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Caution: DRAFT—NOT FOR FILING
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collection through the Federal Register process; for more info, click here.Publication 510
(Rev. March 2023) Contents
Cat. No. 15014I Future Developments . . . . . . . . . . . . 2
Department
Excise Taxes
of the Reminders . . . . . . . . . . . . . . . . . . . 3
Treasury
Introduction . . . . . . . . . . . . . . . . . . 3
DRAFT AS OF
Internal
Revenue
Excise Taxes Not Covered . . . . . . . . . 3
Service
(Including Fuel Tax Chapter 1. Fuel Taxes . . . . . . . . . . . 4
Credits and Refunds) Definitions . . . . . . . . . . . . .
Information Returns . . . . . . .
.
.
.
.
.
.
.
.
4
5
Registration Requirements . . . . . . .
March 15, 2023
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) . . . 12
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 . . . . . . 15
Kerosene for Use in Aviation . . . . . 16
Other Fuels (Including
Alternative Fuels) . . . . . . . . . . 17
Refunds of Second Tax . . . . . . . . 17
Definitions of Nontaxable Uses . . . . 17
Filing Claims . . . . . . . . . . . . . . 21
Chapter 3. Environmental Taxes . . . . 24
Tax on Petroleum . . . . . . . . . . . 24
Ozone-Depleting Chemicals
(ODCs) . . . . . . . . . . . . . . . 24
Chapter 4. Communications and
Air Transportation Taxes . . . . . . 26
Uncollected Tax Report . . . . . . . . 26
Communications Tax . . . . . . . . . 26
Air Transportation Taxes . . . . . . . 28
Chapter 5. Manufacturers Taxes . . . . 30
Taxable Event . . . . . . . . . . . . . 31
Exemptions . . . . . . . . . . . . . . . 31
Sport Fishing Equipment . . . . . . . 32
Bows, Quivers, Broadheads,
and Points . . . . . . . . . . . . . . 32
Arrow Shafts . . . . . . . . . . . . . . 32
Coal . . . . . . . . . . . . . . . . . . . 32
Taxable Tires . . . . . . . . . . . . . . 33
Get forms and other information faster and easier at: Gas Guzzler Tax . . . . . . . . . . . . 34
• IRS.gov (English) • IRS.gov/Korean (한국어)
Vaccines . . . . . . . . . . . . . . . . 34
• IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский)
• IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (Tiếng Việt)
Mar 14, 2023Chapter 6. Retail Tax on Heavy 31,1995). See the Instructions for Form 6627, for Form 4136, Credit for Federal Tax Paid
Trucks, Trailers, and Tractors . . . 35 and Environmental Taxes, later. on Fuels; Form 6478, Biofuel Producer
The Inflation Reduction Act of 2022 (the Credit; and Form 8864, Biodiesel, Renew-
Chapter 7. Ship Passenger Tax . . . . . 38 Act) made the following changes. able Diesel, or Sustainable Aviation Fuels
• Petroleum tax on domestic crude oil Credit.
Chapter 8. Foreign and imported petroleum products. Ef- • Sustainable aviation fuel credit. The Act
Insurance Taxes . . . . . . . . . . . 38 fective January 1, 2023, the Act reinstates created a sustainable aviation fuel (SAF)
and increases the Hazardous Substance credit under section 40B and 6426(k) for
DRAFT AS OF
Chapter 9. Obligations Not in Superfund financing rate (petroleum Su- sales or uses in aviation, effective January
Registered Form . . . . . . . . . . . 39 perfund tax rate) on domestic crude oil and 1, 2023. The new SAF mixture credit is
imported petroleum products (the taxes claimed either on Form 720, Schedule C;
Chapter 10. Indoor Tanning previously expired on December 31,1995). Form 4136; 8864; or Schedule 3 (Form
Services Tax . . . . . . . . . . . . . . 39 This makes the total section 4611 tax rate 8849). See, Notice 2023-6 (Sustainable
on domestic crude oil and imported petro- Aviation Fuel Credit) at Notice 2023-06 .
