for its exclusive use. A state or lo-
area. wise use services provided pursuant to section cal government is any state, any political subdi-
44509 or 44913(b) or subchapter I of chap- vision thereof, or the District of Columbia. An In-
Under contract. A bus is under contract with a ter 471 of title 49, United States Code. For item dian tribal government is treated as a state only
state or local government only if the contract im- (1), treat each flight segment as a separate if the fuel is used in an activity that involves the
flight. exercise of an essential tribal government
function. Gasoline, diesel fuel, and kerosene
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used by the American Red Cross is considered Renewable diesel doesn't include any Credits for fuel provide incentive for U.S.
to be the use of these fuels by a state. ! fuel derived from coprocessing bio- production. The section 6426 fuel credit may
CAUTION mass (as defined in section 45K(c)(3)) not be claimed for biodiesel or alternative fuel
In an aircraft or vehicle owned by an air- with a feedstock that isn't biomass. that is produced outside the United States for
craft museum (No. 15). In an aircraft or vehi- use as a fuel outside the United States. The
cle owned by an aircraft museum means fuel The renewable diesel used to produce the re- United States includes any possession of the
used in an aircraft or vehicle that is owned by newable diesel mixture must be derived from bi- United States.
an organization that meets all the following re- omass, meet ASTM D975, D396, or other
quirements. equivalent standard approved by the IRS, and No credit for fuels derived from paper or
1. It's exempt from income tax as an organi- meet the EPA’s registration requirements for pulp production. Credit for alternative fuels
zation described in section 501(c)(3). fuels and fuel additives under section 211 of the and alternative fuel mixtures isn't available for
Clean Air Act. For a renewable diesel mixture any fuel derived from the production of paper or
2. It's operated as a museum under a state used in aviation, kerosene is treated as if it's pulp.
(or District of Columbia) charter. diesel fuel.
3. It's operated exclusively for acquiring, ex-
hibiting, and caring for aircraft of the type Form 720, Claim requirements. See the In- Filing Claims
used for combat or transport in structions for Form 720 for the biodiesel or re-
World War II. newable diesel mixture claim requirements. This section tells you how to make a claim for a
credit or refund of excise taxes on fuels. This
The aircraft or vehicle (such as a ground Alternative fuel credit claimant. For the al- section also covers recordkeeping require-
servicing vehicle for aircraft) must be used ex- ternative fuel credit, the registered alternative ments and when to include the credit or refund
clusively for the purposes described in item (3). fueler who (1) sold an alternative fuel at retail in your income.
and delivered it into the fuel supply tank of a
In military aircraft (No. 16). In a military air- motor vehicle or motorboat; (2) sold an alterna- Generally, you will provide all the informa-
craft means fuel used in an aircraft owned by tive fuel, delivered it in bulk for taxable use in a tion needed to claim a credit or refund when
the United States or any foreign nation and con- motor vehicle or motorboat, and received the you properly complete Form 8849; Form 4136;
stituting a part of its armed forces. required statement from the buyer; (3) used an Form 720, Schedule C; Form 6478; or Form
alternative fuel (not sold at retail or in bulk as 8864. In some cases, you will have to attach ad-
In commercial aviation (other than foreign previously described) motor vehicle or motor- ditional information. You need to keep records
trade). See Commercial aviation, earlier, for boat; or (4) sold an alternative fuel used as a that support your claim for a credit or refund.
the definition. fuel in aviation is the only person eligible to
make this claim. Keep at your principal place of busi-
Use in a train. Use in a train means fuel used ness all records needed to enable the
in the propulsion engine of equipment or machi- Carbon capture requirement. A credit for RECORDS IRS to verify that you're the person en-
nery that rides on rails. This includes use in a lo- Fischer-Tropsch process liquid fuel derived titled to claim a credit or refund and the amount
comotive, work train, switching engine, and from coal (including peat) can be claimed only if you claimed.
track maintenance machine. the fuel is derived from coal produced at a gasi-
fication facility that separates and sequesters at Ultimate purchaser. Ultimate purchasers may
least 75% of the facility's total carbon dioxide make claims for the nontaxable use of fuels on
Biodiesel or Renewable emissions. Form 4136; Schedule 1 (Form 8849); Form
8864; and Form 720, Schedule C, if reporting
Diesel Mixture Credit, Alternative fuel credit. The registered alter- excise tax liability on that return. If you're an ulti-
native fueler is the person eligible to make the mate purchaser, you must keep the following
Alternative Fuel Credit, claim. An alternative fueler is the person liable records.
and Alternative Fuel for tax on alternative fuel under the rules for tax- • The number of gallons purchased and
able events for other fuels, or would be liable used during the period covered by your
Mixture Credit but for an exemption for nontaxable uses. An al- claim.
ternative fueler includes a person who sells for • The dates of the purchases.
The section 6426 credit for biodiesel and alter- use or uses an alternative fuel in aviation. • The names and addresses of suppliers
native fuel consists of the biodiesel or renewa- and amounts purchased from each in the
ble diesel mixture credit, alternative fuel credit, Alternative fuel mixture credit claimant. period covered by your claim.
and alternative fuel mixture credit. For the alternative fuel mixture credit, the regis- • The nontaxable use for which you used the
tered alternative fueler that produced and sold fuel.
Coordination with income tax credit. Only or used the mixture as a fuel in their trade or • The number of gallons used for each non-
one credit may be claimed for any amount of bi- business is the only person eligible to make this taxable use.
odiesel or renewable diesel. claim. The credit is based on the gallons of al-
ternative fuel in the mixture. An alternative fuel It's important that your records show separately
Biodiesel or renewable diesel mixture mixture is a mixture of alternative fuel and sec- the number of gallons used for each nontaxable
credit claimant. Claimant produced a biodie- tion 4081 taxable fuel (gasoline, diesel fuel, or use that qualifies as a claim. If the fuel is expor-
sel mixture by mixing biodiesel with diesel fuel. kerosene). ted, you must have proof of exportation.
For more information about keeping re-
Claimant produced a renewable diesel mixture For claims made on or after January 8, cords, see Publication 583, Starting a Business
by mixing renewable diesel with diesel fuel ! 2018, alternative fuel mixture means a and Keeping Records, or chapter 1 of Publica-
(other than renewable diesel). CAUTION mixture of taxable fuel and alternative tion 17, Your Federal Income Tax for Individu-
The biodiesel used to produce the biodiesel fuel other than liquefied petroleum gas (LPG), als.
mixture must meet the EPA’s registration re- compressed natural gas (CNG), liquefied natu-
quirements for fuels and fuel additives under ral gas (LNG), liquefied gas derived from bio- Exceptions.
section 211 of the Clean Air Act. mass, or compressed gas derived from bio- 1. Generally, the ultimate purchaser may not
The person that produced and sold or used mass. claim a credit or refund for undyed diesel
the mixture in their trade or business is the only
person eligible to make this claim. The credit is fuel, undyed kerosene, or kerosene for
based on the gallons of biodiesel or renewable Registration. You must be registered by the use in aviation sold for the exclusive use of
diesel in the mixture. IRS to be eligible to claim the section 6426 fuel a state or local government. However, see
credit. See Registration Requirements in chap- Claims by credit card issuers, later, for an
ter 1. exception.

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2. The ultimate purchaser may not claim a number and the fuel can't be purchased with a registration number. See Kerosene for Use in
credit or refund as follows. credit card as explained below. If you sell Aviation, earlier, for a list of nontaxable uses.
a. The ultimate purchaser of gasoline or undyed diesel fuel, undyed kerosene, or kero- You must keep the following information.
aviation gasoline used by a state or sene for use in aviation for use by a state or lo- • The date of each sale.
local government for its exclusive use cal government, you must keep the following in- • The name and address of the buyer.
or by a nonprofit educational organi- formation. • The number of gallons sold to the buyer.
zation for its exclusive use may waive • The name and taxpayer identification num- • A copy of the waiver signed by the buyer at
its right to make a claim by providing a ber of each person (government unit) that the time the credit or payment is claimed.
certificate that is signed under penal- bought the fuel. See Model Waiver L in the Appendix.
ties of perjury by a person authorized • The number of gallons sold to each per-
to bind the ultimate purchaser and is son. Kerosene for use in nonexempt, non-
in the same format as the Model Cer- • An unexpired certificate from the buyer. commercial aviation. To make a claim as an
tificate M. A new certificate is required See Model Certificate P in the Appendix. ultimate vendor of kerosene for use in non-
each year or when any information in The certificate expires on the earlier of 1 exempt, noncommercial aviation, you must
the current certificate expires. year after the date of the certificate or the have a UA registration number. You must keep
date a new certificate is given to the regis- the following information.
b. The ultimate purchaser of kerosene tered ultimate vendor. • The date of each sale.
for use in commercial aviation or non- • The name and address of the buyer.
commercial aviation (other than non- Nonprofit educational organization and • The number of gallons sold to the buyer.
exempt, noncommercial aviation and state use. To make a claim as an ultimate ven- • A copy of the certificate signed by the
exclusive use by a state, political sub- dor (nonprofit educational organization or buyer at the time the credit or payment is
division of a state, or the District of state), you must have a UV registration number claimed. See Model Certificate Q in the
Columbia) may waive its right to make and the fuel can't be purchased with a credit Appendix.
a claim by providing a waiver that is card as explained later. If you sell gasoline or
signed under penalties of perjury by a aviation gasoline to a nonprofit educational or- Claims by credit card issuers. For sales of
person authorized to bind the ultimate ganization for its exclusive use or to a state or gasoline, aviation gasoline, diesel fuel, kero-
purchaser and is in the same format local government for its exclusive use, you must sene, or kerosene for use in aviation that are
as the Model Waiver L. A new waiver keep the following information. purchased by an exempt user with the use of a
is required each year or when any in- • The name and taxpayer identification num- credit card, the registered credit card issuer is
formation in the current waiver ex- ber of each person (nonprofit educational the only person who can make the claim. An ex-
pires. organization or government unit) that empt user for this purpose is:
bought the fuel. • For gasoline or aviation gasoline, a state or
c. The ultimate purchaser of undyed die- • The number of gallons sold to each per- local government (including essential gov-
sel fuel or undyed kerosene used in son. ernment use by an Indian tribal govern-
certain intercity and local buses may • An unexpired certificate from the buyer. ment) or a nonprofit educational organiza-
waive its right to make a claim by pro- See Model Certificate M in the Appendix. tion; or
viding a waiver that is signed under The certificate expires on the earlier of 1 • For diesel fuel, kerosene, or kerosene for
penalties of perjury by a person au- year after the date of the certificate or the use in aviation, a state or local government
thorized to bind the ultimate pur- date a new certificate is given to the regis- (including essential government use by an
chaser and is in the same format as tered ultimate vendor. Indian tribal government).
the Model Waiver N. A new waiver is If gasoline is purchased without the use of a
required each year or when any infor- Blocked pump. To make a claim as an ulti-
mation in the current waiver expires. mate vendor (blocked pump), you must have a credit card, then the registered ultimate vendor
UP registration number. If you sell undyed kero- of the gasoline may make the claim for refund
d. The ultimate purchaser of kerosene sene (other than kerosene for use in aviation) or credit. However, if the gasoline is purchased
for use in nonexempt, noncommercial from a pump that qualifies as a blocked pump with a credit card issued to a state, but the
aviation must provide a certificate that because it's locked by you after each sale and credit card issuer isn't registered by the IRS or
is signed under penalties of perjury by is unlocked by you at the request of the buyer, doesn't meet the conditions described, the
a person authorized to bind the ulti- you must keep the following information for credit card issuer must collect the tax and the
mate purchaser and is in the same each sale of more than 5 gallons. state may make the claim.
format as the Model Certificate Q. A • The date of each sale. If diesel fuel, kerosene, or kerosene for use
new certificate is required each year • The name and address of the buyer. in aviation is purchased without the use of a
or when any information in the current • The number of gallons sold to that buyer. credit card, the registered ultimate vendor may
certificate expires. make the claim for refund or credit. A state isn't
Certain intercity and local bus use. To allowed to make a claim for these fuels. How-
Registered ultimate vendor. Registered ulti- make a claim as an ultimate vendor of undyed ever, if the diesel fuel or kerosene is purchased
mate vendors may make claims for certain diesel fuel or undyed kerosene used in certain with a credit card issued to a state, but the
sales of fuels on Form 720, Schedule C; Form intercity and local buses, you must have a UB credit card issuer isn't registered by the IRS or
4136; Form 8864; and Schedule 2 (Form 8849) registration number. You must keep the follow- doesn't meet the conditions described, the
if reporting excise tax liability on that return. If ing information. credit card issuer must collect the tax and the
you're a registered ultimate vendor, you must • The date of each sale. state may make the claim.
keep certain information pertaining to the sale • The name and address of the buyer. The claim from the credit card issuer must
of the fuel. • The number of gallons sold to the buyer. contain the following information as it applies to
To make a claim, you must have sold the • A copy of the waiver signed by the buyer at the fuel covered in the claim.
fuel at a tax-excluded price, repaid the tax to the time the credit or payment is claimed. • The total number of gallons.
the buyer, or obtained the buyer's written con- See Model Waiver N in the Appendix. • Its registration number.
sent to the allowance of the claim. you're re- Kerosene for use in commercial aviation • A statement that it hasn’t collected the
quired to have a valid certificate or waiver in or noncommercial aviation. To make a claim amount of tax from the ultimate purchaser
your possession in order to make the claim. as an ultimate vendor of kerosene for use in or has obtained the written consent of the
In addition, you must have a registration commercial aviation (other than foreign trade) ultimate purchaser to make the claim.
number that hasn’t been revoked or suspen- or noncommercial aviation (other than non- • A statement that it has repaid or agreed to
ded. See Form 637. exempt, noncommercial aviation and exclusive repay the amount of tax to the ultimate
State use. To make a claim as an ultimate use by a state, political subdivision of a state, or vendor, has obtained the written consent
vendor (state), you must have a UV registration the District of Columbia), you must have a UA of the ultimate vendor to make the claim, or
has otherwise made arrangements that

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  directly or indirectly provide the ultimate           • Tax on fuel you used in mobile machinery               amount in your gross income for the tax year in 
  vendor with reimbursement of the tax.                   (off-highway business use) that traveled               which  you  receive  the  refund.  If  you  claim  a 
• Has in its possession an unexpired certifi-             less than 7,500 miles on public highways.              credit  on  your  income  tax  return,  include  the 
  cate similar to Model Certificate R in the                                                                     credit amount in gross income for the tax year in 
  Appendix and has no reason to believe                 Only  one  credit  may  be  taken  for  each             which you file Form 4136. If you file an amen-
  any of the information in the certificate is          amount of any fuel type. Don't claim a credit for        ded return and claim a credit, include the credit 
  false.                                                any amount for which you have filed a refund or          amount  in  gross  income  for  the  tax  year  in 
                                                        credit  claim  on  Form  8849;  or  credit  on  Form     which you receive the credit.
Taxpayer  identification  number.    To  file  a        720, Schedule C; or Form 8864.
claim,  you  must  have  a  taxpayer  identification                                                             Example  1.          Sharon  Brown,  a  cash  basis 
number.  Your  taxpayer  identification  number         When to file.  You can claim a fuel tax credit on        farmer,  filed  a  2022  Form  1040  on  March  3, 
can be:                                                 your income tax return for the year you used the         2022. On the Schedule F (Form 1040), Sharon 
• An employer identification number (EIN);              fuel (or sold the fuel in the case of a registered       deducted  the  total  cost  of  gasoline  (including 
• A social security number (SSN); or                    ultimate vendor claim).                                  $110 of excise taxes) used on the farm. Then, 
• An individual taxpayer identification num-                     You  may  be  able  to  make  a  fuel  tax      on  Form  4136,  Sharon  claimed  $108  as  a 
  ber (ITIN), if you're an alien individual and         TIP      claim  on  an  amended  income  tax  re-        credit. Sharon reports the $108 as additional in-
  don't have and aren’t eligible to get an                       turn  for  the  year  you  used  the  fuel.     come on the 2022 Schedule F (Form 1040).
  SSN.                                                  Generally, you must file an amended return by 
If you normally file only a U.S. individual in-         the later of 3 years from the date you filed your        Example  2.          March  Corporation  uses  the 
come  tax  return  (such  as  Form  1040  or            original  return  or  within  2  years  from  the  date  calendar year as its tax year. For 2022, the fol-
1040-NR),  use  your  SSN  or  ITIN.  You  get  an      you paid the income tax.                                 lowing amounts of excise tax were included in 
SSN by filing Form SS-5, Application for a So-                                                                   the cost of gasoline the corporation used each 
cial Security Card, with the Social Security Ad-        How to claim a credit.  How you claim a credit           quarter in a nontaxable use.
ministration. To get an ITIN, file Form W-7, Ap-        depends on whether you're an individual, part-
plication for   IRS Individual       Taxpayer           nership, corporation, S corporation, or farmers'         Calendar Quarters . . . .       Fuel Tax Fuel Tax 
Identification Number, with the IRS.                    cooperative association.                                                                 Expense  Claim
If  you  operate  a  business,  use  your  EIN.  If                                                              Jan. 1 – March 31 . . . . . .   $1,300   $1,293
you don't have an EIN, you may apply for one            Individuals.   You claim the credit on Sched-
online.  Go  to IRS.gov/Businesses/Small  and           ule 3 (Form 1040), line 12. If you wouldn’t other-       April 1 – June 30 . . . . . . .  1,100   1,094
click on the “Employer ID Numbers (EINs)” link.         wise have to file an income tax return, you must         July 1 – Sept. 30 . . . . . . .   400         397
You may also apply for an EIN by faxing or mail-        do so to get a fuel tax credit.
                                                                                                                 Oct. 1 – Dec. 31 . . . . . . .    300         298
ing Form SS-4, Application for Employer Identi-         Partnerships.       Partnerships  (other  than 
fication Number, to the IRS.                            electing large partnerships) claim the credit by         Total                           $3,100   $3,082
                                                        including  a  statement  on  Schedule  K-1  (Form 
Claiming a Refund                                       1065), Partner's Share of Income, Deductions,            The  corporation  deducts  the  entire  cost  of 
                                                        Credits,  etc.,  showing  each  partner's  share  of     the  gasoline  (including  the  $3,100  in  excise 
Generally,  you  may  claim  a  refund  of  excise      the number of gallons of each fuel sold or used          taxes) it used during the year as a business ex-
taxes  on  Form  8849.  Complete  and  attach  to       for a nontaxable use, the type of use, and the           pense  on  its  corporation  income  tax  return, 
Form  8849  the  appropriate  Form  8849  sched-        applicable  credit  per  gallon.  Each  partner          thereby reducing its corporate income tax liabil-
ules.  The  Instructions  for  Form  8849  and  the     claims the credit on their income tax return for         ity for that year.
separate instructions for each schedule explain         the partner's share of the fuel used by the part-        Form  8849.  March  Corporation  files  quar-
the requirements for making a claim for refund.         nership.                                                 terly refund claims for the first 2 quarters (end-
                                                                                                                 ing March 31 and June 30). It can't file a quar-
Only one credit may be taken for each amount            Other  entities.    Corporations,  S  corpora-           terly refund claim for the third or fourth quarter 
of any fuel type. If you file Form 720, you can         tions,  farmers'  cooperative  associations,  and        because  it  didn’t  meet  the  $750  minimum  re-
use the Form 720, Schedule C, for your refund           trusts must make the claim on the appropriate            quirement.
claims  for  the  quarter.  See  the  Instructions  for line of their applicable income tax return.              Since  March  Corporation  uses  the  cash 
Form 720. Don't claim a refund on Form 8849             Federal,  state,  and  local  governments,  and          method of accounting, the corporation includes 
for any amount for which you have filed or will         certain tax-exempt organizations (as discussed           $2,387 ($1,293 + $1,094) in its gross income for 
file  a  claim  on  Form  720,  Schedule  C;  Form      earlier  under Claiming  A  Refund)  must  use           the tax year in which it receives the refunds.
8849; or Form 4136.                                     Form 8849, not Form 4136, to make an annual              Form 4136. The corporation claims the re-
Only one claim may be made for any partic-              claim.                                                   maining amounts ($397 + $298) as a credit on 
ular amount of alternative fuel.                                                                                 its  2022  income  tax  return  by  attaching  Form 
                                                        Including the Credit or                                  4136.  It  files  its  tax  return  in  2022.  It  includes 
                                                                                                                 this credit ($695) in its 2022 gross income.
Claiming a Credit on Form                               Refund in Income
4136                                                             In most situations, the amount claimed          Example  3.          Tyler  S.  Sands  used  undyed 
                                                                 as  a  credit  or  refund  will  be  less  than diesel fuel in vehicles used in the construction 
A  credit  may  be  claimed  for  certain  uses  and    CAUTION! the  amount  deducted  as  fuel  tax  ex-       business.  The  vehicles  weren’t  registered  (or 
sales of fuels on Form 4136 when you file your          pense  because  the  LUST  tax  is  generally  not       required  to  be  registered)  for  highway  use.  In 
income tax return at the end of the year. If you        refunded.                                                the  fourth  quarter  of  2022  income  tax  year, 
meet  certain  requirements  (discussed  earlier),                                                               which ends in December, Tyler used 3,000 gal-
you  may  be  able  to  make  a  claim  during  the                                                              lons  of  undyed  diesel  fuel.  The  excise  tax  on 
year.                                                   Include any credit or refund of excise taxes             the  3,000  gallons  of  undyed  diesel  fuel  used 
                                                        on fuels in your gross income if you claimed the 
Credit  only.   You  can  claim  the  following         total cost of the fuel (including the excise taxes)      was $732 (tax of $.244 per gallon).
taxes only as a credit on Form 4136.                    as an expense deduction that reduced your in-            Because  the  tax  is  less  than  $750,  Tyler 
• Tax on fuels used for nontaxable uses if              come tax liability.                                      must claim a credit for the tax on the 2022 in-
  the total for your tax year is less than $750.                                                                 come tax return. Tyler fills out Form 4136 and 
• Tax on fuel you didn’t include in any claim           The  year  you  include  a  credit  or  refund  in       attaches it to the 2022 income tax return, which 
  for refund previously filed for any quarter of        gross income depends on whether you use the              Tyler files in 2022. Tyler enters $729 (credit of 
  your tax year.                                        cash or an accrual method of accounting.                 $.243 per gallon) on Schedule 3 (Form 1040), 
                                                                                                                 line 12.
                                                        Cash method.   If you use the cash method and 
                                                        file  a  claim  for  refund,  include  the  refund 
                                                                                          Chapter 2              Fuel Tax Credits and Refunds    Page 23

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Tyler uses the cash method of accounting. amount ($668.25) to the second quarter amount Example 1. Patty Green uses an accrual
On the 2022 Schedule C (Form 1040) Tyler de- ($607.50) and claims a refund of $1,275.75 by method. Patty files a 2022 return in April 2023.
ducts the total cost of the fuel, including the tax. filing Form 8849 and Schedule 1 (Form 8849). On Schedule C (Form 1040) Patty deducts the
When Tyler files a 2022 Form 1040, it will in- The claim must be filed by September 30, 2022, total cost of gasoline (including $155 of excise
clude the $729 credit shown on a 2022 Form which is the last day of the first quarter (July – taxes) used for an off-highway business use
4136 as additional income on the Schedule C September) following the last quarter (April – during 2022. On Form 4136, Patty claims $153
(Form 1040) for 2022. June) included in the claim. Tyler will have to in- as a credit. The $153 is reported as additional
For the first 2 quarters of 2022, Tyler's re- clude the $1,275.75 excise tax refund as addi- income on the 2022 Schedule C (Form 1040).
cords show the following. tional income on a Schedule C (Form 1040) for
2022. Example 2. Use the same facts as in the
Claim Claim earlier Example 2, except that March Corpora-
Quarter Gallons Used Tax Rate Amount Accrual method. If you use an accrual tion uses an accrual method of accounting.
First 2,750 .243 $668.25 method, include the amount of credit or refund Since the nontaxable use occurred in 2022, the
Second 2,500 .243 607.50 in gross income for the tax year in which you corporation reports the $3,082 of excise taxes
used the fuels (or sold the fuels if you're a regis- as income on its 2022 income tax return. This
Tyler couldn’t file a claim for a refund for the tered ultimate vendor). It doesn't matter whether consists of the $2,387 it claimed on Form 8849
first quarter because the amount of the claim you filed for a quarterly refund or claimed the and the $695 it claimed on Form 4136.
was less than $750. Tyler adds the first quarter entire amount as a credit.

