Publication 510 (Rev. July 2021) Contents

Home , Blender, Excise, Fuel tax, Hearse, Internal Revenue Code, Tax deduction

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Cat. No. 15014I What's New ...... 2 Department of the Reminders ...... 2 Treasury Internal Excise Taxes Introduction ...... 2 Revenue Excise Taxes Not Covered ...... 3 Service (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 and Exempt Uses .... 11 Other Fuels (Including Alternative Fuels) ...... 12 Compressed Natural Gas (CNG) ... 12 Fuels Used on Inland Waterways ... 12 Second Generation Biofuel Not Used as Fuel ...... 13 Biodiesel Sold as But Not Used as Fuel ...... 13

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) ...... 14 Diesel-Water Fuel Emulsion ...... 15 Kerosene for Use in Aviation ..... 15 Other Fuels (Including Alternative Fuels) ...... 16 Refunds of Second Tax ...... 16 Definitions of Nontaxable Uses .... 17 Filing Claims ...... 20

Chapter 3. Environmental Taxes .... 23 Oil Spill Liability Tax ...... 23 Ozone-Depleting Chemicals (ODCs) ...... 23

Chapter 4. Communications and Air Transportation Taxes ...... 25 Uncollected Tax Report ...... 25 Communications Tax ...... 25 Air Transportation Taxes ...... 26

Chapter 5. Manufacturers Taxes .... 29 Taxable Event ...... 29 Exemptions ...... 29 Sport Fishing Equipment ...... 30 Bows, Quivers, Broadheads, and Points ...... 31 Arrow Shafts ...... 31 Coal ...... 31 Taxable Tires ...... 32 Get forms and other information faster and easier at: Gas Guzzler Tax ...... 32 • IRS.gov (English) • IRS.gov/Korean (한국어) Vaccines ...... 33 • IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) • IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (Tiếng Việt)

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Chapter 6. Retail Tax on Heavy Retroactive extension of income tax cred- EIN. However, if you are unsure, please call the Trucks, Trailers, and Tractors ... 33 its: IRS Business and Specialty Tax line at • Section 40A biodiesel and renewable 800-829-4933. Chapter 7. Ship Passenger Tax ..... 36 diesel fuels credit. The section 40A bio- Generally, QSubs and eligible single-owner diesel and renewable diesel fuels credit is disregarded entities will continue to be treated Chapter 8. Foreign retroactively extended for fuel sold or used as disregarded entities for other federal tax pur- Insurance Taxes ...... 37 in calendar years 2018 through 2022. poses (other than employment taxes). • Section 40 biofuel producer credit. The Chapter 9. Obligations Not in For more information on these regulations, section 40 biofuel producer credit is retro- see Treasury Decision (T.D.) 9356, T.D. 9462, Registered Form ...... 37 actively extended for fuel sold or used in and T.D. 9596. You can find T.D. 9356 on calendar years 2018 through 2021. Chapter 10. Indoor Tanning page 675 of Internal Revenue Bulletin (I.R.B.) Extension of oil spill liability tax. The sec- 2007-39, at Services Tax ...... 37 tion 4611 tax on crude oil received (domestic IRS.gov/Pub/IRB/2007-39_IRB#TD9356; Chapter 11. Patient-Centered petroleum oil spill tax), or petroleum products T.D. 9462 on page 504 of I.R.B. 2009-42, at Outcomes Research Fee ...... 38 entered (imported petroleum oil spill tax), is ex- IRS.gov/Pub/IRB/2009-42_IRB#TD9462; tended through 2025. and T.D. 9596 on page 84 of I.R.B. 2012-30, at Chapter 12. Filing Form 720 ...... 39 Inflation adjustments for 2021. For informa- IRS.gov/Pub/IRB/2012-30_IRB#TD9596. tion about inflation adjustments for 2021, such Registration for certain activities. You are Chapter 13. Payment of Taxes ..... 39 as the inflation-adjusted section 4161 tax on ar- required to be registered for certain excise tax How To Make Deposits ...... 39 row shafts, see Revenue Procedure 2020-45, at activities, such as blending of gasoline, diesel When To Make Deposits ...... 40 IRS.gov//RP2020-45. fuel, or kerosene outside the bulk transfer/termi- Amount of Deposits ...... 40 nal system. See the instructions for Form 637 for the list of activities for which you must regis- Chapter 14. Penalties and Interest ... 40 ter. Also see Registration Requirements under Future Developments Fuel Taxes in chapter 1 for information on regis- Chapter 15. Examination and tration for activities related to fuel. Each busi- Appeal Procedures ...... 41 The IRS has created a page on IRS.gov that includes information about Pub. 510, at ness unit that has, or is required to have, a separate EIN must be registered. Chapter 16. Rulings Program ...... 41 IRS.gov/Pub510. Information about any future developments will be posted on that page. To apply for registration, complete Form 637 Chapter 17. How To Get Tax Help ... 41 and provide the information requested in its instructions. If your application is approved, you Chapter 18. Appendix ...... 43 will receive a Letter of Registration showing the Reminders activities for which you are registered, the effec- Index ...... 58 tive date of the registration, and your registra- Pub. 510 updates. Pub. 510 isn't updated an- tion number. A copy of Form 637 isn't a Letter of nually. Instead, it will be updated only when Registration. there are major changes in the tax law. What's New Reducing your excise tax liability. For fed- Photographs of missing children. The Inter- eral income tax purposes, reduce your section nal Revenue Service is a proud partner with the Notes. References to “credit” below are for 4081 excise tax liability by the amount of excise National Center for Missing & Exploited Chil- credits or any applicable allowable payments. tax credit allowable under section 6426(c) or (e) dren® (NCMEC). Photographs of missing chil- Don’t claim the credits or payments for fuel sold and your section 4041 excise tax liability by the dren selected by the Center may appear in this or used after the year they expire unless they’re amount of your excise tax credit allowable un- publication on pages that would otherwise be extended again. der section 6426(d), in determining your deduc- blank. You can help bring these children home tion for those excise taxes or your cost of goods by looking at the photographs and calling Section 6426 credits and section 6427 pay- 1-800-THE-LOST (1-800-843-5678) or ments extensions: sold deduction attributable to those excise taxes. www.missingkids.com/home if you recognize a • Biodiesel or renewable diesel mix- child. tures. The biodiesel or renewable diesel Butane mixture doesn’t qualify for a credit. mixture credit is retroactively extended for A mixture of butane (or other gasoline blend- fuel sold or used in 2018 through 2022. stock) and gasoline is a mixture of two taxable Introduction • Alternative fuel. The alternative fuel credit fuels. Therefore, it isn’t an alternative fuel mix- This publication covers the excise taxes for is retroactively extended for fuel sold or ture and doesn’t qualify for the section 6426 al- used in 2018 through 2021. which you may be liable and which are reported ternative fuel mixture credit. See Revenue Rul- on Form 720 and other forms. It also covers fuel Alternative fuel mixtures. The section 6426 ing 2018-02 at IRS.gov/IRB#RR2018-02. tax credits and refunds. For information on fuel credits and section 6427 payments for alterna- Aviation fuels for use in foreign trade. Avia- credits against income tax see the instructions tive fuel mixtures are retroactively extended for tion gasoline and kerosene for use in aviation for Form 4136, Credit for Federal Tax Paid on fuels sold or used in 2018 through 2021. are exempt from the leaking underground stor- Fuels, Form 6478, Biofuel Producer Credit, and For claims made on or after January 8, age tank (LUST) tax. Form 8864, Biodiesel and Renewable Diesel ! 2018, “alternative fuel mixture” means Disregarded entities and qualified subchap- Fuels Credit. CAUTION a mixture of taxable fuel and alternative ter S subsidiaries. Qualified subchapter S fuel other than liquefied petroleum gas (LPG), subsidiaries (QSubs) and eligible single-owner Comments and suggestions. We welcome compressed natural gas (CNG), liquefied natu- disregarded entities are treated as separate en- your comments about this publication and your ral gas (LNG), liquefied gas derived from bio- tities for excise tax and reporting purposes. suggestions for future editions. mass, and compressed gas derived from bio- QSubs and eligible single-owner disregarded You can send us comments from IRS.gov/ mass. To make a claim for the alternative fuel entities must pay and report excise taxes (other FormsPubs. Click on “More Information,” then mixture credit for 2018 or 2019, you must file than IRS Nos. 31, 51, and 117), register for on “Give Us Feedback.” Form 720-X, Amended Quarterly Federal Ex- most excise tax activities, and claim any re- Or you can write to: cise Tax Return. funds, credits, and payments under the entity's employer identification number (EIN). These Internal Revenue Service actions can't take place under the owner's tax- Tax Forms and Publications payer identification number (TIN). Some QSubs 1111 Constitution Ave. NW, IR-6526 and disregarded entities may already have an Washington, DC 20224

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Although we can't respond individually to See How To Get Tax Help in chapter 17 for For tax forms relating to alcohol, firearms, each comment received, we do appreciate your information about ordering forms and publica- and tobacco, visit the Alcohol and Tobacco Tax feedback and will consider your comments as tions. and Trade Bureau website at www.ttb.gov. we revise our tax products. Guidance Heavy highway vehicle use tax. You report Useful Items • Notice 2005-4 (fuel tax) on page 289 of the federal excise tax on the use of certain You may want to see: I.R.B. 2005-2, at IRS.gov/Pub/IRB/ trucks, truck tractors, and buses used on public IRB2005-2#NOT2005-4 highways on Form 2290, Heavy Highway Vehi- • Notice 2005-62 (biodiesel and avia- cle Use Tax Return. The tax applies to highway Publication tion-grade kerosene) on page 443 of I.R.B. motor vehicles with a taxable gross weight of 2005-35, at IRS.gov/Pub/IRB/ 55,000 pounds or more. Vans, pickup trucks,

509 509 Tax Calendars IRB2005-35#NOT2005-62. panel trucks, and similar trucks generally aren’t Form (and Instructions) • Notice 2005-80 (LUST, kerosene, credit subject to this tax. card issuers, mechanical dye injection) on page 953 of I.R.B. 2005-46, at Note. A Spanish version (Formulario 11-C 11-C Occupational Tax and Registration Return for Wagering IRS.gov/PUB/IRB/ 2290(SP)) is also available. IRB2005-46#NOT2005-80.

637 637 Application for Registration (For • Notice 2006-92 (alternative fuels mixtures) Registration of vehicles. Generally, you must Certain Excise Tax Activities) on page 774 of I.R.B. 2006-43, at prove that you paid your heavy highway vehicle IRS.gov/PUB/IRB/ use tax to register your taxable vehicle with your

720 720 Quarterly Federal Excise Tax Return IRB2006-43#NOT2006-92. state motor vehicle department or to enter the • Notice 2008-110 (biodiesel, cellulosic bio- United States in a Canadian or Mexican regis-

720-X 720-X Amended Quarterly Federal Excise fuel) on page 1298 of I.R.B. 2008-51, at tered taxable vehicle. Generally, a copy of Tax Return IRS.gov/PUB/IRB/ Schedule 1 (Form 2290) is stamped by the IRS IRB2008-51#NOT2008-110 and returned to you as proof of payment.

730 730 Monthly Tax Return for Wagers • Notice 2010-68 (Alaska dyed diesel ex- If you have questions on Form 2290, emption) on page 576 of I.R.B. 2010-44, at

1363 1363 Export Exemption Certificate TIP see its separate instructions, or you IRS.gov/PUB/IRB/ can call the Form 2290 call site at IRB2010-44#NOT2010-68. 2290 2290 Heavy Highway Vehicle Use Tax 1-866-699-4096 (toll free) from the United Return • Notice 2012-27 (fractional aircraft fuel sur- States, and 1-859-669-5733 (not toll free) from tax) on page 849 of I.R.B. 2012-17, at Canada and Mexico. The hours of service are

2290(SP) 2290(SP) Declaración del Impuesto IRS.gov/PUB/IRB/ 8:00 a.m. to 6:00 p.m. Eastern time. sobre el Uso de Vehículos Pesados IRB2012-17#NOT2012-27. en las Carreteras • Revenue Ruling 2016-03 (foreign reinsurance), 2016-3 I.R.B. 282, at IRS.gov/PUB/ Wagering tax and occupational tax. The in-

4136 4136 Credit for Federal Tax Paid on Fuels IRS-Drop#RR2016-02 formation on wagering tax can be found in the • T.D. 9621 (indoor tanning) on page 49 of instructions for Form 730, Tax on Wagering,

6197 6197 Gas Guzzler Tax I.R.B. 2013-28, at IRS.gov/PUB/IRB/ and Form 11-C, Occupational Tax and Regis- IRB2013-28#TD9621. tration Return for Wagering. 6478 6478 Biofuel Producer Credit • Rev. Proc. 2020-45 (inflation adjustments), at IRS.gov//RP2020-45

6627 6627 Environmental Taxes • Revenue Ruling 2018-02 (butane mixture), at IRS.govIRB#RR2018.02. 8849 8849 Claim for Refund of Excise Taxes, and Schedules 1–3, 5, 6, and 8

8864 8864 Biodiesel and Renewable Diesel Excise Taxes Fuels Credit Not Covered Information Returns • Form 720-TO, Terminal Operator Report In addition to the taxes discussed in this publi- • Form 720-CS, Carrier Summary Report cation, you may have to report certain other excise taxes.

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

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under section 211 of the Clean Air Act (42 an approved terminal or deliver liquid product to suitable for use as a motor fuel. Gasoline in- U.S.C. 7545). It also includes certain liquid fuel an approved terminal. cludes any gasoline blend other than: which is derived by, or from, any cultivated al- • Qualified ethanol and methanol fuel (at gae, cyanobacteria, or lemna. It isn't alcohol of least 85% of the blend consists of alcohol less than 150 proof (disregard any added dena- Registration produced from coal, including peat), turants). See Form 6478 for more information. • Partially exempt ethanol and methanol fuel Requirements (at least 85% of the blend consists of alco- State. This includes any state, any of its politi- hol produced from natural gas), or cal subdivisions, the District of Columbia, and The following discussion applies to excise tax • Denatured alcohol. the American Red Cross. An Indian tribal gov- registration requirements for activities relating Gasoline also includes gasoline blendstocks, ernment is treated as a state only if transactions to fuels only. See Form 637 for other persons discussed later. involve the exercise of an essential tribal gov- who must register and for more information ernment function. about registration. Aviation gasoline. This means all special grades of gasoline suitable for use in aviation Taxable fuel. This means gasoline, diesel fuel, Persons that are required to be registered. reciprocating engines and covered by ASTM and kerosene. You are required to be registered if you are a: specification D910 or military specification Blender; • MIL-G-5572. Terminal. This is a storage and distribution fa- • Enterer; cility supplied by pipeline or vessel, and from • Pipeline operator; which taxable fuel may be removed at a rack. It • Position holder; Taxable Events doesn't include a facility at which gasoline • Refiner; blendstocks are used in the manufacture of • Terminal operator; The tax on gasoline is $.184 per gallon. The tax products other than finished gasoline if no gas- • Vessel operator; on aviation gasoline is $.194 per gallon. When oline is removed from the facility. A terminal • Producer or importer of alcohol, biodiesel, used in a fractional ownership program aircraft, doesn't include any facility where finished gaso- agri-biodiesel, and renewable diesel; or gasoline also is subject to a surtax of $.141 per line, diesel fuel, or kerosene is stored if the fa- • Producer of cellulosic or second genera- gallon. See Surtax on any liquid used in a frac- cility is operated by a registrant and all such tax- tion biofuel. tional ownership program aircraft as fuel, later. able fuel stored at the facility has been previously taxed upon removal from a refinery Persons that may register. You may, but Tax is imposed on the removal, entry, or or terminal. aren’t required to, register if you are a: sale of gasoline. Each of these events is dis- • Feedstock user, cussed later. Also, see the special rules that ap- Terminal operator. This is any person that • Industrial user, ply to gasoline blendstocks, later. owns, operates, or otherwise controls a termi- • Throughputter that isn't a position holder, nal. • Ultimate vendor, If the tax is paid on the gasoline in more than • Diesel-water fuel emulsion producer, one event, a refund may be allowed for the Throughputter. This is any person that is a • Credit card issuer, or “second” tax paid. See Refunds of Second Tax position holder or that owns taxable fuel within • Alternative fuel claimant. in chapter 2. the bulk transfer/terminal system (other than in Ultimate vendors, credit card issuers, and alter- a terminal). native fuel claimants don’t need to be registered Removal from terminal. All removals of gaso- to buy or sell fuel. However, they must be regis- line at a terminal rack are taxable. The position Vessel operator. This is the person that oper- holder for that gasoline is liable for the tax. ates a vessel within the bulk transfer/terminal tered to file claims for certain sales and uses of system. However, vessel doesn't include a fuel. See Form 637 for more information. Two-party exchanges. In a two-party ex- deep-draft ocean-going vessel. change, the receiving person, not the delivering Taxable fuel registrant. This is an enterer, an person, is liable for the tax imposed on the re- industrial user, a refiner, a terminal operator, or moval of taxable fuel from the terminal at the Information Returns a throughputter who received a Letter of Regis- terminal rack. A two-party exchange means a tration under the excise tax registration provi- transaction (other than a sale) where the deliv- sions and whose registration hasn’t been re- ering person and receiving person are both tax- Form 720-TO and Form 720-CS are information voked or suspended. The term registrant as returns used to report monthly receipts and dis- able fuel registrants and all of the following ap- used in the discussions of these fuels means a ply. bursements of liquid products. A liquid product taxable fuel registrant. is any liquid transported into storage at a termi- • The transaction includes a transfer from nal or delivered out of a terminal. For a list of Additional information. See the Form 637 the delivering person, who holds the inven- products, see the product code table in the In- instructions for the information you must submit tory position for the taxable fuel in the ter- structions for Forms 720-TO and 720-CS. when you apply for registration. minal as reflected in the records of the terminal operator. The returns are due the last day of the Failure to register. The penalty for failure to • The exchange transaction occurs before or month following the month in which the transac- register if you must register, unless due to rea- at the same time as removal across the tion occurs. Generally, these returns can be sonable cause, is $10,000 for the initial failure, rack by the receiving person. filed on paper or electronically. For information and then $1,000 each day thereafter you fail to • The terminal operator in its records treats on filing electronically, see Publication 3536, register. the receiving person as the person that re- Motor Fuel Excise Tax EDI Guide. Publication moves the product across the terminal 3536 is only available on the IRS website. rack for purposes of reporting the transac- Gasoline and Aviation tion on Form 720-TO. Form 720-TO. This information return is used • The transaction is subject to a written con- by terminal operators to report receipts and dis- Gasoline tract. bursements of all liquid products to and from all Terminal operator's liability. The terminal approved terminals. Each terminal operator Gasoline. Gasoline means all products com- operator is jointly and severally liable for the tax must file a separate form for each approved ter- monly or commercially known or sold as gaso- if the position holder is a person other than the minal. line with an octane rating of 75 or more that are terminal operator and isn't a registrant. Form 720-CS. This information return must be However, a terminal operator meeting all the filed by bulk transport carriers (barges, vessels, following conditions at the time of the removal and pipelines) who receive liquid product from won’t be liable for the tax. • The terminal operator is a registrant.