Chapter 11. Patient-Centered leum products the sum of this reinstated • Termination of alternative fuel credits
March 15, 2023
Outcomes Research Fee . . . . . . 39 Hazardous Substance Superfund financing for liquefied hydrogen. The Act removed
rate (petroleum Superfund tax rate) (for liquefied hydrogen from the definition of al-
Chapter 12. Filing Form 720 . . . . . . . 40 2023, $.164 per barrel, to be indexed an- ternative fuel under section 6426(d)(2) for
nually for inflation) and the Oil Spill Liability purposes of the alternative fuel credit and
Chapter 13. Payment of Taxes . . . . . 40 Trust Fund financing rate (petroleum oil alternative fuel mixture credit for fuel sold
How To Make Deposits . . . . . . . . 40 spill tax rate) ($.09 per barrel). See the In- or used after 2022.
When To Make Deposits . . . . . . . 41 structions for Form 6627. • Coal: The Act made permanent higher tax
Amount of Deposits . . . . . . . . . . 41 • Renewable diesel and kerosene rates funding the Black Lung Disability
changes. The Act made the following Trust Fund. The increased tax rates are as
Chapter 14. Penalties and Interest . . . 41 changes effective for fuel sold or used after follows for sales and uses after September
2022. 30, 2022.
Chapter 15. Examination and
a) Renewable diesel. a) Underground mined coal.
Appeal Procedures . . . . . . . . . . 42
Renewable diesel no longer in- The rate of tax on coal from under-
Chapter 16. Rulings Program . . . . . . 42 cludes fuel derived from biomass that ground mines is increased to the
meets the requirements of a Depart- lower of $1.10 per ton or 4.4% of the
Chapter 17. How To Get Tax Help . . . 42 ment of Defense specification for mili- sale price (was $.50 per ton or 2% of
tary jet fuel or an American Society of sales price before October 1, 2022).
Chapter 18. Appendix . . . . . . . . . . 44 Testing Materials (ASTM) specifica- b) Surfaced mined coal.
tion for aviation turbine fuel. The rate of tax on coal from sur-
Index . . . . . . . . . . . . . . . . . . . . . 60 b) Kerosene. face mines is increased to the lower of
Kerosene is no longer treated as $.55 per ton or 4.4% of the sale price
diesel fuel for purposes of the renewa- (was $.25 per ton or 2% of sales price
ble diesel mixture credit. beforel October 1, 2022).
Future Developments • Extension of alternative fuel credits. • Stock repurchase tax under section
The Act retroactively reinstates the al- 4501. The Act established a stock re-
For the latest information about developments ternative fuel and alternative fuel mixture purchase excise tax under section 4501
related to Pub. 510, such as legislation enacted credits for fuel sold or used through 2024. equal to 1% of the fair market value of
after it was published, go to IRS.gov/Pub510. The credits previously expired in 2021. stock repurchased during the tax year by
You can claim the alternative fuel mixture certain publicly traded corporations or their
credit for the 2022 third calendar quarter specified affiliates, effective for repurcha-
ses occurring after 2022. This will be re-
What’s New on Form 720.
You can’t claim the alternative fuel ported on Form 7208, Stock Repurchase
credit for the 2022 first, second, and third Excise Tax, and attached to Form 720. For
Due to the IRS' acquiescence in a re-
calendar quarters on Form 720. Instead, more information, go to IRB2023-3 .
! cent court case, the section 4611 tax
CAUTION on exported crude oil currently doesn’t
you must follow the instructions in Notice Inflation Adjustments for 2023.