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Part Two.

Excise Taxes

Other Than Fuel

Taxes

the Commonwealth of Puerto Rico, any posses- establish that the petroleum tax has already
sion of the United States, the Commonwealth of been imposed on such crude oil in order not to
the Northern Mariana Islands, the Trust Terri- be liable for the tax.
3. tory of the Pacific Islands, the continental shelf
areas (applying the principles of section 638),
and foreign trade zones. No one is exempt from Ozone-Depleting
the environmental taxes, including the federal
Environmental government, state and local governments, In- Chemicals (ODCs)
dian tribal governments, and nonprofit educa-
Taxes tional organizations. For a list of the taxable ODCs and tax rates, see
Instructions for the Form 6627.
Oil Spill Liability Tax Taxable event. Tax is imposed on an ODC
Environmental taxes are imposed on domestic when it's first used or sold by its manufacturer
crude oil and imported petroleum products (oil The oil spill liability tax is reported on Form or importer. The manufacturer or importer is lia-
spill liability), the sale or use of ozone-depleting 6627, and Form 720 (IRS Nos. 16, 18, 21, and ble for the tax.
chemicals (ODCs), and imported products con- 53). The tax rate is the sum of the Oil Spill Lia-
taining or manufactured with ODCs. In addition, bility Trust Fund financing rate (oil spill liability Use of ODCs. You use an ODC if you put it
a floor stocks tax is imposed on ODCs held on financing rate) and the Hazardous Substance into service in a trade or business or for the pro-
January 1 by any person (other than the manu- Superfund financing rate (petroleum Superfund duction of income. Also, an ODC is used if you
facturer or importer of the ODCs) for sale or for financing rate). The oil spill liability financing use it in the making of an article, including incor-
use in further manufacture. rate is $.09 per barrel. The petroleum Super- poration into the article, chemical transforma-
The Infrastructure Investment and Jobs Act re- fund financing rate is $.164 per barrel, begin- tion, or release into the air. The loss, destruc-
instates the section 4661 excise tax on chemi- ning in calendar year 2023, and will be adjusted tion, packaging, repackaging, or warehousing
cals (other than ODCs) (IRS No. 54) and the annually for inflation. See Form 6627 for the of ODCs isn't a use of the ODC.
section 4671 tax on imported chemical substan- rates. The creation of a mixture containing an ODC
is treated as a taxable use of the ODC con-
ces (IRS No. 17), effective July 1, 2022 (they The oil spill liability tax is generally imposed tained in the mixture. An ODC is contained in a
previously expired on December 31,1995). See on crude oil received at a U.S. refinery and to mixture only if the chemical identity of the ODC
the Instructions for Form 6627. petroleum products entered into the United isn't changed. Generally, tax is imposed when
See Table of Taxable Imported Chemical States for consumption, use, or warehousing. the mixture is created and not on its sale or use.
Sustances, for a listing of taxable imported The tax also applies to certain uses and the ex- However, you can choose to have the tax im-
chemical substances and the IRS-provided tax portation of domestic crude oil. posed on its sale or use by checking the appro-
rates for most of the substances. Any additional Crude oil includes crude oil condensates priate box on Form 6627. You can revoke this
tax rates the IRS provides will be available ei- and natural gasoline. Petroleum products in- choice only with IRS consent.
ther online or in the Table of Taxable Imported clude crude oil, refined and residual oil, and The creation of a mixture for export or for
Chemical Sustances when they become availa- other liquid hydrocarbon refinery products. use as a feedstock isn't a taxable use of the
ble. Taxpayers are reminded that they may cal- ODCs contained in the mixture.
culate their own tax rates for imported chemical Crude oil. Tax is imposed on crude oil when
substances, regardless of whether the IRS has it's received at a U.S. refinery. The operator of Exceptions. The following may be exempt
provided a tax rate. the refinery is liable for the tax. from the tax on ODCs.
Revenue Procedure 2022-26 provides proce- Tax is imposed on domestic crude oil used • Metered-dose inhalers.
dures for requesting a determination that a sub- or exported before it's received at a U.S. refin- • Recycled ODCs.
stance be added or removed. ery. However, the use of crude oil for extracting • Exported ODCs.
See Notice 2022-15 for information about tem- oil or natural gas on the premises where such • ODCs used as feedstock.
porary relief from the penalty for failure to de- crude oil was produced isn't taxable. The user Metered-dose inhalers. There is no tax on
posit the 2022 third and fourth quarter taxes. or exporter is liable for the tax. ODCs used or sold for use as propellants in
metered-dose inhalers. For a sale to be nontax-
For updates, such as the not yet shown tax Imported petroleum products. Tax is im- able, you must obtain from the purchaser an ex-
rates for taxable imported chemical substances, posed on petroleum products when they enter emption certificate that you rely on in good faith.
or substances recently added or removed, go to the United States for consumption, use, or The certificate must be in substantially the form
IRS.gov/Form6627. Also, see Frequently Asked warehousing. The person entering the petro- as the sample certificate set forth in Regulations
Questions and Answers. leum product into the country is liable for the section 52.4682-2(d)(5). The certificate may be
tax, including the tax on imported crude oil, included as part of the sales documentation.
Figure the environmental tax on Form 6627. En- even if it's subsequently received at a U.S. re- Keep the certificate with your records.
ter the tax on the appropriate lines of Form 720 finery.
and attach Form 6627 to Form 720. Tax is imposed only once on any imported Recycled ODCs. There is no tax on any
For environmental tax purposes, United States petroleum product. Thus, the operator of a U.S. ODC diverted or recovered in the United States
includes the 50 states, the District of Columbia, refinery that receives imported crude oil must as part of a recycling process (and not as part

Chapter 3 Environmental Taxes Page 25

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of the original manufacturing or production substances to which the imported substance haven’t used when you make the choice and all
process). There is no tax on recycled tax applies and the IRS-provided tax rates for later entries. Make the choice by checking the
Halon-1301 or recycled Halon-2402 imported most of the substances. Any additional tax rates box in Form 6627, Part V, under Election. The
from a country that has signed the Montreal the IRS provides will be available either online choice is effective as of the beginning of the cal-
Protocol on Substances that Deplete the Ozone or in the Table of Taxable Imported Chemical endar quarter to which the Form 6627 applies.
Layer (Montreal Protocol). Sustances when they become available. Reve- You can revoke this choice only with IRS con-
The Montreal Protocol is administered by nue Procedure 2022-26 provides procedures sent.
the United Nations (UN). To determine if a for requesting a determination that a substance
country has signed the Montreal Protocol, con- be added or removed. Sale of article incorporating imported prod-
tact the UN at UNtreaty.un.org. uct. The importer may treat the sale of an arti-
For updates, such as the not yet shown tax cle manufactured or assembled in the United
Exported ODCs. Generally, there is no tax rates for some of the taxable imported chemical States as the first sale or use of an imported
on ODCs sold for export if certain requirements substances, or substances recently added or taxable product incorporated in that article if
are met. For a sale to be nontaxable, you and removed, go to IRS.gov/Form6627. Also, see both the following apply.
the purchaser must be registered, see Form Frequently Asked Questions and Answers. • The importer has consistently treated the
637. Also, you must obtain from the purchaser sale of similar items as the first sale or use
an exemption certificate that you rely on in good See Notice 2022-15 for information about
faith. Keep the certificate with your records. The temporary relief from the penalty for failure to of similar taxable imported products.
certificate must be in substantially the same deposit the 2022 third and fourth quarter taxes. • The importer hasn’t chosen to treat entry
into the United States as use of the prod-
form as the sample certificate set forth in Regu- To figure the tax, you'll generally need to uct.
lations section 52.4682-5(d)(3). The tax benefit know the ratio of the weight of each taxable
of this exemption is limited. For more informa- chemical used to make the substance to the to- Imported products table. The table lists all
tion, see Regulations section 52.4682-5. tal weight of the substance (the conversion fac- the products that are subject to the tax on im-
ODCs used as feedstock. There is no tax tor). See the Instructions for Form 6627. ported taxable products and specifies the ODC
on ODCs sold for use or used as a feedstock. You may calculate your own tax rates for im- weight of each product. See Table of Taxable
An ODC is used as a feedstock only if the ODC ported chemical substances, regardless of Imported Chemical Substances.
is entirely consumed in the manufacture of an- whether the IRS has provided a tax rate. Each listing in the table identifies a product
other chemical. The transformation of an ODC by name and includes only products that are
into one or more new compounds qualifies as described by that name. Most listings identify a
use as a feedstock, but use of an ODC in a mix- Imported Taxable Products product by both name and Harmonized Tariff
ture doesn't qualify. (ODC Tax on Imported Schedule (HTS) heading. In those cases, a
For a sale to be nontaxable, you must obtain Products, IRS No. 19) product is included in that listing only if the
from the purchaser an exemption certificate that product is described by that name and the rate
you rely on in good faith. The certificate must be An imported product containing or manufac- of duty on the product is determined by refer-
in substantially the same form as the sample tured with ODCs is subject to tax if it's entered ence to that HTS heading. A product is included
certificate set forth in Regulations section into the United States for consumption, use, or in the listing even if it's manufactured with or
52.4682-2(d)(2). Keep the certificate with your warehousing and is listed in the Imported Prod- contains a different ODC than the one specified
records. ucts Table. The Imported Products Table is lis- in the table.
ted in Regulations section 52.4682-3(f)(6). Part II of the table lists electronic items that
Credits or refunds. A credit or refund (without aren’t included within any other list in the table.
interest) of tax paid on ODCs may be claimed if The tax is based on the weight of the ODCs An imported product is included in this list only
a taxed ODC is: used in the manufacture of the product. Use the if the product meets one of the following tests.
• Used as a propellant in a metered-dose in- following methods to figure the ODC weight. • It's an electronic component whose opera-
haler (the person who used the ODC as a • The actual (exact) weight of each ODC tion involves the use of nonmechanical
propellant may file a claim), used as a material in manufacturing the amplification or switching devices such as
• Exported (the manufacturer may file a product. tubes, transistors, and integrated circuits.
claim), or • If the actual weight can't be determined, • It contains components described in (1),
• Used as a feedstock (the person who used the ODC weight listed for the product in the which account for more than 15% of the
the ODC may file a claim). Imported Products Table. cost of the product.
For information on how to file for credits or re- However, if you can't determine the actual These components don’t include passive
funds, see the Instructions for Form 720, and weight and the table doesn't list an ODC weight electrical devices, such as resistors and capaci-
Schedule 6 (Form 8849). for the product, the rate of tax is 1% of the entry tors. Items such as screws, nuts, bolts, plastic
value of the product. parts, and similar specially fabricated parts that
Conditions to allowance for ODCs expor- may be used to construct an electronic item
ted. To claim a credit or refund for ODCs that Taxable event. Tax is imposed on an imported aren’t themselves included in the listing for
are exported, you must have repaid or agreed taxable product when the product is first sold or electronic items.
to repay the tax to the exporter, or obtained the used by its importer. The importer is liable for
exporter's written consent to allowance of the the tax. Rules for listing products. Products are
credit or refund. You must also have the evi- listed in the table according to the following
dence required by the EPA as proof that the Use of imported products. You use an im- rules.
ODCs were exported. ported product if you put it into service in a 1. A product is listed in Part I of the table if it's
trade or business or for the production of in- a mixture containing ODCs.
come or use it in the making of an article, in-
Tax on Imported Chemical cluding incorporation into the article. The loss, 2. A product is listed in Part II of the table if
Substances, IRS No. 17 destruction, packaging, repackaging, ware- the Commissioner has determined that the
housing, or repair of an imported product isn't a ODCs used as materials in the manufac-
The imported chemical substance tax is equal use of that product. ture of the product under the predominant
to the chemical tax that would have been im- method are used for purposes of refrigera-
posed on the taxable chemicals (listed in Form Importer election. The importer may choose tion or air conditioning, creating an aerosol
6627, Part II) used as materials in the manufac- to treat the entry of a product into the United or foam, or manufacturing electronic com-
ture of the substance if such substance had States as the use of the product. Tax is im- ponents.
been manufactured in the United States. See posed on the date of entry instead of when the
the Instructions for Form 6627 and its Table of product is sold or used. The choice applies to
Taxable Imported Chemical Substances for the all imported taxable products that you own and
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3. A product is listed in Part III of the table if 2. ODCs contained in a manufactured article Alternative method taxpayers. For alterna-
the Commissioner has determined that the in which the ODCs will be used for their in- tive method taxpayers, the report must be filed
product meets both the following tests. tended purpose without being released by the due date of the Form 720 that includes
a. It isn't an imported taxable product. from the article. an adjustment to the separate account for the
b. It would otherwise be included within 3. ODCs that have been reclaimed or recy- uncollected tax. See Alternative method in
a list in Part II of the table. cled. chapter 11.
4. ODCs sold in a qualifying sale for: Where to file. Don't file the uncollected tax re-
For example, floppy disk drive units are lis- port with Form 720. Instead, mail the report to:
ted in Part III because they aren’t imported taxa- a. Use as a feedstock,
ble products and would have been included in b. Export, or Department of the Treasury
the Part II list for electronic items not specifically Internal Revenue Service
identified, but for their listing in Part III. c. Use as a propellant in a metered-dose Cincinnati, OH 45999
inhaler.
ODC weight. The Table ODC weight of a
product is the weight, determined by the Com-
missioner, of the ODCs used as materials in the Tax on Chemicals (Other
manufacture of the product under the predomi- Than Ozone-Depleting Communications Tax
nant method of manufacturing. The ODC weight Chemicals (ODCs)), IRS No. A 3% tax is imposed on amounts paid for local
is listed in Part II in pounds per single unit of
product unless otherwise specified. 54 telephone service and teletypewriter exchange
service.
Modifying the table. A manufacturer or im- See Form 6627, Part II, for the list and rates for
porter of a product may request that the IRS the tax on chemicals other than ODCs, IRS No. Local telephone service. This includes ac-
add a product and its ODC weight to the table. 54. cess to a local telephone system and the privi-
They also may request the IRS remove a prod- lege of telephonic quality communication with
uct from the table, or change or specify the most people who are part of the system. Local
ODC weight of a product. To request a modifi- telephone service also includes any facility or
cation, see Regulations section 52.4682-3(g) services provided in connection with this serv-
for the mailing address and information that ice. The tax applies to lease payments for cer-
must be included in the request. tain customer premises equipment (CPE) even
though the lessor doesn't also provide access
4. to a local telecommunications system.
Floor Stocks Tax
Local-only service. Local-only service is
Tax is imposed on any ODC held (other than by local telephone service as described above,
the manufacturer or importer of the ODC) on Communications provided under a plan that doesn't include long
January 1 for sale or use in further manufactur- distance telephone service or that separately
ing. The person holding title (as determined un- and Air states the charge for local service on the bill to
der local law) to the ODC is liable for the tax, customers. Local-only service also includes any
whether or not delivery has been made. facility or services provided in connection with
Transportation this service, even though these services and fa-
These chemicals are taxable without regard cilities may also be used with long-distance
to the type or size of storage container in which service.
the ODCs are held. The tax may apply to an Taxes
ODC whether it's in a 14-ounce can or a Private communication service. Private
30-pound tank. Excise taxes are imposed on amounts paid for communication service isn't local telephone
certain facilities and services. If you receive any service. Private communication service in-
You’re liable for the floor stocks tax if you payment on which tax is imposed, you're re- cludes accessory-type services provided in
hold any of the following on January 1. quired to collect the tax, file returns, and pay the connection with a Centrex, PBX, or other similar
1. At least 400 pounds of ODCs other than tax over to the government. system for dual use accessory equipment.
halons or methyl chloroform, However, the charge for the service must be
If you fail to collect and pay over the taxes, you stated separately from the charge for the basic
2. At least 50 pounds of halons, or may be liable for the trust fund recovery pen- system, and the accessory must function, in
3. At least 1,000 pounds of methyl chloro- alty. See chapter 14, later. whole or in part, in connection with intercommu-
form. nication among the subscriber's stations.
If you're liable for the tax, prepare an inven- Uncollected Tax Report Teletypewriter exchange service. This in-
tory on January 1 of the taxable ODCs held on cludes access from a teletypewriter or other
that date for sale or for use in further manufac- A separate report is required to be filed by col- data station to a teletypewriter exchange sys-
turing. You must pay this floor stocks tax by lecting agents of communications services and tem and the privilege of intercommunication by
June 30 of each year. Report the tax on Form air transportation taxes if the person from whom that station with most persons having teletype-
6627 and Form 720, Part II, for the second cal- the facilities or services tax (the tax) is required writer or other data stations in the same ex-
endar quarter. to be collected (the taxpayer) refuses to pay the change system.
For the tax rates, see the Instructions for tax, or it's impossible for the collecting agent to
Form 6627. collect the tax. The report must contain the Figuring the tax. The tax is based on the sum
name and address of the taxpayer, the type of of all charges for local telephone service inclu-
ODCs not subject to floor stocks tax. The facility provided or service rendered, the ded in the bill. However, if the bill groups indi-
floor stocks tax isn't imposed on any of the fol- amount paid for the facility or service (the vidual items for billing and tax purposes, the tax
lowing ODCs. amount on which the tax is based), and the date is based on the sum of the individual items
paid. within that group. The tax on the remaining
1. ODCs mixed with other ingredients that items not included in any group is based on the
contribute to achieving the purpose for Regular method taxpayers. For regular charge for each item separately. Don't include
which the mixture will be used, unless the method taxpayers, the report must be filed by in the tax base state or local sales or use taxes
mixture contains only ODCs and one or the due date of the Form 720 on which the tax that are separately stated on the taxpayer's bill.
more stabilizers. would have been reported.
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Exemptions service that doesn't provide access to a local This includes a school operated by an organiza-
telephone system. tion exempt under section 501(c)(3) if the
school meets the above qualifications.
Payments for certain services or payments from Coin-operated telephones. The tax for local
certain users are exempt from the communica- telephone service doesn't apply to payments Qualified blood collector organizations.
tions tax. made for services by inserting coins in public The tax doesn't apply to telephone services fur-
coin-operated telephones. But the tax applies if nished to qualified blood collector organizations
Nontaxable service. Nontaxable service the coin-operated telephone service is fur- for their use. A qualified blood collector organi-
means bundled service and long distance serv- nished for a guaranteed amount. Figure the tax zation is one that is:
ice. Nontaxable service also includes pre-paid on the amount paid under the guarantee plus • Described in section 501(c)(3) and exempt
telephone cards and pre-paid cellular service. any fixed monthly or other periodic charge. from tax under section 501(a),
Bundled service. Bundled service is local • Primarily engaged in the activity of collect-
and long distance service provided under a Telephone-operated security systems. The ing human blood,
plan that doesn't separately state the charge for tax doesn't apply to amounts paid for tele- • Registered with the IRS, and
the local telephone service. Bundled service in- phones used only to originate calls to a limited • Registered by the Food and Drug Adminis-
cludes plans that provide both local and long number of telephone stations for security entry tration to collect blood.
distance service for either a flat monthly fee or a into a building. In addition, the tax doesn't apply
charge that varies with the elapsed transmis- to any amounts paid for rented communication Federal, state, and local government. The
sion time for which the service is used. Tele- equipment used in the security system. tax doesn't apply to communication services
communications companies provide bundled provided to the government of the United
service for both landlines and wireless (cellular) News services. The tax on teletypewriter ex- States, the government of any state or its politi-
service. If Voice over Internet Protocol service change service doesn't apply to charges for the cal subdivisions, the District of Columbia, or the
provides both local and long distance service following news services. United Nations. Treat an Indian tribal govern-
and the charges aren’t separately stated, such • Services dealing exclusively with the col- ment as a state for the exemption from the com-
service is bundled service. lection or dissemination of news for or munications tax only if the services involve the
The method for sending or receiving a call, through the public press or radio or televi- exercise of an essential tribal government func-
such as on a landline telephone, wireless (cellu- sion broadcasting. tion.
lar), or some other method, doesn't affect • Services used exclusively in the collection
whether a service is local-only or bundled. or dissemination of news by a news ticker Exemption certificate. Any form of exemption
service furnishing a general news service certificate will be acceptable if it includes all the
Long distance service. Long distance similar to that of the public press. information required by the Internal Revenue
service is telephonic quality communication Code and Regulations. See Regulations sec-
with persons whose telephones are outside the This exemption applies to payments received
local telephone system of the caller. for messages from one member of the news tion 49.4253-11. File the certificate with the pro-
media to another member (or to or from their vider of the communication services. An ex-
Pre-paid telephone cards (PTC). A PTC bona fide correspondents). For the exemption emption certificate isn't required for nontaxable
will be treated as bundled service unless a PTC to apply, the charge for these services must be services.
expressly states it's for local-only service. Gen- billed in writing to the person paying for the The following users that are exempt from the
erally, the person responsible for collecting the service and that person must certify in writing communications tax don’t have to file an annual
tax is the carrier who transfers the PTC to the that the services are used for an exempt pur- exemption certificate after they have filed the in-
transferee. The transferee is the first person pose. itial certificate to claim an exemption from the
that isn't a carrier to whom a PTC is transferred communications tax.
by the carrier. The transferee is the person lia- Services not exempted. The tax applies • The American National Red Cross and
ble for the tax and is eligible to request a credit to amounts paid by members of the news me- other international organizations.
or refund. For more information, see Regula- dia for local telephone service. • Nonprofit hospitals.
• Nonprofit educational organizations.
tions section 49.4251-4. International organizations and the Ameri- • Qualified blood collector organizations.
The holder is the person that purchases a can Red Cross. The tax doesn't apply to com- • State and local governments.
PTC to use and not to resell. Holders aren’t lia- munication services furnished to an interna-
ble for the tax and can't request a credit or re- tional organization or to the American National The federal government doesn't have to file
fund. Red Cross. any exemption certificate.
Pre-paid cellular telephones. Rules simi- All other organizations must furnish exemp-
lar to the PTC rules described above apply to Nonprofit hospitals. The tax doesn't apply to tion certificates when required.
pre-paid cellular telephones. The transferee is telephone services furnished to income tax-ex-
the person eligible to request the credit or re- empt nonprofit hospitals for their use. Also, the Credits or Refunds
fund. tax doesn't apply to amounts paid by these hos-
pitals to provide local telephone service in the If tax is collected and paid over for nontaxable
Installation charges. The tax doesn't apply to homes of their personnel who must be reached services, or for certain services or users exempt
payments received for the installation of any in- during their off-duty hours. from the communications tax, the collector or
strument, wire, pole, switchboard, apparatus, or taxpayer may claim a credit or refund if it has re-
equipment. However, the tax does apply to pay- Nonprofit educational organizations. The paid the tax to the person from whom the tax
ments for the repair or replacement of those tax doesn't apply to payments received for serv- was collected or obtained the consent of that
items incidental to ordinary maintenance. ices and facilities furnished to a nonprofit edu- person to the allowance of the credit or refund.
cational organization for its use. A nonprofit ed- Alternatively, the person who paid the tax may
Answering services. The tax doesn't apply to ucational organization is one that satisfies all claim a refund. For more information on how to
amounts paid for a private line, an answering the following requirements. file for credits or refunds, see the Instructions
service, and a one-way paging or message • It normally maintains a regular faculty and for Form 720; Form 8864; or Form 8849.
service if they don’t provide access to a local curriculum.
telephone system and the privilege of tele- • It normally has a regularly enrolled body of Collectors. The collector may request a credit
phonic communication as part of the local tele- pupils or students in attendance at the or refund if it has repaid the tax to the person
phone system. place where its educational activities are from whom the tax was collected, or obtained
regularly carried on. the consent of that person to the allowance of
Mobile radio telephone service. The tax • It's exempt from income tax under section the credit or refund. These requirements also
doesn't apply to payments for a two-way radio 501(a). apply to nontaxable service refunds.