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• The terminal operator has an unexpired Bulk transfers not received at approved ter- registered with the IRS as a blender. See Form notification certificate (discussed later) minal or refinery. Tax is imposed if: 637. from the position holder. 1. Gasoline is removed by bulk transfer from However, if an untaxed liquid is sold as • The terminal operator has no reason to be- a terminal or refinery, or entered by bulk taxed taxable fuel and that untaxed liquid is lieve any information on the certificate is transfer into the United States. used to produce blended taxable fuel, the per- false. son that sold the untaxed liquid is jointly and 2. No tax was previously imposed (as dis- severally liable for the tax imposed on the Removal from refinery. The removal of gaso- cussed earlier). blender's sale or removal of the blended taxa- line from a refinery is taxable if the removal 3. Upon removal from the pipeline or vessel, ble fuel. meets either of the following conditions. the gasoline isn't received at an approved • it's made by bulk transfer and the refiner, Notification certificate. The notification certif- terminal or refinery (or at another pipeline the owner of the gasoline immediately be- icate is used to notify a person of the registra- or vessel). fore the removal, or the operator of the tion status of the registrant. A copy of the regis- pipeline or vessel isn't a registrant. The owner of the gasoline when it's re- trant's letter of registration can't be used as a • it's made at the refinery rack. moved from the pipeline or vessel is liable for notification certificate. A model notification cer- The refiner is liable for the tax. the tax. However, an owner meeting all the fol- tificate is shown in the Appendix as Model Cer- lowing conditions at the time of the removal tificate C. A notification certificate must contain Exception. The tax doesn't apply to a re- won’t be liable for the tax. all information necessary to complete the moval of gasoline at the refinery rack if all the • The owner is a registrant. model. following requirements are met. • The owner has an unexpired notification The certificate may be included as part of • The gasoline is removed from an approved certificate (discussed later) from the opera- any business records normally used for a sale. refinery not served by pipeline (other than tor of the terminal or refinery where the A certificate expires on the earlier of the date for receiving crude oil) or vessel. gasoline is received. the registrant provides a new certificate, or the • The gasoline is received at a facility oper- • The owner has no reason to believe any in- date the recipient of the certificate is notified ated by a registrant and located within the formation on the certificate is false. that the registrant's registration has been re- bulk transfer/terminal system. The operator of the facility where the gasoline is voked or suspended. The registrant must pro- • The removal from the refinery is by railcar. received is liable for the tax if the owner meets vide a new certificate if any information on a • The same person operates the refinery these conditions. The operator is jointly and certificate has changed. and the facility at which the gasoline is re- severally liable if the owner doesn't meet these ceived. Additional persons liable. When the person conditions. liable for the tax willfully fails to pay the tax, joint Entry into the United States. The entry of Sales to unregistered person. The sale of and several liability for the tax is imposed on: gasoline into the United States is taxable if the gasoline located within the bulk transfer/termi- • Any officer, employee, or agent of the per- entry meets either of the following conditions. nal system to a person that isn't a registrant is son who is under a duty to ensure the pay- • it's made by bulk transfer and the enterer taxable if tax wasn't previously imposed under ment of the tax and who willfully fails to or the operator of the pipeline or vessel any of the events discussed earlier. perform that duty, or isn't a registrant. • Anyone who willfully causes the person to The seller is liable for the tax. However, a • it'sn't made by bulk transfer. fail to pay the tax. seller meeting all the following conditions at the The enterer is liable for the tax. 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 • The seller has an unexpired notification porter of record is jointly and severally liable for Gasoline blendstocks may be subject certificate (discussed later) from the buyer. the tax with the enterer if the importer of record to $.001 per gallon LUST tax as dis- • The seller has no reason to believe any in- ! isn't the enterer of the taxable fuel and the en- CAUTION cussed below. terer isn't a taxable fuel registrant. formation on the certificate is false. However, an importer of record meeting The buyer of the gasoline is liable for the tax if both of the following conditions at the time of the seller meets these conditions. The buyer is Gasoline includes gasoline blendstocks. The the entry won’t be liable for the tax. jointly and severally liable if the seller doesn't previous discussions apply to these blend- • The importer of record has an unexpired meet these conditions. stocks. However, if certain conditions are met, notification certificate (discussed later) the removal, entry, or sale of gasoline blend- from the enterer. Exception. The tax doesn't apply to a sale stocks are taxed at $.001 per gallon or aren’t • The importer of record has no reason to if all of the following apply. subject to the excise tax. believe any information in the certificate is • The buyer's principal place of business Blendstocks. Gasoline blendstocks are: false. isn't in the United States. • The sale occurs as the fuel is delivered into • Alkylate, Customs bond. The customs bond won’t a transport vessel with a capacity of at • Butane, be charged for the tax imposed on the entry of least 20,000 barrels of fuel. • Butene, the gasoline if at the time of entry the surety has • The seller is a registrant and the exporter • Catalytically cracked gasoline, an unexpired notification certificate from the en- of record. • Coker gasoline, terer and has no reason to believe any informa- • The fuel was exported. • Ethyl tertiary butyl ether (ETBE), tion in the certificate is false. • Hexane, Removal or sale of blended gasoline. The • Hydrocrackate, Removal from a terminal by unregistered removal or sale of blended gasoline by the blen- • Isomerate, position holder or unregistered pipeline or der is taxable. See Blended taxable fuel under • Methyl tertiary butyl ether (MTBE), vessel operator. The removal by bulk transfer Definitions, earlier. • Mixed xylene (not including any separated of gasoline from a terminal is taxable if the posi- The blender is liable for the tax. The tax is isomer of xylene), tion holder for the gasoline or the operator of figured on the number of gallons not previously • Natural gasoline, the pipeline or vessel isn't a registrant. The po- subject to the tax on gasoline. • Pentane, sition holder is liable for the tax. The terminal Persons who blend alcohol with gasoline to • Pentane mixture, operator is jointly and severally liable for the tax produce an alcohol fuel mixture outside the bulk • Polymer gasoline, if the position holder is a person other than the transfer/terminal system must pay the gasoline • Raffinate, terminal operator. However, see Terminal oper- tax on the volume of alcohol in the mixture. See • Reformate, ator's liability under Removal from terminal, ear- Form 720 to report this tax. You also must be • Straight-run gasoline, lier, for an exception. • Straight-run naphtha,

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• Tertiary amyl methyl ether (TAME), finery isn't taxable if the person otherwise liable Transmix means a by-product of refined • Tertiary butyl alcohol (gasoline grade) for the tax (position holder, refiner, or enterer) products created by the mixing of different (TBA), meets all the following requirements. specification products during pipeline transpor- • Thermally cracked gasoline, • The person is a registrant. tation. • Toluene, and • The person has an unexpired notification • Transmix containing gasoline. certificate (discussed earlier) from the op- Kerosene. This means any of the following liq- uids. However, gasoline blendstocks don't in- erator of the terminal or refinery where the One of the two grades of kerosene (No. clude any product that can't be used without fur- gasoline blendstocks are received. • 1-K and No. 2-K) covered by ASTM speci- ther processing in the production of finished • The person has no reason to believe any fication D3699. gasoline. information on the certificate is false. • Kerosene-type jet fuel covered by ASTM Not used to produce finished gasoline. Bulk transfers to registered industrial user. specification D1655 or military specifica- Gasoline blendstocks not used to produce fin- The removal of gasoline blendstocks from a tion MIL-DTL-5624T (Grade JP-5) or ished gasoline aren’t taxable (other than LUST) pipeline or vessel isn't taxable (other than MIL-DTL-83133E (Grade JP-8). See Kero- if the following conditions are met. LUST) if the blendstocks are received by a reg- sene for Use in Aviation, later. istrant that is an industrial user. An industrial However, kerosene doesn't include exclu- Removals and entries not connected to user is any person that receives gasoline blend- ded liquid, discussed earlier. sale. Nonbulk removals and entries aren’t tax- stocks by bulk transfer for its own use in the Kerosene also includes any liquid that would able if the person otherwise liable for the tax manufacture of any product other than finished be described above but for the presence of a (position holder, refiner, or enterer) is a regis- gasoline. dye of the type used to dye kerosene for a non- trant. Credits or refunds. A credit or refund of the taxable use. Removals and entries connected to sale. gasoline tax may be allowable if gasoline is Diesel-powered highway vehicle. This is any Nonbulk removals and entries aren’t taxable if used for a nontaxable purpose or exempt use. self-propelled vehicle designed to carry a load the person otherwise liable for the tax (position For more information, see chapter 2. holder, refiner, or enterer) is a registrant, and at over public highways (whether or not also de- the time of the sale, meets the following require- signed to perform other functions) and propel- ments. Diesel Fuel and led by a diesel-powered engine. Specially de- • The person has an unexpired certificate signed mobile machinery for nontransportation (discussed later) from the buyer. Kerosene functions and vehicles specially designed for • The person has no reason to believe any off-highway transportation are generally not considered diesel-powered highway vehicles. information in the certificate is false. Generally, diesel fuel and kerosene are taxed in For more information about these vehicles and the same manner as gasoline (discussed ear- Sales after removal or entry. The sale of for information about vehicles not considered lier). However, special rules (discussed later) a gasoline blendstock that wasn't subject to tax highway vehicles, see apply to dyed diesel fuel and dyed kerosene, Off-Highway Business on its nonbulk removal or entry, as discussed Use (No. 2) in chapter 2. earlier, is taxable. The seller is liable for the tax. and to undyed diesel fuel and undyed kerosene sold or used in Alaska for certain nontaxable However, the sale isn't taxable if, at the time of Diesel-powered train. This is any diesel-pow- uses and undyed kerosene used for a feed- the sale, the seller meets the following require- ered equipment or machinery that rides on rails. stock purpose. ments. The term includes a locomotive, work train, • The seller has an unexpired certificate Diesel fuel means: switching engine, and track maintenance ma- (discussed next) from the buyer. • Any liquid that without further processing chine. • The seller has no reason to believe any in- or blending is suitable for use as a fuel in a formation in the certificate is false. diesel-powered highway vehicle or train, Taxable Events and Certificate of buyer. The certificate from the • Transmix. buyer certifies the gasoline blendstocks won’t The tax on diesel fuel and kerosene is $.244 be used to produce finished gasoline. The cer- A liquid is suitable for this use if the liquid has per gallon. it's imposed on the removal, entry, or tificate may be included as part of any business practical and commercial fitness for use in the sale of diesel fuel and kerosene. Each of these records normally used for a sale. A model certif- propulsion engine of a diesel-powered highway events is discussed later. Only the $.001 LUST icate is shown in the Appendix as Model Certifi- vehicle or diesel-powered train. A liquid may tax applies to dyed diesel fuel and dyed kero- cate D. The certificate must contain all informa- possess this practical and commercial fitness sene, discussed later. tion necessary to complete the model. even though the specified use isn't the predomi- A certificate expires on the earliest of the fol- nant use of the liquid. However, a liquid doesn't If the tax is paid on the diesel fuel or kero- lowing dates. possess this practical and commercial fitness sene in more than one event, a refund may be • The date 1 year after the effective date (not solely by reason of its possible or rare use as a allowed for the “second” tax paid. See Refunds earlier than the date signed) of the certifi- fuel in the propulsion engine of a diesel-pow- of Second Tax in chapter 2. cate. ered highway vehicle or diesel-powered train. • The date a new certificate is provided to Diesel fuel doesn't include gasoline, kerosene, Use in certain intercity and local buses. the seller. excluded liquid, No. 5 and No. 6 fuel oils cov- Dyed diesel fuel and dyed kerosene can't be • The date the seller is notified that the buy- ered by ASTM specification D396, or F-76 (Fuel used in certain intercity and local buses. A claim er's right to provide a certificate has been Naval Distillate) covered by military specifica- for $.17 per gallon may be made by the regis- withdrawn. tion MIL-F-16884. tered ultimate vendor (under certain conditions) or the ultimate purchaser for undyed diesel fuel The buyer must provide a new certificate if any An excluded liquid is either of the follow- or undyed kerosene sold for use in certain inter- information on a certificate has changed. ing. city or local buses. An intercity or local bus is a The IRS may withdraw the buyer's right to 1. A liquid that contains less than 4% normal bus engaged in furnishing (for compensation) provide a certificate if that buyer uses the gaso- paraffins. passenger land transportation available to the line blendstocks in the production of finished general public. The bus must be engaged in gasoline or resells the blendstocks without get- 2. A liquid with all the following properties. one of the following activities. ting a certificate from its buyer. a. Distillation range of 125 degrees Fah- • Scheduled transportation along regular renheit or less. routes regardless of the size of the bus. Received at approved terminal or refinery. • Nonscheduled transportation if the seating The nonbulk removal or entry of gasoline blend- b. Sulfur content of 10 ppm or less. capacity of the bus is at least 20 adults (not stocks received at an approved terminal or re- c. Minimum color of +27 Saybolt. including the driver).