2022–39. • Transportation of persons by air (IRS
apply. See AOD 2023-01, at IRS.gov/Actions
In addition, you can’t claim the alterna- No. 26). The section 4261 tax on the
on Decisions.
tive fuel mixture credit for the 2022 first and amount paid for each domestic segment of
second calendar quarters on Form 720. In- taxable air transportation is increased to
Pub. 510 updates. Pub. 510 isn't updated an-
stead, you must follow the instructions in $4.80.
nually; instead it's only updated when there are
Notice 2022–39. • Use of international air travel facilities
major changes in the tax law. If you need further
For the purpose of 2022 alternative fuel (IRS No. 27). The section 4261 tax on the
assistance see the Instructions for Forms 720,
mixture claims, "alternative fuel mixture" amount paid for international flights is in-
8864, 4136, 6478, or Schedule 3 (Form 8849)
means a mixture of taxable fuel and alter- creased to $21.10 per person for flights
for the most recent updates.
native fuel other than liquefied petroleum that begin or end in the United States. The
Don’t claim the credits or payments for fuel gas (LPG), compressed natural gas
sold or used after the year they expire unless tax is increased to $10.60 per person for
(CNG), liquefied natural gas (LNG), lique- domestic segments that begin or end in
they’re extended again. Only one credit may be fied gas derived from biomass, and com-
taken for each amount of any fuel type. Alaska or Hawaii (applies only to depar-
pressed gas derived from biomass. See tures).
Note. “IRS Nos.” refers to pre-printed numbers the Instructions for Form 720. • Arrow shafts (IRS No. 106). The section
on Form 720. • Retroactive extension of income tax 4161 tax on arrow shafts is increased to
credits: $.59 per arrow shaft. See Revenue
The Infrastructure Investment and Jobs The Act retroactively extended the sec- Procedure 2022-38.
Act. Effective July 1, 2022, the Infrastructure tion 40 biofuel producer credit (it had ex-
Investment and Jobs Act reinstates the section pired at the end of 2021) and extends the
4661 excise tax on chemicals (other than section 40A biodiesel and renewable die-
ODCs) (IRS No. 54) and the section 4671 tax sel fuels credit.
on imported chemical substances (IRS No. 17) Generally, for information on fuel cred-
(they previously expired on December its against income tax, see the instructions
Page 2 Publication 510 (March 2023)Comments and suggestions. We welcome • Notice 2006-92 (alternative fuels mixtures),
Reminders your comments about this publication and your
suggestions for future editions.
I.R.B. 2006-43, at IRS.gov/PUB/IRB/
IRB2006-43#NOT2006-92.
Reducing your excise tax liability. For fed- You can send us comments from IRS.gov/ • Notice 2008-110 (biodiesel, cellulosic bio-
eral income tax purposes, reduce your section FormsPubs. Click on “More Information,” then fuel), I.R.B. 2008-51, at IRS.gov/PUB/IRB/
4081 excise tax liability by the amount of excise on “Give Us Feedback.” IRB2008-51#NOT2008-110
tax credit allowable under section 6426(c) or (e) Or you can write to: • Notice 2010-68 (Alaska dyed diesel ex-
and your section 4041 excise tax liability by the emption), I.R.B. 2010-44, at
DRAFT AS OF
amount of your excise tax credit allowable un- Internal Revenue Service IRS.gov/PUB/IRB/
der section 6426(d), in determining your deduc- Tax Forms and Publications IRB2010-44#NOT2010-68.
tion for those excise taxes or your cost of goods 1111 Constitution Ave. NW, IR-6526 • Notice 2012-27 (fractional aircraft fuel sur-
sold deduction attributable to those excise Washington, DC 20224 tax), I.R.B. 2012-17, at IRS.gov/PUB/IRB/
taxes. IRB2012-17#NOT2012-27.