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Collectors using the regular method for Percentage tax. A tax of 7.5% applies to during the second preceding calendar
deposits. Collectors using the regular method amounts paid for taxable transportation of per- year,
for deposits must use Form 720-X to request a sons by air. Amounts paid for transportation in- 2. The airport was receiving essential air
credit or refund if the collector has repaid the clude charges for layover or waiting time and service subsidies as of August 5, 1997, or
tax to the person from whom the tax was collec- movement of aircraft in deadhead service.
ted, or obtained the consent of that person to 3. The airport isn't connected by paved roads
the allowance of the credit or refund. Mileage awards. The percentage tax may to another airport.
apply to an amount paid (in cash or in kind) to
Collectors using the alternative method an air carrier (or any related person) for the right To apply the 100,000 passenger rule to any
for deposits. Collectors using the alternative to provide mileage awards for, or other reduc- airport described in (3) above, only count com-
method for deposits must adjust their separate tions in the cost of, any transportation of per- mercial passengers departing from the airport
accounts for the credit or refund if it has repaid sons by air. For example, this applies to mile- by air on flight segments of at least 100 miles.
the tax to the person from whom the tax was age awards purchased by credit card An updated list of rural airports can be found
collected, or obtained the consent of that per- companies, telephone companies, restaurants, on the Department of Transportation website at
son to the allowance of the credit or refund. For hotels, and other businesses. www.dot.gov and enter the phrase “Essential
more information, see the Instructions for Form Generally, the percentage tax doesn't apply Air Service” in the search box.
720. to amounts paid for mileage awards where the
mileage awards can't, under any circumstan- Taxable transportation. Taxable transporta-
ces, be redeemed for air transportation that is tion is transportation by air that meets either of
Air Transportation Taxes subject to the tax. Until regulations are issued, the following tests.
the following rules apply to mileage awards. • It begins and ends either in the United
Taxes are imposed on amounts paid for: • Amounts paid for mileage awards that States or at any place in Canada or Mexico
• Transportation of persons by air, can't be redeemed for taxable transporta- not more than 225 miles from the nearest
• Use of international air travel facilities, and tion beginning and ending in the United point on the continental U.S. boundary
• Transportation of property by air. States aren’t subject to the tax. For this (this is the 225-mile zone).
rule, mileage awards issued by a foreign • It's directly or indirectly from one port or
air carrier are considered to be usable only station in the United States to another port
Aircraft Management on that foreign air carrier and not redeema- or station in the United States, but only if it
Services ble for taxable transportation beginning isn't a part of uninterrupted international air
and ending in the United States. Therefore, transportation.
Amounts paid by an aircraft owner for certain amounts paid to a foreign air carrier for
aircraft management services are exempt from mileage awards aren’t subject to the tax. Round trip. A round trip is considered two
the section 4261 and 4271 excise taxes im- • Amounts paid by an air carrier to a domes- separate trips. The first trip is from the point of
posed on transportation by air. An aircraft tic air carrier for mileage awards that can departure to the destination. The second trip is
owner includes a person that owns an aircraft be redeemed for taxable transportation the return trip from that destination.
and a person that leases an aircraft for 31 days aren’t subject to the tax to the extent those Uninterrupted international air transpor-
or more. A person owns an aircraft if the person miles will be awarded in connection with tation. This means transportation entirely by
holds legal title to the aircraft, or if the person the purchase of taxable transportation. air that doesn't begin and end in the United
holds substantial incidents of ownership in the • Amounts paid by an air carrier to a domes- States or in the 225-mile zone if there isn't more
aircraft for a period of more than 31 days. A les- tic air carrier for mileage awards that can than a 12-hour scheduled interval between ar-
see of an aircraft includes the beneficiary of an be redeemed for taxable transportation are rival and departure at any station in the United
owner trust that holds legal title to the aircraft. subject to the tax to the extent those miles States. For a special rule that applies to military
won’t be awarded in connection with the personnel, see Exemptions, later.
If an aircraft owner pays an amount to an air- purchase of taxable transportation.
craft management services provider for flights Transportation between the continental
on the aircraft owner's aircraft, the amount paid Domestic-segment tax. The domestic-seg- United States and Alaska or Hawaii. This
isn't subject to the section 4261 or 4271 excise ment tax is a flat dollar amount for each seg- transportation is partially exempt from the tax
tax, even if the aircraft owner isn’t on the flight. ment of taxable transportation for which an on transportation of persons by air. The tax
However, tax may apply if an aircraft owner amount is paid. However, see Rural airports, doesn't apply to the part of the trip between the
pays an amount to an aircraft management later. A segment is a single takeoff and a single point at which the route of transportation leaves
services provider for flights on a substitute air- landing. or enters the continental United States (or a
craft. An allocation is required if an aircraft port or station in the 225-mile zone) and the
owner pays an amount to an aircraft manage- Note. Generally, the tax on each domes- point at which it enters or leaves Hawaii or
ment services provider that includes an amount tic-segment of taxable air transportation increa- Alaska. Leaving or entering occurs when the
attributable to flights on the aircraft owner's air- ses annually based on adjustments for inflation. route of the transportation passes over either
craft and an amount attributable to flights on a See the Instructions for Form 720 for the tax the U.S. border or a point 3 nautical miles (3.45
substitute aircraft. rate. statute miles) from low tide on the coastline, or
when it leaves a port or station in the 225-mile
The aircraft management services exemp- Charter flights. If an aircraft is chartered, zone. Therefore, this transportation is subject to
tion doesn’t apply to amounts paid by an aircraft the domestic-segment tax for each segment of the percentage tax on the part of the trip in U.S.
owner for aircraft management services related taxable transportation is figured by multiplying airspace, the domestic-segment tax for each
to (i) an aircraft that the aircraft owner has the tax by the number of passengers transpor- domestic segment, and the tax on the use of in-
leased for a period of less than 31 days, (ii) a ted on the aircraft. ternational air travel facilities.
fractionally owned aircraft, or (iii) an aircraft
used for scheduled passenger service for which Rural airports. The domestic-segment tax Transportation within Alaska or Hawaii.
tickets are sold on a seat-by-seat basis to the doesn't apply to a segment to or from a rural air- The tax on transportation of persons by air ap-
general public. port. An airport is a rural airport for a calendar plies to the entire fare paid in the case of flights
year if fewer than 100,000 commercial passen- between any of the Hawaiian Islands, and be-
Transportation of gers departed from the airport by air during the tween any ports or stations in the Aleutian Is-
second preceding calendar year (the 100,000 lands or other ports or stations elsewhere in
Persons by Air passenger rule), and one of the following is Alaska. The tax applies even though parts of
true:
The tax on transportation of persons by air is the flights may be over international waters or
made up of the: 1. The airport isn't located within 75 miles of over Canada, if no point on the direct line of
• Percentage tax, and another airport from which 100,000 or transportation between the ports or stations is
• Domestic-segment tax. more commercial passengers departed
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more than 225 miles from the United States 1. Transporting individuals, equipment, or person applies only to departures. This tax
(Hawaii or Alaska). supplies in the exploration for, or the de- doesn't apply if all the transportation is subject
velopment or removal of, hard minerals, to the percentage tax. It also doesn't apply if the
Package tours. The air transportation taxes oil, or gas. surtax on fuel used in a fractional ownership
apply to “complimentary” air transportation fur- program aircraft is imposed. See the Instruc-
nished solely to participants in package holiday 2. Planting, cultivating, cutting, transporting, tions for Form 720 for the tax rates.
tours. The amount paid for these package tours or caring for trees (including logging oper-
includes a charge for air transportation even ations). Note. Generally, both the tax on the use of
though it may be advertised as “free.” This rule 3. Providing emergency medical transporta- international air travel facilities for any interna-
also applies to the tax on the use of interna- tion. tional air transportation, if the transportation be-
tional air travel facilities. gins or ends in the United States, and the tax
However, during a use described in items per person for domestic segments that begins
Liability for tax. The person paying for taxable (1) or (2), the tax applies if the helicopter takes or ends in Alaska or Hawaii (applies to depar-
transportation is liable for the tax and, ordinarily, off from, or lands at, a facility eligible for assis- tures only), are increased annually based on in-
the person receiving the payment collects the tance under the Airport and Airway Develop- flation adjustments. See the Instructions for
tax, files the returns, and pays the tax over to ment Act of 1970, or otherwise uses services Form 720 for the tax rate.
the government. However, if payment is made provided under section 44509 or 44913(b) or
outside the United States for a prepaid order, subchapter I of chapter 471 of title 49, United
exchange order, or similar order, the person fur- States Code. For item (1), treat each flight seg-
nishing the initial transportation provided for un- ment as a separate flight. Transportation of
der that order must collect the tax. Fixed-wing aircraft uses. The tax doesn't Property by Air
A travel agency that is an independent apply to air transportation by fixed-wing aircraft
broker and sells tours on aircraft that it charters if the fixed-wing aircraft is used for any of the A tax of 6.25% is imposed on amounts paid
must collect the transportation tax, file the re- following purposes. (whether in or outside the United States) for
turns, and pay the tax over to the government. transportation of property by air. The fact that
However, a travel agency that sells tours as the 1. Planting, cultivating, cutting, transporting, the aircraft may not use public or commercial
agent of an airline must collect the tax and remit or caring for trees (including logging oper- airports in taking off and landing has no effect
it to the airline for the filing of returns and for the ations). on the tax. The tax applies only to amounts paid
payment of the tax over to the government. An 2. Providing emergency medical transporta- to a person engaged in the business of trans-
independent third party that isn't under the air- tion. The aircraft must be equipped for, porting property by air for hire.
line's supervision or control, but is acting on be- and exclusively dedicated on that flight to,
half of, and receiving compensation from, a acute care emergency medical services. The tax applies only to transportation (in-
passenger, isn't required to collect the tax and cluding layover time and movement of aircraft in
pay it to the government. For more information 3. Providing emergency medical transporta- deadhead service) that begins and ends in the
on resellers of air transportation, see Revenue tion if the fixed-wing aircraft is equipped United States. Thus, the tax doesn't apply to
Ruling 2006-52 at IRS.gov/PUB/IRB/ for, and exclusively dedicated on that flight transportation of property by air that begins or
IRB2006-43#RR2006-52. to, acute care emergency medical serv- ends outside the United States.
The fact that the aircraft doesn't use public ices.
Exemptions. The tax on transportation of
or commercial airports in taking off and landing However, during a use described in item (1), property by air doesn't apply in the following sit-
has no effect on the tax. But see Certain heli- the tax applies if the fixed-wing aircraft takes off uations. See Special Rules on Transportation
copter uses, later. from, or lands at, a facility eligible for assistance Taxes, later.
For taxable transportation that begins and under the Airport and Airway Development Act
ends in the United States, the tax applies re- of 1970, or otherwise uses services provided Cropdusting and firefighting service.
gardless of whether the payment is made in or under section 44509 or 44913(b) or subchapter The tax doesn't apply to amounts paid for crop-
outside the United States. I of chapter 471 of title 49, United States Code. dusting or aerial firefighting service.
If the tax isn't paid when payment for the
transportation is made, the air carrier providing Skydiving. The tax doesn't apply to any air Exportation. The tax doesn't apply to pay-
the initial segment of the transportation that be- transportation exclusively for the purpose of ments for transportation of property by air in the
gins or ends in the United States becomes lia- skydiving. course of exportation (including to U.S. posses-
sions) by continuous movement, as evidenced
ble for the tax. Seaplanes. The tax doesn't apply to any air by the execution of Form 1363, Export Exemp-
transportation by seaplane for any segment tion Certificate. See Form 1363 for more infor-
Exemptions. The tax on transportation of per- consisting of a takeoff from, and a landing on, mation.
sons by air doesn't apply in the following situa- water if the places where the takeoff and land-
tions. See Special Rules on Transportation ing occur aren’t receiving financial assistance Certain helicopter and fixed-wing air am-
Taxes, later. from the Airport and Airways Trust Fund. bulance uses. The tax doesn't apply to
amounts paid for the use of helicopters in con-
Military personnel on international trips. Bonus tickets. The tax doesn't apply to struction to set heating and air conditioning
When traveling in uniform at their own expense, free bonus tickets issued by an airline company units on roofs of buildings, to dismantle tower
U.S. military personnel on authorized leave are to its customers who have satisfied all require- cranes, and to aid in construction of power lines
deemed to be traveling in uninterrupted interna- ments to qualify for the bonus tickets. However, and ski lifts.
tional air transportation even if the scheduled in- the tax applies to amounts paid by customers The tax also doesn't apply to air transporta-
terval between arrival and departure at any sta- for advance bonus tickets when customers tion by helicopter or fixed-wing aircraft for the
tion in the United States is actually more than have traveled insufficient mileage to fully qualify purpose of providing emergency medical serv-
12 hours. However, such personnel must buy for the free advance bonus tickets. ices. The fixed-wing aircraft must be equipped
their tickets within 12 hours after landing at the
first domestic airport and accept the first availa- for, and exclusively dedicated on that flight to,
ble accommodation of the type called for by International acute care emergency medical services.
their tickets. The trip must begin or end outside Air Travel Facilities Skydiving. The tax doesn't apply to any air
the United States and the 225-mile zone. transportation exclusively for the purpose of
Certain helicopter uses. The tax doesn't A tax per person is imposed (whether in or out- skydiving.
apply to air transportation by helicopter if the side the United States) for international flights
helicopter is used for any of the following purpo- that begin or end in the United States. How- Excess baggage. The tax doesn't apply to
ses. ever, for a domestic segment that begins or excess baggage accompanying a passenger
ends in Alaska or Hawaii, a reduced tax per on an aircraft operated on an established line.

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Surtax on fuel used in a fractional own- Also, the taxes apply if the aircraft is withdraws a taxable article from a customs bon-
ership program aircraft. The tax doesn't ap- jet-powered, regardless of its maximum certifi- ded warehouse for sale or use in the United
ply if the surtax on fuel used in a fractional own- cated takeoff weight or whether or not it's oper- States.
ership program aircraft is imposed. ated on an established line.
Sale. A sale is the transfer of the title to, or the
Alaska and Hawaii. For transportation of Mixed load of persons and property. If a substantial incidents of ownership in, an article
property to and from Alaska and Hawaii, the tax single amount is paid for air transportation of to a buyer for consideration that may consist of
in general doesn't apply to the portion of the persons and property, the payment must be al- money, services, or other things.
transportation that is entirely outside the conti- located between the amount subject to the tax
nental United States (or the 225-mile zone if the on transportation of persons and the amount Use considered sale. A manufacturer who
aircraft departs from or arrives at an airport in subject to the tax on transportation of property. uses a taxable article is liable for the tax in the
the 225-mile zone). But the tax applies to flights The allocation must be reasonable and suppor- same manner as if it were sold.
between ports or stations in Alaska and the ted by adequate records. Lease considered sale. The lease of an
Aleutian Islands, as well as between ports or
article (including any renewal or extension of
stations in Hawaii. The tax applies even though Credits or refunds. If tax is collected and paid the lease) by the manufacturer is generally con-
parts of the flights may be over international wa- over for air transportation that isn't taxable air sidered a taxable sale. However, for the gas
ters or over Canada, if no point on a line drawn transportation, the collector may claim a credit guzzler tax, only the first lease (excluding any
from where the route of transportation leaves or refund if it has repaid the tax to the person renewal or extension) of the automobile by the
the United States (Alaska) to where it reenters from whom the tax was collected or obtained manufacturer is considered a sale.
the United States (Alaska) is more than 225 the consent of that person to the allowance of
miles from the United States. the credit or refund. Alternatively, the person Manufacturers taxes based on sale price.
Seaplanes. The tax doesn't apply to any air who paid the tax may claim a refund. For infor- The manufacturers taxes imposed on the sale
transportation by seaplane for any segment mation on how to file for credits or refunds, see of sport fishing equipment, electric outboard
consisting of a take off from, and a landing on, the Instructions for Forms 720,8864, or 8849. motors, and bows are based on the sale price
water if the places where the take off and land- of the article. The taxes imposed on coal are
ing occur aren’t receiving financial assistance based either on the sale price or the weight.
from the Airport and Airways Trust Fund. The price for which an article is sold in-
cludes the total consideration paid for the arti-
Liability for tax. The person paying for taxable cle, whether that consideration is in the form of
transportation is liable for the tax and, ordinarily, money, services, or other things. However, you
the person engaged in the business of trans- 5. include certain charges made when a taxable
porting property by air for hire receives the pay- article is sold and you exclude others. To figure
ment, collects the tax, files the returns, and the price on which you base the tax, use the fol-
pays the tax over to the government. lowing rules.
If tax isn't paid when a payment is made out- Manufacturers
1. Include both the following charges in the
side the United States, the person furnishing price.
the last segment of taxable transportation col- Taxes a. Any charge for coverings or contain-
lects the tax from the person to whom the prop-
erty is delivered in the United States. The following discussion of manufacturers ers (regardless of their nature).
taxes applies to the tax on: b. Any charge incident to placing the ar-
Special Rules on • Sport fishing equipment; ticle in a condition packed ready for
Transportation Taxes • Fishing rods and fishing poles; shipment.
• Electric outboard motors;
Aircraft used by affiliated corporations. • Fishing tackle boxes; 2. Exclude all the following amounts from
The taxes don’t apply to payments received by • Bows, quivers, broadheads, and points; the price.
one member of an affiliated group of corpora- • Arrow shafts; a. The manufacturers excise tax,
tions from another member for services fur- • Coal; whether or not it's stated as a sepa-
nished in connection with the use of an aircraft. • Taxable tires; rate charge.
However, the aircraft must be owned or leased • Gas guzzler automobiles; and b. The transportation charges pursuant
by a member of the affiliated group and can't be • Vaccines. to the sale. The cost of transportation
available for hire by a nonmember of the affili- of goods to a warehouse before their
ated group. Determine whether an aircraft is Manufacturer. The term “manufacturer” in-
available for hire by a nonmember of an affili- cludes a producer or importer. A manufacturer bona fide sale isn't excludable.
ated group on a flight-by-flight basis. is any person who produces a taxable article c. Delivery, insurance, installation, retail
For this rule, an affiliated group of corpora- from new or raw material, or from scrap, sal- dealer preparation charges, and other
tions is any group of corporations connected vage, or junk material, by processing or chang- charges you incur in placing the arti-
with a common parent corporation through 80% ing the form of an article or by combining or as- cle in the hands of the purchaser un-
or more of stock ownership. sembling two or more articles. If you furnish the der a bona fide sale.
materials and keep title to those materials and
Small aircraft. The taxes don’t apply to trans- to the finished article, you're considered the d. Discounts, rebates, and similar allow-
portation furnished by an aircraft having a maxi- manufacturer even though another person ac- ances actually granted to the pur-
mum certificated takeoff weight of 6,000 tually manufactures the taxable article. chaser.
pounds or less. However, the taxes do apply if A manufacturer who sells a taxable article in e. Local advertising charges. A charge
the aircraft is operated on an established line. knockdown (unassembled) condition is liable made separately when the article is
Operated on an established line means the air- for the tax. The person who buys these compo- sold and that qualifies as a charge for
craft operates with some degree of regularity nent parts and assembles a taxable article may “local advertising” may, within certain
between definite points. However, it doesn't in- also be liable for tax as a further manufacturer limits, be excluded from the sale
clude any time an aircraft is being operated on depending on the labor, material, and overhead price.
a flight that is solely for sightseeing. required to assemble the completed article if f. Charges for warranty paid at the pur-
Consider an aircraft to be operated on an the article is assembled for business use. chaser's option. However, a charge
established line if it's operated on a charter ba- Importer. An importer is a person who for a warranty of an article that the
sis between two cities also served by that car- brings a taxable article into the United States, or manufacturer requires the purchaser
rier on a regularly scheduled basis. to pay to obtain the article is included
Chapter 5 Manufacturers Taxes Page 31