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A bus is available to the general public if the located within the bulk transfer/terminal c. The removal from a terminal by an un- bus is available for hire to more than a limited system. registered position holder. number of persons, groups, or organizations. 3. The removal from the refinery is by: 2. Upon removal from the pipeline or vessel, the diesel fuel or kerosene isn't received at Removal from terminal. All removals of diesel a. Railcar and the same person operates an approved terminal or refinery (or at an- fuel and kerosene at a terminal rack are taxa- the refinery and the facility at which other pipeline or vessel). ble. The position holder for that fuel is liable for the diesel fuel or kerosene is re- the tax. ceived, or The owner of the diesel fuel or kerosene when it's removed from the pipeline or vessel is Two-party exchanges. In a two-party ex- b. For diesel fuel only, a trailer or semi- liable for the tax. However, an owner meeting change, the receiving person, not the delivering trailer used exclusively to transport all the following conditions at the time of the re- person, is liable for the tax imposed on the re- the diesel fuel from a refinery (descri- moval won’t be liable for the tax. moval of taxable fuel from the terminal at the bed in (1)) to a facility (described in The owner is a registrant. terminal rack. A two-party exchange means a (2)) less than 20 miles from the refin- • The owner has an unexpired notification transaction (other than a sale) where the delivery. • certificate (discussed under Gasoline) from ering person and receiving person are both tax- the operator of the terminal or refinery able fuel registrants and all of the following ap- Entry into the United States. The entry of where the diesel fuel or kerosene is re- ply. diesel fuel or kerosene into the United States is ceived. • The transaction includes a transfer from taxable if the entry meets either of the following The owner has no reason to believe any in- the delivering person, who holds the inven- conditions. • formation on the certificate is false. tory position for the taxable fuel in the ter- • it's made by bulk transfer and the enterer minal as reflected in the records of the ter- or the operator of the pipeline or vessel The operator of the facility where the diesel fuel minal operator. isn't a registrant. or kerosene is received is liable for the tax if the • The exchange transaction occurs before or • It isn't made by bulk transfer. owner meets these conditions. The operator is at the same time as completion of removal The enterer is liable for the tax. jointly and severally liable if the owner doesn't across the rack by the receiving person. meet these conditions. • The terminal operator in its records treats Importer of record's liability. The im- the receiving person as the person that re- porter of record is jointly and severally liable for Sales to unregistered person. The sale of moves the product across the terminal the tax with the enterer if the importer of record diesel fuel or kerosene located within the bulk rack for purposes of reporting the transac- isn't the enterer of the taxable fuel and the en- transfer/terminal system to a person that isn't a tion on Form 720-TO. terer isn't a taxable fuel registrant. registrant is taxable if tax wasn't previously im- • The transaction is subject to a written con- However, an importer of record meeting posed under any of the events discussed ear- tract. both of the following conditions at the time of lier. the entry won’t be liable for the tax. The seller is liable for the tax. However, a Terminal operator's liability. The terminal 1. The importer of record has an unexpired seller meeting all the following conditions at the operator is jointly and severally liable for the tax time of the sale won’t be liable for the tax. if the terminal operator provides any person notification certificate (discussed under Gasoline) from the enterer. • The seller is a registrant. with any bill of lading, shipping paper, or similar • The seller has an unexpired notification document indicating that diesel fuel or kerosene 2. The importer of record has no reason to certificate (discussed under Gasoline) from is dyed (discussed later). believe any information in the certificate is the buyer. The terminal operator is jointly and severally false. • The seller has no reason to believe any in- liable for the tax if the position holder is a per- formation on the certificate is false. son other than the terminal operator and isn't a Customs bond. The customs bond won’t registrant. However, a terminal operator won’t be charged for the tax imposed on the entry of The buyer of the diesel fuel or kerosene is liable be liable for the tax in this situation if, at the time the diesel fuel or kerosene if at the time of entry for the tax if the seller meets these conditions. of the removal, the following conditions are met. the surety has an unexpired notification certifi- The buyer is jointly and severally liable if the • The terminal operator is a registrant. cate from the enterer and has no reason to be- seller doesn't meet these conditions. The terminal operator has an unexpired lieve any information in the certificate is false. • Exception. The tax doesn't apply to a sale notification certificate (discussed under if all of the following apply. Gasoline) from the position holder. Removal from a terminal by unregistered • The buyer's principal place of business The terminal operator has no reason to be- position holder or unregistered pipeline or • isn't in the United States. lieve any information on the certificate is vessel operator. The removal by bulk transfer • The sale occurs as the fuel is delivered into false. of diesel fuel or kerosene from a terminal is tax- a transport vessel with a capacity of at able if the position holder for that fuel or the op- least 20,000 barrels of fuel. Removal from refinery. The removal of diesel erator of the pipeline or vessel isn't a registrant. The seller is a registrant and the exporter fuel or kerosene from a refinery is taxable if the The position holder is liable for the tax. The ter- • of record. removal meets either of the following condi- minal operator is jointly and severally liable for The fuel was exported. tions. the tax if the position holder is a person other • it's made by bulk transfer and the refiner, than the terminal operator. However, see Termi- • Removal or sale of blended diesel fuel or the owner of the fuel immediately before nal operator's liability under Removal from ter- kerosene. The removal or sale of blended die- the removal, or the operator of the pipeline minal, earlier, for an exception. sel fuel or blended kerosene by the blender is or vessel isn't a registrant. taxable. Blended taxable fuel produced using it's made at the refinery rack. Bulk transfers not received at approved ter- • biodiesel is subject to the tax. See Blended tax- minal or refinery. The removal by bulk trans- The refiner is liable for the tax. able fuel under Definitions, earlier. fer of diesel fuel or kerosene from a terminal or The blender is liable for the tax. The tax is Exception. The tax doesn't apply to a re- refinery or the entry of diesel fuel or kerosene figured on the number of gallons not previously moval of diesel fuel or kerosene at the refinery by bulk transfer into the United States is taxable subject to the tax. rack if all the following conditions are met. if the following conditions apply. Persons who blend biodiesel with undyed 1. The diesel fuel or kerosene is removed 1. No tax was previously imposed (as dis- diesel fuel to produce and sell or use a biodie- from an approved refinery not served by cussed earlier) on any of the following sel mixture outside the bulk transfer/terminal pipeline (other than for receiving crude oil) events. system must pay the diesel fuel tax on the vol- or vessel. a. The removal from the refinery. ume of biodiesel in the mixture. Generally, the biodiesel mixture must be diesel fuel (defined 2. The diesel fuel or kerosene is received at b. The entry into the United States. a facility operated by a registrant and earlier). See Form 720 to report this tax. You

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also must be registered by the IRS as a blen- The notice under item (1) must be provided amount of dye required to meet the dyeing der. See Form 637 for more information. by the time of the removal and must appear on requirements. However, if an untaxed liquid is sold as taxa- all shipping papers, bills of lading, and similar • The alteration or attempted alteration oc- ble fuel and that untaxed liquid is used to pro- documents accompanying the removal of the curs in an exempt area of Alaska. See Re- duce blended taxable fuel, the person that sold fuel. moval for sale or use in Alaska, later. the untaxed liquid is jointly and severally liable Any seller that fails to post the required no- • Diesel fuel or kerosene meeting the dyeing for the tax imposed on the blender's sale or re- tice under item (2) is presumed to know that the requirements (described earlier) is blended moval of the blended taxable fuel. fuel will be used for a taxable use (a use other with diesel fuel or kerosene not meeting than a nontaxable use listed later). That seller is the dyeing requirements and the blending Additional persons liable. When the person subject to the penalty described next. occurs as part of a nontaxable use (other liable for the tax willfully fails to pay the tax, joint than export), discussed later. and several liability for the tax applies to: Penalty. A penalty is imposed on a person if • Any officer, employee, or agent of the per- any of the following situations apply. Alaska and Feedstocks son who is under a duty to ensure the pay- 1. Any dyed fuel is sold or held for sale by ment of the tax and who willfully fails to the person for a use the person knows or Tax of $.001 per gallon is imposed on: perform that duty; or has reason to know isn't a nontaxable use • Undyed diesel fuel or undyed kerosene • Anyone who willfully causes the person to of the fuel. sold or used in Alaska for certain nontaxa- fail to pay the tax. ble uses (see Later sales on page 10). 2. Any dyed fuel is held for use or used by • Undyed kerosene used for feedstock pur- Credits or refunds. A credit or refund is allow- the person for a use other than a nontaxa- poses. able for the tax on undyed diesel fuel or undyed ble use and the person knew, or had rea- kerosene used for a nontaxable use. For more son to know, that the fuel was dyed. Removal for sale or use in Alaska. No tax is information, see chapter 2. 3. The person willfully alters, chemically or imposed on the removal, entry, or sale of diesel otherwise, or attempts to so alter, the fuel or kerosene in Alaska for ultimate sale or Dyed Diesel Fuel and Dyed strength or composition of any dye in dyed use in certain areas of Alaska for certain non- Kerosene fuel. taxable uses. The removal or entry of any diesel fuel or kerosene isn't taxed if all the following re- Dyed diesel fuel and dyed kerosene 4. The person has knowledge that a dyed quirements are satisfied. are subject to $.001 per gallon LUST fuel that has been altered, as described in ! 1. The person otherwise liable for the tax CAUTION tax as discussed below, unless the fuel (3) above, sells or holds for sale such fuel is for export. for any use for which the person knows or (position holder, refiner, or enterer): has reason to know isn't a nontaxable use a. Is a registrant, of the fuel. The excise tax isn't imposed on the removal, b. Can show satisfactory evidence of the entry, or sale of diesel fuel or kerosene (other The penalty is the greater of $1,000 or $10 nontaxable nature of the transaction, than the LUST tax) if all the following tests are per gallon of the dyed diesel fuel or dyed kero- and met. sene involved. After the first violation, the • The person otherwise liable for tax (for ex- $1,000 portion of the penalty increases depend- c. Has no reason to believe the evi- ample, the position holder) is a registrant. ing on the number of violations. dence is false. • In the case of a removal from a terminal, This penalty is in addition to any tax im- 2. In the case of a removal from a terminal, the terminal is an approved terminal. posed on the fuel. the terminal is an approved terminal. • The diesel fuel or kerosene satisfies the If the penalty is imposed, each officer, em- 3. The owner of the fuel immediately after the dyeing requirements (described next). ployee, or agent of a business entity who will- removal or entry holds the fuel for its own fully participated in any act giving rise to the use in a nontaxable use (discussed later) Dyeing requirements. Diesel fuel or kerosene penalty is jointly and severally liable with that or is a qualified dealer. satisfies the dyeing requirements only if it satis- entity for the penalty. fies the following requirements. There is no administrative appeal or review If all three of the requirements above aren’t • It contains the dye Solvent Red 164 (and allowed for the third and subsequent penalty met, then tax is imposed at $.244 per gallon. no other dye) at a concentration spectrally imposed by section 6715 on any person except A qualified dealer is any person that holds equivalent to at least 3.9 pounds of the for: a qualified dealer license from the state of solid dye standard Solvent Red 26 per • Fraud or a mistake in the chemical analy- Alaska or has been registered by the IRS as a thousand barrels of fuel or any dye of a sis, or qualified retailer. Satisfactory evidence may in- type and in a concentration that has been • Mathematical calculation of the penalty. clude copies of qualified dealer licenses or ex- approved by the Commissioner. If you are liable for the penalty, you may also emption certificates obtained for state tax pur- • Is indelibly dyed by mechanical injection. poses. See section 6 of Notice 2005-80 for transi- be liable for the back-up tax, discussed later. tion rules that apply until final regulations However, the penalty applies only to dyed die- Later sales. The excise tax applies to die- are issued by the IRS. sel fuel and dyed kerosene, while the back-up sel fuel or kerosene sold by a qualified dealer tax may apply to other fuels. The penalty may after the removal or entry. The tax is imposed at Notice required. A legible and conspicuous apply if the fuel is held for sale or use for a taxa- the time of the sale and the qualified dealer is li- notice stating either: DYED DIESEL FUEL, ble use while the back-up tax doesn't apply un- able for the tax. However, the sale isn't taxable NONTAXABLE USE ONLY, PENALTY FOR less the fuel is delivered into a fuel supply tank. (other than the LUST tax at $.001 per gallon) if TAXABLE USE or DYED KEROSENE, NON- Exception to penalty. The penalty under all the following requirements are met. TAXABLE USE ONLY, PENALTY FOR TAXA- item (3) won’t apply in any of the following situa- • The fuel is sold in Alaska for certain non- BLE USE must be: tions. taxable uses. The buyer buys the fuel for its own use in a 1. Provided by the terminal operator to any • Diesel fuel or kerosene meeting the dyeing • nontaxable use or is a qualified dealer. person that receives dyed diesel fuel or requirements (described earlier) is blended The seller can show satisfactory evidence dyed kerosene at a terminal rack of that with any undyed liquid and the resulting • of the nontaxable nature of the transaction operator, and product meets the dyeing requirements. • Diesel fuel or kerosene meeting the dyeing and has no reason to believe the evidence 2. Posted by a seller on any retail pump or requirements (described earlier) is blended is false. other delivery facility where it sells dyed with any other liquid (other than diesel fuel diesel fuel or dyed kerosene for use by its or kerosene) that contains the type and Feedstock purposes. The $.001 per gallon buyer. LUST tax is imposed on the removal or entry of

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undyed kerosene if all the following conditions Back-up Tax For kerosene removed directly from a termi- are met. nal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $.219. The 1. The person otherwise liable for tax (posi- Tax is imposed on the delivery of any of the fol- rate of $.219 also applies if kerosene is re- tion holder, refiner, or enterer) is a regis- lowing into the fuel supply tank of a diesel-pow- moved into any aircraft from a qualified refueler trant. ered highway vehicle. truck, tanker, or tank wagon that is loaded with Any dyed diesel fuel or dyed kerosene for 2. In the case of a removal from a terminal, • the kerosene from a terminal that is located other than a nontaxable use. the terminal is an approved terminal. within an airport. The airport terminal doesn't Any undyed diesel fuel or undyed kero- • need to be a secured airport terminal for this 3. Either: sene on which a credit or refund (for fuel rate to apply. However, the refueler truck, used for a nontaxable purpose) has been a. The person otherwise liable for tax tanker, or tank wagon must meet the require- allowed. uses the kerosene for a feedstock ments discussed under Certain refueler trucks, Any liquid other than gasoline, diesel fuel, purpose, or • tankers, and tank wagons, treated as terminals, or kerosene. later. b. The kerosene is sold for use by the Generally, this back-up tax is imposed at a buyer for a feedstock purpose and, at For kerosene removed directly into the fuel rate of $.244 per gallon. the time of the sale, the person other- tank of an aircraft for use in commercial avia- wise liable for tax has an unexpired tion, the rate of tax is $.044 per gallon. For kero- Liability for tax. Generally, the operator of the certificate (described later) from the sene removed into an aircraft from a qualified vehicle into which the fuel is delivered is liable buyer and has no reason to believe refueler truck, tanker, or tank wagon, the $.044 for the tax. In addition, the seller of the diesel any information on the certificate is rate applies only if the truck, tanker, or tank fuel or kerosene is jointly and severally liable for false. wagon is loaded at a terminal that is located in a the tax if the seller knows or has reason to know secured area of the airport. See Terminal loca- If all of the requirements above aren’t met, that the fuel will be used for other than a nontax- ted within a secured area of an airport, later. In then tax is imposed at $.244 per gallon. able use. Kerosene is used for a feedstock purpose addition, the operator must provide the position when it's used for nonfuel purposes in the man- Exemptions from the back-up tax. The holder with a certificate similar to Model Certifi- ufacture or production of any substance other back-up tax doesn't apply to a delivery of diesel cate K in the Appendix. than gasoline, diesel fuel, or Other Fuels. For fuel or kerosene for uses 1, 2, 6, 7, 12, 13, 14, For kerosene removed directly into the fuel example, kerosene is used for a feedstock pur- and 15 listed under Definitions of Nontaxable tank of an aircraft for a use exempt from tax un- pose when it's used as an ingredient in the pro- Uses in chapter 2. der section 4041(c) (such as use in an aircraft duction of paint, but isn't used for a feedstock In addition, since the back-up tax is imposed purpose when it's used to power machinery at a for the exclusive use of a state or local govern- only on the delivery into the fuel supply tank of a ment), the rate of tax is $.001. There is no tax factory where paint is produced. A feedstock diesel-powered vehicle or train, the tax doesn't user is a person that uses kerosene for a feed- on kerosene removed directly into the fuel tank apply to diesel fuel or kerosene used as heating of an aircraft for use in foreign trade. The kero- stock purpose. A registered feedstock user is a oil or in stationary engines. person that has been registered by the IRS as a sene must be removed from a qualifying refu- feedstock user. See Registration Require- eler truck, tanker, or tank wagon loaded at a ter- ments, earlier. minal located within a secured area of an Diesel-Water Fuel airport. See Terminal located within a secured Later sales. The excise tax ($.244 per gal- Emulsion area of an airport, later. In addition, the operator lon) applies to kerosene sold for use by the must provide the position holder with a certifi- buyer for a feedstock purpose (item (3)(b) cate similar to Model Certificate K in the Appen- Diesel-water fuel emulsion means diesel fuel at above) if the buyer in that sale later sells the dix. The position holder is liable for the $.001 least 14% of which is water and for which the kerosene. The tax is imposed at the time of the per gallon tax. emulsion additive is registered by a United later sale and that seller is liable for the tax. States manufacturer with the EPA under section For kerosene removed directly from a termi- Certificate. The certificate from the buyer 211 of the Clean Air Act as in effect on March nal into the fuel tank of a fractional ownership certifies the buyer is a registered feedstock user 31, 2003. program aircraft, a surtax of $.141 per gallon and the kerosene will be used by the buyer for a applies. feedstock purpose. The certificate may be in- A reduced tax rate of $.198 per gallon is im- cluded as part of any business records normally posed on a diesel-water fuel emulsion. To be el- Certain refueler trucks, tankers, and tank used for a sale. A model certificate is shown in igible for the reduced rate, the person who wagons treated as terminals. For purposes the Appendix as Model Certificate G. Your cer- sells, removes, or uses the diesel-water fuel of the tax imposed on kerosene for use in avia- tificate must contain all information necessary emulsion must be registered by the IRS. If the tion removed directly into the fuel tank of an air- to complete the model. diesel-water fuel emulsion doesn't meet the re- craft for use in commercial aviation, certain re- A certificate expires on the earliest of the fol- quirements above, or if the person who sells, fueler trucks, tankers, and tank wagons are lowing dates. removes, or uses the fuel isn't registered, the treated as part of a terminal if the following con- • The date 1 year after the effective date (not diesel-water fuel emulsion is taxed at $.244 per ditions are met. earlier than the date signed) of the certifi- gallon. cate. 1. Such terminal is located within an area of • The date the seller is provided a new certif- Credits or refunds. The allowance for a credit an airport. or refund on a diesel-water fuel emulsion is dis- icate or notice that the current certificate is 2. Any kerosene for use in aviation that is cussed in chapter 2. invalid. loaded in a refueler truck, tanker, or tank • The date the seller is notified the buyer's wagon at a terminal is for delivery into air- registration has been revoked or suspen- craft at the airport in which the terminal is ded. Kerosene for Use in located. The buyer must provide a new certificate if Aviation 3. Except in exigent circumstances, such as any information on a certificate has changed. those identified in Notice 2005-80, no vehicle registered for highway use is loaded Taxable Events with kerosene for use in aviation at the terminal. Generally, kerosene is taxed at $.244 per gallon unless a reduced rate applies (see Diesel Fuel 4. The refueler truck, tanker, or tank wagon and Kerosene, earlier). meets the following requirements:

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a. Has storage tanks, hose, and cou- see Small aircraft under Special Rules on Fractional owner. Any person owning any in- pling equipment designed and used Transportation Taxes in chapter 4. terest (including the entire interest) in a frac- for fueling aircraft, • Any use where the surtax on fuel used in a tional program aircraft. fractional ownership program aircraft is im- b. Isn’t registered for highway use, and posed. See Surtax on any liquid used in a Dry lease aircraft exchange. An agreement, c. Is operated by the terminal operator or fractional ownership program aircraft as documented by the written program agree- a person that makes a daily account- fuel below. ments, under which the fractional program air- ing to the terminal operator of each craft are available, on an as-needed basis with- delivery of fuel from the refueler truck, out crew, to each fractional owner. tanker, or tank wagon. Information re- Surtax on Any Liquid porting will be required by terminal op- Special rule relating to deadhead service. erators regarding this provision. Until Used in a Fractional A fractional program aircraft won’t be consid- the format of this information reporting ered to be used on account of a qualified frac- is issued, taxpayers are required to Ownership Program tional owner when it's used in deadhead service retain records regarding the daily ac- Aircraft as Fuel and a person other than a qualified fractional counting, but aren’t required to report owner is separately charged for such service. such information. Fuel used in a fractional ownership program air- More information. See section 4043 for more craft (as defined below), is subject to a surtax of information on the surtax. Terminal located within a secured area of $.141 per gallon. The fractional ownership pro- an airport. See Notice 2005-4 and Notice gram manager is liable for the tax. The surtax 2005-80 for the list of terminals located within a applies in addition to any other taxes imposed secured area of an airport. This list refers to fu- on the removal, entry, use, or sale of the fuel. If Certificate for eling operations at airport terminals as it applies the surtax is imposed, the following air transpor- Commercial Aviation to the federal excise tax on kerosene for use in tation taxes don't apply. aviation, and has nothing to do with the general • Transportation of persons by air. and Exempt Uses security of airports either included or not inclu- • Transportation of property by air. ded in the list. • Use of international air travel facilities. A certificate is required from the aircraft opera- These taxes are described under Air Trans- tor: Liability For Tax portation Taxes, later. • To support aircraft operator liability for tax on removal of kerosene for use in aviation A fractional ownership program aircraft flight directly into the fuel tank of an aircraft in If the kerosene is removed directly into the fuel is considered noncommercial aviation; for the commercial aviation, or tank of an aircraft for use in commercial avia- rules for kerosene used in noncommercial avia- • For exempt uses. tion, the operator of the aircraft in commercial tion, see Kerosene for Use in Aviation above. aviation is liable for the tax on the removal at the rate of $.044 per gallon. However, the posi- A fractional ownership program is one under Certificate. The certificate may be included as tion holder is liable for the LUST tax for kero- which: part of any business records normally used for sene for use in aviation removed directly into • A single fractional ownership program a sale. See Model Certificate K in the Appendix. the fuel tank of an aircraft for use exempt from manager provides fractional ownership A certificate expires on the earliest of the fol- tax under section 4041(c) (except foreign program management services on behalf lowing dates. trade). For example, for kerosene removed di- of the fractional owners; • The date 1 year after the effective date (not rectly into the aircraft for use in military aircraft, • There are one or more fractional owners earlier than the date signed) of the certifi- the position holder is liable for the tax. per fractional program aircraft, with at least cate. one fractional program aircraft having • The date the buyer provides the seller a For the aircraft operator to be liable for the more than one owner; new certificate or notice that the current tax $.044 rate, the position holder must meet • For at least two fractional program aircraft, certificate is invalid. the following requirements: none of the ownership interests in the air- • The date the IRS or the buyer notifies the • Is a taxable fuel registrant, craft are less than the minimum fractional seller that the buyer's right to provide a • Has an unexpired certificate (a model cer- ownership interest or held by the program certificate has been withdrawn. tificate is shown in the Appendix as Model manager; The buyer must provide a new certificate if Certificate K) from the operator of the air- • There exists a dry-lease aircraft exchange any information on a certificate has changed. craft, and arrangement among all of the fractional • Has no reason to believe any of the infor- owners; and The IRS may withdraw the buyer's right to mation in the certificate is false. • There are multi-year program agreements provide a certificate if the buyer uses the kero- covering the fractional ownership, frac- sene for use in aviation to which a certificate re- Commercial aviation. Commercial aviation is tional ownership program management lates other than as stated in the certificate. any use of an aircraft in the business of trans- services, and dry-lease aircraft exchange Exempt use. The rate on kerosene for use porting persons or property by air for pay. How- aspects of the program. in aviation is $.001 (LUST tax) if it's removed ever, commercial aviation doesn't include any from any refinery or terminal directly into the of the following uses. Fractional program aircraft. Any aircraft that, fuel tank of an aircraft for an exempt use. An ex- • Any use exclusively for the purpose of sky- in any fractional ownership aircraft program, is empt use includes kerosene for the exclusive diving. listed as a fractional program aircraft in the use of a state or local government. There is no • Certain air transportation by seaplane. See management specifications issued to the man- tax on kerosene removed directly into the fuel Seaplanes under Transportation of Per- ager of such program by the Federal Aviation tank of an aircraft for use in foreign trade. sons by Air in chapter 4. Administration under subpart K of part 91, title • Any use of an aircraft owned or leased by 14, Code of Federal Regulations, and is regis- Flash title transaction. A position holder isn't a member of an affiliated group and un- tered in the United States. liable for tax if, among other conditions, it ob- available for hire by nonmembers. For Fractional program aircraft aren’t considered tains a certificate (described above) from the more information, see Aircraft used by af- used for transportation of a qualified fractional operator of the aircraft into which the kerosene filiated corporations under Special Rules owner, or on account of such qualified fractional is delivered. In a “flash title transaction” the po- on Transportation Taxes in chapter 4. owner when they are used for flight demonstra- sition holder sells the kerosene to a wholesale • Any use of an aircraft that has a maximum tion, maintenance or crew training. In such sit- distributor (reseller) that in turn sells the kero- certificated takeoff weight of 6,000 pounds uations, the flight isn't commercial aviation. In- sene to the aircraft operator as the kerosene is or less, unless the aircraft is operated on stead, the tax on the fuel used in the flight is being removed from a terminal into the fuel tank an established line. For more information, imposed at the non-commercial aviation rate.

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of an aircraft. In this case, the position holder required to be registered) for highway use, that Certificate. The certificate from the buyer cer- will be treated as having a certificate from the have both the following characteristics. tifies the CNG will be used in a nontaxable use. operator of the aircraft if: • They are propelled by a motor. The certificate may be included as part of any • The aircraft operator puts the reseller's • They are designed for carrying or towing business records normally used for a sale. A name, address, and EIN on the certificate loads from one place to another, regard- model certificate is shown in the Appendix as in place of the position holder's informa- less of the type of material or load carried Model Certificate J. tion; and or towed. A certificate expires on the earliest of the fol- • The reseller provides the position holder Motor vehicles don’t include any vehicle that lowing dates. with a statement of the kerosene reseller. moves exclusively on rails, or any of the follow- • The date 1 year after the effective date (which may be no earlier than the date Reseller statement. This is a statement ing items: farm tractors, trench diggers, power signed) of the certificate. that is signed under penalties of perjury by a shovels, bulldozers, road graders, road rollers, • The date a new certificate is provided to person with authority to bind the reseller; is pro- and similar equipment that doesn't carry or tow the seller. vided at the bottom or on the back of the certifi- a load. • The date the seller is notified the buyer's cate (or in an attached document); and con- right to provide a certificate has been with- tains: Taxable Events drawn. • The reseller's name, address, and EIN; • The position holder's name, address, and Bulk sales. Tax is imposed on the sale of CNG EIN; and Tax is imposed on the delivery of Other Fuels into the fuel supply tank of the propulsion en- that isn't in connection with delivery into the fuel • A statement that the reseller has no reason supply tank of the propulsion engine of a motor to believe that any information in the ac- gine of a motor vehicle or motorboat. However, there is no tax on the delivery if tax was im- vehicle or motorboat if the buyer furnishes a companying aircraft operator's certificate is written statement to the seller that the entire false. posed under the bulk sales rule, discussed next, or the delivery is for a nontaxable use. If quantity of the CNG covered by the sale is for use as a fuel in a motor vehicle or motorboat Credits or refunds. A claim may be made by the delivery is in connection with a sale, the and the seller has given the buyer a written ac- the ultimate purchaser (the operator) for taxed seller is liable for the tax. If it isn't in connection knowledgment of receipt of the statement. The kerosene for use in aviation used in commercial with a sale, the operator of the vehicle or boat is seller of the CNG is liable for the tax. aviation (other than foreign trade) and noncom- liable for the tax. mercial aviation (other than nonexempt, non- Motor vehicle. For this purpose, motor vehicle commercial aviation and exclusive use by a Bulk sales. Tax is imposed on the sale of has the same meaning as given under Other state, political subdivision of a state, or the Dis- Other Fuels that isn't in connection with delivery Fuels (Including Alternative Fuels), earlier. trict of Columbia). A claim may be made by a into the fuel supply tank of the propulsion engine of a motor vehicle or motorboat if the buyer registered ultimate vendor for certain sales. For Nontaxable uses. The nontaxable uses of more information, see chapter 2. furnishes a written statement to the seller stating the entire quantity of the fuel covered by the CNG are discussed under Other Fuels (Includ- sale is for other than a nontaxable use listed in ing Alternative Fuels) in chapter 2. Other Fuels (Including chapter 2. The seller is liable for this tax. Alternative Fuels) Tax rate. See Form 720 and the Instructions Fuels Used on Inland for Form 720 for the tax rates. Waterways Other Fuels means any liquid except gas oil, Nontaxable uses. The nontaxable uses of fuel oil, or any product taxable under section The tax on inland waterways fuel use Other Fuels (including alternative fuels) are dis- 4081. Other Fuels include alternative fuels. Al- applies at the rate listed on Form 720. cussed in chapter 2. ! ternative fuels are: CAUTION This is in addition to all other taxes im- • Liquefied petroleum gas (LPG), posed on the sale or use of the fuel. • “P Series” fuels, Compressed Natural • Compressed natural gas (CNG) (dis- Tax applies to liquid fuel used in the propul- cussed later), Gas (CNG) sion system of commercial transportation ves- • Liquefied hydrogen, sels while traveling on certain inland and intra- • Any liquid fuel derived from coal (including coastal waterways. The tax generally applies to peat) through the Fischer-Tropsch proc- Taxable Events all types of vessels, including ships, barges, ess, and tugboats. The LUST tax must be paid on • Liquid fuel derived from biomass, Tax is imposed on the delivery of compressed any liquid fuel used on inland waterways that • Liquefied natural gas (LNG), and natural gas (CNG) into the fuel supply tank of isn't subject to LUST tax under section 4041(d) • Liquefied gas derived from biomass. the propulsion engine of a motor vehicle or mo- or 4081. For example, Bunker C residual fuel oil Liquefied petroleum gas includes propane, pen- torboat. The tax is based on the gasoline gallon is subject to the LUST tax. tane, or mixtures of those products. equivalent of CNG. See Form 720 for the tax rate. Inland and intracoastal waterways. Inland Qualified methanol and ethanol fuels. and intracoastal waterways on which fuel con- Qualified ethanol and methanol means any liq- However, there is no tax on the delivery if sumption is subject to tax are specified in sec- uid at least 85% of which consists of alcohol tax was imposed under the bulk sales rule dis- tion 206 of the Inland Waterways Revenue Act produced from coal, including peat. The tax cussed next, or the delivery is for a nontaxable of 1978, as amended. See Regulations section rates are listed in the Instructions for Form 720. use, listed in chapter 2. If the delivery is in con- 48.4042-1(g) for a list of these waterways. nection with a sale, the seller is liable for the Partially exempt methanol and ethanol tax. If it isn't in connection with a sale, the oper- Commercial waterway transportation. Com- fuels. A reduced tax rate applies to these ator of the boat or vehicle is liable for the tax. mercial waterway transportation is the use of a fuels. Partially exempt ethanol and methanol vessel on inland or intracoastal waterways for means any liquid at least 85% of which consists If CNG is delivered into the fuel supply tank either of the following purposes. of alcohol produced from natural gas. The tax by the seller in connection with the sale of CNG • The use is in the business of transporting rates are listed in the Instructions for Form 720. for a nontaxable use, the seller is liable for the property for compensation or hire. tax unless, at the time of the sale, the seller has • The use is in transporting property in the Motor vehicles. Motor vehicles include all an exemption certificate from the buyer. The business of the owner, lessee, or operator types of vehicles, whether or not registered (or seller must have no reason to believe any infor- of the vessel, whether or not a fee is mation in the certificate is false. charged.