Butane mixture doesn’t qualify for a credit. Although we can't respond individually to • Revenue Ruling 2016-03 (foreign reinsur-
A mixture of butane (or other gasoline blend- each comment received, we do appreciate your ance), I.R.B. 282, at IRS.gov/PUB/IRS-
March 15, 2023
stock) and gasoline is a mixture of two taxable feedback and will consider your comments as Drop#RR2016-02.
fuels. Therefore, it isn’t an alternative fuel mix- we revise our tax products. • T.D. 9621 (indoor tanning), I.R.B. 2013-28,
ture and doesn’t qualify for the section 6426 al- at IRS.gov/PUB/IRB/IRB2013-28#TD9621.
ternative fuel mixture credit. See Revenue Rul- • Revenue Procedure 2022–38 (inflation ad-
Useful Items justments) at IRS.gov//RP2022-38.
ing 2018-02 at IRS.gov/IRB#RR2018-02. You may want to see: • Revenue Ruling 2018-02 (butane mixture)
Disregarded entities and qualified subchap- at IRS.govIRB#RR2018.02.
ter S subsidiaries. Qualified subchapter S Publication • Notice 2023-6 (Sustainable Aviation Fuel
subsidiaries (QSubs) and eligible single-owner Credit) at Notice 2023-06
disregarded entities are treated as separate en- 509 Tax Calendars
• IRB 2023-10 page 502 Trafigura Trading
509
tities for excise tax and reporting purposes. LLC v. United States, 29 F.4th 286 (5th Cir.
QSubs and eligible single-owner disregarded Form (and Instructions)
2022) https://www.irs.gov/actions-on-
entities must pay and report excise taxes (other 11-C Occupational Tax and Registration decisions.
than IRS Nos. 31, 51, and 117) register for most
11-C
Return for Wagering
excise tax activities; and claim any refunds,
637 Application for Registration (For
credits, and payments under the entity's em- Excise Taxes
637
ployer identification number (EIN). These ac- Certain Excise Tax Activities)
tions can't take place under the owner's tax- 720 Quarterly Federal Excise Tax Return Not Covered
payer identification number (TIN). Some QSubs
720
and disregarded entities may already have an 720-X Amended Quarterly Federal Excise
In addition to the taxes discussed in this publi-
720-X
EIN. However, if you're unsure, please call the Tax Return
cation, you may have to report certain other ex-
IRS Business and Specialty Tax line at 730 Monthly Tax Return for Wagers cise taxes.
800-829-4933.
730
1363 Export Exemption Certificate For tax forms relating to alcohol, firearms,
Generally, QSubs and eligible single-owner
1363
disregarded entities will continue to be treated 2290 Heavy Highway Vehicle Use Tax and tobacco, visit the Alcohol and Tobacco Tax
and Trade Bureau website at www.ttb.gov.
2290
as disregarded entities for other federal tax pur- Return
poses (other than employment taxes). 2290(SP) Declaración del Impuesto Heavy highway vehicle use tax. You report
For more information on these regulations,
2290(SP)
sobre el Uso de Vehículos Pesados the federal excise tax on the use of certain
see Treasury Decisions (T.D.) 9356, T.D. 9462, en las Carreteras trucks, truck tractors, and buses used on public
and T.D. 9596. You can find T.D. 9356 of Inter-
4136 Credit for Federal Tax Paid on Fuels highways on Form 2290, Heavy Highway Vehi-
nal Revenue Bulletin (I.R.B.) 2007-39 at
cle Use Tax Return. The tax applies to highway
4136
IRS.gov/Pub/IRB/2007-39_IRB#TD9356; 6197 Gas Guzzler Tax
motor vehicles with a taxable gross weight of
T.D. 9462, I.R.B. 2009-42, at
6197
6478 Biofuel Producer Credit 55,000 pounds or more. Vans, pickup trucks,
IRS.gov/Pub/IRB/2009-42_IRB#TD9462;
panel trucks, and similar trucks generally aren’t
6478
and T.D. 9596, I.R.B. 2012-30, at 6627 Environmental Taxes
subject to this tax.
6627
IRS.gov/Pub/IRB/2012-30_IRB#TD9596.
8849 Claim for Refund of Excise Taxes,
Photographs of missing children. The Inter- Note. A Spanish version (Formulario
8849
and Schedules 1–3, 5, 6, and 8
nal Revenue Service is a proud partner with the 2290(SP)) is also available.