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in the sale price on which the tax is doesn't apply to the taxes on coal and vac- For sales for use as supplies for vessels and
figured. cines. Supplies for vessels means ships' aircraft, if the manufacturer and purchaser
stores, sea stores, or legitimate equipment aren’t registered, the owner or agent of the ves-
Bonus goods. Allocate the sale price if you on vessels of war of the United States or sel must provide an exemption certificate to the
give free nontaxable goods with the purchase of any foreign nation, vessels employed in manufacturer before or at the time of sale. See
taxable merchandise. Figure the tax only on the the fisheries or whaling business, or ves- Regulations section 48.4221-4(d) for the certifi-
sale price attributable to the taxable articles. sels actually engaged in foreign trade. cate requirements.
Example. A manufacturer sells a quantity • Sale of an article for use by the purchaser
for further manufacture, or for resale by the Proof of export requirement. Within 6
of taxable articles and gives the purchaser cer- purchaser to a second purchaser for use months of the date of sale or shipment by the
tain nontaxable articles as a bonus. The sale by the second purchaser for further manu- manufacturer, whichever is earlier, the manu-
price of the shipment is $1,500. The normal facture. This exemption doesn't apply to facturer must receive proof of exportation. See
sale price is $2,000: $1,500 for the taxable arti- the tax on coal and tires. Use for further Regulations section 48.4221-3(d) for evidence
cles and $500 for the nontaxable articles. Since manufacture means use in the manufac- that qualifies as proof of exportation.
the taxable items represent 75% of the normal ture or production of an article subject to
sale price, the tax is based on 75% of the actual the manufacturers excise taxes. If you buy Proof of resale for further manufacture re-
sale price, or $1,125 (75% of $1,500). The re- articles tax free and resell or use them quirement. Within 6 months of the date of sale
maining $375 is allocated to the nontaxable arti- other than in the manufacture of another or shipment by the manufacturer, whichever is
cles. article, you're liable for the tax on their re- earlier, the manufacturer must receive proof
sale or use just as if you had manufactured that the article has been resold for use in further
and sold them. manufacture. See Regulations section
Taxable Event • Sale of an article for export or for resale by 48.4221-2(c) for evidence that qualifies as proof
the purchaser to a second purchaser for of resale.
Tax attaches when the title to the article sold export. The article may be exported to a
passes from the manufacturer to the buyer. foreign country or to a possession of the Information to be furnished to purchaser.
When the title passes depends on the intention United States. A vaccine shipped to a pos- The manufacturer must indicate to the pur-
of the parties as gathered from the contract of session of the United States isn't consid- chaser that the articles normally would be sub-
sale. In the absence of expressed intention, the ered to be exported. If an article is sold tax ject to tax and are being sold tax free for an ex-
legal rules of presumption followed in the juris- free for export and the manufacturer empt purpose because the purchaser has
diction where the sale occurs determine when doesn't receive proof of export, the manu- provided the required certificate.
title passes. facturer is liable for the tax.
• Sales of articles of native Indian handicraft, Credits or Refunds
If the taxable article is used by the manufac- such as bows and arrow shafts, manufac-
turer, the tax attaches at the time use begins. tured by Indians on reservations, in Indian
schools, or under U.S. jurisdiction in The manufacturer may be eligible to obtain a
The manufacturer is liable for the tax. Alaska. credit or refund of the manufacturers tax for cer-
• For tire exemptions, see section 4221(e) tain uses, sales, exports, and price readjust-
Partial payments. The tax applies to each (2). ments. The claim must set forth in detail the
partial payment received when taxable articles facts upon which the claim is based.
are:
• Leased, Requirements for Exempt Uses, sales, and exports. A credit or refund
• Sold conditionally, Sales (without interest) of the manufacturers taxes
• Sold on installment with chattel mortgage, may be allowable if a tax-paid article is, by any
or The following requirements must be met for a person:
• Sold on installment with title to pass in the sale to be exempt from the manufacturers tax. • Exported;
future. • Used or sold for use as supplies for ves-
To figure the tax, multiply the partial payment by Registration requirements. The manufac- sels (except for coal and vaccines);
the tax rate in effect at the time of the payment. turer, first purchaser, and second purchaser in • Sold to a state or local government for its
the case of resales must be registered. See the exclusive use (except for coal, gas guz-
Form 637 instructions for more information. zlers, and vaccines);
• Sold to a nonprofit educational organiza-
Exemptions Exceptions to registration requirements. tion for its exclusive use (except for coal,
Registration isn't required for: gas guzzlers, and vaccines);
The following sales by the manufacturer are ex- • State or local governments, • Sold to a qualified blood collector organi-
empt from the manufacturers tax. • Foreign purchasers of articles sold or re- zation for its exclusive use (except for gas
• Sale of an article to a state or local govern- sold for export, guzzlers, recreational equipment, and vac-
ment for the exclusive use of the state or • The U.S. Government, or cines); or
local government. This exemption doesn't • Parties to a sale of supplies for vessels • Used for further manufacture of another ar-
apply to the taxes on coal, gas guzzlers, and aircraft. ticle subject to the manufacturers taxes
and vaccines. “State” is defined in Defini- (except for coal).
tions in chapter 1. Certification requirement. If the purchaser is
• Sale of an article to a nonprofit educational required to be registered, the purchaser must Export. If a tax-paid article is exported, the ex-
organization for its exclusive use. This ex- give the manufacturer its registration number porter or shipper may claim a credit or refund if
emption doesn't apply to the taxes on coal, and certify the exempt purpose for which the ar- the manufacturer waives its right to claim the
gas guzzlers, and vaccines. “Nonprofit ed- ticle will be used. The information must be in credit or refund. In the case of a tax-paid article
ucational organization” is defined under writing and may be noted on the purchase order used to make another taxable article, the sub-
Communications Tax in chapter 4. or other document furnished by the purchaser sequent manufacturer may claim the credit or
• Sale of an article to a qualified blood col- to the seller in connection with the sale. refund.
lector organization. This exemption doesn't For a sale to a state or local government, an
apply to gas guzzlers, recreational equip- exemption certificate must be signed by an offi- Price readjustments. In addition, a credit or
ment, and vaccines. “Qualified blood col- cer or employee authorized by the state or local refund (without interest) may be allowable for a
lector organizations” are defined under government. See Regulations section tax-paid article for which the price is readjusted
Communications Tax in chapter 4. 48.4221-5(c) for the certificate requirements. by reason of return or repossession of the arti-
• Sale of an article for use by the purchaser cle or a bona fide discount, rebate, or allowance
as supplies for vessels. This exemption for taxes based on price.
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Conditions to allowance. To claim a credit or 1. Fishing rods and poles (and component
refund in the case of export; supplies for ves- parts), fishing reels, fly fishing lines, other
sels; or sales to a state or local government, fishing lines not over the 130 pounds test, Bows, Quivers,
nonprofit educational organization, or qualified fishing spears, spear guns, and spear tips.
Broadheads, and Points
blood collector organization, the person who 2. Items of terminal tackle, including leaders,
paid the tax must certify on the claim that one of artificial lures, artificial baits, artificial flies, The tax on bows is 11% of the sales price. The
the following applies and that the claimant has fishing hooks, bobbers, sinkers, snaps, tax is paid by the manufacturer, producer, or im-
the required supporting information. drayles, and swivels (but not including nat- porter. It applies to bows having a peak draw
• The claimant sold the article at a tax-exclu- ural bait or any item of terminal tackle de- weight of 30 pounds or more. The tax is also im-
ded price. signed for use and ordinarily used on fish- posed on the sale of any part or accessory suit-
• The person has repaid, or agreed to repay, ing lines not described in (1)). able for inclusion in or attachment to a taxable
the tax to the ultimate vendor of the article.
• The person has obtained the written con- 3. The following items of fishing supplies and bow and any quiver, broadhead, or point suita-
sent of the ultimate vendor to make the accessories: fish stringers, creels, bags, ble for use with arrows described below.
claim. baskets, and other containers designed to Pay this tax with Form 720. No tax deposits
The ultimate vendor is generally the seller mak- hold fish, portable bait containers, fishing are required.
ing the sale that gives rise to the overpayment vests, landing nets, gaff hooks, fishing
of tax. hook disgorgers, and dressing for fishing
lines and artificial flies. Arrow Shafts
Claim for further manufacture. To claim 4. Fishing tip-ups and tilts.
a credit or refund for further manufacture, the Generally, the section 4161 tax on arrow shafts
claimant must include a statement that contains 5. Fishing rod belts, fishing rodholders, fish- increases annually based on inflation adjust-
the following. ing harnesses, fish fighting chairs, fishing ments. See Form 720 for the tax rate. The tax is
• The name and address of the manufac- outriggers, and fishing downriggers. paid by the manufacturer, producer, or importer
turer and the date of payment. of any arrow shaft (whether sold separately or
• An identification of the article for which the See Revenue Ruling 88-52 in Cumulative Bulle-
credit or refund is claimed. tin 1988-1 for a more complete description of incorporated as part of a finished or unfinished
• The amount of tax paid on the article and the items of taxable equipment. product) of a type used in the manufacture of
any arrow that after its assembly meets either of
the date on which it was paid. the following conditions.
• Information indicating that the article was Fishing rods and fishing poles. The tax on
used as material in the manufacture or pro- fishing rods and fishing poles (and component • It measures 18 inches or more in overall
duction of, or as a component part of, a parts) is 10% of the sales price not to exceed length.
second article manufactured or produced $10 per article. The tax is paid by the manufac- • It measures less than 18 inches in overall
by the manufacturer, or was sold on or in turer, producer, or importer. length but is suitable for use with a taxable
bow.
connection with, or with the sale of, a sec- Fishing tackle boxes. The tax on fishing Exemption for certain wooden arrows.
ond article manufactured or produced by tackle boxes is 3% of the sales price. The tax is The tax doesn't apply to any shaft made of all
the manufacturer. paid by the manufacturer, producer, or importer. natural wood with no laminations or artificial
• An identification of the second article.
For claims by the exporter or shipper, the Electric outboard boat motors. A tax of 3% means of enhancing the spine of such shaft
claim must contain the proof of export and a of the sale price is imposed on the sale by the (whether sold separately or incorporated as part
statement signed by the person that paid the manufacturer of electric outboard motors. This of a finished or unfinished product) and used in
tax waiving the right to claim a credit or refund. includes any parts or accessories sold on or in the manufacture of any arrow that after its as-
The statement must include the amount of tax connection with the sale of those articles. sembly meets both of the following conditions.
paid, the date of payment, and the office to • It measures / of an inch or less in diame-5 16
which it was paid. Certain equipment resale. The tax on the ter.
sale of sport fishing equipment is imposed a • It isn't suitable for use with a taxable bow.
Claim for price readjustment. To claim a second time under the following circumstances. Pay this tax with Form 720. No tax deposits
credit or refund for a price readjustment, the If the manufacturer sells a taxable article to any are required.
person who paid the tax must include with the person, the manufacturer is liable for the tax. If
claim a statement that contains the following. the purchaser or any other person then sells it
• A description of the circumstances that to a person who is related (discussed next) to
gave rise to the price readjustment. the manufacturer, that related person is liable Coal
• An identification of the article whose price for a second tax on any subsequent sale of the Section 4121 imposes a tax on the first sale of
was readjusted. article. The second tax, however, isn't imposed coal mined in the United States. The producer
• The price at which the article was sold. if the constructive sale price rules under section of the coal is liable for the tax. The producer is
• The amount of tax paid on the article and 4216(b) apply to the sale by the manufacturer. the person who has vested ownership of the
the date on which it was paid. If the second tax is imposed, a credit for tax coal under state law immediately after the coal
• The name and address of the purchaser. previously paid by the manufacturer is available is severed from the ground. Determine vested
• The amount repaid to the purchaser or provided the related person can document the ownership without regard to any contractual ar-
credited to the purchaser's account. tax paid. The documentation requirement is rangement for the sale or other disposition of
generally satisfied only through submission of the coal or the payment of any royalties be-
copies of actual records of the person that pre- tween the producer and third parties. A pro-
Sport Fishing Equipment viously paid the tax. ducer includes any person who extracts coal
A tax of 10% of the sale price is imposed on Related person. For the tax on sport fish- from coal waste refuse piles (or from the silt
many articles of sport fishing equipment sold by ing equipment, a person is a related person of waste product that results from the wet washing
the manufacturer. This includes any parts or ac- the manufacturer if that person and the manu- of coal).
cessories sold on or in connection with the sale facturer have a relationship described in section The tax isn't imposed on coal extracted from
of those articles. 465(b)(3)(C). a riverbed by dredging if it can be shown that
Pay this tax with Form 720. No tax deposits the coal has been taxed previously.
are required.
Sport fishing equipment includes all the fol-
lowing items.
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Tax rates. The tax on underground-mined coal age depletion. For example, the tax doesn't ap-
is the lower of: ply if, before selling the coal, you break it, clean
• $1.10 a ton, or it, size it, or apply any other process considered Taxable Tires
• 4.4% of the sale price. mining under the rules for depletion. In this Taxable tires are divided into three cat-
case, the tax applies only when you sell the egories for reporting and figuring the
The tax rate for underground-mined coal. The tax doesn't apply to coal used as fuel CAUTION! tax as described below.
! coal from 1/1/2022 to 9/30/2022 were in the coal drying process since it's considered
CAUTION the lower of 50 cents a ton or 2% of the
to be used in a mining process. However, the
sale price. tax does apply when you use the coal as fuel or A tax is imposed on taxable tires sold by the
The tax on surface-mined coal is the lower as an ingredient in making coke since the coal manufacturer, producer, or importer at the rate
of: isn't used in a mining process. of $.0945 ($.04725 in the case of a biasply tire
• 55 cents a ton, or You must use a constructive sale price to or super single tire) for each 10 pounds of the
• 4.4% of the sale price. figure the tax under the 4.4% (2% if sold be- maximum rated load capacity over 3,500
The tax rate for surface-mined coal tween 1/1/2022 and 9/30/2022) rate if you use pounds. The three categories for reporting the
the coal in other than a mining process. Base tax and the tax rate are listed below.
! from 1/1/2022 to 9/30/2022 were the your constructive sale price on sales of a like • Taxable tires other than biasply or super
CAUTION lower of 25 cents a ton or 2% of the single tires at $.0945.
sales price. kind and grade of coal by you or other produc-
ers made f.o.b. mine or cleaning plant. Nor- • Taxable tires, biasply or super single tires
Coal will be taxed at the 4.4% (2% if sold mally, you use the same constructive price (other than super single tires designed for
between 01/01/2022 and 09/30/2022) rate if the used to figure your percentage depletion de- steering) at $.04725.
selling price is less than $25 a ton for under- duction. • Taxable tires, super single tires designed
ground-mined coal and less than $12.50 a ton for steering at $.0945.
for surface-mined coal. Apply the tax propor- Blending. If you blend surface-mined coal with A taxable tire is any tire of the type used on
tionately if a sale or use includes a portion of a underground-mined coal during the cleaning highway vehicles if wholly or partially made of
ton. process, you must figure the excise tax on the rubber and if marked according to federal regu-
sale of the blended, cleaned coal. Figure the lations for highway use. A biasply tire is a pneu-
Example. If you sell 21,000 pounds (10.5 tax separately for each type of coal in the blend. matic tire on which the ply cords that extend to
tons) of coal from an underground mine for Base the tax on the amount of each type in the the beads are laid at alternate angles substan-
$525, the price per ton is $50. The tax is $1.10 blend if you can determine the proportion of tially less than 90 degrees to the centerline of
× 10.5 tons ($11.55). If sold between 1/1/2022 - each type of coal contained in the final blend. the tread. A super single tire is a tire greater
9/30/2022, $.50 X 10.5 tons ($5.25). Base the tax on the ratio of each type originally than 13 inches in cross section width designed
put into the cleaning process if you can't deter- to replace 2 tires in a dual fitment.
Coal production. Coal is produced from sur- mine the proportion of each type of coal in the
face mines if all geological matter (trees, earth, blend. However, the tax is limited to 4.4% (2% if Special rule, manufacturer's retail stores.
rock) above the coal is removed before the coal sold between 1/1/2022 and 9/30/2022) of the The excise tax on taxable tires is imposed at
is mined. Treat coal removed by auger and coal sale price per ton of the blended coal. the time the taxable tires are delivered to the
reclaimed from coal waste refuse piles as pro- manufacturer-owned retail stores, not at the
duced from a surface mine. Exemption from tax. The tax doesn't apply to time of sale.
Treat coal as produced from an under- sales of lignite and imported coal. The only
ground mine when the coal isn't produced from other exemption from the tax on the sale of coal Tires on imported articles. The importer of
a surface mine. In some cases, a single mine is for coal exported as discussed next. an article equipped with taxable tires is treated
may yield coal from both surface mining and un- as the manufacturer of the tires and is liable for
derground mining. Determine if the coal is from Exported. The tax doesn't apply to the sale
a surface mine or an underground mine for of coal if the coal is in the stream of export when the taxable tire excise tax when the article is
each ton of coal produced and not on a sold by the producer and the coal is actually ex- sold (except in the case of an automobile bus
mine-by-mine basis. ported. chassis or body with tires).
Coal is in the stream of export when sold by
Determining tonnage or selling price. The the producer if the sale is a step in the exporta- Tires exempt from tax. The tax on taxable
producer pays the tax on coal at the time of sale tion of the coal to its ultimate destination in a tires doesn't apply to the following items.
or use. In figuring the selling price for applying foreign country. For example, coal is in the • Domestically recapped or retreaded tires if
the tax, the point of sale is f.o.b. (free on board) stream of export when: the tires have been sold previously in the
United States and were taxable tires at the
mine or f.o.b. cleaning plant if you clean the 1. The coal is loaded on an export vessel time of sale.
coal before selling it. This applies even if you and title is transferred from the producer to • Tire carcasses not suitable for commercial
sell the coal for a delivered price. The f.o.b. a foreign purchaser, or use.
mine or f.o.b. cleaning plant is the point at • Tires for use on qualifying intercity, local,
which you figure the number of tons sold for ap- 2. The producer sells the coal to an export and school buses. For tax-free treatment,
plying the applicable tonnage rate, and the broker in the United States under terms of the registration requirements discussed
point at which you figure the sale price for ap- a contract showing that the coal is to be earlier under Requirements for Exempt
plying the 4.4% rate (2% if sold between shipped to a foreign country. Sales, apply.
1/1/2022 and 9/30/2022). Proof of export includes any of the following • Tires sold for the exclusive use of the De-
The tax applies to the full amount of coal items. partment of Defense or the Coast Guard.
sold. However, the IRS allows a calculated re- • A copy of the export bill of lading issued by • Tires of a type used exclusively on mobile
duction of the taxable weight of the coal for the the delivering carrier. machinery. A taxable tire used on mobile
weight of the moisture in excess of the coal's in- • A certificate signed by the export carrier's machinery isn't exempt from tax.
herent moisture content. Include in the sale agent or representative showing actual ex- Qualifying intercity or local bus. This is
price any additional charge for a freeze-condi- portation of the coal. any bus used mainly (more than 50%) to trans-
tioning additive in figuring the tax. • A certificate of landing signed by a cus- port the general public for a fee and that either
Don't include in the sales price the excise toms officer of the foreign country to which operates on a schedule along regular routes or
tax imposed on coal. the coal is exported. seats at least 20 adults (excluding the driver).
• If the foreign country doesn't have a cus-
Coal used by the producer. The tax on coal toms administrator, a statement of the for- Qualifying school bus. This is any bus
applies if the coal is used by the producer in eign consignee showing receipt of the substantially all the use (85% or more) of which
other than a mining process. A mining process coal. is to transport students and employees of
means the same for this purpose as for percent- schools.
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Credit or refund. A credit or refund (without made directly to a purchaser for the described
interest) is allowable on tax-paid tires if the tires emergency use and the manufacturer and pur-
have been: chaser (other than a state or local government) Vaccines
• Exported; are registered.
• Sold to a state or local government for its Treat an Indian tribal government as a state Tax is imposed on certain vaccines sold by the
exclusive use; only if the police or other law enforcement pur- manufacturer in the United States. A taxable
• Sold to a nonprofit educational organiza- poses are an essential tribal government func- vaccine means any of the following vaccines.
tion for its exclusive use; tion. • Any vaccine containing diphtheria toxoid.
• Sold to a qualified blood collector organi- • Any vaccine containing tetanus toxoid.
zation for its exclusive use in connection Model type. Model type is a particular class of • Any vaccine containing pertussis bacteria,
with a vehicle the organization certifies will automobile as determined by EPA regulations. extracted or partial cell bacteria, or specific
be primarily used in the collection, storage, pertussis antigens.
or transportation of blood; Fuel economy. Fuel economy is the average • Any vaccine containing polio virus.
• Used or sold for use as supplies for ves- number of miles an automobile travels on a gal- • Any vaccine against measles.
sels; or lon of gasoline (or diesel fuel) rounded to the • Any vaccine against mumps.
• Sold in connection with qualified intercity, nearest 0.1 mile as figured by the EPA. • Any vaccine against rubella.
local, or school buses. • Any vaccine against hepatitis A.
Imported automobiles. The tax also ap- • Any vaccine against hepatitis B.
Also, a credit or refund (without interest) is plies to automobiles that don’t have a proto- • Any vaccine against chicken pox.
allowable on tax-paid tires sold by any person type-based fuel economy rating assigned by • Any vaccine against rotavirus gastroenteri-
on, or in connection with, any other article that the EPA. An automobile imported into the Uni- tis.
is sold or used in an activity listed above. ted States without a certificate of conformity to • Any HIB vaccine.
The person who paid the tax is eligible to U.S. emission standards and that has no as- • Any conjugate vaccine against streptococ-
make the claim. signed fuel economy rating must be either: cus pneumoniae.
• Converted by installation of emission con- • Any trivalent vaccine against influenza or
trols to conform in all material respects to any other vaccine against influenza.
Gas Guzzler Tax an automobile already certified for sale in • Any meningococcal vaccine.
the United States, or • Any vaccine against the human papilloma-
Tax is imposed on the sale by the manufacturer • Modified by installation of emission control virus.
of automobiles of a model type that has a fuel components and individually tested to
economy standard as measured by the EPA of demonstrate emission compliance. The effective date for the tax on any vaccine
less than 22.5 miles per gallon. If you import an An imported automobile that has been con- against influenza, other than trivalent influenza
automobile for personal use, you may be liable verted to conform to an automobile already cer- vaccines, is the later of August 1, 2013, or the
for this tax. Figure the tax on Form 6197, as dis- tified for sale in the United States may use the date the Secretary of Health and Human Serv-
cussed later. The tax rate is based on fuel fuel economy rating assigned to that certified ices lists a vaccine against seasonal influenza
economy rating. The tax rates for the gas guz- automobile. for purposes of compensation for any vac-
zler tax are shown on Form 6197. A fuel economy rating isn't generally availa- cine-related injury or death through the Vaccine
ble for modified imported automobiles because Injury Compensation Trust Fund.
A person that lengthens an existing automo- the EPA doesn't require a highway fuel econ- The tax is $.75 per dose of each taxable
bile is the manufacturer of an automobile. omy test on them. A separate highway fuel vaccine. The tax per dose on a vaccine that
economy test would be required to devise a fuel contains more than one taxable vaccine is $.75
Automobiles. An automobile (including limou- economy rating (otherwise the automobile is times the number of taxable vaccines.
sines) means any four-wheeled vehicle that is: presumed to fall within the lowest fuel economy
• Rated at an unloaded gross vehicle weight rating category). Taxable use. Any manufacturer (including a
of 6,000 pounds or less, For more information about fuel economy governmental entity) that uses a taxable vac-
• Propelled by an engine powered by gaso- ratings for imported automobiles, see Revenue cine before it's sold will be liable for the tax in
line or diesel fuel, and Ruling 86-20 and Revenue Procedure 86-9 in the same manner as if the vaccine was sold by
• Intended for use mainly on public streets, Cumulative Bulletin 1986-1, and Revenue Pro- the manufacturer.
roads, and highways. cedure 87-10 in Cumulative Bulletin 1987-1.
Vehicles not subject to tax. For the gas Credit or refund. A credit or refund (without
guzzler tax, the following vehicles aren’t consid- Exemptions. No one is exempt from the gas interest) is available if the vaccine is:
ered automobiles. guzzler tax, including the federal government, • Returned to the person who paid the tax
state and local governments, qualified blood (other than for resale), or
1. Limousines with a gross unloaded vehicle collector organizations, and nonprofit educa- • Destroyed.
weight of more than 6,000 pounds. tional organizations. However, see Vehicles not
2. Vehicles operated exclusively on a rail or subject to tax, earlier. The claim for a credit or refund must be filed
within 6 months after the vaccine is returned or
rails. destroyed.
Form 6197. Use Form 6197 to figure your tax
3. Vehicles sold for use and used primarily: liability for each quarter. Attach Form 6197 to Conditions to allowance. To claim a
a. As ambulances or combination ambu- your Form 720 for the quarter. See the Form credit or refund, the person who paid the tax
lance-hearses; 6197 instructions for more information and the must have repaid or agreed to repay the tax to
one-time filing rules. the ultimate purchaser of the vaccine or ob-
b. For police or other law enforcement tained the written consent of such purchaser to
purposes by federal, state, or local Credit or refund. If the manufacturer paid the allowance of the credit or refund.
governments; or tax on a vehicle that is used or resold for an
c. For firefighting purposes. emergency use, the manufacturer can claim a
credit or refund. For information about how to
4. Vehicles treated under 49 U.S.C. 32901 file for credits or refunds, see the Instructions
(1978) as non-passenger automobiles. for Form 720 or Form 8849.
This includes limousines manufactured
primarily to transport more than 10 per-
sons.
The manufacturer can sell a vehicle descri-
bed in item (3) tax free only when the sale is
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1. Specially designed mobile machinery • Dry freight and refrigerated truck van bod-
for nontransportation functions. A ies 24 feet or less in length.
self-propelled vehicle isn't a highway vehi- • Dump truck bodies with load capacities of
6. cle if all the following apply. 8 cubic yards or less.
a. The chassis has permanently moun- • Refuse packer truck bodies with load ca-
ted to it machinery or equipment used pacities of 20 cubic yards or less.
Retail Tax on to perform certain operations (con- For more information on these classifications,
struction, manufacturing, drilling, min- see Revenue Procedure 2005-19, I.R.B.
ing, timbering, processing, farming, or 2005-14, at IRS.gov/PUB/IRB/
Heavy Trucks, similar operations) if the operation of IRB2015-14#RR2005-19.
the machinery or equipment is unrela- The gross vehicle weight means the maxi-
Trailers, and ted to transportation on or off the pub- mum total weight of a loaded vehicle. Gener-
lic highways. ally, this maximum total weight is the gross ve-
b. The chassis has been specially de- hicle weight rating provided by the
Tractors signed to serve only as a mobile car- manufacturer or determined by the seller of the
riage and mount (and power source, if completed article. The seller's gross vehicle
applicable) for the machinery or weight rating is determined solely on the basis
A tax of 12% of the sales price is imposed on equipment, whether or not the machi- of the strength of the chassis frame and the axle
the first retail sale of the following articles, in- nery or equipment is in operation. capacity and placement. The seller may not
take into account any readily attachable compo-
cluding related parts and accessories sold on or c. The chassis couldn’t, because of its nents (such as tires or rim assemblies) in deter-
in connection with, or with the sale of, the arti- special design and without substantial mining the gross vehicle weight.
cles. structural modification, be used as
• Truck chassis and bodies. part of a vehicle designed to carry any Parts or accessories. The tax applies to parts
• Truck trailer and semitrailer chassis and other load. or accessories sold on or in connection with, or
bodies. with the sale of, a taxable article. For example,
• Tractors of the kind chiefly used for high- 2. Vehicles specially designed for if at the time of the sale by the retailer, the part
way transportation in combination with a off-highway transportation. A vehicle or accessory has been ordered from the re-
trailer or semitrailer. isn't treated as a highway vehicle if the ve- tailer, the part or accessory will be considered
hicle is specially designed for the primary as sold in connection with the sale of the vehi-
A truck is a highway vehicle primarily designed function of transporting a particular type of cle. The tax applies in this case whether or not
to transport its load on the same chassis as the load other than over the public highway the retailer bills the parts or accessories sepa-
engine, even if it's equipped to tow a vehicle, and because of this special design, the ve- rately.
such as a trailer or semitrailer. hicles's capability to transport a load over
A tractor is a highway vehicle designed to tow a a public highway is substantially limited or If the retailer sells a taxable chassis, body,
vehicle, such as a trailer or semitrailer. A tractor impaired. or tractor without parts or accessories consid-
may carry incidental items of cargo when tow- To make this determination, you can ered essential for the operation or appearance
ing or limited amounts of cargo when not tow- take into account the vehicle's size, of the taxable article, the sale of the parts or ac-
ing. whether the vehicle is subject to licensing, cessories by the retailer to the purchaser is con-
safety, or other requirements, and whether sidered made in connection with the sale of the
A sale of a truck, truck trailer, or semitrailer is the vehicle can transport a load at a sus- taxable article even though they're shipped sep-
considered a sale of a chassis and a body. tained speed of at least 25 miles per hour. arately, at the same time, or on a different date.
The seller is liable for the tax. It doesn't matter that the vehicle can carry The tax applies unless there is evidence to the
heavier loads off highway than it's allowed contrary. For example, if a retailer sells to any
Chassis or body. A chassis or body is taxable to carry over the highway. person a chassis and the bumpers for the chas-
sis, or sells a taxable tractor and the fifth wheel
only if you sell it for use as a component part of 3. Nontransportation trailers and and attachments, the tax applies to the parts or
a highway vehicle that is a truck, truck trailer or semitrailers. A trailer or semitrailer isn't accessories regardless of the method of billing
semitrailer, or a tractor of the kind chiefly used treated as a highway vehicle if it's spe- or the time at which the shipments were made.
for highway transportation in combination with a cially designed to function only as an en- The tax doesn't apply to parts and accessories
trailer or semitrailer. closed stationary shelter for carrying on a that are spares or replacements.
Highway vehicle. A highway vehicle is any nontransportation function at an off-high- The tax imposed on parts and accessories
self-propelled vehicle designed to carry a load way site. For example, a trailer that is ca- sold on or in connection with the taxable articles
over public highways, whether or not it's also pable only of functioning as an office for listed earlier and the tax imposed on the sepa-
designed to perform other functions. Examples an off-highway construction operation isn't rate purchase of parts and accessories for the
of vehicles designed to carry a load over public a highway vehicle. taxable articles listed earlier don’t apply to an
highways are passenger automobiles, motorcy- idling reduction device or insulation that has an
cles, buses, and highway-type trucks and truck Gross vehicle weight. The tax doesn't apply R value of at least R35 per inch.
tractors. A vehicle is a highway vehicle even to truck chassis and bodies suitable for use with
though the vehicle's design allows it to perform a vehicle that has a gross vehicle weight of Idling reduction device. An idling reduc-
a highway transportation function for only one of 33,000 pounds or less. It also doesn't apply to tion device is any device or system of devices
the following. truck trailer and semitrailer chassis and bodies that provide the tractor with services, such as
• A particular type of load, such as passen- suitable for use with a trailer or semitrailer that heat, air conditioning, and electricity, without
gers, furnishings, and personal effects (as has a gross vehicle weight of 26,000 pounds or the use of the main drive engine while the trac-
in a house, office, or utility trailer). less. Tractors that have a gross vehicle weight tor is temporarily parked or stationary. The de-
• A special kind of cargo, goods, supplies, or of 19,500 pounds or less and a gross combined vice must be affixed to the tractor and deter-
materials. weight of 33,000 pounds or less are excluded mined by the Administrator of the EPA, in
• Some off-highway task unrelated to high- from the 12% retail tax. consultation with the Secretary of Energy and
way transportation, except as discussed The following four classifications of truck Secretary of Transportation, to reduce idling
next. body types meet the suitable for use stand- while parked or stationary. The EPA discusses
ard and will be excluded from the retail excise idling reduction technologies on its website at
Vehicles not considered highway vehi- tax. www.epa.gov/smartway/technology/idling.htm.
cles. Generally, the following kinds of vehicles • Platform truck bodies 21 feet or less in
aren’t considered highway vehicles for length.
purposes of the retail tax.
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Separate purchase. The tax generally ap- cle or lease it on a long-term basis (a be taxable, liability for tax isn't incurred on the
plies to the price of a part or accessory and its model certificate is shown in the Appendix later sale or lease.
installation if the following conditions are met. as Model Certificate XX). There is no regis-
• The owner, lessee, or operator of any vehi- tration requirement. Presumptive retail sales price. There are
cle that contains a taxable article installs rules to ensure that the tax base of transactions
any part or accessory on the vehicle. Leases. A long-term lease (a lease with a considered to be taxable sales includes either
• The installation occurs within 6 months af- term of 1 year or more, taking into account op- an actual or presumed markup percentage. If
ter the vehicle is first placed in service. tions to renew) before a first retail sale is treated the person liable for tax is the vehicle's manu-
as a taxable sale. The tax is imposed on the facturer, producer, or importer, the following
The owners of the trade or business instal- lessor at the time of the lease. discussions show how you figure the presump-
ling the parts or accessories are secondarily lia- A short-term lease (a lease with a term of tive retail sales price depending on the type of
ble for the tax. less than 1 year, taking into account options to transaction and the persons involved in the
A vehicle is placed in service on the date the renew) before a first retail sale is treated as a transaction. Table 6-1 outlines the appropriate
owner takes actual possession of the vehicle. taxable use. The tax is imposed on the lessor at tax base calculation for various transactions.
This date is established by a signed delivery the time of the lease. The presumed markup percentage to be
ticket or other comparable document indicating
delivery to and acceptance by the owner. Exported vehicle. A vehicle exported be- used for trucks and truck-tractors is 4%. But for
The tax doesn't apply if the installed part or fore its first retail sale, used in a foreign country, truck trailers and semitrailers and remanufac-
accessory is a replacement part or accessory. and then returned to the United States is sub- tured trucks and tractors, the presumed markup
The tax also doesn't apply if the total price of ject to the retail tax on its first domestic use or percentage is zero.
the parts and accessories, including installation retail sale after importation. Sale. For a taxable sale by a manufacturer,
charges, during the 6-month period is $1,000 or Tax on resale of tax-paid trailers and producer, importer, or related person, you gen-
less. However, if the total price is more than semitrailers. The tax applies to a trailer or erally figure the tax on a tax base of the sales
$1,000, the tax applies to the cost of all parts semitrailer resold within 6 months after having price plus an amount equal to the presumed
and accessories (and installation charges) dur- been sold in a taxable sale. The seller liable for markup percentage times that sales price.
ing that period. the tax on the resale can claim a credit equal to Long-term lease. In the case of a
Example. You bought a taxable vehicle the tax paid on the prior taxable sale. The credit long-term lease by a manufacturer, producer,
and placed it in service on April 8. On May 3, can't exceed the tax on the resale. See Regula- importer, or related person, figure the tax on a
you bought and installed parts and accessories tions section 145.4052-1(a)(4) for information tax base of the constructive sales price plus an
at a cost of $850. On July 15, you bought and on the conditions to allowance for the credit. amount equal to the presumed markup percent-
installed parts and accessories for $300. Tax of Use treated as sale. If any person uses a age times the constructive sales price.
$138 (12% of $1,150) applies on July 15. Also, taxable article before the first retail sale of the Short-term lease. When a manufacturer,
tax will apply to any costs of additional parts article, that person is liable for the tax as if the producer, importer, or related person leases an
and accessories installed on the vehicle before article had been sold at retail by that person. article in a short-term lease considered a taxa-
October 8. Figure the tax on the price at which similar arti- ble use, figure the tax on a constructive sales
cles are sold in the ordinary course of trade by price at which those or similar articles are gen-
First retail sale defined. The sale of an article retailers. The tax attaches when the use begins. erally sold in the ordinary course of trade by re-
is treated as the first retail sale, and the seller If the seller of an article regularly sells the ar- tailers.
will be liable for the tax imposed on the sale un- ticles at retail in arm's-length transactions, fig- But if the lessor in this situation regularly
less one of the following exceptions applies. ure the tax on its use on the lowest established sells articles at retail in arm's-length transac-
• There has been a prior taxable sale, lease, retail price for the articles in effect at the time of tions, figure the tax on the lowest established
or use of the article (however, see Tax on the taxable use. retail price in effect at the time of the taxable
resale of tax-paid trailers and semitrailers, If the seller of an article doesn't regularly sell use.
later). the articles at retail in arm's-length transactions, If a person other than the manufacturer, pro-
• The sale qualifies as a tax-free sale under a constructive price on which the tax is figured ducer, importer, or related person leases an ar-
section 4221 (see Sales exempt from tax, will be determined by the IRS after considering ticle in a short-term lease considered a taxable
later). the selling practices and price structures of sell- use, figure the tax on a tax base of the price for
• The seller in good faith accepts from the ers of similar articles. which the article was sold to the lessor plus the
purchaser a statement signed under penal- If a seller of an article incurs liability for tax cost of parts and accessories installed by the
ties of perjury and executed in good faith on the use of the article and later sells or leases lessor and a presumed markup percentage.
that the purchaser intends to resell the arti- the article in a transaction that otherwise would
Related person. A related person is any
Table 6-1. Tax Base member of the same controlled group as the
manufacturer, producer, or importer. Don't treat
IF the transaction is a... THEN figure the base by using the... as a related person a person that sells the arti-
cles through a permanent retail establishment
Sale by the manufacturer, producer, Sales price plus (presumed markup in the normal course of being a retailer if that
importer, or related person percentage × sales price) person has records to prove the article was sold
Sale by the dealer Total consideration paid for the item including for a price that included a markup equal to or
any charges incident to placing it in a greater than the presumed markup percentage.
condition ready for use
General rule for sales by dealers to the con-
Long-term lease by the manufacturer, Constructive sales price plus (presumed sumer. For a taxable sale, other than a
producer, importer, or related person markup percentage × constructive sales price) long-term lease, by a person other than a man-
Short-term lease by the manufacturer, Constructive sales price at which such or ufacturer, producer, importer, or related person,
producer, importer, or related person similar articles are sold your tax base is the retail sales price as dis-
cussed next under Determination of tax base.
Long- or Short-term lease by a lessor other Price for which the article was sold to the When you sell an article to the consumer,
than the manufacturer, producer, importer, lessor plus the cost of parts and accessories generally you don’t add a presumed markup to
or related person installed by the lessor plus a presumed
markup percentage
Short-term lease where the articles are Lowest established retail price in effect at the
regularly sold at arm's length time of the taxable use