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The operation of all vessels meeting either Fishing vessels. Fuel isn't taxable when • The departure time, departure point, route of these requirements is commercial waterway used by a fishing vessel while traveling to a fish- traveled, destination, and arrival time for transportation regardless of whether the vessel ing site, while engaged in fishing, or while re- each vessel. is actually transporting property on a particular turning from the fishing site with its catch. A voyage. However, see Exemptions, later. The vessel isn't transporting property in the busi- If you claim an exemption from the tax, in- tax is imposed on fuel consumed in vessels ness of the owner, lessee, or operator by clude in your records the following additional in- while engaged in any of the following activities. merely transporting fish or other aquatic animal formation as it pertains to you. • Moving without cargo. life caught on the voyage. • The draft of the vessel on each voyage. • Awaiting passage through locks. However, the tax does apply to fuel used by • The type of vessel in which you used the • Moving to or from a repair facility. a commercial vessel along the specified water- fuel. • Dislodging vessels grounded on a sand ways while traveling to pick up aquatic animal • The ultimate use of the cargo (for vessels bar. life caught by another vessel and while trans- operated by state or local governments). • Fleeting barges into a single tow. porting the catch of that other vessel. • Maneuvering around loading and unloading docks. Deep-draft ocean-going vessels. Fuel Second Generation isn't taxable when used by a vessel designed Liquid fuel. Liquid fuel includes diesel fuel, primarily for use on the high seas if it has a draft Biofuel Not Used as Fuel Bunker C residual fuel oil, Other Fuels, and gas- of more than 12 feet on the voyage. For each oline. The tax is imposed on liquid fuel actually voyage, figure the draft when the vessel has its If you claimed the section 40 second generation consumed by a vessel's propulsion engine and greatest load of cargo and fuel. A voyage is a biofuel producer credit, you are liable for an ex- not on the unconsumed fuel in a vessel's tank. round trip. If a vessel has a draft of more than cise tax on each gallon of second generation bi- 12 feet on at least one way of the voyage, the ofuel if you don't use the fuel for the purposes Dual use of liquid fuels. The tax applies to all vessel satisfies the 12-foot draft requirement for described under Qualified Second Generation taxable liquid used as a fuel in the propulsion of the entire voyage. Biofuel Production next. the vessel, regardless of whether the engine (or Passenger vessels. Fuel isn't taxable Qualified second generation biofuel pro- other propulsion system) is used for another when used by vessels primarily for the transpor- purpose. The tax applies to all liquid fuel con- duction. This is second generation biofuel tation of persons. The tax doesn't apply to fuel which during the tax year: sumed by the propulsion engine even if it oper- used in commercial passenger vessels while ates special equipment by means of a power being operated as passenger vessels, even if 1. Is sold by the producer to another person– take-off or power transfer. For example, the fuel such vessels also transport property. Nor does used in the engine both to operate an alterna- a. For use by the buyer in the buyer’s it apply to ferryboats carrying passengers and trade or business to produce a quali- tor, generator, or pumps and to propel the ves- their cars. sel is taxable. fied second generation biofuel mixture The tax doesn't apply to fuel consumed in Ocean-going barges. Fuel isn't taxable (other than casual off-farm produc- engines not used to propel the vessel. when used in tugs to move LASH and SEABED tion), If you draw liquid fuel from the same tank to ocean-going barges released by their b. For use by the buyer as a fuel in a operate both a propulsion engine and a nonpro- ocean-going carriers solely to pick up or deliver trade or business, or pulsion engine, determine the fuel used in the international cargoes. c. Who sells the second generation bio- nonpropulsion engine and exclude that fuel However, it's taxable when any of the follow- fuel at retail to another person and from the tax. IRS will accept a reasonable esti- ing conditions apply. puts the second generation biofuel in mate of the fuel based on your operating experi- • One or more of the barges in the tow isn't a the retail buyer’s fuel tank; or ence, but you must keep records to support LASH barge, SEABED barge, or other your allocation. ocean-going barge carried aboard an 2. Is used or sold by the producer for any ocean-going vessel. purpose described in (1) above. Voyages crossing boundaries of the speci- • One or more of the barges isn't on an inter- fied waterways. The tax applies to fuel con- national voyage. Qualified second generation biofuel production sumed by a vessel crossing the boundaries of • Part of the cargo carried isn't being trans- doesn't include purchasing alcohol and increas- the specified waterways only to the extent of ported internationally. ing the proof of the alcohol through additional fuel consumed for propulsion while on those distillation. Nor does it include second genera- State or local governments. No tax is im- waterways. Generally, the operator may figure tion biofuel that isn't both produced in the Uni- posed on the fuel used in a vessel operated by the fuel so used during a particular voyage by ted States or a U.S. possession and used as a a state or local government in transporting multiplying total fuel consumed in the propul- fuel in the United States or a U.S. possession. A property on official business. The ultimate use sion engine by a fraction. The numerator of the qualified second generation biofuel mixture of the cargo must be for a function ordinarily fraction is the time spent operating on the speci- combines second generation biofuel with gaso- carried out by governmental units. An Indian fied waterways and the denominator is the total line or a special fuel. The producer of the mix- tribal government is treated as a state only if the time spent on the voyage. This calculation can't ture either: fuel is used in the exercise of an essential tribal be used where it's found to be unreasonable. • Used it as a fuel, or government function. • Sold it as fuel to another person. Taxable event. Tax is imposed on liquid fuel All operators of vessels used in com- Report the tax on Form 720. The rate of tax used in the propulsion system of a vessel. See mercial waterway transportation who depends on the applicable rate used to figure Form 720 for the tax rate. RECORDS acquire liquid fuel must keep adequate the credit. No deposits are required. The person who operates (or whose em- records of all fuel used for taxable purposes. ployees operate) the vessel in which the fuel is Operators who are seeking an exclusion from consumed is liable for the tax. If a vessel owner the tax must keep records that will support any Biodiesel Sold as But (or lessee) contracts with an independent con- exclusion claimed. tractor to operate the vessel, the independent Not Used as Fuel contractor is the person liable for tax, regard- Your records should include all of the follow- less of who purchases the fuel. The tax is paid ing information. If the credit was claimed (either as an excise tax with Form 720. No tax deposits are required. • The acquisition date and quantity of fuel credit or income tax credit) or a refund was delivered into storage tanks or the tanks on claimed, you are liable for an excise tax if you Exemptions. Certain types of commercial wa- your vessel. used the mixture or biodiesel other than as a terway transportation are excluded from the tax. • The identification number or name of each fuel, separated the biodiesel from a mixture, or vessel using the fuel. mixed the biodiesel.

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Report the tax on Form 720. The rate of tax mate vendors and Credit Card Purchases, clusive use (including essential government use depends on the applicable rate used to figure later). by an Indian tribal government), or a nonprofit the credit. No deposits are required. • Exclusive use by a state, political subdivi- educational organization for its exclusive use, sion of a state, or the District of Columbia the person who extended credit to the ultimate (see Sales by registered ultimate vendors purchaser (the credit card issuer) is treated as and Credit Card Purchases, later). the person that paid the tax and makes the • In an aircraft or vehicle owned by an air- claim if the credit card issuer: craft museum. • Is registered by the IRS, The following are the uses of aviation gaso- • Has established that the amount of tax 2. line for which a credit or refund may be allowa- hasn’t been collected from the person who ble to an ultimate purchaser. purchased the gasoline or has obtained • On a farm for farming purposes (credit written consent from the ultimate pur- only). chaser to the allowance of the credit or re- Fuel Tax Credits • Export. fund, and • In foreign trade. • Has repaid or agreed to repay the amount and Refunds • Certain helicopter and fixed-wing air ambu- of the tax to the ultimate vendor, has ob- lance uses. tained the written consent of the ultimate In commercial aviation (other than foreign vendor to the allowance of the credit or re- Federal excise taxes are imposed on certain • trade). fund, or has made arrangements that pro- fuels as discussed in chapter 1. This chapter Exclusive use by a qualified blood collector vide the ultimate vendor with reimburse- lists the nontaxable uses of each fuel and de- • organization. ment of the tax. fines the nontaxable uses. Information on the Exclusive use by a nonprofit education or- If the requirements above aren’t met by the refund of second tax is included. This chapter • ganization (see Sales by registered ulti- credit card issuer, the credit card issuer must also explains credits and refunds for the biodie- mate vendors and Credit card purchases, collect the tax from the ultimate purchaser and sel or renewable diesel mixture credits, and the later). only the ultimate purchaser may make the alternative fuel mixture and alternative fuel Exclusive use by a state, political subdivi- claim. credits. • sion of a state, or the District of Columbia Information on how to make a claim for credit or (see Sales by registered ultimate vendors How to make the claim. If the claim is made refund is included in this chapter and in the in- and Credit and purchases, later). by the credit card issuer, see Schedule C structions for: • In an aircraft owned by an aircraft mu- (Form 720) or Schedule 8 (Form 8849). • Form 720, seum. • Form 4136, and • In military aircraft. • Form 8849. Undyed Diesel Fuel and Claims by persons who paid the tax to the Exported taxable fuel. The claim rates for ex- government. Except for sales to nonprofit ed- Undyed Kerosene (Other ported taxable fuel are listed on Schedule C ucational organizations and states and local Than Kerosene Used in (Form 720), Schedule 1 (Form 8849), and Form governments, a credit or refund is allowable to 4136. Taxpayers making a claim for exported the person that paid the tax to the government if Aviation) taxable fuel must include with their records the gasoline was sold to the ultimate purchaser proof of exportation. Proof of exportation in- (including an exporter) by either that person or For conditions to an allowance of a credit or re- cludes: by a retailer and the fuel was exported; used or fund on exported dyed diesel fuel and dyed ker- • A copy of the export bill of lading issued by sold for use as a supply for vessels or aircraft, osene, see Exported taxable fuel, earlier. the delivering carrier, including military aircraft, commercial fishing, • A certificate by the agent or representative and foreign trade; sold to a qualified blood col- Ultimate purchasers. The following are non- of the export carrier showing actual expor- lector organization; or used or sold for use in taxable uses of diesel fuel and kerosene (de- tation of the fuel, the production of Other Fuels. See Filing fined earlier) for which a credit or refund may be • A certificate of lading signed by a customs Claims, later. allowable to an ultimate purchaser. officer of the foreign country to which the • On a farm for farming purposes. fuel is exported, or Sales by registered ultimate vendors. This • Off-highway business use. • A statement of the foreign consignee is an ultimate vendor that sells gasoline or avia- • Export. showing receipt of the fuel. tion gasoline to any of the following and that is • In a qualified local bus. purchased without the use of a credit card. • In a school bus. • A state or local government for its exclu- • Other than as a fuel in a propulsion engine Gasoline and Aviation sive use (including essential government of a diesel-powered highway vehicle (such use by an Indian tribal government). as home heating oil). Gasoline • A nonprofit educational organization for its • Exclusive use by a qualified blood collector exclusive use. organization. Ultimate purchasers. The following are the The registered ultimate vendor may make • In a highway vehicle owned by the United uses of gasoline (defined earlier) for which a the claim if the ultimate purchaser didn’t use a States that isn't used on a highway. credit or refund may be allowable to an ultimate credit card and waives its right to the credit or • Exclusive use by a nonprofit educational purchaser. refund by providing the registered ultimate ven- organization (see Sales by Registered Ulti- • On a farm for farming purposes (credit dor with a certificate. A sample certificate is in- mate Vendors and Credit Card Purchases, only). cluded as Model Certificate M in the Appendix. later). • Off-highway business use. The registered ultimate vendor must have the • Exclusive use by a state, political subdivi- • Export. certificate at the time the credit or refund is sion of a state, or the District of Columbia • In a boat engaged in commercial fishing. claimed. (see Sales by Registered Ultimate Ven- • In certain intercity and local buses. The ultimate vendor must be registered by dors and Credit Card Purchases, later). • In a school bus. the IRS. See Registration Requirements, ear- • In a vehicle owned by an aircraft museum. • Exclusive use by a qualified blood collector lier. • As a fuel in a propulsion engine of a die- organization. sel-powered train. • In a highway vehicle owned by the United Credit card purchases. If gasoline and avia- States that isn't used on a highway. tion gasoline are purchased with a credit card • Exclusive use by a nonprofit educational issued to a state or local government for its ex- organization (see Sales by registered ulti-

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Sales by Registered Ultimate waiver is included as Model Waiver N in the Ap- • The emulsion additive is registered by a pendix. The registered ultimate vendor must U.S. manufacturer with the EPA under sec- Vendors have the waiver at the time the credit or pay- tion 211 of the Clean Air Act as in effect on ment is claimed. March 31, 2003, The following are the sales for which a credit or • Undyed diesel fuel taxed at $.244 was refund may be allowable to the registered ulti- Credit card purchases. If undyed diesel fuel used to produce the diesel-water fuel mate vendor only. or kerosene is purchased with a credit card is- emulsion, and • Undyed diesel fuel or undyed kerosene sued to a state, the person who extended credit • The diesel-water fuel emulsion was used sold for the exclusive use by a state or lo- to the state (the credit card issuer) is treated as or sold for use in the blender's trade or cal government (if credit card rules (de- the person that paid the tax and makes the business. fined later) don't apply), claim if the credit card issuer: • Undyed kerosene sold from a blocked • Is registered by the IRS, pump (defined below), or • Has established that the amount of tax Kerosene for Use in • Undyed diesel fuel or undyed kerosene hasn’t been collected from the person who used in certain intercity and local buses, purchased the diesel fuel or kerosene, or Aviation only if the ultimate purchaser waives its has obtained written consent from the ulti- right to the credit or refund by providing the mate purchaser to the allowance of the Ultimate purchasers. Ultimate purchasers of registered ultimate vendor with a waiver. credit or refund, and kerosene used in certain aviation uses may • Has repaid or agreed to repay the amount make a claim if the rate of tax on their use is Registered ultimate vendor (state use). of the tax to the ultimate vendor, has ob- less than the rate of tax that was charged on the This is a person that sells undyed diesel fuel or tained the written consent of the ultimate kerosene. undyed kerosene to a state or local government vendor to the allowance of the credit or re- The ultimate purchaser of the kerosene for its exclusive use (including essential govern- fund, or has made arrangements that pro- used in commercial aviation (other than foreign ment use by an Indian tribal government). The vide the ultimate vendor with reimburse- trade) and noncommercial aviation (other than diesel fuel or kerosene must be purchased by ment of the tax. nonexempt, noncommercial aviation and exclu- the state without the use of a credit card, issued If the requirements above aren’t met by the sive use by a state, political subdivision of a to the state by the credit card issuer, in order for state, or the District of Columbia) is eligible to 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 make a claim if the ultimate purchaser certifies mate vendor must be registered by the IRS. that the right to make the claim hasn’t been See Registration Requirements, earlier. only the ultimate purchaser may make the claim. waived. Generally, the ultimate purchaser is the aircraft operator. Registered ultimate vendor (blocked The following are the nontaxable uses of pump). This is an ultimate vendor that sells kerosene used in noncommercial aviation for undyed kerosene from a blocked pump. Diesel-Water Fuel which a credit or refund may be allowable to the A credit or refund may be allowable to a reg- ultimate purchaser. istered ultimate vendor (blocked pump) if the Emulsion • On a farm for farming purposes. vendor sold to a buyer undyed kerosene from a • Certain helicopter and fixed-wing aircraft blocked pump for use other than as a fuel in a A claim for credit or refund may be made for the uses. diesel-powered highway vehicle and the vendor nontaxable use of a diesel-water fuel emulsion • Exclusive use by a qualified blood collector had no reason to believe the kerosene wouldn’t and for undyed diesel fuel used to produce a organization. be used in that manner. diesel-water fuel emulsion. The claim rate for nontaxable use of a diesel-water fuel emulsion • Exclusive use by a nonprofit educational Blocked pump. A blocked pump is a fuel taxed at $.198 per gallon is $.197 (if exported, organization. pump that meets all the following requirements. the claim rate is $.198). The following are the • In an aircraft owned by an aircraft mu- nontaxable uses for a diesel-water fuel emul- seum. 1. it's used to make retail sales of undyed sion for which a credit or refund may be allowa- • In military aircraft. kerosene for use by the buyer in any non- ble to an ultimate purchaser. taxable use. • On a farm for farming purposes. Kerosene for use partly in commercial avia- 2. it's at a fixed location. • Off-highway business use. tion and partly in nonexempt, noncommer- • Export. cial aviation. If the fuel is used partly for use in 3. it's identified with a legible and conspicu- • In a qualified local bus. commercial aviation and partly for use in non- ous notice stating, “UNDYED UNTAXED • In a school bus. exempt, noncommercial aviation, the operator KEROSENE, NONTAXABLE USE ONLY.” • Other than as fuel in the propulsion engine may identify, either at the time of purchase or 4. It meets either of the following conditions. of a train or diesel-powered highway vehi- after the kerosene has been used, the amount cle (but not off-highway use). that will be (or has been) used in commercial a. It can't reasonably be used to dis- • Exclusive use by a qualified blood collector aviation. At the same time, the operator would pense fuel directly into the fuel supply organization. either make the claim or waive the right to make tank of a diesel-powered highway ve- • In a highway vehicle owned by the United the claim for credit or refund of the kerosene for hicle or train. States that isn't used on a highway. use in commercial and nonexempt, noncom- b. it's locked by the vendor after each • Exclusive use by a nonprofit educational mercial aviation. sale and unlocked by the vendor only organization. If the operator doesn't identify the amount of in response to a buyer's request for • Exclusive use by a state, political subdivi- kerosene that will be (or has been) used in undyed kerosene for use other than sion of a state, or the District of Columbia. commercial aviation, the operator may provide as a fuel in a diesel-powered highway • In an aircraft or vehicle owned by an air- a certificate to the ultimate vendor similar to vehicle or train. craft museum. Model Certificate Q in the Appendix. For kerosene purchased with the certificate, used in Registered ultimate vendor (certain inter- Blender claims. The claim rate for undyed commercial aviation, and taxed at $.244 per city and local buses). This is an ultimate ven- diesel fuel taxed at $.244 and used to produce gallon, use of the certificate will be treated as a dor that sells undyed diesel fuel or undyed ker- a diesel-water fuel emulsion is $.046 per gallon waiver of the right to claim a credit or refund for osene to the ultimate purchaser for use in of diesel fuel so used. The blender must be reg- the $.025 per gallon part of the tax. The ultimate certain intercity and local buses. istered by the IRS in order to make the claim. vendor may make this claim. The operator may The registered ultimate vendor may make The blender must attach a statement to the make a claim for the $.175 tax per gallon of the the claim if the ultimate purchaser waives its claim certifying that: kerosene, but can't waive the right to make the right to the credit or refund by providing the reg- • The diesel-water fuel emulsion contains at claim for the $.175 tax per gallon. istered ultimate vendor with a waiver. A sample least 14% water,