National Center for Missing & Exploited 8864 Biodiesel, Renewable Diesel, or
8864
Children (NCMEC). Photographs of missing Sustainable Aviation Fuels Credit
Registration of vehicles. Generally, you must
children selected by the Center may appear in prove that you paid your heavy highway vehicle
Information Returns
this publication on pages that would otherwise use tax to register your taxable vehicle with your
be blank. You can help bring these children • Form 720-TO, Terminal Operator Report state motor vehicle department or to enter the
home by looking at the photographs and calling • Form 720-CS, Carrier Summary Report United States in a Canadian or Mexican regis-
1-800-THE-LOST (1-800-843-5678) if you rec- See How To Get Tax Help in chapter 17 for tered taxable vehicle. Generally, a copy of
ognize a child. information about ordering forms and publica- Schedule 1 (Form 2290) is stamped by the IRS
tions. and returned to you as proof of payment.
Introduction Guidance If you have questions on Form 2290,
• Notice 2005-4 (fuel tax), I.R.B. 2005-2, at TIP see its separate instructions, or you
This publication covers the excise taxes for can call the Form 2290 call site at
which you may be liable and which are reported IRS.gov/Pub/IRB/IRB2005-2#NOT2005-4.
• Notice 2005-62 (biodiesel and avia- 1-866-699-4096 (toll free) from the United
on Form 720 and other forms. It also covers fuel States, and 1-859-669-5733 (not toll free) from
tax credits and refunds. For information on fuel tion-grade kerosene), I.R.B. 2005-35, at
IRS.gov/Pub/IRB/ Canada and Mexico. The hours of service are
credits against income tax see the instructions 8:00 a.m. to 6:00 p.m. Eastern time.
for Forms 4136, 6478, or 8864. Only one credit IRB2005-35#NOT2005-62.
may be taken for each amount of any fuel type. • Notice 2005-80 (LUST, kerosene, credit
card issuers, mechanical dye injection), Wagering tax and occupational tax. The in-
I.R.B. 2005-46, at IRS.gov/PUB/IRB/ formation on wagering tax can be found in the
IRB2005-46#NOT2005-80. Instructions for Form 730, and Form 11-C.
Publication 510 (March 2023) Page 3Part 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
DRAFT AS OF
March 15, 2023
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.
1. removed or sold by the blender contain less
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.
Fuel Taxes Blender. This is the person that produces
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-
Definitions fuel by pipeline or vessel. nal operator. You hold the inventory position
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 TaxesU.S.C. 7545). It also includes certain liquid fuel • Partially exempt ethanol and methanol fuel
that is derived by, or from, any cultivated algae,
cyanobacteria, or lemna. It isn't alcohol of less Registration (at least 85% of the blend consists of alco-
hol produced from natural gas; or
than 150 proof (disregard any added denatur-
ants). See Form 6478 for more information.
Requirements • Denatured alcohol.
Gasoline also includes gasoline blendstocks,
The following discussion applies to excise tax discussed later.
State. This includes any state, any of its politi-
registration requirements for activities relating
cal subdivisions, the District of Columbia, and
to fuels only. See Form 637 for other persons Aviation gasoline. This means all special
DRAFT AS OF
the American Red Cross. An Indian tribal gov-
who must register and for more information grades of gasoline suitable for use in aviation
ernment is treated as a state only if transactions
about registration. reciprocating engines and covered by ASTM
involve the exercise of an essential tribal gov- specification D910 or military specification
ernment function.
Persons that are required to be registered. MIL-G-5572.
Taxable fuel. This means gasoline, diesel fuel, you're required to be registered if you're a:
and kerosene. • Blender; Taxable Events
• Enterer;
March 15, 2023
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-
Persons that may register. You may, but cussed later. Also, see the special rules that ap-
able fuel stored at the facility has been
aren’t required to, register if you're a: ply to Gasoline Blendstocks, later.
previously taxed upon removal from a refinery
or terminal. • Feedstock user,
• Industrial user, If the tax is paid on the gasoline in more than
• Throughputter that isn't a position holder, one event, a refund may be allowed for the
Terminal operator. This is any person that “second” tax paid. See Refunds of Second Tax
owns, operates, or otherwise controls a termi- • Ultimate vendor,
• Diesel-water fuel emulsion producer, in chapter 2.
nal.