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the tax base. However, you do add a markup if liability arises at the time of the sale. The tax is Camper coaches or bodies for self-pro-
all the following apply. figured on the entire sales price. No part of the pelled mobile homes. This is any article de-
• You don’t perform any significant activities tax is deferred because the sales price is paid signed to be mounted or placed on trucks, truck
relating to the processing of the sale of a in installments. chassis, or automobile chassis and to be used
taxable article. primarily as living quarters or camping accom-
• The main reason for processing the sale Repairs and modifications. The tax modations. Further, the tax doesn't apply to
through you is to avoid or evade the pre- doesn't apply to the sale or use of an article that chassis specifically designed and constructed
sumed markup. has been repaired or modified unless the cost to accommodate and transport self-propelled
• You don’t have records proving that the ar- of the repairs and modifications is more than mobile home bodies.
ticle was sold for a price that included a 75% of the retail price of a comparable new arti-
markup equal to or greater than the pre- cle. This includes modifications that change the Farm feed, seed, and fertilizer equip-
sumed markup percentage. transportation function of an article or restore a ment. This is any body primarily designed to
wrecked article to a functional condition. How- process or prepare, haul, spread, load, or un-
In these situations, your tax base is the sales ever, this exception generally doesn't apply to load feed, seed, or fertilizer to or on farms. This
price plus an amount equal to the presumed an article that wasn't subject to the tax when it exemption applies only to the farm equipment
markup percentage times that selling price. was new. body (and parts and accessories) and not to the
chassis upon which the farm equipment is
Determination of tax base. These rules apply Further manufacture. The tax doesn't ap- mounted.
to both normal retail sales price and presump- ply to the use by a person of a taxable article as
tive retail sales price computations. To arrive at material in the manufacture or production of, or Ambulances and hearses. This is any
the tax base, the price is the total consideration as a component part of, another article to be ambulance, hearse, or combination ambu-
paid (including trade-in allowance) for the item manufactured or produced by that person. Don't lance-hearse.
and includes any charge incident to placing the treat a person as engaged in the manufacture
article in a condition ready for use. However, of any article merely because that person com- Truck-tractors. This is any truck-tractor
see Presumptive retail sales price, earlier. bines the article with a: specifically designed for use in shifting semi-
• Coupling device (including any fifth wheel); trailers in and around freight yards and freight
Exclusions from tax base. Exclude from • Wrecker crane; terminals.
the tax base the retail excise tax imposed on • Loading and unloading equipment (includ- Concrete mixers. This is any article de-
the sale. Exclude any state or local retail sales ing any crane, hoist, winch, or power lift- signed to be placed or mounted on a truck,
tax if stated as a separate charge from the price gate); truck trailer, or semitrailer chassis to be used to
whether the sales tax is imposed on the seller • Aerial ladder or tower; process or prepare concrete. This exemption
or purchaser. Also exclude the value of any • Ice and snow control equipment; doesn't apply to the chassis on which the article
used component of the article furnished by the • Earth moving, excavation, and construc- is mounted.
first user of the article. tion equipment;
Exclude charges for transportation, delivery, • Spreader; Sales exempt from tax. The following sales
insurance, and installation (other than installa- • Sleeper cab; are ordinarily exempt from tax.
tion charges for parts and accessories, dis- • Cab shield; or • Sales to a state or local government for its
cussed earlier) and other expenses incurred in • Wood or metal floor. exclusive use.
connection with the delivery of an article to a Sales to Indian tribal governments, but
purchaser. These expenses are those incurred Combining an article with an item in this list •
in delivery from the retail dealer to the cus- doesn't give rise to taxability. However, see only if the transaction involves the exercise
tomer. In the case of delivery directly from the Parts or accessories, earlier. of an essential tribal government function.
manufacturer to the dealer's customer, include • Sales to a nonprofit educational organiza-
the transportation and delivery charges to the Articles exempt from tax. The tax on heavy tion for its exclusive use.
extent the charges don't exceed what it would trucks, trailers, and tractors doesn't apply to • Sales to a qualified blood collector organi-
have cost to ship the article to the dealer. sales of the articles described in the following zation (as defined under Communications
Exclude amounts charged for machinery or discussions. Tax in chapter 4) for its exclusive use in the
collection, storage, or transportation of
equipment that doesn't contribute to the high- Rail trailers and rail vans. This is any blood.
way transportation function of the vehicle, provi- chassis or body of a trailer or semitrailer de- • Sales for use by the purchaser for further
ded those charges are supported by adequate signed for use both as a highway vehicle and a manufacture of other taxable articles.
records. For example, for an industrial vacuum railroad car (including any parts and accesso- • Sales for export or for resale by the pur-
loader vehicle, exclude amounts charged for ries designed primarily for use on and in con- chaser to a second purchaser for export.
the vacuum pump and hose, filter system, ma- nection with it). Don't treat a piggyback trailer or • Sales to the United Nations for official use.
terial separator, silencer or muffler, control cabi- semitrailer as designed for use as a railroad
net, and ladder. Similarly, for a sewer cleaning car. Registration requirement. In general, the
vehicle, exclude amounts charged for the high seller and buyer must be registered for a sale to
pressure water pump, hose components, and Parts and accessories. This is any part or be tax free. See the Form 637 instructions for
the vacuum pipe. accessory sold separately from the truck or more information. Certain registration excep-
trailer, except as described earlier under Parts tions apply in the case of sales to state and lo-
Sales not at arm's length. For any taxable or accessories and Separate purchase. cal governments, sales to foreign purchasers
article sold (not at arm's length) at less than the for export, and sales for resale or long-term
fair market price, figure the excise tax on the Trash containers. This is any box, con-
price for which similar articles are sold at retail tainer, receptacle, bin, or similar article that leasing.
in the ordinary course of trade. meets all the following conditions. Further manufacture. If you buy articles
A sale isn't at arm's length if either of the fol- • It's designed to be used as a trash con- tax free and resell or use them other than in the
lowing apply. tainer. manufacture of another article, you're liable for
• One of the parties is controlled (in law or in • It isn't designed to carry freight other than the tax on their resale or use just as if you had
fact) by the other or there is common con- trash. manufactured and made the first retail sale of
trol, whether or not the control is actually • It isn't designed to be permanently moun- them.
exercised to influence the sales price. ted on or affixed to a truck chassis or body.
• The sale is made under special arrange- Credits or refunds. A credit or refund (without
ments between a seller and a purchaser. House trailers. This is any house trailer interest) of the retail tax on the taxable articles
(regardless of size) suitable for use in connec-
Installment sales. If the first retail sale is tion with either passenger automobiles or described earlier may be allowable if the tax
an installment sale, or other form of sale in trucks. has been paid with respect to an article and, be-
fore any other use, such article is used by any
which the sales price is paid in installments, tax
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person as a component part of another taxable benefit of the passengers. Therefore, John is 2. Life, sickness, and accident insurance,
article manufactured or produced. The person engaged in the business of the vessel and isn't and annuity contracts: 1 cent. For exam-
using the article as a component part is eligible a passenger. ple, on a premium payment of $10.10, the
for the credit or refund. tax is 11 cents.
A credit or refund is allowable if, before any Example 2. Marian Green is a travel agent.
other use, an article is, by any person: Marian is taking the cruise as a promotional trip 3. Reinsurance policies covering any of the
• Exported, to determine if it should be offered to the clients taxable contracts described in items (1)
• Used or sold for use as supplies for ves- of the travel agency. Marian is a passenger. and (2): 1 cent.
sels, However, the tax doesn't apply to casualty in-
• Sold to a state or local government for its Taxable situations. There are two taxable sit- surance premiums paid to foreign insurers for
exclusive use, uations. The first situation involves voyages on coverage of export goods in transit to foreign
• Sold to a nonprofit educational organiza- commercial passenger vessels extending over destinations.
tion for its exclusive use, or one or more nights. A voyage extends over one
• Sold to a qualified blood collector organi- or more nights if it extends for more than 24 Premium. Premium means the agreed
zation for its exclusive use in the collection, hours. A passenger vessel is any vessel with price or consideration for assuming and carry-
storage, or transportation of blood. stateroom or berth accommodations for more ing the risk or obligation. It includes any addi-
than 16 passengers. tional charge or assessment payable under the
A credit or refund is also allowable if there is a The second situation involves voyages on a contract, whether in one sum or installments. If
price readjustment by reason of the return or re- commercial vessel transporting passengers en- premiums are refunded, claim the tax paid on
possession of an article or by reason of a bona gaged in gambling on the vessel beyond the those premiums as an overpayment against tax
fide discount, rebate, or allowance. territorial waters of the United States. Territorial due on other premiums paid or file a claim for
See Conditions to allowance in chapter 5. waters of the United States are those waters refund.
within the international boundary line between
Tire credit. A credit is allowed against the re- the United States and any contiguous foreign When liability attaches. The liability for this
tail tax on the taxable articles described earlier country or within 3 nautical miles (3.45 statute tax attaches when the premium payment is
if taxable tires are sold on or in connection with miles) from low tide on the coastline. If passen- transferred to the foreign insurer or reinsurer
the sale of the article. The credit is equal to the gers participate as players in any policy game (including transfers to any bank, trust fund, or
manufacturers excise tax imposed on the taxa- or other lottery, or any other game of chance for similar recipient designated by the foreign in-
ble tires. This is the section 4051(d) taxable tire money or other thing of value that the owner or surer or reinsurer) or to any nonresident agent,
credit and is claimed on Form 720, Schedule C operator of the vessel (or their employee, agent, solicitor, or broker. A person can pay the tax be-
for the same quarter for which the tax on the or franchisee) conducts, sponsors, or operates, fore the liability attaches if the person keeps re-
heavy vehicle is reported. the voyage is subject to the ship passenger tax. cords consistent with that practice.
The tax applies regardless of the duration of the
voyage. A casual, friendly game of chance with Who must file. The person who pays the pre-
other passengers that isn't conducted, spon- mium to the foreign insurer (or to any nonresi-
sored, or operated by the owner or operator dent person such as a foreign broker) must pay
isn't gambling for determining if the voyage is the tax and file the return. Otherwise, any per-
subject to the ship passenger tax. son who issued or sold the policy, or who is in-
7. sured under the policy, is required to pay the
Exemptions. The tax doesn't apply when a tax and file the return.
vessel is on a voyage of less than 12 hours be- The person liable for this tax must keep
tween two points in the United States or if a accurate records that identify each pol-
Ship Passenger vessel is owned or operated by a state or local RECORDS icy or instrument subject to tax. These
government. records must clearly establish the type of policy
Tax or instrument, the gross premium paid, the
identity of the insured and insurer, and the total
A tax of $3 per passenger is imposed on certain premium charged. If the premium is to be paid
ship voyages, as explained later under Taxable in installments, the records must also establish
situations. The tax is imposed only once for the amount and anniversary date of each in-
each passenger, either at the time of first em- stallment.
barkation or disembarkation in the United 8. The records must be kept at the place of
States. business or other convenient location for at
least 3 years after the later of the date any part
The person providing the voyage (the operator of the tax became due, or the date any part of
of the vessel) is liable for the tax. Foreign
the tax was paid. During this period, the records
must be readily accessible to the IRS.
Voyage. A voyage is the vessel's journey that Insurance Taxes The person having control or possession of
includes the outward and homeward trips or a policy or instrument subject to this tax must
passages. The voyage starts when the vessel Tax is imposed on insurance policies issued by keep the policy for at least 3 years after the date
begins to load passengers and continues until foreign insurers. Any person who makes, signs, any part of the tax on it was paid.
the vessel has completed at least one outward issues, or sells any of the documents and in- For information on reinsurance premi-
and one homeward passage. The tax may be struments subject to the tax, or for whose use or TIP ums paid from one foreign insurer to
imposed even if a passenger doesn't make both benefit they're made, signed, issued, or sold, is another foreign insurer, see Revenue
an outward and a homeward passage as long liable for the tax. Ruling 2008-15, I.R.B. 2008-12, at
as the voyage begins or ends in the United
States. The following tax rates apply to each dollar (or IRS.gov/PUB/IRB/IRB2008-12#RR2008-15.
fraction thereof) of the premium paid.
Passenger. A passenger is an individual car- Treaty-based positions under I.R.C 6114.
ried on the vessel other than the master or a 1. Casualty insurance and indemnity, fidelity,
crew member or other individual engaged in the and surety bonds: 4 cents. For example, You may have to file an annual report disclosing
business of the vessel or its owners. on a premium payment of $10.10, the tax the amount of premiums exempt from U.S. ex-
is 44 cents. cise tax as a result of the application of a treaty
Example 1. John Smith works as a guest
lecturer. The cruise line hired John for the
Chapter 8 Foreign Insurance Taxes Page 39