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Sales by Registered Ultimate If the requirements above aren’t met by the 3. The person that paid the second tax filed a credit card issuer, the credit card issuer must timely claim for refund containing the infor- Vendors collect the tax from the ultimate purchaser and mation required (see Refund claim, later). only the ultimate purchaser may make the Kerosene for use in commercial aviation or 4. The person that paid the first tax has met claim. noncommercial aviation. The registered ulti- the reporting requirements, discussed mate vendor of kerosene for use in commercial next. aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, non- Other Fuels (Including Reporting requirements. Generally, the per- commercial aviation and exclusive use by a Alternative Fuels) son that paid the first tax must file a “First Tax- state, political subdivision of a state, or the Dis- payer's Report” with its Form 720 for the quarter trict of Columbia) may make this claim if the ulti- to which the report relates. A model first taxpay- Credit or refund for nontaxable use of taxed mate purchaser waives its right to the credit or er's report is shown in the Appendix as Model Other Fuels may be allowable to an ultimate payment by providing the registered ultimate Certificate B. The report must contain all infor- purchaser. While tax is generally imposed on vendor with a waiver. A sample waiver is inclu- mation needed to complete the model. delivery, Other Fuels are taxed prior to delivery ded as Model Waiver L in the Appendix. The in the case of certain bulk sales described in By the due date for filing the Form 720, you registered ultimate vendor must have the waiver chapter 1. The following are the nontaxable must also send a separate copy of the report to at the time the credit or payment is claimed. uses of Other Fuels for which a credit or refund the following address. Noncommercial aviation means any use of may be allowable to the ultimate purchaser. Department of the Treasury an aircraft not described as commercial avia- • On a farm for farming purposes. Internal Revenue Service tion. For the definition of commercial aviation, • Off-highway business use. Cincinnati, OH 45999-0555 see Commercial aviation on page 11. • In a boat engaged in commercial fishing. • In certain intercity and local buses. Kerosene for use in nonexempt, noncom- • In a school bus. Write “EXCISE – FIRST TAXPAYER'S RE- mercial aviation. Only the registered ultimate • In a qualified local bus. PORT” across the top of that copy. vendor may claim a credit or payment for sales • Exclusive use by a qualified blood collector of kerosene for use in nonexempt, noncommer- Optional reporting. A first taxpayer's re- organization. cial aviation. The ultimate vendor must be regis- port isn't required for the tax imposed on: • Exclusive use by a nonprofit educational tered by the IRS (activity letter UA) and have • Removal at a terminal rack, organization. the required certificate from the ultimate pur- • Nonbulk entries into the United States, and • Exclusive use by a state, political subdivi- chaser. A sample certificate is included as • Removals or sales by blenders. sion of a state, or the District of Columbia. Model Certificate Q in the Appendix. The regis- • In an aircraft or vehicle owned by an air- However, if the person liable for the tax expects tered ultimate vendor must have the certificate craft museum. that another tax will be imposed on that fuel, at the time the credit or payment is claimed. • In any boat operated by the United States that person should (but isn't required to) file a for its exclusive use or any vessel of war of first taxpayer's report. Kerosene for use in aviation by a state or any foreign nation. local government. Only the registered ulti- Providing information. The first taxpayer mate vendor may claim a credit or payment for See Biodiesel or Renewable Diesel Mixture must give a copy of the report to the buyer of sales of kerosene for use in aviation to a state Credit, Alternative Fuel Credit, and Alternative the fuel within the bulk transfer/terminal system or local government for its exclusive use (in- Fuel Mixture Credit, later. or to the owner of the fuel immediately before cluding essential government use by an Indian the first tax was imposed, if the first taxpayer tribal government). The kerosene for use in avi- isn't the owner at that time. If an optional report ation must be purchased by the state without Refunds of Second Tax is filed, a copy should (but isn't required to) be the use of a credit card in order for the ultimate given to the buyer or owner. vendor to make the claim. The ultimate vendor The tax on dyed diesel fuel for inland A person that receives a copy of the first tax- must be registered by the IRS (activity letter ! waterways fuel use applies at the rate payer's report and later sells the fuel within the UV) and have the required certificate from the CAUTION listed on Form 720. This is in addition bulk transfer/terminal system must give the ultimate purchaser. A sample certificate is inclu- to all other taxes imposed on the sale or use of copy and a “Statement of Subsequent Seller” to ded as Model Certificate P in the Appendix. The the fuel. The section 4081(e) refund (discussed the buyer. If the later sale is outside the bulk registered ultimate vendor must have the certifi- below) can't be claimed. transfer/terminal system and that person ex- cate at the time the credit or payment is pects that another tax will be imposed, that per- claimed. If the tax is paid and reported to the govern- son should (but isn't required to) give the copy ment on more than one taxable event for a taxa- and the statement to the buyer. A model state- Credit card purchases. If taxed kerosene for ble fuel under section 4081, the person paying ment of subsequent seller is shown in the Ap- use in aviation is purchased with a credit card the “second tax” may claim a refund (without in- pendix as Model Certificate A. The statement issued to a state, the person who extended terest) of that tax if certain conditions and re- must contain all information necessary to com- credit to the state (the credit card issuer) is trea- porting requirements are met. No credit against plete the model. ted as the person that paid the tax and makes any tax is allowed for this tax. For information If the first taxpayer's report relates to fuel the claim if the credit card issuer: about taxable events, see the discussions un- sold to more than one buyer, copies of that re- • Is registered by the IRS, der Gasoline, Diesel Fuel and Kerosene and port must be made when the fuel is divided. • Has established that the amount of tax Kerosene for Use in Aviation in chapter 1. Each buyer must be given a copy of the report. hasn’t been collected from the person who purchased the kerosene, or has obtained Conditions to allowance of refund. A claim Refund claim. You must have filed Form 720 written consent from the ultimate pur- for refund of the tax is allowed only if all the fol- and paid the second tax before you file for a re- chaser to the allowance of the credit or re- lowing conditions are met. fund of that tax. You must make your claim for fund, and refund on Form 8849. Complete Schedule 5 • Has repaid or agreed to repay the amount 1. A tax on the fuel was paid to the govern- (Form 8849) and attach it to your Form 8849. of the tax to the ultimate vendor, has ob- ment and not credited or refunded (the Don't include this claim with a claim under an- tained the written consent of the ultimate “first tax”). other tax provision. You must not have included vendor to the allowance of the credit or re- 2. After the first tax was imposed, another tax the second tax in the price of the fuel and must fund, or has made arrangements that pro- was imposed on the same fuel and was not have collected it from the purchaser. You vide the ultimate vendor with reimburse- paid to the government (the “second tax”). must submit the following information with your ment of the tax. claim. • A copy of the first taxpayer's report (discussed earlier).

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• A copy of the statement of subsequent 3. To operate, manage, conserve, improve, Fuel used between airfield and farm. seller if the fuel was bought from someone or maintain your farm and its tools and Fuel used by an aerial applicator for the direct other than the first taxpayer. equipment. flight between the airfield and one or more farms is treated as a farming purpose. 4. To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. Fuel not used for farming. Fuel isn't used Definitions of For this use to qualify, you must have pro- on a farm for farming purposes if it's used in any Nontaxable Uses duced more than half the commodity so of the following ways. treated during the tax year. Commodity • Off the farm, such as on the highway or in means a single raw product. For example, This section provides definitions of the terms noncommercial aviation, other than fuel apples and peaches are two separate used in Table 2-1 for nontaxable uses. If appli- used between the airfield and farm descri- commodities. cable, the type of use number from Table 2-1 is bed above, even if the fuel is used in trans- indicated in each heading. 5. To plant, cultivate, care for, or cut trees or porting livestock, feed, crops, or equip- to prepare (other than sawing logs into ment. Type of use table. The first column of the ta- lumber, chipping, or other milling) trees for • For personal use, such as mowing the ble is the number you enter on Form 4136, market, but only if the planting, etc., is inci- lawn. Form 8849, or Schedule C (Form 720) for that dental to your farming operations. Your • In processing, packaging, freezing, or can- type of use. For type of use 2, the mobile ma- tree operations will be incidental only if ning operations. chinery parenthetical applies only to Form 8849 they are minor in nature when compared • In processing crude gum into gum spirits of and Form 720. to the total farming operations. turpentine or gum resin or in processing maple sap into maple syrup or maple On a farm for farming purposes (No. 1). On If any other person, such as a neighbor or sugar. a farm for farming purposes means fuel used in custom operator, performs a service for you on carrying on a trade or business of farming, on a your farm for any of the purposes listed in (1) or Off-highway business use (No. 2). Off-high- farm in the United States, and for farming pur- (2), you are considered to be the ultimate pur- way business use means fuel used in a trade or poses. chaser that used the fuel on a farm for farming business or in an income-producing activity purposes. However, see Custom application of other than as a fuel in a highway vehicle regis- Farm. A farm includes livestock, dairy, fish, fertilizer and pesticide, next. tered or required to be registered for use on poultry, fruit, fur-bearing animals, and truck If doubt exists whether the owner, the ten- public highways. The terms “highway vehicle,” farms; orchards; plantations; ranches; nurser- ant, or the operator of the farm bought the fuel, “public highway,” and “registered” are defined ies; ranges; and feed yards for fattening cattle. determine who bore the cost of the fuel. For ex- below. Don't consider any use in a boat as an It also includes structures such as greenhouses ample, if the owner of a farm and the tenant off-highway business use. used primarily for the raising of agricultural or equally share the cost of gasoline that is used Off-highway business use includes fuels horticultural commodities. A fish farm is an area on a farm for farming purposes, each can claim used in any of the following ways. where fish are grown or raised — not merely a credit for the tax on one-half of the fuel used. • In stationary machines such as generators, caught or harvested. compressors, power saws, and similar Custom application of fertilizer and pes- equipment. Farming purposes. As an owner, tenant, or ticide. Fuel used on a farm for farming purpo- • For cleaning purposes. operator, you use fuel on a farm for farming pur- ses includes fuel used in the application of fertil- • In forklift trucks, bulldozers, and earthmov- poses if you use it in any of the following ways. izer, pesticides, or other substances, including ers. aerial applications. Generally, the applicator is 1. To cultivate the soil or to raise or harvest treated as having used the fuel on a farm for Generally, this use doesn't include nonbusi- any agricultural or horticultural commodity. farming purposes. For aviation gasoline, the ness use of fuel, such as use by minibikes, aerial applicator makes the claim as the ulti- snowmobiles, power lawn mowers, chain saws, 2. To raise, shear, feed, care for, train, or and other yard equipment. manage livestock, bees, poultry, fur-bear- mate purchaser. For kerosene used in aviation, ing animals, or wildlife. the ultimate purchaser may make the claim or waive their right to make the claim to the regis- Example. Caroline owns a landscaping tered ultimate vendor. business. She uses power lawn mowers and chain saws in her business. The gasoline used Table 2-1. Type of Use Table in the power lawn mowers and chain saws qualifies as fuel used in an off-highway busi- No. Type of Use ness use. The gasoline used in her personal 1 On a farm for farming purposes lawn mower at home doesn't qualify. 2 Off-highway business use (for business use other than in a highway vehicle Highway vehicle. A highway vehicle is any registered or required to be registered for highway use) (other than use in mobile self-propelled vehicle designed to carry a load machinery) over public highways, whether or not it's also 3 Export designed to perform other functions. Examples 4 In a boat engaged in commercial fishing of vehicles designed to carry a load over public 5 In certain intercity and local buses highways are passenger automobiles, motorcy- 6 In a qualified local bus cles, buses, and highway-type trucks and truck 7 In a bus transporting students and employees of schools (school buses) tractors. A vehicle is a highway vehicle even 8 For diesel fuel and kerosene (other than kerosene used in aviation) used other though the vehicle's design allows it to perform than as a fuel in the propulsion engine of a train or diesel-powered highway a highway transportation function for only one of vehicle (but not off-highway business use) the following. 9 In foreign trade • A particular type of load, such as passen- 10 Certain helicopter and fixed-wing aircraft uses gers, furnishings, and personal effects (as in a house, office, or utility trailer). 11 Exclusive use by a qualified blood collector organization • A special kind of cargo, goods, supplies, or 12 In a highway vehicle owned by the United States that isn't used on a highway materials. 13 Exclusive use by a nonprofit educational organization • Some off-highway task unrelated to high- 14 Exclusive use by a state, political subdivision of a state, or the District of way transportation, except as discussed Columbia next. 15 In an aircraft or vehicle owned by an aircraft museum 16 In military aircraft

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Vehicles not considered highway vehi- hicle operated under a dealer's tag, license, or able to the general public. The bus must be en- cles. Generally, the following kinds of vehicles permit's considered registered. A highway vehi- gaged in one of the following activities. aren’t considered highway vehicles for purpo- cle isn't considered registered solely because a • Scheduled transportation along regular ses of the credit or refund of fuel taxes. special permit allows the vehicle to be operated routes. at particular times and under specified condi- Nonscheduled operations if the seating ca- 1. Specially designed mobile machinery • tions. pacity of the bus is at least 20 adults, not for nontransportation functions. A including the driver. Vans and similar vehi- self-propelled vehicle isn't a highway vehi- Dual use of propulsion motor. Off-highway cles used for van-pooling or taxi service cle if all the following apply. business use doesn't include any fuel used in don't qualify. a. The chassis has permanently moun- the propulsion motor of a registered highway ted to it machinery or equipment used vehicle even though that motor also operates Available to the general public. This means to perform certain operations (con- special equipment by means of a power take-off you offer service to more than a limited number struction, manufacturing, drilling, min- or power transfer. It doesn't matter if the special of persons or organizations. If a bus operator ing, timbering, processing, farming, or equipment is mounted on the vehicle. normally provides charter operations through similar operations) if the operation of travel agencies but has buses available for the machinery or equipment is unrela- Example. The motor of a registered con- chartering by the general public, this service is ted to transportation on or off the pub- crete-mixer truck operates both the engine and available to the general public. A bus doesn't lic highways. the mixing unit by means of a power take-off. qualify when its operator uses it to provide ex- The fuel used in the motor to run the mixer isn't clusive services to only one person, group, or b. The chassis has been specially de- off-highway business use. organization. Also, intercity bus transportation signed to serve only as a mobile car- doesn't include transporting students and em- riage and mount (and power source, if Use in separate motor. Off-highway business ployees of schools or intercity transportation in applicable) for the machinery or use includes fuel used in a separate motor to a qualified local bus. equipment, whether or not the machi- operate special equipment, such as a refrigera- nery or equipment is in operation. tion unit, pump, generator, or mixing unit. If you In a qualified local bus (No. 6). In a qualified c. The chassis couldn’t, because of its draw fuel from the same tank that supplies fuel local bus means fuel used in a bus meeting all special design and without substantial to the propulsion motor, you must figure the the following requirements. structural modification, be used as quantity used in the separate motor operating • it's engaged in furnishing (for compensa- part of a vehicle designed to carry any the special equipment. You may make a rea- tion) intracity passenger land transporta- other load. sonable estimate based on your operating ex- tion available to the general public. perience and supported by your records. • It operates along scheduled, regular d. The vehicle must have traveled less You can use devices that measure the miles routes. than 7,500 miles on public highways the vehicle has traveled (such as hubometers) • It has a seating capacity of at least 20 during the taxable year. to figure the gallons of fuel used to propel the adults (excluding the driver). 2. Vehicles specially designed for vehicle. Add to this amount the fuel consumed • it's under contract with (or is receiving off-highway transportation. A vehicle while idling or warming up the motor before pro- more than a nominal subsidy from) any isn't treated as a highway vehicle if the ve- pelling the vehicle. The difference between your state or local government to furnish the hicle is specially designed for the primary total fuel used and the fuel used to propel the transportation. function of transporting a particular type of vehicle is the fuel used in the separate motor. load other than over the public highway Intracity passenger land transportation. and because of this special design, the ve- Example. Hazel owns a refrigerated truck. This is the land transportation of passengers hicle's capability to transport a load over a It has a separate motor for the refrigeration unit. between points located within the same metro- public highway is substantially limited or The same tank supplies both motors. Using the politan area. It includes transportation along impaired. truck's hubometer, Hazel figures that 90% of routes that cross state, city, or county bounda- To make this determination, you can the fuel was used to propel the truck. Therefore, ries if the routes remain within the metropolitan take into account the vehicle's size, 10% of the fuel is used in an off-highway busi- area. whether the vehicle is subject to licensing, ness use. safety, or other requirements, and whether Under contract. A bus is under contract with a the vehicle can transport a load at a sus- Fuel lost or destroyed. You can't treat fuel state or local government only if the contract im- tained speed of at least 25 miles per hour. lost or destroyed through spillage, fire, or other poses a bona fide obligation on the bus opera- It doesn't matter that the vehicle can carry casualty as fuel used in an off-highway busi- tor to furnish the transportation. heavier loads off highway than it's allowed ness use. to carry over the highway. More than a nominal subsidy. A subsidy is Export (No. 3). Export means fuel transported more than nominal if it's reasonably expected to 3. Nontransportation trailers and semi- from the United States with the intention that the exceed an amount equal to 3 cents multiplied trailers. A trailer or semitrailer isn't treated fuel remain in a foreign country or possession of by the number of gallons of fuel used in buses as a highway vehicle if it's specially de- the United States. Fuel isn't exported if it's in the on subsidized routes. A company that operates signed to function only as an enclosed sta- fuel supply tank of a vehicle or aircraft. its buses along subsidized and unsubsidized in- tionary shelter for carrying on a nontrans- tracity routes may consider its buses qualified portation function at an off-highway site. In a boat engaged in commercial fishing local buses only when the buses are used on For example, a trailer that is capable only (No. 4). In a boat engaged in commercial fish- the subsidized intracity routes. of functioning as an office for an off-high- ing means fuel used in taking, catching, pro- way construction operation isn't a highway cessing, or transporting fish, shellfish, or other In a school bus (No. 7). In a school bus vehicle. aquatic life for commercial purposes, such as means fuel used in a bus engaged in the trans- selling or processing the catch, on a specific trip portation of students or employees of schools. Public highway. A public highway includes basis. They include boats used in both fresh A school is an educational organization with a any road in the United States that isn't a private and salt water fishing. They don't include boats regular faculty and curriculum and a regularly roadway. This includes federal, state, county, used for both sport fishing and commercial fish- enrolled body of students who attend the place and city roads and streets. ing on the same trip. where the educational activities occur.