• Credit card issuer, or
• Alternative fuel claimant. Removal from terminal. All removals of gaso-
Throughputter. This is any person that is a 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-
bursements of liquid products. A liquid product minal as reflected in the records of the ter-
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-
structions for Forms 720-TO and 720-CS. rack by the receiving person.
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• 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
blender's sale or removal of the blended taxa-
2. No tax was previously imposed (as dis-
Removal from refinery. The removal of gaso- ble fuel.
cussed earlier).
line from a refinery is taxable if the removal
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-
DRAFT AS OF
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.
March 15, 2023
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
time of the sale won’t be liable for the tax.
Gasoline Blendstocks
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 buyer of the gasoline is liable for the tax if The previous discussions apply to these blend-
both of the following conditions at the time of
the seller meets these conditions. The buyer is stocks. However, if certain conditions are met,
the entry won’t be liable for the tax.
jointly and severally liable if the seller doesn't the removal, entry, or sale of gasoline blend-
• The importer of record has an unexpired meet these conditions. stocks are taxed at $.001 per gallon or aren’t
notification certificate (discussed in Cus-
subject to the excise tax. If these conditions
toms bond below) from the enterer. Exception. The tax doesn't apply to a sale aren’t met, gasoline blendstocks are generally
• The importer of record has no reason to if all of the following apply. taxed as gasoline. However, transmix contain-
believe any information in the certificate is • The buyer's principal place of business ing gasoline is taxed as a diesel fuel. See Die-
false. isn't in the United States. sel Fuel and Kerosene, later.
Customs bond. The customs bond won’t
• The sale occurs as the fuel is delivered into
a transport vessel with a capacity of at Blendstocks. Gasoline blendstocks are:
be charged for the tax imposed on the entry of
least 20,000 barrels of fuel. • Alkylate,
the gasoline if at the time of entry the surety has
an unexpired notification certificate from the en-
• The seller is a registrant and the exporter • Butane,
of record. • Butene,
terer and has no reason to believe any informa-
tion in the certificate is false.
• The fuel was exported. • Catalytically cracked gasoline,
• Coker gasoline,
Removal or sale of blended gasoline. The • Ethyl tertiary butyl ether (ETBE),
Removal from a terminal by unregistered
removal or sale of blended gasoline by the blen- • Hexane,
position holder or unregistered pipeline or
der is taxable. See Blended taxable fuel under • Hydrocrackate,
vessel operator. The removal by bulk transfer
Definitions, earlier. • Isomerate,
of gasoline from a terminal is taxable if the posi-
tion holder for the gasoline or the operator of The blender is liable for the tax. The tax is • Methyl tertiary butyl ether (MTBE),
the pipeline or vessel isn't a registrant. The po- figured on the number of gallons not previously • Mixed xylene (not including any separated
sition holder is liable for the tax. The terminal subject to the tax on gasoline. isomer of xylene),
operator is jointly and severally liable for the tax Persons who blend alcohol with gasoline to • Natural gasoline,
if the position holder is a person other than the produce an alcohol fuel mixture outside the bulk • Pentane,
terminal operator. transfer/terminal system must pay the gasoline • Pentane mixture,
tax on the volume of alcohol in the mixture. See • Polymer gasoline,
Bulk transfers not received at approved ter- Form 720 to report this tax. You must also be • Raffinate,
minal or refinery. Tax is imposed if: registered with the IRS as a blender. See Form • Reformate,
637. • Straight-run gasoline,
However, if an untaxed liquid is sold as • Straight-run naphtha,
taxed taxable fuel and that untaxed liquid is • Tertiary amyl methyl ether (TAME),
Page 6 Chapter 1 Fuel Taxes• Tertiary butyl alcohol (gasoline grade) for the tax (position holder, refiner, or enterer) Transmix. Transmix means a by-product of
(TBA), meets all the following requirements. refined products created by the mixing of differ-
• Thermally cracked gasoline, • The person is a registrant. ent specification products during pipeline trans-
• Toluene, and • The person has an unexpired notification portation.