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with the United States that overrides (or other- 4376) for policy and plan years ending on or af-
wise modifies) any provision of the Internal Rev- ter October 1, 2012. Generally, references to
enue Code. taxes on Form 720 include this fee.
Attach any disclosure statement to the first 10.
quarter Form 720. You may be able to use Form Specified health insurance policies. See
8833, Treaty-Based Return Position Disclosure the Instructions for Form 720 revised for the
Under Section 6114 or 7701(b), as a disclosure second quarter of each year for information on
statement. See the Instructions for Form 720 for Indoor Tanning the fee amount. Generally, issuers of specified
information on how and where to file. health insurance polices must use one of the
See Revenue Procedure 92-14 in Cumula- Services Tax following four alternative methods to determine
tive Bulletin 1992-1 for procedures you can use the average number of lives covered under a
to claim a refund of this tax under certain U.S. The tax on indoor tanning service is 10% of the policy for the policy year.
treaties. amount paid for that service. The tax is paid by 1. The actual count method.
the person paying for the services and is collec-
ted by the person receiving payment for the in- 2. The snapshot method.
door tanning services. 3. The member months method.
Definition of indoor tanning services. In- 4. The state form method.
door tanning service means a service employ-
9. ing any electronic product designed to incorpo- Applicable self-insured health plans. See
rate one or more ultraviolet lamps and intended the Instructions for Form 720 revised for the
for the irradiation of an individual by ultraviolet second quarter of each year for information on
radiation, with wavelengths in air between 200 the fee amount. Generally, plan sponsors of ap-
Obligations Not and 400 nanometers, to induce skin tanning. plicable self-insured health plans must use one
The term doesn't include phototherapy service of the following three alternative methods to de-
performed by, and on the premises of, a li- termine the average number of lives covered
in Registered censed medical professional (such as a derma- under a plan for the plan year.
tologist, psychologist, or registered nurse). See 1. Actual count method.
Form Regulation 49.5000B-1 Indoor Tanning
Services for more information, and special rules 2. Snapshot method.
Tax is imposed on any person who issues a for qualified physical fitness facilities, undesig- 3. Form 5500 method.
registration-required obligation not in registered nated payment cards, and bundled payments.
Reporting and paying the fee. File Form 720
form. The tax is: File Form 720. The person receiving the pay- annually to report and pay the fee on the sec-
• 1% of the principal of the obligation, multi- ment for indoor tanning services (collector) ond quarter Form 720 no later than July 31 of
plied by must collect and remit the tax and file the return. the calendar year immediately following the last
• The number of calendar years (or portions If the tax isn't collected for any reason, the col- day of the policy year or plan year to which the
of calendar years) during the period start- lector is liable for the tax. The collector isn't re- fee applies. If you file Form 720 only to report
ing on the date the obligation was issued quired to make semimonthly deposits of the tax. the fee, don’t file Form 720 for the first, third, or
and ending on the date it matures.
fourth quarters of the year. If you file Form 720
A registration-required obligation is any obliga- to report quarterly excise tax liability for the first,
tion other than one that meets any of the follow- third, or fourth quarter of the year (for example,
ing conditions. filers reporting the foreign insurance tax (IRS
1. It's issued by a natural person. No. 30)), don’t make an entry on the line for IRS
No. 133 on those filings.
2. It isn't of a type offered to the public. 11. Deposits aren’t required for this fee, so issu-
3. It has a maturity (at issue) of not more than ers and plan sponsors aren’t required to pay the
1 year. fee using the Electronic Federal Tax Payment
System (EFTPS).
4. It's a tax-exempt bond. Patient-Centered However, if the fee is paid using EFTPS, the
5. It's issued under an arrangement reasona- payment should be applied to the second quar-
bly designed to ensure that the obligation Outcomes ter. See Electronic deposit requirement under
will be sold only to foreign persons. How To Make Deposits in chapter 13, later.
For item (5), if the obligation isn't in registered Research Fee More information. For more information, in-
form, the interest on the obligation must be pay- cluding methods for calculating the average
able only outside the United States and its pos- The patient-centered outcomes research fee is number of lives covered, see the Instructions for
sessions. Also, the obligation must state on its imposed on issuers of specified health insur- Form 720; sections 4375, 4376, 4377; and Reg-
face that any U.S. person who holds it shall be ance policies (section 4375) and plan sponsors ulations 46.4375-1; see T.D. 9602, I.R.B.
subject to limits under the U.S. income tax laws. of applicable self-insured health plans (section 2012-52, at IRS.gov/PUB/IRB/
IRB2012-52#TD9602.

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Part Three.

Quarterly Filing

Information

a. Repaid the tax to the person from you're making your payment by check or money
whom it was collected, or order.
12. b. Obtained the consent of that person
to the allowance of the adjustment.
2. For other adjustments, the claimant has:
Filing Form 720 a. Not included the tax in the price of the
article and not collected the tax from
Use Form 720 to report and pay the excise the purchaser, 13.
taxes previously discussed in this publication. b. Repaid the tax to the ultimate pur-
File Form 720 for each calendar quarter until chaser, or
you file a final Form 720. For information on fil-
ing Form 720 electronically, go to IRS.gov/ c. Attached the written consent of the ul- Payment of
eFile. timate purchaser to the allowance of
the adjustment.
You may be required to file your returns on a Taxes
monthly or semimonthly basis instead of quar- However, the conditions listed under (2) don’t
terly if you don’t make deposits as required (see apply to environmental taxes, the ship passen- Generally, semimonthly deposits of excise
Payment of Taxes, later) or are liable for the ex- ger tax, obligations not in registered form, for- taxes are required. A semimonthly period is the
cise tax on taxable fuels and meet certain con- eign insurance taxes, fuels used on inland wa- first 15 days of a month (the first semimonthly
ditions. terways, cellulosic or second generation biofuel period) or the 16th through the last day of a
sold as but not used as fuel, biodiesel sold as month (the second semimonthly period).
Form 720 has three parts and three schedules. fuel but not used as fuel, and certain fuel taxes However, no deposit is required for the situa-
• Part I consists of excise taxes generally re- if the tax was based on use (for example, dyed tions listed below; the taxes are payable with
quired to be deposited (see Payment of diesel fuel used in trains, LPG, and CNG). Form 720.
Taxes, later).
• Part II consists of excise taxes that aren’t Final return. File a final return if: • The net liability for taxes listed in Form
720, Part I doesn’t exceed $2,500 for the
required to be deposited. • You go out of business, or quarter.
• Part III is used to figure your tax liability for • You won’t owe excise taxes that are re- • The gas guzzler tax is being paid on a
the quarter and the amount of any balance portable on Form 720 in future quarters. one-time filing.
due or overpayment.
• Schedule A, Excise Tax Liability, is used Due dates. Form 720 must be filed by the fol- • The liability is for taxes listed in Form 720,
Part II, except for the floor stocks tax,
to record your net tax liability for each sem- lowing due dates. which generally requires a single deposit.
imonthly period in a quarter. Complete it if
you have an entry in Part I.
• Schedule C, Claims, is used to make Quarter Covered Due Dates
claims. However, Schedule C can only be January, February, March . . . . . April 30 How To Make Deposits
used if you're reporting a liability in Part I or April, May, June . . . . . . . . . . . . . July 31
Part II. July, August, September . . . . . . October 31 Electronic deposit requirement. You must
• Schedule T, Two-Party Exchange Infor- October, November, use electronic funds transfer to make excise tax
mation Reporting, is used to report certain December . . . . . . . . . . . . . . . . . . January 31 deposits. Generally, electronic funds transfers
exchanges of taxable fuel before or in con- are made using EFTPS. If you don’t want to use
nection with the removal at the terminal If any due date falls on a Saturday, Sunday, EFTPS, you can arrange for your tax professio-
rack. or legal holiday, you can file the return on the nal, financial institution, payroll service, or other
Attachments to Form 720. You may have next business day. trusted third party to make deposits on your be-
half. Also, you may arrange for your financial in-
to attach the following forms. stitution to submit a same-day wire payment on
• Form 6197 for the gas guzzler tax. One-time filing. If you import a gas guzzling
• Form 6627 for environmental taxes. automobile, you may be eligible to make a your behalf.
one-time filing using your SSN if you: EFTPS is a free service provided by the De-
Form 720-X. This form is used to make adjust- • Don't import gas guzzling automobiles in partment of Treasury. Services provided by
ments to Forms 720 filed in prior quarters. You the course of your trade or business, and your tax professional, financial institution, pay-
can file Form 720-X by itself or, if it shows a de- • Aren’t required to file Form 720 reporting roll service, or other third party may have a fee.
crease in tax, you can attach it to Form 720. other excise taxes for the calendar quarter, To get more information about EFTPS or to en-
See Form 720-X for more information. except for a one-time filing. roll in EFTPS, visit www.eftps.gov or call
1-800-555-4477. Additional information about
If you meet both requirements above, see EFTPS is also available in Publication 966,
Conditions to allowance. For tax decrea- Gas guzzler tax (IRS No. 40) in the Instructions Electronic Federal Tax Payment System: A
ses, the claimant must check the appropriate for Form 720 for how to file and pay the tax. Guide to Getting Started.
box on Form 720-X stating that:
Depositing on time. For EFTPS deposits
1. For adjustments of communications or air Payment voucher. Form 720-V, Payment to be on time, you must submit the transaction
transportation taxes, the claimant has: Voucher, must be included with Form 720 if you at least 1 day before the date the deposit is due
have a balance due on Form 720, line 10; and (by 8:00 p.m. Eastern time).
Chapter 13 Payment of Taxes Page 41

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Same-day wire payment option. If you fail to example, amounts billed in December, January, be at least 1/6 (16.67%) of the net tax liability
submit a deposit transaction on EFTPS by 8:00 and February are considered collected during reported for the look-back quarter.
p.m. Eastern time the day before the date a de- January, February, and March and are reported
posit is due, you can still make your deposit on on Form 720 as the tax for the first quarter of Exceptions. The safe harbor rule doesn't
time by using the Federal Tax Collection Serv- the calendar year. apply to:
• The first and second quarters beginning on
ice (FTCS). To use the same-day wire payment The separate account for each month must or after the effective date of an increase in
method, you will need to make arrangements reflect: the rate of tax unless the deposit of taxes
with your financial institution ahead of time.
Please check with your financial institution re- 1. All items of tax included in amounts billed for each semimonthly period in the calen-
garding availability, deadlines, and costs. Your or tickets sold during the month, and dar quarter is at least 1/6 (16.67%) of the
tax liability you would have had for the
financial institution may charge you a fee for 2. Other items of adjustment relating to tax look-back quarter if the increased rate of
payments made this way. To learn more about for prior months (within the statute of limi- tax had been in effect for that look-back
the information you will need to provide your fi- tations on credits or refunds). quarter;
nancial institution to make a same-day wire
payment, visit IRS.gov/Payments and click on The separate account for any month can't • Any quarter if liability includes any tax not
Same-day wire. include an adjustment resulting from a refusal to in effect throughout the look-back quarter;
You will automatically be enrolled in pay or inability to collect unless the refusal has or
TIP EFTPS when you apply for an EIN. You been reported to the IRS. See Uncollected Tax • For deposits under the alternative method,
will receive a separate mailing contain- Report in chapter 4. any quarter if liability includes any tax not
in effect throughout the look-back quarter
ing instructions for activating your EFTPS en- The net amount of tax that is considered col- and the month preceding the look-back
rollment after you receive your EIN. lected during the semimonthly period must be quarter.
either:
• The net amount of tax reflected in the sep- Requirements to be met. For the safe harbor
arate account for the corresponding semi- rule to apply, you must:
When To Make Deposits monthly period of the preceding month, or • Make each deposit timely at an authorized
There are two methods for determining depos- • One-half of the net amount of tax reflected financial institution, and
in the separate account for the preceding • Pay any underpayment for the current
its: the regular method and the alternative month. quarter by the due date of the return.
method.
The regular method applies to all taxes in Special rule for deposits of taxes in Sep- The IRS may withdraw the right to
Part I of Form 720 except for communications tember. See the Instructions for Form 720 for a ! make deposits of tax using the safe
and air transportation taxes if deposits are special rule on deposits made in September. CAUTION harbor rule from any person not com-
plying with these rules.
based on amounts billed or tickets sold, rather
than on amounts actually collected. See Alter-
native method (IRS Nos. 22, 26, 27, and 28), Amount of Deposits Tax rate increases. You must modify the safe
later. harbor rule if there has been an increase in the
Deposits for a semimonthly period must gener- rate of tax. You must figure your tax liability in
If you're depositing more than one tax under ally be at least 95% of the net tax liability for that the look-back quarter as if the increased rate
a method, combine all the taxes under the period unless the safe harbor rule applies. Gen- had been in effect. To qualify for the safe harbor
method and make one deposit for the semi- erally, you don't have to make a deposit for a rule, your deposits can't be less than / of the 1 6
monthly period. period in which you incurred no tax liability. refigured tax liability.

Regular method. The deposit of tax for a sem- Net tax liability. Your net tax liability is your
imonthly period is due by the 14th day following tax liability for the period minus any claims on
that period. Generally, this is the 29th day of a Form 720, Schedule C for the period. You may
month for the first semimonthly period and the figure your net tax liability for a semimonthly pe-
14th day of the following month for the second riod by dividing your net liability incurred during
semimonthly period. If the 14th or the 29th day the calendar month by two. If you use this 14.
falls on a Saturday, Sunday, or legal holiday, method, you must use it for all semimonthly pe-
you must make the deposit by the immediately riods in the calendar quarter.
preceding day that isn't a Saturday, Sunday, or
legal holiday. Don't reduce your liability by any Penalties
amounts from Form 720-X.
Alternative method (IRS Nos. 22, 26, 27, CAUTION!
and 28). Deposits of communications and air and Interest
transportation taxes may be based on taxes in- Safe Harbor Rule Penalties and interest may result from any of
cluded in amounts billed or tickets sold during a
the following acts.
semimonthly period instead of on taxes actually The safe harbor rule applies separately to de- Failing to collect and pay over tax as the
collected during the period. Under the alterna- posits under the regular method and the alter- •
collecting agent (see Trust fund recovery
tive method, the tax included in amounts billed native method. Persons who filed Form 720 for penalty, later).
or tickets sold during a semimonthly period is the look-back quarter (the second calendar Failing to keep adequate records.
considered collected during the first 7 days of quarter preceding the current quarter) are con- •
the second following semimonthly period. The sidered to meet the semimonthly deposit re- • Failing to file returns.
deposit of tax is due by the third banking day af- quirement if the deposit for each semimonthly • Failing to pay taxes.
ter the seventh day of that period. period in the current quarter is at least 1/6 • Filing returns late.
For an example of the alternative method, (16.67%) of the net tax liability reported for the • Filing false or fraudulent returns.
see the Instructions for Form 720. look-back quarter. • Paying taxes late.
• Failing to make deposits.
To use the alternative method, you must For the semimonthly period for which the • Depositing taxes late.
keep a separate account of the tax included in additional deposit is required, the additional de- • Making false statements relating to tax.
amounts billed or tickets sold during the month posit must be at least 11/90 (12.23%), 10/90 • Failing to register.
and report on Form 720 the tax included in (11.12%) for non-EFTPS, of the net tax liability • Misrepresenting that tax is excluded from
amounts billed or tickets sold and not the reported for the look-back quarter. Also, the the price of an article.
amount of tax that is actually collected. For total deposit for that semimonthly period must
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Failure to register. The civil penalty for failure unagreed case involving an excise tax covered filing your return online or in your local commun-
to register if you're required to register, unless in this publication differs from other tax cases in ity, if you qualify, which include the following.
due to reasonable cause, is $10,000 for the ini- that you can only contest it in court after pay- • Free File. This program lets you prepare
tial failure, and then $1,000 each day thereafter ment of the tax by filing suit for a refund in the and file your federal individual income tax
you fail to register. United States District Court or the United States return for free using brand-name tax-prep-
Court of Federal Claims. aration-and-filing software or Free File filla-
Claims. There are criminal penalties for false ble forms. However, state tax preparation
or fraudulent claims. In addition, any person may not be available through Free File. Go
who files a refund claim with respect to the use to IRS.gov/FreeFile to see if you qualify for
of certain fuels for an excessive amount (with- free online federal tax preparation, e-filing,
out reasonable cause) may have to pay a civil and direct deposit or payment options.
penalty. An excessive amount is the amount • VITA. The Volunteer Income Tax Assis-
claimed that is more than the allowable amount. 16. tance (VITA) program offers free tax help
The penalty is the greater of two times the ex- to people with low-to-moderate incomes,
cessive amount or $10. persons with disabilities, and limited-Eng-
lish-speaking taxpayers who need help
Trust fund recovery penalty. If you provide Rulings Program preparing their own tax returns. Go to
taxable communications, air transportation IRS.gov/VITA, download the free IRS2Go
services, or indoor tanning services, you have The IRS has a program for assisting taxpayers app, or call 800-906-9887 for information
to collect excise taxes from those persons who who have technical problems with tax laws and on free tax return preparation.
pay you for those services. You must pay over regulations. The IRS will answer inquiries from • TCE. The Tax Counseling for the Elderly
these taxes to the U.S. Government. individuals and organizations about the tax ef- (TCE) program offers free tax help for all
If you willfully fail to collect or pay over these fect of their acts or transactions. The National taxpayers, particularly those who are 60
taxes, or if you evade or defeat them in any Office of the IRS issues rulings on those mat- years of age and older. TCE volunteers
way, the trust fund recovery penalty may apply. ters. specialize in answering questions about
Willfully means voluntarily, consciously, and in- pensions and retirement-related issues
tentionally. The trust fund recovery penalty A ruling is a written statement to a taxpayer that unique to seniors. Go to IRS.gov/TCE,
equals 100% of the taxes not collected or not interprets and applies tax laws to the taxpayer's download the free IRS2Go app, or call
paid over to the U.S. Government. specific set of facts. There are also determina- 888-227-7669 for information on free tax
The trust fund recovery penalty may be im- tion letters issued by IRS directors and informa- return preparation.
posed on any person responsible for collecting, tion letters issued by IRS directors or the Na- • MilTax. Members of the U.S. Armed
accounting for, and paying over these taxes. If tional Office. Forces and qualified veterans may use Mil-
this person knows that these required actions Tax, a free tax service offered by the De-
aren’t taking place for whatever reason, the per- There is a fee for most types of determination partment of Defense through Military One-
son is acting willfully. Paying other expenses of letters and rulings. For complete information on Source. For more information, go to
the business instead of paying the taxes is will- the rulings program, see the first Internal Reve- MilitaryOneSource MilitaryOneSource.mil/ (
ful behavior. nue Bulletin published each year. MilTax).
A responsible person can be an officer or Also, the IRS offers Free Fillable
employee of a corporation, a partner or em- Forms, which can be completed online and
ployee of a partnership, or any other person then filed electronically regardless of in-
who had responsibility for certain aspects of the come.
business and financial affairs of the employer
(or business). This may include accountants, Using online tools to help prepare your re-
turn. Go to IRS.gov/Tools for the following.
trustees in bankruptcy, members of a board, 17. The Earned Income Tax Credit Assistant
banks, insurance companies, or sureties. The •
responsible person could even be another cor- (IRS.gov/EITCAssistant) determines if
poration—in other words, anyone who has the you’re eligible for the earned income credit
duty and the ability to direct, account for, or pay How To Get Tax (EIC).
over the money. Having signature power on the • The Online EIN Application IRS.gov/EIN ( )
business checking account could be a signifi- helps you get an employer identification
cant factor in determining responsibility. Help number (EIN) at no cost.
• The Tax Withholding Estimator IRS.gov/ (
If you have questions about a tax issue; need W4app) makes it easier for you to estimate
help preparing your tax return; or want to down- the federal income tax you want your em-
load free publications, forms, or instructions, go ployer to withhold from your paycheck.
to IRS.gov to find resources that can help you This is tax withholding. See how your with-
right away. holding affects your refund, take-home
pay, or tax due.
15. Preparing and filing your tax return. After The First-Time Homebuyer Credit Account
receiving all your wage and earnings state- •
Look-up IRS.gov/HomeBuyer ( ) tool pro-
ments (Forms W-2, W-2G, 1099-R, 1099-MISC, vides information on your repayments and
Examination and 1099-NEC, etc.); unemployment compensation account balance.
statements (by mail or in a digital format) or The Sales Tax Deduction Calculator
other government payment statements (Form •
(IRS.gov/SalesTax) figures the amount you
Appeal 1099-G); and interest, dividend, and retirement can claim if you itemize deductions on
statements from banks and investment firms Schedule A (Form 1040).
(Forms 1099), you have several options to
Procedures choose from to prepare and file your tax return. Getting answers to your tax ques-
You can prepare the tax return yourself, see if tions. On IRS.gov, you can get
If your excise tax return is examined and you you qualify for free tax preparation, or hire a tax up-to-date information on current
disagree with the findings, you can get informa- professional to prepare your return. events and changes in tax law.
tion about audit and appeal procedures from
Publication 556, Examination of Returns, Ap- Free options for tax preparation. Go to
peal Rights, and Claims for Refund. An IRS.gov to see your options for preparing and