Registered. A vehicle is considered registered In certain intercity and local buses (No. 5). For diesel fuel and kerosene (other than when it's registered or required to be registered In certain intercity and local buses means fuel kerosene used in aviation) used other than for highway use under the law of any state, the used in a bus engaged in furnishing (for com- as a fuel (No. 8). Diesel fuel and kerosene District of Columbia, or any foreign country in pensation) passenger land transportation avail- (other than kerosene used in aviation) used which it's operated or situated. Any highway ve-

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other than as a fuel in the propulsion engine of a zation for its exclusive use in the collection, In military aircraft (No. 16). In a military air- diesel-powered highway vehicle or diesel-pow- storage, or transportation of blood. craft means fuel used in an aircraft owned by ered train (not including off-highway business the United States or any foreign nation and con- use) means undyed diesel fuel and undyed ker- Qualified blood collector organization. stituting a part of its armed forces. osene used: A qualified blood collector organization is one • For home heating, lighting, and cooking; that is: In commercial aviation (other than foreign • In boats; • Described in section 501(c)(3) and exempt trade). See Commercial aviation, earlier, for • In stationary machines, such as generators from tax under section 501(a), the definition. and compressors; • Primarily engaged in the activity of collect- • For cleaning purposes; or ing human blood, Use in a train. Use in a train means fuel used • In minibikes and snowmobiles. • Registered by the IRS, and in the propulsion engine of equipment or machi- • Registered by the Food and Drug Adminis- nery that rides on rails. This includes use in a lo- In foreign trade (No. 9). In foreign trade tration to collect blood. comotive, work train, switching engine, and means fuel used in civil aircraft employed in for- track maintenance machine. eign trade or trade between the United States In a highway vehicle owned by the United and any of its possessions. The term trade in- States that isn't used on a highway (No. cludes the transportation of persons or property 12). In a highway vehicle owned by the United Biodiesel or Renewable for hire and the making of the necessary prepa- States that isn't used on a highway means fuel rations for such transportation. In the case of used in a vehicle that wasn't used on public Diesel Mixture Credit, aircraft registered in a foreign country, the coun- highways during the period covered by the try must allow reciprocal benefits for aircraft claim. This use applies whether or not the vehi- Alternative Fuel Credit, registered in the United States. cle is registered or required to be registered for highway use. and Alternative Fuel Certain helicopter and fixed-wing aircraft Mixture Credit uses (No. 10). Includes: Exclusive use by a nonprofit educational organization (No. 13). Exclusive use by a The section 6426 credit for biodiesel and alter- Certain helicopter uses. Certain helicop- nonprofit educational organization means fuel native fuel consists of the biodiesel or renewa- ter uses means fuel used by a helicopter for any used by an organization exempt from income ble diesel mixture credit, alternative fuel credit, of the following purposes. tax under section 501(a) that meets both of the and alternative fuel mixture credit. following requirements. 1. Transporting individuals, equipment, or • It has a regular faculty and curriculum. supplies in the exploration for, or the de- Coordination with income tax credit. Only • It has a regularly enrolled body of students velopment or removal of, hard minerals, one credit may be claimed for any amount of bi- who attend the place where the instruction oil, or gas. odiesel or renewable diesel. If any amount is normally occurs. claimed (or will be claimed) for any amount of 2. Planting, cultivating, cutting, transporting, A nonprofit educational organization also in- biodiesel or renewable diesel on Form 720, or caring for trees (including logging oper- cludes a school operated by a church or other Form 8849, or Form 4136, then a claim can't be ations). organization described in section 501(c)(3) if made on Form 8864 for that amount of biodie- 3. Providing emergency medical transporta- the school meets the above requirements. sel or renewable diesel. tion. Exclusive use by a state, political subdivi- Biodiesel or renewable diesel mixture During a use described in items (1) and (2), sion of a state, or the District of Columbia credit claimant. Claimant produced a biodie- the helicopter must not takeoff from, or land at, (No. 14). Exclusive use by a state, political sel mixture by mixing biodiesel with diesel fuel. a facility eligible for assistance under the Airport subdivision of a state, or the District of Colum- Claimant produced a renewable diesel mixture and Airway Development Act of 1970, or other- bia means fuel purchased by the state or local by mixing renewable diesel with diesel fuel wise use services provided pursuant to section government for its exclusive use. A state or lo- (other than renewable diesel). 44509 or 44913(b) or subchapter I of chap- cal government is any state, any political subdi- The person that produced and sold or used ter 471 of title 49, United States Code. For item vision thereof, or the District of Columbia. An In- the mixture in their trade or business is the only (1), treat each flight segment as a separate dian tribal government is treated as a state only person eligible to make this claim. The credit is flight. if the fuel is used in an activity that involves the based on the gallons of biodiesel or renewable Fixed-wing aircraft uses. Fixed-wing air- exercise of an essential tribal government func- diesel in the mixture. tion. Gasoline, diesel fuel, and kerosene used craft uses means fuel used by a fixed-wing air- Renewable diesel doesn't include any by the American Red Cross is considered to be craft for any of the following purposes. fuel derived from coprocessing bio- the use of these fuels by a state. ! 1. Planting, cultivating, cutting, transporting, CAUTION mass (as defined in section 45K(c)(3)) with a feedstock that isn't biomass. or caring for trees (including logging oper- In an aircraft or vehicle owned by an air- ations). craft museum (No. 15). In an aircraft or vehicle owned by an aircraft museum means fuel Claim requirements. See the Instructions for 2. Providing emergency medical transporta- used in an aircraft or vehicle that is owned by Form 720 for the biodiesel or renewable diesel tion. The aircraft must be equipped for, an organization that meets all the following re- mixture claim requirements. and exclusively dedicated on that flight to, quirements. acute care emergency medical services. Alternative fuel credit claimant. For the al- 1. It's exempt from income tax as an organi- ternative fuel credit, the registered alternative During a use described in item (1), the aircraft zation described in section 501(c)(3). must not takeoff from, or land at, a facility eligi- fueler who (1) sold an alternative fuel at retail ble for assistance under the Airport and Airway 2. It's operated as a museum under a state and delivered it into the fuel supply tank of a Development Act of 1970, or otherwise use (or District of Columbia) charter. motor vehicle or motorboat; (2) sold an alterna- services provided pursuant to section 44509 or tive fuel, delivered it in bulk for taxable use in a 3. It's operated exclusively for acquiring, ex- motor vehicle or motorboat, and received re- 44913(b) or subchapter I of chapter 471 of title hibiting, and caring for aircraft of the type 49, United States Code. quired statement from the buyer; (3) used an al- used for combat or transport in ternative fuel (not sold at retail or in bulk as pre- World War II. Exclusive use by a qualified blood collector viously described) motor vehicle or motorboat; organization (No. 11). Exclusive use by a The aircraft or vehicle (such as a ground or (4) sold an alternative fuel used as a fuel in qualified blood collector organization means servicing vehicle for aircraft) must be used ex- aviation is the only person eligible to make this fuel used by the qualified blood collector organi- clusively for the purposes described in item (3). claim.

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Carbon capture requirement. A credit for Keep at your principal place of busi- c. The ultimate purchaser of undyed die- Fischer-Tropsch process liquid fuel derived ness all records needed to enable the sel fuel or undyed kerosene used in from coal (including peat) can be claimed only if RECORDS IRS to verify that you are the person certain intercity and local buses may the fuel is derived from coal produced at a gasi- entitled to claim a credit or refund and the waive its right to make a claim by pro- fication facility that separates and sequesters at amount you claimed. viding a waiver that is signed under least 75% of the facility's total carbon dioxide penalties of perjury by a person au- emissions. Ultimate purchaser. Ultimate purchasers may thorized to bind the ultimate pur- make claims for the nontaxable use of fuels on chaser and is in the same format as Alternative fuel credit. The registered alter- Form 4136, Schedule 1 (Form 8849), and the Model Waiver N. A new waiver is native fueler is the person eligible to make the Schedule C (Form 720) if reporting excise tax li- required each year or when any infor- claim. An alternative fueler is the person liable ability on that return. If you are an ultimate pur- mation in the current waiver expires. for tax on alternative fuel under the rules for tax- chaser, you must keep the following records. d. The ultimate purchaser of kerosene able events for Other Fuels (discussed in chap- • The number of gallons purchased and for use in nonexempt, noncommercial ter 1) or would be liable but for an exemption for used during the period covered by your aviation must provide a certificate that nontaxable uses. An alternative fueler includes claim. is signed under penalties of perjury by a person who sells for use or uses an alterna- • The dates of the purchases. a person authorized to bind the ulti- tive fuel in aviation. • The names and addresses of suppliers mate purchaser and is in the same and amounts purchased from each in the Alternative fuel mixture credit claimant. format as the Model Certificate Q. A period covered by your claim. For the alternative fuel mixture credit, the regis- new certificate is required each year • The nontaxable use for which you used the tered alternative fueler that produced and sold or when any information in the current fuel. or used the mixture as a fuel in their trade or certificate expires. • The number of gallons used for each non- business is the only person eligible to make this taxable use. Registered ultimate vendor. Registered ulti- claim. The credit is based on the gallons of al- mate vendors may make claims for certain ternative fuel in the mixture. An alternative fuel it's important that your records show separately sales of fuels on Form 4136, Schedule 2 (Form mixture is a mixture of alternative fuel and sec- the number of gallons used for each nontaxable 8849), and Schedule C (Form 720) if reporting tion 4081 taxable fuel (gasoline, diesel fuel, or use that qualifies as a claim. If the fuel is expor- excise tax liability on that return. If you are a kerosene). ted, you must have proof of exportation. registered ultimate vendor, you must keep cer- For more information about keeping re- For claims made on or after January 8, tain information pertaining to the sale of the fuel. cords, see Publication 583, Starting a Business 2018, “alternative fuel mixture” means ! and Keeping Records, or chapter 1 of Publica- To make a claim, you must have sold the CAUTION a mixture of taxable fuel and alternative tion 17, Your Federal Income Tax for Individu- fuel at a tax-excluded price, repaid the tax to fuel other than liquefied petroleum gas (LPG), als. the buyer, or obtained the buyer's written con- compressed natural gas (CNG), liquefied natu- sent to the allowance of the claim. You are re- ral gas (LNG), liquefied gas derived from bio- Exceptions. quired to have a valid certificate or waiver in mass, or compressed gas derived from bio- your possession in order to make the claim. mass. 1. Generally, the ultimate purchaser may not claim a credit or refund for undyed diesel In addition, you must have a registration fuel, undyed kerosene, or kerosene for number that hasn’t been revoked or suspen- Registration. You must be registered by the use in aviation sold for the exclusive use of ded. See Form 637. IRS to be eligible to claim the section 6426 fuel a state or local government. However, see State use. To make a claim as an ultimate credit. See Registration Requirements in chap- Claims by credit card issuers, later, for an vendor (state), you must have a UV registration ter 1. exception. number and the fuel can't be purchased with a credit card as explained below. If you sell Credits for fuel provide incentive for United 2. The ultimate purchaser may not claim a undyed diesel fuel, undyed kerosene, or kero- States production. The section 6426 fuel credit or refund as follows. sene for use in aviation for use by a state or lo- credit may not be claimed for biodiesel or alter- a. The ultimate purchaser of gasoline or cal government, you must keep the following in- native fuel that is produced outside the United aviation gasoline used by a state or formation. States for use as a fuel outside the United local government for its exclusive use The name and taxpayer identification num- States. The United States includes any posses- • or by a nonprofit educational organi- ber of each person (government unit) that sion of the United States. zation for its exclusive use may waive bought the fuel. its right to make a claim by providing a No credit for fuels derived from paper or • The number of gallons sold to each per- certificate that is signed under penal- son. pulp production. Credit for alternative fuels ties of perjury by a person authorized and alternative fuel mixtures isn't available for • An unexpired certificate from the buyer. to bind the ultimate purchaser and is See Model Certificate P in the Appendix. any fuel derived from the production of paper or in the same format as the Model Cer- pulp. The certificate expires on the earlier of 1 tificate M. A new certificate is required year after the date of the certificate or the each year or when any information in date a new certificate is given to the regis- Filing Claims the current certificate expires. tered ultimate vendor. b. The ultimate purchaser of kerosene Nonprofit educational organization and This section tells you how to make a claim for a for use in commercial aviation or non- state use. To make a claim as an ultimate ven- credit or refund of excise taxes on fuels. This commercial aviation (other than non- dor (nonprofit educational organization or section also covers recordkeeping require- exempt, noncommercial aviation and state), you must have a UV registration number ments and when to include the credit or refund exclusive use by a state, political sub- and the fuel can't be purchased with a credit in your income. division of a state, or the District of card as explained later. If you sell gasoline or Columbia) may waive its right to make aviation gasoline to a nonprofit educational or- Generally, you will provide all the informa- a claim by providing a waiver that is ganization for its exclusive use or to a state or tion needed to claim a credit or refund when signed under penalties of perjury by a local government for its exclusive use, you must you properly complete Form 8849, Form 4136, person authorized to bind the ultimate keep the following information. Schedule C (Form 720), Form 6478, or Form purchaser and is in the same format • The name and taxpayer identification num- 8864. In some cases, you will have to attach ad- as the Model Waiver L. A new waiver ber of each person (nonprofit educational ditional information. You need to keep records is required each year or when any in- organization or government unit) that that support your claim for a credit or refund. formation in the current waiver ex- bought the fuel. pires.