• Transmix containing gasoline. certificate from the operator of the terminal
or refinery where the gasoline blendstocks Kerosene. This means any of the following liq-
However, gasoline blendstocks don't in-
are received. uids.
clude any product that can't be used without fur-
ther processing in the production of finished • The person has no reason to believe any • One of the two grades of kerosene (No.
DRAFT AS OF
information on the certificate is false. 1-K and No. 2-K) covered by ASTM speci-
gasoline.
fication D3699.
Not used to produce finished gasoline. Bulk transfers to registered industrial user. • Kerosene-type jet fuel covered by ASTM
The removal of gasoline blendstocks from a specification D1655 or military specifica-
Gasoline blendstocks not used to produce fin-
pipeline or vessel isn't taxable (other than tion MIL-DTL-5624T (Grade JP-5) or
ished gasoline aren’t taxable (other than LUST)
LUST) if the blendstocks are received by a reg- MIL-DTL-83133E (Grade JP-8). See Kero-
if the following conditions are met.
istrant that is an industrial user. An industrial sene for Use in Aviation, later.
March 15, 2023
Removals and entries not connected to user is any person that receives gasoline blend- However, kerosene doesn't include exclu-
sale. Nonbulk removals and entries aren’t tax- stocks by bulk transfer for its own use in the ded liquid, discussed earlier.
able if the person otherwise liable for the tax manufacture of any product other than finished
Kerosene also includes any liquid that would
(position holder, refiner, or enterer) is a regis- gasoline.
be described above but for the presence of a
trant.
dye of the type used to dye kerosene for a non-
Credits or refunds. A credit or refund of the
Removals and entries connected to sale. taxable use.
gasoline tax may be allowable if gasoline is
Nonbulk removals and entries aren’t taxable if used for a nontaxable purpose or exempt use.
the person otherwise liable for the tax (position Diesel-powered highway vehicle. This is any
For more information, see Fuel Tax Credits and
holder, refiner, or enterer) is a registrant, and at self-propelled vehicle designed to carry a load
Refunds in chapter 2.
the time of the sale, meets the following require- over public highways (whether or not also de-
ments. signed to perform other functions) and propel-
• The person has an unexpired certificate
from the buyer.
Diesel Fuel and led by a diesel-powered engine. Specially de-
signed mobile machinery for nontransportation
• The person has no reason to believe any Kerosene functions and vehicles specially designed for
off-highway transportation aren’t generally con-
information in the certificate is false.
sidered diesel-powered highway vehicles. For
Generally, diesel fuel and kerosene are taxed in
Sales after removal or entry. The sale of more information about these vehicles and for
the same manner as gasoline (discussed ear-
a gasoline blendstock that wasn't subject to tax information about vehicles not considered high-
lier). However, special rules (discussed under
on its nonbulk removal or entry, as discussed way vehicles, see Off-highway business use
Alaska and Feedstocks) apply to dyed diesel
earlier, is taxable. The seller is liable for the tax. (No. 2) in chapter 2.
fuel and dyed kerosene, and to undyed diesel
However, the sale isn't taxable if, at the time of
fuel and undyed kerosene sold or used in
the sale, the seller meets the following require- Diesel-powered train. This is any diesel-pow-
Alaska for certain nontaxable uses and undyed
ments. ered equipment or machinery that rides on rails.
kerosene used for a feedstock purpose.
• The seller has an unexpired certificate The term includes a locomotive, work train,
(discussed below) from the buyer. switching engine, and track maintenance ma-
Diesel fuel. Diesel fuel means:
• The seller has no reason to believe any in- chine.
formation in the certificate is false.