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sentations for individuals, small businesses, • Access your tax records, including key
• IRS.gov/Help: A variety of tools to help you and tax professionals. data from your most recent tax return, and
get answers to some of the most common transcripts.
tax questions. Online tax information in other languages. • View digital copies of select notices from
• IRS.gov/ITA: The Interactive Tax Assistant, You can find information on IRS.gov/ the IRS.
a tool that will ask you questions and, MyLanguage if English isn’t your native lan- • Approve or reject authorization requests
based on your input, provide answers on a guage. from tax professionals.
number of tax law topics. View your address on file or manage your
•
• IRS.gov/Forms: Find forms, instructions, Free Over-the-Phone Interpreter (OPI) Serv- communication preferences.
and publications. You will find details on ice. The IRS is committed to serving our multi-
the most recent tax changes and interac- lingual customers by offering OPI services. The Tax Pro Account. This tool lets your tax pro-
tive links to help you find answers to your OPI Service is a federally funded program and fessional submit an authorization request to ac-
questions. is available at Taxpayer Assistance Centers cess your individual taxpayer IRS online
• You may also be able to access tax law in- (TACs), other IRS offices, and every VITA/TCE account. For more information, go to IRS.gov/
formation in your electronic filing software. return site. The OPI Service is accessible in TaxProAccount.
more than 350 languages.
Need someone to prepare your tax return? Using direct deposit. The fastest way to re-
There are various types of tax return preparers, Accessibility Helpline available for taxpay- ceive a tax refund is to file electronically and
including enrolled agents, certified public ac- ers with disabilities. Taxpayers who need in- choose direct deposit, which securely and elec-
countants (CPAs), accountants, and many oth- formation about accessibility services can call tronically transfers your refund directly into your
ers who don’t have professional credentials. If 833-690-0598. The Accessibility Helpline can financial account. Direct deposit also avoids the
you choose to have someone prepare your tax answer questions related to current and future possibility that your check could be lost, stolen,
return, choose that preparer wisely. A paid tax accessibility products and services available in destroyed, or returned undeliverable to the IRS.
preparer is: alternative media formats (for example, braille, Eight in 10 taxpayers use direct deposit to re-
• Primarily responsible for the overall sub- large print, audio, etc.). The Accessibility Help- ceive their refunds. If you don’t have a bank ac-
stantive accuracy of your return, line doesn’t have access to your IRS account. count, go to IRS.gov/DirectDeposit for more in-
• Required to sign the return, and For help with tax law, refunds, or account-rela- formation on where to find a bank or credit
• Required to include their preparer tax iden- ted issues, go to IRS.gov/LetUsHelp. union that can open an account online.
tification number (PTIN). Note. Form 9000, Alternative Media Prefer- Getting a transcript of your return. The
Although the tax preparer always signs the re- ence, or Form 9000(SP) allows you to elect to quickest way to get a copy of your tax transcript
turn, you're ultimately responsible for providing receive certain types of written correspondence is to go to IRS.gov/Transcripts. Click on either
all the information required for the preparer to in the following formats. “Get Transcript Online” or “Get Transcript by
accurately prepare your return. Anyone paid to • Standard Print. Mail” to order a free copy of your transcript. If
prepare tax returns for others should have a • Braille. you prefer, you can order your transcript by call-
ing 800-908-9946.
thorough understanding of tax matters. For • Audio (MP3).
more information on how to choose a tax pre-
parer, go to Tips for Choosing a Tax Preparer • Plain Text File (TXT). Reporting and resolving your tax-related
identity theft issues.
on IRS.gov. • Braille Ready File (BRF). • Tax-related identity theft happens when
someone steals your personal information
Coronavirus. Go to IRS.gov/Coronavirus for Disasters. Go to Disaster Assistance and to commit tax fraud. Your taxes can be af-
links to information on the impact of the corona- Emergency Relief for Individuals and fected if your SSN is used to file a fraudu-
virus, as well as tax relief available for individu- Businesses to review the available disaster tax lent return or to claim a refund or credit.
als and families, small and large businesses, relief.
and tax-exempt organizations. • The IRS doesn’t initiate contact with tax-
Getting tax forms and publications. Go to payers by email, text messages (including
Employers can register to use Business IRS.gov/Forms to view, download, or print all of shortened links), telephone calls, or social
Services Online. The Social Security Adminis- the forms, instructions, and publications you media channels to request or verify per-
tration (SSA) offers online service at SSA.gov/ may need. Or, you can go to IRS.gov/ sonal or financial information. This in-
employer for fast, free, and secure online W-2 OrderForms to place an order. cludes requests for personal identification
filing options to CPAs, accountants, enrolled numbers (PINs), passwords, or similar in-
agents, and individuals who process Form W-2, Getting tax publications and instructions in formation for credit cards, banks, or other
Wage and Tax Statement, and Form W-2c, eBook format. You can also download and financial accounts.
Corrected Wage and Tax Statement. view popular tax publications and instructions • Go to IRS.gov/IdentityTheft, the IRS Iden-
(including the Instructions for Form 1040) on tity Theft Central webpage, for information
IRS social media. Go to IRS.gov/SocialMedia mobile devices as eBooks at IRS.gov/eBooks. on identity theft and data security protec-
to see the various social media tools the IRS tion for taxpayers, tax professionals, and
uses to share the latest information on tax Note. IRS eBooks have been tested using businesses. If your SSN has been lost or
changes, scam alerts, initiatives, products, and Apple's iBooks for iPad. Our eBooks haven’t stolen or you suspect you’re a victim of
services. At the IRS, privacy and security are been tested on other dedicated eBook readers, tax-related identity theft, you can learn
paramount. We use these tools to share public and eBook functionality may not operate as in- what steps you should take.
information with you. Don’t post your SSN or tended. • Get an Identity Protection PIN (IP PIN). IP
other confidential information on social media PINs are six-digit numbers assigned to tax-
sites. Always protect your identity when using Access your online account (Individual tax- payers to help prevent the misuse of their
any social networking site. payers only). Go to IRS.gov/Account to se- SSNs on fraudulent federal income tax re-
The following IRS YouTube channels pro- curely access information about your federal tax turns. When you have an IP PIN, it pre-
vide short, informative videos on various tax-re- account. vents someone else from filing a tax return
lated topics in English, Spanish, and ASL. • View the amount you owe and a break- with your SSN. To learn more, go to
• Youtube.com/irsvideos. down by tax year. IRS.gov/IPPIN.
• Youtube.com/irsvideosmultilingua. • See payment plan details or apply for a
• Youtube.com/irsvideosASL. new payment plan. Ways to check on the status of your refund.
• Make a payment or view 5 years of pay- • Go to IRS.gov/Refunds.
Watching IRS Videos. The IRS Video portal ment history and any pending or sched- • Download the official IRS2Go app to your
(IRSVideos.gov) contains video and audio pre- uled payments. mobile device to check your refund status.

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• Call the automated refund hotline at Understanding an IRS notice or letter you throughout the process and will do every-
800-829-1954. you’ve received. Go to IRS.gov/Notices to thing possible to resolve your issue. TAS can
find additional information about responding to help you if:
Note. The IRS can’t issue refunds before an IRS notice or letter. • Your problem is causing financial difficulty
mid-February for returns that claimed the EIC or for you, your family, or your business;
the additional child tax credit (ACTC). This ap- Note. You can use Schedule LEP (Form • You face (or your business is facing) an
plies to the entire refund, not just the portion as- 1040), Request for Change in Language Prefer- immediate threat of adverse action; or
sociated with these credits. ence, to state a preference to receive notices, • You’ve tried repeatedly to contact the IRS
letters, or other written communications from but no one has responded, or the IRS
Making a tax payment. Go to IRS.gov/ the IRS in an alternative language. You may not hasn’t responded by the date promised.
Payments for information on how to make a immediately receive written communications in
payment using any of the following options. the requested language. The IRS’s commitment How Can You Reach TAS?
• IRS Direct Pay: Pay your individual tax bill to LEP taxpayers is part of a multi-year timeline
or estimated tax payment directly from that is scheduled to begin providing translations TAS has offices in every state, the District of
your checking or savings account at no in 2023. You will continue to receive communi- Columbia, and Puerto Rico. Your local advo-
cost to you. cations, including notices and letters, in English cate’s number is in your local directory and at
• Debit or Credit Card: Choose an approved until they're translated to your preferred lan- TaxpayerAdvocate.IRS.gov/Contact-Us. You
payment processor to pay online or by guage. can also call them at 877-777-4778.
phone.
• Electronic Funds Withdrawal: Schedule a Contacting your local IRS office. Keep in
payment when filing your federal taxes us- mind, many questions can be answered on How Else Does TAS Help
ing tax return preparation software or IRS.gov without visiting an IRS TAC. Go to Taxpayers?
through a tax professional. IRS.gov/LetUsHelp for the topics people ask
• Electronic Federal Tax Payment System: about most. If you still need help, IRS TACs TAS works to resolve large-scale problems that
Best option for businesses. Enrollment is provide tax help when a tax issue can’t be han- affect many taxpayers. If you know of one of
required. dled online or by phone. All TACs now provide these broad issues, report it to them at IRS.gov/
• Check or Money Order: Mail your payment service by appointment, so you’ll know in ad- SAMS.
to the address listed on the notice or in- vance that you can get the service you need
structions. without long wait times. Before you visit, go to TAS for Tax Professionals
• Cash: You may be able to pay your taxes IRS.gov/TACLocator to find the nearest TAC
with cash at a participating retail store. and to check hours, available services, and ap- TAS can provide a variety of information for tax
• Same-Day Wire: You may be able to do pointment options. Or, on the IRS2Go app, un- professionals, including tax law updates and
same-day wire from your financial institu- der the Stay Connected tab, choose the Con- guidance, TAS programs, and ways to let TAS
tion. Contact your financial institution for tact Us option and click on “Local Offices.” know about systemic problems you’ve seen in
availability, cost, and time frames. your practice.

Note. The IRS uses the latest encryption The Taxpayer Advocate Low Income Taxpayer
technology to ensure that the electronic pay-
ments you make online, by phone, or from a Service (TAS) Is Here To Clinics (LITCs)
mobile device using the IRS2Go app are safe
and secure. Paying electronically is quick, easy, Help You LITCs are independent from the IRS. LITCs
and faster than mailing in a check or money or- represent individuals whose income is below a
certain level and need to resolve tax problems
der. What Is TAS? with the IRS, such as audits, appeals, and tax
What if I can’t pay now? Go to IRS.gov/ TAS is an independent organization within the collection disputes. In addition, LITCs can pro-
Payments for more information about your op- IRS that helps taxpayers and protects taxpayer vide information about taxpayer rights and re-
tions. rights. Their job is to ensure that every taxpayer sponsibilities in different languages for individu-
• Apply for an online payment agreement is treated fairly and that you know and under- als who speak English as a second language.
(IRS.gov/OPA) to meet your tax obligation stand your rights under the Taxpayer Bill of Services are offered for free or a small fee for
in monthly installments if you can’t pay Rights. eligible taxpayers. To find an LITC near you, go
your taxes in full today. Once you complete to TaxpayerAdvocate.IRS.gov/about-us/Low-
the online process, you will receive imme- Income-Taxpayer-Clinics-LITC or see IRS Pub.
diate notification of whether your agree- How Can You Learn About Your 4134, Low Income Taxpayer Clinic List.
ment has been approved. Taxpayer Rights?
• Use the Offer in Compromise Pre-Qualifier
to see if you can settle your tax debt for The Taxpayer Bill of Rights describes 10 basic
less than the full amount you owe. For rights that all taxpayers have when dealing with
more information on the Offer in Compro- the IRS. Go to TaxpayerAdvocate.IRS.gov to
mise program, go to IRS.gov/OIC. help you understand what these rights mean to
you and how they apply. These are your rights.
Filing an amended return. Go to IRS.gov/ Know them. Use them. 18.
Form1040X for information and updates.
What Can TAS Do for You?
Checking the status of an amended return. Appendix
Go to IRS.gov/WMAR to track the status of TAS can help you resolve problems that you
Form 1040-X amended returns. can’t resolve with the IRS. And their service is This appendix contains models of the certifi-
free. If you qualify for their assistance, you will cates, waivers, reports, and statements dis-
Note. It can take up to 3 weeks from the be assigned to one advocate who will work with cussed in Part One.
date you filed your amended return for it to
show up in our system, and processing it can
take up to 16 weeks.

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Model Certificate A

                              STATEMENT OF SUBSEQUENT SELLER
 1.  

    Name, address, and employer identification number of seller in subsequent sale

 2.  

    Name, address, and employer identification number of the buyer in subsequent sale

 3.  
    Date and location of subsequent sale

 4.  
    Volume and type of taxable fuel sold

    The undersigned seller (“Seller”) has received the copy of the first taxpayer's report provided with this statement in 
 connection with Seller's purchase of the taxable fuel described in this statement.
    Under penalties of perjury, Seller declares that Seller has examined this statement, including any accompanying 
 schedules and statements, and, to the best of Seller's knowledge and belief, they're true, correct and complete.

 Signature and date signed

 Printed or typed name of person signing this report

 Title—

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Model Certificate B
FIRST TAXPAYER'S REPORT

First Taxpayer's name, address and employer identification number

Name, address, and employer identification number of the buyer of the taxable fuel subject to tax

3.
Date and location of removal, entry, or sale

4.
Volume and type of taxable fuel removed, entered or sold

5. Check type of taxable event:
Removal from refinery
Entry into United States
Bulk transfer from terminal by unregistered position holder
Bulk transfer not received at an approved terminal
Sale within the bulk transfer/terminal system
Removal at the terminal rack
Removal or sale by the blender

6.
Amount of federal excise tax paid on account of the removal, entry, or sale

The undersigned taxpayer (“Taxpayer”) hasn’t received, and won’t claim, a credit with respect to, or a refund of, the tax
on the taxable fuel to which this form relates.
Under penalties of perjury, Taxpayer declares that Taxpayer has examined this statement, including any accompanying
schedules and statements, and to the best of Taxpayer's knowledge and belief, they're true, correct and complete.

Signature and date signed

Printed or typed name of person signing this report

Title

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Model Certificate C
                         NOTIFICATION CERTIFICATE OF TAXABLE FUEL REGISTRANT

Name, address, and employer identification number of person receiving certificate

The undersigned taxable registrant (“Registrant”) hereby certifies under penalties of perjury that Registrant is registered 
by the Internal Revenue Service with registration number   and that Registrant's registration hasn’t 
been revoked or suspended by the Internal Revenue Service.

Registrant understands that the fraudulent use of this certificate may subject Registrant and all parties making such 
fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Signature and date signed

Printed or typed name of person signing

Title of person signing

Name of Registrant

Employer identification number

Address of Registrant

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Model Certificate D
CERTIFICATE OF PERSON BUYING GASOLINE BLENDSTOCKS FOR USE OTHER THAN IN THE PRODUCTION OF
FINISHED GASOLINE
(To support tax-free sales (other than LUST) under section 4081 of the Internal Revenue Code.)

Name, address, and employer identification number of seller
The undersigned buyer (“Buyer”) hereby certifies the following under penalties of perjury:
The gasoline blendstocks to which this certificate relates won’t be used to produce finished gasoline.
This certificate applies to the following (complete as applicable):
If this is a single purchase certificate, check here and enter:
1. Invoice or delivery ticket number
2. (number of gallons) of (type of gasoline blendstocks)
If this is a certificate covering all purchases under a specified account or order number, check here and enter:
1. Effective date
2. Expiration date
(period not to exceed 1 year after the effective date)
3. Type (or types) of gasoline blendstocks
4. Buyer's account or order number
Buyer won’t claim a credit or refund under section 6427(h) of the Internal Revenue Code for any gasoline blendstocks
covered by this certificate.
Buyer will provide a new certificate to the seller if any information in this certificate changes.
If Buyer resells the gasoline blendstocks to which this certificate relates, Buyer will be liable for tax unless Buyer obtains a
certificate from the purchaser stating that the gasoline blendstocks won’t be used to produce finished gasoline and otherwise
complies with the conditions of §48.4081-4(b)(3) of the Manufacturers and Retailers Excise Tax Regulations.
Buyer understands that if Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer's
right to provide a certificate.
Buyer hasn’t been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn.
In addition, the Internal Revenue Service hasn’t notified Buyer that the right to provide a certificate has been withdrawn from a
purchaser to which Buyer sells gasoline blendstocks tax free.
Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such fraudulent use
of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Signature and date signed

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

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Model Certificate G
CERTIFICATE OF REGISTERED FEEDSTOCK USER

(To support tax-free removals and entries (other than LUST) of kerosene under section 4082 of the Internal Revenue Code.)

(Buyer) certifies the following under penalties of perjury:
Name of buyer

Buyer is a registered feedstock user with registration number . Buyer's registration hasn’t been revoked
or suspended.

The kerosene to which this certificate applies will be used by Buyer for a feedstock purpose.

This certificate applies to percent of Buyer's purchases from (name, address, and employer
identification number of seller) as follows (complete as applicable):

1. A single purchase on invoice or delivery ticket number .

2. All purchases between (effective date) and (expiration date) (period not to exceed
one year after the effective date) under account or order number(s) . If this certificate applies only to Buyer's
purchases for certain locations, check here and list the locations.

If Buyer sells the kerosene to which this certificate relates, Buyer will be liable for tax on that sale.

Buyer will provide a new certificate to the seller if any information in this certificate changes.

If Buyer violates the terms of this certificate, the Internal Revenue Service may revoke the Buyer's registration.

Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of
this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Employer identification number

Address of Buyer

Signature and date signed

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Model Certificate J
CERTIFICATE OF PERSON BUYING COMPRESSED NATURAL GAS (CNG) FOR A NONTAXABLE USE

(To support tax-free sales of CNG under section 4041 of the Internal Revenue Code.)

Name, address, and employer identification number of seller

(“Buyer”) certifies the following under penalties of perjury:
Name of buyer

The CNG to which this certificate relates will be used in a nontaxable use.
This certificate applies to the following (complete as applicable):

If this is a single purchase certificate, check here and enter:
1. Invoice or delivery ticket number
2. (Gasoline gallon equivalents)
If this is a certificate covering all purchases under a specified account or order number, check here and enter:
1. Effective date
2. Expiration date
(period not to exceed 1 year after the effective date)
3. Buyer's account or order number
Buyer won’t claim a credit or refund under section 6427 of the Internal Revenue Code for any CNG to which this certificate
relates.
Buyer will provide a new certificate to the seller if any information in this certificate changes.
Buyer understands that if Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer's
right to provide a certificate.
Buyer hasn’t been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn.
In addition, the Internal Revenue Service hasn’t notified Buyer that the right to provide a certificate has been withdrawn
from a purchaser to which Buyer sells CNG tax free.
Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use
of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Employer identification number

Address of Buyer

Signature and date signed

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Model Certificate K
                      CERTIFICATE OF PERSON BUYING KEROSENE FOR USE IN AVIATION FOR 
                                    COMMERCIAL AVIATION OR NONTAXABLE USE
(To support operator liability for tax on removals of kerosene for use in aviation directly into the fuel tank of an aircraft in 
commercial aviation pursuant to § 4081 of the Internal Revenue Code or to support a tax rate of zero under § 4041(c) pursuant 
to §§4041(c) and 4082.)