• Any liquid that without further processing
or blending is suitable for use as a fuel in a
Certificate of buyer. The certificate from the diesel-powered highway vehicle or train; or Taxable Events
buyer certifies the gasoline blendstocks won’t • Transmix.
be used to produce finished gasoline. The cer- The tax on diesel fuel and kerosene is $.244
A liquid is suitable for this use if the liquid per gallon. It's imposed on the removal, entry,
tificate may be included as part of any business
has practical and commercial fitness for use in or sale of diesel fuel and kerosene. Each of
records normally used for a sale. A model certif-
the propulsion engine of a diesel-powered high- these events is discussed later. Only the $.001
icate is shown in the Appendix as Model Certifi-
way vehicle or diesel-powered train. A liquid LUST tax applies to dyed diesel fuel and dyed
cate D. The certificate must contain all informa-
may possess this practical and commercial fit- kerosene, discussed later.
tion necessary to complete the model.
ness even though the specified use isn't the
A certificate expires on the earliest of the fol-
predominant use of the liquid. However, a liquid If the tax is paid on the diesel fuel or kero-
lowing dates.
doesn't possess this practical and commercial sene in more than one event, a refund may be
• The date 1 year after the effective date (not fitness solely by reason of its possible or rare
earlier than the date signed) of the certifi- allowed for the “second” tax paid. See Refunds
use as a fuel in the propulsion engine of a die- of Second Tax in chapter 2.
cate. sel-powered highway vehicle or diesel-powered
• The date a new certificate is provided to train. Diesel fuel doesn't include gasoline, kero-
the seller. Use in certain intercity and local buses.
sene, excluded liquid, No. 5 and No. 6 fuel oils Dyed diesel fuel and dyed kerosene can't be
• The date the seller is notified that the buy- covered by ASTM specification D396, or F-76
er's right to provide a certificate has been used in certain intercity and local buses. A claim
(Fuel Naval Distillate) covered by military speci- for $.17 per gallon may be made by the regis-
withdrawn. fication MIL-F-16884. tered ultimate vendor (under certain conditions)
The buyer must provide a new certificate if any or the ultimate purchaser for undyed diesel fuel
information on a certificate has changed. Excluded liquid. An excluded liquid is either or undyed kerosene sold for use in certain inter-
The IRS may withdraw the buyer's right to of the following: city or local buses. An intercity or local bus is a
provide a certificate if that buyer uses the gaso- 1. A liquid that contains less than 4% normal bus engaged in furnishing (for compensation)
line blendstocks in the production of finished paraffins. passenger land transportation available to the
gasoline or resells the blendstocks without get- general public. The bus must be engaged in
ting a certificate from its buyer. 2. A liquid with all the following properties. one of the following activities.
a. Distillation range of 125 degrees Fah- • Scheduled transportation along regular
Received at approved terminal or refinery. renheit or less. routes regardless of the size of the bus.
The nonbulk removal or entry of gasoline blend- • Nonscheduled transportation if the seating
stocks received at an approved terminal or re- b. Sulfur content of 10 ppm or less. capacity of the bus is at least 20 adults (not
finery isn't taxable if the person otherwise liable c. Minimum color of +27 Saybolt. including the driver).
Chapter 1 Fuel Taxes Page 7A 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,
3. The removal from the refinery is by:
fuel and kerosene at a terminal rack are taxa- 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).
DRAFT AS OF
the diesel fuel or kerosene is re-
Two-party exchanges. In a two-party ex- The owner of the diesel fuel or kerosene
ceived; or
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.
(2)) less than 20 miles from the refin- • The owner has an unexpired notification
March 15, 2023
ering person and receiving person are both tax-
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 operator of the facility where the diesel fuel
• The exchange transaction occurs before or or the operator of the pipeline or vessel
or kerosene is received is liable for the tax if the
at the same time as completion of removal isn't a registrant.
owner meets these conditions. The operator is
across the rack by the receiving person. • It isn't made by bulk transfer.
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 lier.
both of the following conditions at the time of
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. diesel fuel to produce and sell or use a biodie-
1. The diesel fuel or kerosene is removed
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
Page 8 Chapter 1 Fuel TaxesYou can also read