Name, address, and employer identification number of position holder
The undersigned aircraft operator (“Buyer”) hereby certifies the following under the penalties of perjury:
The kerosene for use in aviation to which this certificate relates is purchased (check one):  for 
use on a farm for farming purposes;       for use in foreign trade (reciprocal benefits required for foreign registered airlines); 
 for use in certain helicopter and fixed-wing air ambulance uses;    for use other than as a fuel in the propulsion engine 
of an aircraft;  for the exclusive use of a qualified blood collector organization;      for the exclusive use of a nonprofit 
educational organization;     for the exclusive use of a state;  for use in an aircraft owned by an aircraft museum;              for 
use in military aircraft; or  for use in commercial aviation (other than foreign trade).
With respect to kerosene for use in aviation purchased after June 30, 2005, for use in commercial aviation
(other than foreign trade), Buyer's registration number is      . Buyer's registration hasn’t been suspended or revoked 
by the Internal Revenue Service. 
This certificate applies to the following (complete as applicable): 
This is a single purchase certificate:
1.                      Invoice or delivery ticket number
2.                      Number of gallons
 This is a certificate covering all purchases under a specified account or order number:
1. Effective date              
2. Expiration date                 (period not to exceed 1 year after the effective date)
3. Buyer's account number 
Buyer agrees to provide the person liable for tax with a new certificate if any information in this certificate changes.
If the kerosene for use in aviation to which this certificate relates is being bought for use in commercial aviation 
(other than foreign trade), Buyer is liable for tax on its use of the fuel and will pay that tax to the government.
If Buyer sells or uses the kerosene for use in aviation to which this certificate relates for a use other than the use 
 stated above, Buyer will be liable for tax. 
Buyer understands that it must be prepared to establish by satisfactory evidence the purpose for which the
 fuel purchased under this certificate was used.
Buyer hasn’t been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn. 
If Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer's right to provide a certificate.
The fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of this certificate
 to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

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Model Waiver L
WAIVER FOR USE BY ULTIMATE PURCHASERS OF KEROSENE FOR CERTAIN USES IN AVIATION
(To support vendor's claim for a credit or payment under § 6427(l)(4)(C)(i) of the Internal Revenue Code.)

Name, Address, and Employer Identification Number of Ultimate Vendor
The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under penalties of perjury:
A. The kerosene to which this waiver relates is purchased for — (check one):
1. Use on a farm for farming purposes,
2. Use in foreign trade (reciprocal benefits required for foreign registered airlines),
3. Use in certain helicopter and fixed-wing air ambulance uses,
4. The exclusive use of a qualified blood collector organization,
5. The exclusive use of a nonprofit educational organization,
6. Use in an aircraft owned by an aircraft museum,
7. Use in military aircraft, or
8. Use in commercial aviation (other than foreign trade).
B. This waiver applies to the following (complete as applicable):
This is a single purchase waiver:
1. Invoice or delivery ticket number
2. Number of gallons
This is a waiver covering all purchases under a specified account or order number:
1. Effective date
2. Expiration date (period not to exceed 1 year after the effective date)
3. Buyer's account number
Buyer will provide a new waiver to the vendor if any information in this waiver changes.
If Buyer uses the kerosene for use in aviation to which this waiver relates for a use other than the use stated above, Buyer will be liable for
tax.
Buyer understands that by signing this waiver, Buyer gives up its right to claim any credit or payment for the kerosene for use in aviation
used in a nontaxable use.
Buyer acknowledges that it hasn’t and won’t claim any credit or payment for the kerosene for use in aviation to which this waiver relates.
Buyer understands that the fraudulent use of this waiver may subject Buyer and all parties making such fraudulent use of this waiver to a
fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

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Model Certificate M
CERTIFICATE FOR STATE USE OR NONPROFIT EDUCATIONAL
ORGANIZATION USE
(To support vendor's claim for a credit or payment under § 6416(a)(4) of the Internal Revenue Code.)

Name, address, and employer identification number of ultimate vendor
The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under the penalties of perjury:
Buyer will use the gasoline or aviation gasoline to which this certificate relates (check one):
For the exclusive use of a state or local government; or
For the exclusive use of a nonprofit educational organization.
This certificate applies to the following (complete as applicable):
This is a single purchase certificate:
1. Invoice or delivery ticket number
2. Number of gallons
This is a certificate covering all purchases under a specified account or order number:
1. Effective date
2. Expiration date (period not to exceed 1 year after the effective date)
3. Buyer's account number
Buyer will provide a new certificate to the vendor if any information in this certificate changes.
Buyer understands that by signing this certificate, Buyer gives up its right to claim any credit or payment for
the gasoline or aviation gasoline to which this certificate relates.
Buyer acknowledges that it hasn’t and won’t claim any credit or payment for the gasoline or aviation gasoline
to which this certificate relates.
Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such
fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

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Model Waiver N
WAIVER FOR USE BY ULTIMATE PURCHASERS OF DIESEL FUEL OR
KEROSENE USED IN INTERCITY BUS TRANSPORTATION
(To support vendor's claim for a credit or payment under § 6427 of the Internal Revenue Code.)

Name, address, and employer identification number of ultimate vendor
The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under the penalties of perjury:
The diesel fuel or kerosene to which this waiver relates is purchased for use in intercity bus transportation.
This waiver applies to the following (complete as applicable):
This is a single purchase waiver:
1. Invoice or delivery ticket number
2. Number of gallons
This is a waiver covering all purchases under a specified account or order number:
1. Effective date
2. Expiration date (period not to exceed 1 year after the effective date)
3. Buyer's account number
Buyer will provide a new waiver to the vendor if any information in this waiver changes.
If Buyer uses the diesel fuel or kerosene to which this waiver relates for a use other than in intercity bus
transportation, Buyer will be liable for tax.
Buyer understands that by signing this waiver, Buyer gives up its right to claim any credit or payment for the
diesel fuel or kerosene used in intercity bus transportation.
Buyer acknowledges that it hasn’t and won’t claim any credit or payment for the diesel fuel or kerosene to
which this waiver relates.
Buyer understands that the fraudulent use of this waiver may subject Buyer and all parties making such
fraudulent use of this waiver to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

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Model Certificate O
CERTIFICATE FOR BIODIESEL
Certificate Identification Number:
(To support a claim related to biodiesel or a biodiesel mixture under section 6426 of the Internal Revenue Code.)
The undersigned biodiesel producer (“Producer”) hereby certifies the following under penalties of perjury:
1.

Producer's name, address, and employer identification number (EIN)
2.

Name, address, and EIN of person buying the biodiesel from Producer
3.
Date and location of sale to buyer
4. This certificate applies to gallons of biodiesel.
5. Producer certifies that the biodiesel to which this certificate relates is:
Agri-biodiesel (derived solely from virgin oils)
%
Biodiesel other than agri-biodiesel
%
This certificate applies to the following sale:
Invoice or delivery ticket number
Total number of gallons of biodiesel sold under that invoice or delivery ticket number (including biodiesel not
covered by this certificate)
Total number of certificates issued for that invoice or delivery ticket number
6.

Name, address, and employer identification number of reseller to whom certificate is issued (only in the case of certificates
reissued to a reseller after the return of the original certificate)
7. Original Certificate Identification Number (only in the case of certificates reissued to a reseller after return of the
original certificate).
Producer is registered as a biodiesel producer with registration number .
Producer's registration hasn’t been suspended or revoked by the Internal Revenue Service.
Producer certifies that the biodiesel to which this certificate relates in monoalkyl esters of long chain fatty acids derived
from plant or animal matter that meets the requirements of the American Society of Testing and Materials D6751 and
the registration requirements for fuels and fuel additives established by EPA under section 211 of the Clean Air Act (42
U.S.C. 7545).
Producer understands that the fraudulent use of this certificate may subject Producer and all parties making any
fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing this certificate

Title of person signing

Signature and date signed

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Model Certificate P
CERTIFICATE OF STATE USE
(To support vendor's claim for credit or payment under section 6427 of the Internal Revenue Code.)

Name, Address, and Employer Identification Number of Vendor
The undersigned buyer (“Buyer”) hereby certifies the following under penalties of perjury:

A. Buyer will use the diesel fuel or kerosene to which this certificate relates for the exclusive use of a state or local
government, or the District of Columbia.

B. This certificate applies to the following (complete as applicable):

1. If this is a single purchase certificate, check here and enter:

a. Invoice or delivery ticket number

b. Number of gallons

2. If this is a certificate covering all purchases under a specified account or order number, check here
and enter:

a. Effective date

b. Expiration date
(period not to exceed 1 year after effective date)

c. Buyer's account or order number

▪ Buyer will provide a new certificate to the vendor if any information in this certificate changes.

▪ If Buyer uses the diesel fuel or kerosene to which this certificate relates for a purpose other than stated in the
certificate, Buyer will be liable for any tax.

▪ Buyer acknowledges that it hasn’t and won’t claim any credit or payment for the diesel fuel or kerosene to which
this certificate relates.

▪ Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such
fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

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Model Certificate Q
CERTIFICATE OF ULTIMATE PURCHASER OF KEROSENE FOR USE IN NONEXEMPT, NONCOMMERCIAL AVIATION
(To support vendor's claim for credit or payment under section 6427(l)(4)(C)(ii) of the Internal Revenue Code.)

Name, Address, and Employer Identification Number of Ultimate Vendor
The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under penalties of perjury:
A. The kerosene to which this certificate relates is purchased for a nonexempt use in noncommercial aviation.
B. This certificate applies to the following (complete as applicable):

1. If this is a single purchase certificate, check here and enter:
a. Invoice or delivery ticket number
b. Number of gallons
2. This is a certificate covering all purchases under a specified account or order number:
a. Effective date
b. Expiration date
(period not to exceed 1 year after effective date)
c. Buyer's account number
▪ Buyer will provide a new certificate to the vendor if any information in this certificate changes.
▪ If Buyer uses the kerosene to which this certificate relates for a use other than the nontaxable use stated above, Buyer will be
liable for tax.
▪ Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such fraudulent use of this
certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

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Model Certificate R
CERTIFICATE OF BUYER OF TAXABLE FUEL FOR USE BY A STATE OR NONPROFIT EDUCATIONAL
ORGANIZATION
(To support credit card issuer's claim for credit, refund, or payment under section 6416(a)(4)(B) or section 6427(l)(5)(D) of
the Internal Revenue Code.)

Name, Address, and Employer Identification Number of Credit Card Issuer.
The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under penalties of perjury:

A. Buyer will use the taxable fuel to which this certificate relates for the exclusive use of a state; or

B. Buyer will use the gasoline to which this certificate relates for the exclusive use of a nonprofit
educational organization.

C. This certificate applies to all purchases made with the credit card identified below during the period
specified:

a. Effective date of certificate

b. Expiration date of certificate
(period not to exceed 2 years after effective date)

c. Buyer's account number

▪ Buyer will provide a new certificate to the credit card issuer if any information in this certificate changes.

▪ Buyer understands that by signing this certificate, Buyer gives up its right to claim a credit or payment for
the taxable fuel purchased with the credit card to which this certificate relates.

▪ Buyer acknowledges that it hasn’t and won’t claim any credit or payment for the taxable fuel purchased
with the credit card to which this certificate relates.

▪ Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making
such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of
prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

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Model Statement S
STATEMENT OF BIODIESEL RESELLER
(To support a claim related to biodiesel or a biodiesel mixture under section 6426 of the Internal Revenue Code.)
The undersigned biodiesel producer (“Reseller”) hereby certifies the following under penalties of perjury:
1.

Reseller's name, address, and employer identification number (EIN)
2.

Name, address, and EIN of Reseller's buyer
3.
Date and location of sale to buyer
4. Volume of biodiesel sold
5. Certificate Identification Number on the Certificate for Biodiesel
Reseller has bought the biodiesel described in the accompanying Certificate for Biodiesel and Reseller has no reason
to believe that any information in the certificate is false.
Reseller hasn’t been notified by the Internal Revenue Service that its right to provide a certificate or statement has been
withdrawn.
Reseller understands that the fraudulent use of this statement may subject Reseller and all parties making any
fraudulent use of this statement to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing this certificate

Title of person signing

Signature and date signed

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Model Certificate T
                                 Certificate to Support Nontaxable Sale of Articles Listed in Section 4051
                                                      for Resale or Long-Term Lease

 I hereby certify that I am______________________________(Title) of ______________________, (Name of purchaser) that I am 
 authorized to execute this certificate, and that:

 The undersigned buyer of articles listed in section 4051 ("Buyer") hereby certifies the following under penalties of perjury:
 (Check appropriate line)
 ---- the article or articles specified in the accompanying order, or on the reverse side hereof, (or)
 ---- all orders placed by the purchaser for the period commencing ___________ (Date) (period not to exceed 12 calendar quarters), 
 are purchased either for resale or for lease on a long-term basis.
 I have filed Form 637 and have received registration number____________.

 I understand that the fraudulent use of this certificate to secure exemption will subject me and all parties making such fraudulent use 
 to a fine of not more than $ 10,000, or to imprisonment for not more than 5 years, or both, together with costs of prosecution.

 Printed or typed name of person signing this certificate

 Title of person signing

 Signature and date signed

                      To help us develop a more useful index, please let us know if you have ideas for index entries.
Index                 See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                   Assistance (See Tax help)         Exemptions   28                      Exceptions  25
A                                  Aviation gasoline, defined 5      Figuring the tax  27                 Ozone-depleting chemicals 
Affiliated corporations    31                                        Local telephone service 27           (ODCs)      25
Agri-biodiesel, defined    4       B                                 Local-only service   27              United States (defined)  25
Air transportation taxes   29      Back-up tax  10                   Private communication               Examination procedures     43
                                                                     service     27                      Exempt articles, retail tax 38
  225-mile-zone rule  29           Biodiesel, defined  4             Teletypewriter exchange             Exempt communication services:
  Alaska 29 31,                    Blended taxable fuel, defined 4   service     27                       American Red Cross    28
  Baggage   30                     Blender, defined  4             Credit card purchases:                 Answering service   28
  Bonus tickets 30                 Blocked pump    15                Aviation gasoline   15               Coin-operated telephones    28
  Credits or refunds  31           Blood collector organizations,    Gasoline   15                        Installation charges 28
  Exemptions  30                     qualified 20 28,                Kerosene for use in aviation     17  International organizations 28
  Export 30                        Boats 20                          Undyed diesel fuel   15              Mobile radio telephone 
  Fixed-wing aircraft 30           Bonus tickets  30                 Undyed kerosene     15               service    28
  Hawaii 29 31,                    Bows, Quivers, Broadheads, and  Credit or refund:                      News services 28
  Helicopters 30                     Points   33
  International air travel         Bulk transfer, defined 4          Gas guzzler tax   35                 Nonprofit educational 
  facilities  30                   Bulk transfer/terminal system,    Manufacturers taxes    32            organizations    28
  Military personnel 30              defined  4                      Resale of tax-paid                   Nonprofit hospitals 28
  Package tours   30               Buses 20                          semitrailers      37                 Private communication 
  Persons by air  29                 Tire tax 34                     Retail tax 38                        service    27
                                                                     Tire tax 35                          Qualified blood collector 
  Persons liable  30 31,                                             Vaccines   35                        organizations    28
  Property by air 30               C                               Credits 23                             Radio broadcasts   28
  Tax rates 29                     Chemicals, ozone-depleting 25                                          Security systems 28
  Taxable transportation   29      Claims:                         D                                     Exempt sales, heavy trucks   38
  Travel agency   30                 Claiming a credit 23                                                Exemptions:
  Uninterrupted international 29     Claiming a refund  23         Deposits:                              Air transportation taxes 30
Aircraft 20                          Filing claims 21                Net tax liability 42                 Bonus tickets 30
  Affiliated corporations  31      Coal:                           Deposits, How to make     41           Coal 34
  Small planes  31                   Blending  34                  Diesel fuel:                           Communications taxes     28
Aircraft museum   21                 Exemptions    34                Definitions 7                        Federal government   28
Alaska:                              Producer  33                    Exported   7                         Fixed-wing aircraft 30
  Air transportation taxes 29        Production   34               Diesel-water fuel emulsion,            For export 32
                                                                     defined  4                           Further manufacturing  32
  Tax on diesel fuel or kerosene 9   Selling price 34              Dyed diesel fuel    9                  Helicopters 30
Alcohol and tobacco taxes     3      Tax rates 34                  Dyed kerosene   9                      Indian handicrafts 32
Alternative fuel credit 21         Coin-operated telephones   28
                                                                                                          Indian tribal governments  28
Alternative fuel, defined  4       Comments   3                    E                                      Military personnel 30
American Red Cross    28           Commercial aviation   21
Answering service  28              Commercial fishing   20         Electric outboard motors    33         Nonprofit educational 
Appeal procedures    43            Commercial waterway             Enterer, defined    4                  organizations    28 32, 
Approved refinery, defined    4      transportation   13           Entry, defined 4                       Qualified blood collector 
Approved terminal, defined    4    Communications taxes:           Environmental taxes:                   organizations    32
Arrow shafts 33                      Credits or refunds 28           Credit or refund  26
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  State and local governments   28, Highway vehicle   19 20,         Off-highway use     19           Sport fishing equipment:
      32                            Highway vehicle                  Oil spill liability 25            List of equipment  33
  Taxable tires 34                    (Diesel-powered)    7          Other Fuels (Including            Resales   33
  Vessel supplies  32                                                  Alternative Fuels)   12        State and local governments     28
Export 20                           I                                Other fuels, defined   4         State or local governments   20
Exported taxable fuel  14           Identifying number   23          Ozone-depleting chemicals:       State or nonprofit educational 
                                    Imported taxable products          Floor stocks tax  27            organization use    15
F                                     (ODCs)  26                       Imported taxable products  26  State use 15 22, 
Farming  18                         Income, include in   23                                           State, defined   5
Federal government    28            Indoor tanning services  40      P                                Suggestions   3
Fishing 20                          Information returns, liquid      Patient-centered outcomes 
Fishing rods and fishing              products   5                     research fee      40           T
  poles.  33                        Inland and intracoasal           Payment of taxes    41           Tanning tax  40
Fishing tackle boxes  33              waterways    13                Penalties:                       Tax help  43
Fixed-wing aircraft 30              Inland waterways  13               Dyed diesel fuel  9            Tax rate 33
Floor stocks tax:                   Intercity and local buses 20       Dyed kerosene     9             Air transportation of persons  29
  Ozone-depleting chemicals     27  Interest and penalties   42      Pipeline operator, defined   4    Air transportation of property 30
Floor stocks, ODCs    25            International air travel         Position holder, defined  4       Arrow shafts    33
Foreign trade  20                     facilities 30                  Publications (See Tax help)       Bows, Quivers, Broadheads, and 
Form:                                                                                                       Points 33
  1363  30                          K                                Q                                 Coal 34
  4136  23                          Kerosene:                        Qualified local bus    20         Electric outboard motor   33
  6197  35 41,                        Definitions 7                                                    International air travel 
  6627  25 41,                        Exported   7                                                          facilities 30
  720  23 35 41, ,                    For use in aviation 10         R                                 Obligations not in registered 
  720-X  41                                                          Rack, defined  4                       form 40
  8849  23                          L                                Radio broadcasts    28            Policies issued by foreign 
                                                                     Records   21                           persons    39
  8864  14                          Liquid products, information     Refiner, defined    4             Ship passenger tax  39
Form 720:                             returns 5                                                        Sport fishing equipment   33
  Attachments   41                  Local telephone service  27      Refinery, defined   4
  Due dates  41                     Local-only service   27          Refunds   23                      Trucks   36
  Final return 41                                                    Refunds of second tax     17     Taxable fuel registrant   5
  Schedule A   41                   M                                Registered ultimate vendor   15, Taxable tires:
  Schedule C   41                                                      22                              Exemptions      34
  Schedule T   41                   Manufacturer, defined    31      Registrant  5                    Taxable Tires:
Free tax services  43               Manufacturers taxes:             Registration 5                    Manufacturers taxes  34
Fuels:                                Arrow shafts 33                Registration-required            Taxes, Payment of  41
  Alternative fuel 12                 Bows, Quivers, Broadheads, and   obligations  40                Taxpayer identification 
  Diesel 7                            Points     33                  Related persons:                  number    23
  Diesel-water fuel emulsion  10      Coal 33                          Heavy trucks      37           Teletypewriter exchange 
  For use in aviation 10              Credits or refunds  32           Sport fishing equipment 33      service   27
  Gasoline  5                         Exemptions   32                Removal, defined    4            Terminal operator, defined  5
  Kerosene  7                         Gas guzzler tax 35             Retail tax:                      Terminal, defined  5
  Other Fuels  12                     Lease 31                         Credits or refunds   38        Throughputter, defined    5
  Used on inland waterways    13      Lease payments   32              Heavy trucks      36           Tires:
                                      Partial payments   32          Rulings Program     43            Credit against heavy truck 
                                                                                                            tax 39
G                                     Registration 32                Rural airports 29                 Credit or refund of tax  35
                                      Related person  33                                              Train 21
Gambling  39                          Requirements for exempt        S                                Train (Diesel-powered)    7
Gas guzzler tax:                      sales    32
  Automobiles   35                    Sale 31                        Sale, defined 4                  Travel agency    30
  Credit or refund 35                 Sport fishing equipment 33     Sales by registered ultimate     TTY/TDD information  43
                                                                       vendors, gasoline    15        Two-party exchanges   5 8, 
  Limousines   35                     Taxable Tires   34             Sales by registered ultimate 
  Vehicles not subject to tax 35      Vaccines   35                    vendors, kerosene for use in   U
Gasoline blendstocks   6            Military aircraft 21               aviation  16
Gasoline, defined  5                Mobile radio telephone           Sales price:                     Ultimate purchaser  21
                                      service 28                       Bonus goods       32           Uninterrupted international air 
H                                                                      Cost of transportation  31      transportation    29 30, 
Hawaii, air transportation          N                                  Delivery costs    31           Used other than as a fuel:
  taxes  29                         News services   28                 Discounts  31                   Diesel fuel and kerosene   20
Heavy Motor Vehicle User Fee     3  Nonprofit educational              Installation costs   31        Uses, nontaxable:
Heavy trucks:                         organization    20               Insurance costs   31            Alternative fuels 17
  First retail sale, defined 37     Nonprofit educational              Local advertising charges  31   Aviation gasoline 14
  Further manufacture  38             organization use and state       Manufacturers excise tax   31   Diesel fuel  15
  Installment sales 38                use  22                          Rebates   31                    Diesel-water fuel emulsion  16
  Parts or accessories 36           Nonprofit educational              Retail dealer preparation       Gasoline    14
                                      organizations   28               costs     31                    Kerosene    15
  Presumptive retail sales          Nontaxable uses, definitions  18   Warranty charges     31         Liquefied petroleum gas 
      price 37
  Related persons   37              Nontaxable uses, type of use     School bus   20                        (LPG)  17
                                      table 18
  Separate purchases   37                                            Second generation biofuel    4    Other Fuels     17
                                                                     Security systems    28
  Tax base  38                      O                                Ship passenger tax     39        V
  Tax rate  36
Helicopter  20                      Obligations not in registered    Special September rule, When to  Vaccines:
Help (See Tax help)                   form  40                         deposit   42                    Credit or refund  35

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Manufacturers tax 35            Law enforcement 35                                         When to deposit 42
Vehicles:                       Vendors, registered ultimate 15, W
Gas guzzler 35                  22
Imported  35                    Vessel operator, defined 5       Wagering and occupational 
                                                                  wagering fee 3

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