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• The number of gallons sold to each per- the only person who can make the claim. An ex- online. Go to the IRS website at IRS.gov/ son. empt user for this purpose is: Businesses/Small and click on the “Employer ID • An unexpired certificate from the buyer. • For gasoline or aviation gasoline, a state or Numbers (EINs)” link. You may also apply for See Model Certificate M in the Appendix. local government (including essential gov- an EIN by faxing or mailing Form SS-4, Applica- The certificate expires on the earlier of 1 ernment use by an Indian tribal govern- tion for Employer Identification Number, to the year after the date of the certificate or the ment) or a nonprofit educational organiza- IRS. date a new certificate is given to the regis- tion; or tered ultimate vendor. • For diesel fuel, kerosene, or kerosene for use in aviation, a state or local government Claiming A Refund Blocked pump. To make a claim as an ulti- (including essential government use by an mate vendor (blocked pump), you must have a Indian tribal government). Generally, you may claim a refund of excise UP registration number. If you sell undyed kero- taxes on Form 8849. Complete and attach to sene (other than kerosene for use in aviation) If gasoline is purchased without the use of a Form 8849 the appropriate Form 8849 sched- from a pump that qualifies as a blocked pump credit card, then the registered ultimate vendor ules. The instructions for Form 8849 and the because it's locked by you after each sale and of the gasoline may make the claim for refund separate instructions for each schedule explain is unlocked by you at the request of the buyer, or credit. However, if the gasoline is purchased the requirements for making a claim for refund. you must keep the following information for with a credit card issued to a state, but the If you file Form 720, you can use the Sched- each sale of more than 5 gallons. credit card issuer isn't registered by the IRS or ule C (Form 720) for your refund claims for the • The date of each sale. doesn't meet the conditions described, the quarter. See the Instructions for Form 720. • The name and address of the buyer. credit card issuer must collect the tax and the Don't claim a refund on Form 8849 for any • The number of gallons sold to that buyer. state may make the claim. amount for which you have filed or will file a If diesel fuel, kerosene, or kerosene for use claim on Schedule C (Form 720) or Form 4136. Certain intercity and local bus use. To in aviation is purchased without the use of a make a claim as an ultimate vendor of undyed credit card, the registered ultimate vendor may Only one claim may be made for any partic- diesel fuel or undyed kerosene used in certain make the claim for refund or credit. A state isn't ular amount of alternative fuel. intercity and local buses, you must have a UB allowed to make a claim for these fuels. How- registration number. You must keep the follow- ever, if the diesel fuel or kerosene is purchased ing information. with a credit card issued to a state, but the Claiming a Credit on Form • The date of each sale. credit card issuer isn't registered by the IRS or 4136 • The name and address of the buyer. doesn't meet the conditions described, the • The number of gallons sold to the buyer. credit card issuer must collect the tax and the A credit may be claimed for certain uses and • A copy of the waiver signed by the buyer at state may make the claim. sales of fuels on Form 4136 when you file your the time the credit or payment is claimed. The claim from the credit card issuer must income tax return at the end of the year. If you See Model Waiver N in the Appendix. contain the following information as it applies to meet certain requirements (discussed earlier), Kerosene for use in commercial aviation the fuel covered in the claim. you may be able to make a claim during the or noncommercial aviation. To make a claim • The total number of gallons. year. as an ultimate vendor of kerosene for use in • Its registration number. Credit only. You can claim the following commercial aviation (other than foreign trade) • A statement that it hasn’t collected the taxes only as a credit on Form 4136. or noncommercial aviation (other than non- amount of tax from the ultimate purchaser Tax on fuels used for nontaxable uses if exempt, noncommercial aviation and exclusive or has obtained the written consent of the • the total for your tax year is less than $750. use by a state, political subdivision of a state, or ultimate purchaser to make the claim. Tax on fuel you didn’t include in any claim the District of Columbia), you must have a UA • A statement that it has repaid or agreed to • for refund previously filed for any quarter of registration number. See Kerosene for use in repay the amount of tax to the ultimate your tax year. aviation, earlier, for a list of nontaxable uses. vendor, has obtained the written consent Tax on fuel you used in mobile machinery You must keep the following information. of the ultimate vendor to make the claim, or • (off-highway business use) that traveled • The date of each sale. has otherwise made arrangements which less than 7,500 miles on public highways. • The name and address of the buyer. directly or indirectly provide the ultimate The number of gallons sold to the buyer. vendor with reimbursement of the tax. • Don't claim a credit for any amount for which A copy of the waiver signed by the buyer at • Has in its possession an unexpired certifi- • you have filed a refund claim on Form 8849 or the time the credit or payment is claimed. cate similar to Model Certificate R in the credit on Schedule C (Form 720). See Model Waiver L in the Appendix. Appendix and has no reason to believe any of the information in the certificate is Kerosene for use in nonexempt, non- false. When to file. You can claim a fuel tax credit on commercial aviation. To make a claim as an your income tax return for the year you used the ultimate vendor of kerosene for use in non- Taxpayer identification number. To file a fuel (or sold the fuel in the case of a registered exempt, noncommercial aviation, you must claim, you must have a taxpayer identification ultimate vendor claim). have a UA registration number. You must keep number. Your taxpayer identification number You may be able to make a fuel tax the following information. can be an: TIP claim on an amended income tax re- • The date of each sale. • Employer identification number (EIN), turn for the year you used the fuel. • The name and address of the buyer. • Social security number (SSN), or Generally, you must file an amended return by • The number of gallons sold to the buyer. • Individual taxpayer identification number the later of 3 years from the date you filed your • A copy of the certificate signed by the (ITIN), if you are an alien individual and original return or within 2 years from the date buyer at the time the credit or payment is don't have and aren’t eligible to get an you paid the income tax. claimed. See Model Certificate Q in the SSN. Appendix. If you normally file only a U.S. individual in- How to claim a credit. How you claim a credit come tax return (such as Form 1040 or Claims by credit card issuers. For sales of depends on whether you are an individual, part- 1040NR), use your SSN or ITIN. You get an gasoline, aviation gasoline, diesel fuel, kero- nership, corporation, S corporation, or farmers' SSN by filing Form SS-5, Application for a So- sene, or kerosene for use in aviation that are cooperative association. cial Security Card, with the Social Security Ad- purchased by an exempt user with the use of a ministration. To get an ITIN, file Form W-7, Ap- Individuals. You claim the credit on the credit card, the registered credit card issuer is plication for IRS Individual Taxpayer “Credits from” line of Form 1040. Also check Identification Number, with the IRS. box b on that line. If you wouldn’t otherwise If you operate a business, use your EIN. If have to file an income tax return, you must do you don't have an EIN, you may apply for one so to get a fuel tax credit.

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Partnerships. Partnerships (other than credit. Sharon reports the $108 as additional in- per gallon) on the “Credits from” line of his Form electing large partnerships) claim the credit by come on her 2022 Schedule F (Form 1040). 1040 and checks box b. including a statement on Schedule K-1 (Form Tyler uses the cash method of accounting. 1065), Partner's Share of Income, Deductions, Example 2. March Corporation uses the On his 2021 Schedule C (Form 1040), he de- Credits, etc., showing each partner's share of calendar year as its tax year. For 2021, the fol- ducts the total cost of the fuel, including the tax. the number of gallons of each fuel sold or used lowing amounts of excise tax were included in When Tyler files his 2022 Form 1040, he will infor a nontaxable use, the type of use, and the the cost of gasoline the corporation used each clude the $729 credit shown on his 2021 Form applicable credit per gallon. Each partner quarter in a nontaxable use. 4136 as additional income on his Schedule C claims the credit on his or her income tax return (Form 1040) for 2022. for the partner's share of the fuel used by the partnership. Calendar Quarters .... Fuel Tax Fuel Tax Example, continued. For the first 2 quarters Expense Claim of 2021, Tyler's records show the following. Other entities. Corporations, S corpora- Jan. 1 – March 31 ...... $1,300 $1,293 tions, farmers' cooperative associations, and Claim Claim trusts must make the claim on the appropriate April 1 – June 30 ...... 1,100 1,094 Quarter Gallons Used Tax Rate Amount line of their applicable income tax return. July 1 – Sept. 30 ...... 400 397 First 2,750 .243 $668.25 Federal, state, and local governments, and Oct. 1 – Dec. 31 ...... 300 298 certain tax-exempt organizations (as discussed Second 2,500 .243 607.50 earlier under Claiming a Refund) must use Total $3,100 $3,082 Tyler couldn’t file a claim for a refund for the Form 8849, not Form 4136, to make an annual first quarter because the amount of the claim claim. The corporation deducts the entire cost of was less than $750. He adds the first quarter the gasoline (including the $3,100 in excise amount ($668.25) to the second quarter amount taxes) it used during the year as a business ex- ($607.50) and claims a refund of $1,275.75 by Including the Credit or pense on its corporation income tax return, filing Form 8849 and Schedule 1 (Form 8849). Refund in Income thereby reducing its corporate income tax liabil- The claim must be filed by September 30, 2021, ity for that year. In most situations, the amount claimed which is the last day of the first quarter (July – Form 8849. March Corporation files quar- as a credit or refund will be less than September) following the last quarter (April – ! terly refund claims for the first 2 quarters (end- CAUTION the amount deducted as fuel tax ex- June) included in the claim. He will have to in- ing March 31 and June 30). It can't file a quar- pense because the LUST tax is generally not clude the $1,275.75 excise tax refund as addi- terly refund claim for the third or fourth quarter refunded. tional income on his Schedule C (Form 1040) because it didn’t meet the $750 minimum re- for 2021. quirement. Include any credit or refund of excise taxes on Since March Corporation uses the cash Accrual method. If you use an accrual fuels in your gross income if you claimed the to- method of accounting, the corporation includes method, include the amount of credit or refund tal cost of the fuel (including the excise taxes) $2,387 ($1,293 + $1,094) in its gross income for in gross income for the tax year in which you as an expense deduction that reduced your in- the tax year in which it receives the refunds used the fuels (or sold the fuels if you are a reg- come tax liability. (2021). istered ultimate vendor). It doesn't matter The year you include a credit or refund in Form 4136. The corporation claims the re- whether you filed for a quarterly refund or gross income depends on whether you use the maining amounts ($397 + $298) as a credit on claimed the entire amount as a credit. cash or an accrual method of accounting. its 2021 income tax return by attaching Form 4136. It files its tax return in 2022. It includes Example 1. Patty Green uses an accrual Cash method. If you use the cash method and this credit ($695) in its 2022 gross income. method. She files her 2021 return in April 2022. file a claim for refund, include the refund On Schedule C (Form 1040), she deducts the amount in your gross income for the tax year in Example 3. Tyler S. Sands used undyed total cost of gasoline (including $155 of excise which you receive the refund. If you claim a diesel fuel in vehicles used in his construction taxes) used for an off-highway business use credit on your income tax return, include the business. The vehicles weren’t registered (or during 2021. On Form 4136, Patty claims $153 credit amount in gross income for the tax year in required to be registered) for highway use. In as a credit. She reports the $153 as additional which you file Form 4136. If you file an amen- the fourth quarter of his 2021 income tax year, income on her 2021 Schedule C (Form 1040). ded return and claim a credit, include the credit which ends in December, he used 3,000 gallons of undyed diesel fuel. The excise tax on amount in gross income for the tax year in Example 2. Use the same facts as in Ex- the 3,000 gallons of undyed diesel fuel he used which you receive the credit. ample 2 above, except that March Corporation was $732 (tax of $.244 per gallon). uses an accrual method of accounting. Since Example 1. Sharon Brown, a cash basis Because the tax is less than $750, Tyler the nontaxable use occurred in 2021, the corpo- farmer, filed her 2021 Form 1040 on March 3, must claim a credit for the tax on his 2021 in- ration reports the $3,082 of excise taxes as in- 2022. On her Schedule F (Form 1040), Sharon come tax return. He fills out Form 4136 and at- come on its 2021 income tax return. This con- deducted the total cost of gasoline (including taches it to his 2021 income tax return, which sists of the $2,387 it claimed on Form 8849 and $110 of excise taxes) used on the farm. Then, he files in 2022. He enters $729 (credit of $.243 the $695 it claimed on Form 4136. on Form 4136, Sharon claimed $108 as a

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Part Two.

Excise Taxes Other Than Fuel Taxes

Crude oil. Tax is imposed on crude oil when Exceptions. The following may be exempt it's received at a United Sates refinery. The op- from the tax on ODCs. erator of the refinery is liable for the tax. • Metered-dose inhalers. 3. Tax is imposed on domestic crude oil used • Recycled ODCs. or exported before it's received at a United • Exported ODCs. States refinery. However, the use of crude oil • ODCs used as feedstock. for extracting oil or natural gas on the premises Environmental Metered-dose inhalers. There is no tax on where such crude oil was produced isn't taxa- ODCs used or sold for use as propellants in ble. The user or exporter is liable for the tax. Taxes metered-dose inhalers. For a sale to be nontax- Imported petroleum products. Tax is im- able, you must obtain from the purchaser an exemption certificate that you rely on in good faith. posed on petroleum products when they enter The certificate must be in substantially the form the United States for consumption, use, or as the sample certificate set forth in Regulations warehousing. The person entering the petro- Environmental taxes are imposed on crude oil section 52.4682-2(d)(5). The certificate may be leum product into the country is liable for the and petroleum products (oil spill liability), the included as part of the sales documentation. tax, including the tax on imported crude oil, sale or use of ozone-depleting chemicals Keep the certificate with your records. (ODCs), and imported products containing or even if it's subsequently received at a U.S. re- manufactured with ODCs. In addition, a floor finery. Recycled ODCs. There is no tax on any stocks tax is imposed on ODCs held on Janu- Tax is imposed only once on any imported ODC diverted or recovered in the United States ary 1 by any person (other than the manufac- petroleum product. Thus, the operator of a U.S. as part of a recycling process (and not as part turer or importer of the ODCs) for sale or for use refinery that receives imported crude oil must of the original manufacturing or production in further manufacture. establish that the petroleum tax has already process). There is no tax on recycled been imposed on such crude oil in order not to Halon-1301 or recycled Halon-2402 imported Figure the environmental tax on Form 6627. En- be liable for the tax. from a country that has signed the Montreal ter the tax on the appropriate lines of Form 720 Protocol on Substances that Deplete the Ozone and attach Form 6627 to Form 720. Layer (Montreal Protocol). Ozone-Depleting The Montreal Protocol is administered by For environmental tax purposes, United States the United Nations (U.N.). To determine if a includes the 50 states, the District of Columbia, Chemicals (ODCs) country has signed the Montreal Protocol, con- the Commonwealth of Puerto Rico, any posses- tact the U.N. The website is UNtreaty.un.org. sion of the United States, the Commonwealth of For a list of the taxable ODCs and tax rates, see the Northern Mariana Islands, the Trust Terri- the Form 6627 instructions. Exported ODCs. Generally, there is no tax tory of the Pacific Islands, the continental shelf on ODCs sold for export if certain requirements areas (applying the principles of section 638), Taxable event. Tax is imposed on an ODC are met. For a sale to be nontaxable, you and and foreign trade zones. No one is exempt from when it's first used or sold by its manufacturer the purchaser must be registered. See Form the environmental taxes, including the federal or importer. The manufacturer or importer is lia- 637, Application for Registration (for Certain Ex- government, state and local governments, In- ble for the tax. cise Tax Activities). Also, you must obtain from dian tribal governments, and nonprofit educa- the purchaser an exemption certificate that you tional organizations. Use of ODCs. You use an ODC if you put it rely on in good faith. Keep the certificate with into service in a trade or business or for the pro- your records. The certificate must be in sub- duction of income. Also, an ODC is used if you stantially the same form as the sample certifi- Oil Spill Liability Tax use it in the making of an article, including incor- cate set forth in Regulations section poration into the article, chemical transforma- 52.4682-5(d)(3). The tax benefit of this exemption is limited. For more information, see Regu- The oil spill liability tax is reported on Form tion, or release into the air. The loss, destruc- lations section 52.4682-5. 6627, Environmental Taxes, and Form 720, tion, packaging, repackaging, or warehousing of ODCs isn't a use of the ODC. Quarterly Federal Excise Tax Return (IRS Nos. ODCs used as feedstock. There is no tax 18 and 21). The oil spill liability tax rate is $.09 The creation of a mixture containing an ODC on ODCs sold for use or used as a feedstock. per barrel and generally applies to crude oil re- is treated as a taxable use of the ODC con- An ODC is used as a feedstock only if the ODC ceived at a U.S. refinery and to petroleum prod- tained in the mixture. An ODC is contained in a is entirely consumed in the manufacture of an- ucts entered into the United States for con- mixture only if the chemical identity of the ODC other chemical. The transformation of an ODC sumption, use, or warehousing. The tax also isn't changed. Generally, tax is imposed when into one or more new compounds qualifies as applies to certain uses and the exportation of the mixture is created and not on its sale or use. use as a feedstock, but use of an ODC in a mix- domestic crude oil. However, you can choose to have the tax im- ture doesn't qualify. posed on its sale or use by checking the appro- For a sale to be nontaxable, you must obtain priate box on Form 6627. You can revoke this Crude oil includes crude oil condensates from the purchaser an exemption certificate that choice only with IRS consent. and natural gasoline. Petroleum products in- you rely on in good faith. The certificate must be clude crude oil, refined and residual oil, and The creation of a mixture for export or for in substantially the same form as the sample other liquid hydrocarbon refinery products. use as a feedstock isn't a taxable use of the certificate set forth in Regulations section ODCs contained in the mixture.

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52.4682-2(d)(2). Keep the certificate with your tive as of the beginning of the calendar quarter For example, floppy disk drive units are lis- records. to which the Form 6627 applies. You can re- ted in Part III because they aren’t imported taxa- voke this choice only with IRS consent. ble products and would have been included in Credits or refunds. A credit or refund (without the Part II list for electronic items not specifically interest) of tax paid on ODCs may be claimed if Sale of article incorporating imported prod- identified, but for their listing in Part III. a taxed ODC is: uct. The importer may treat the sale of an arti- • Used as a propellant in a metered-dose in- cle manufactured or assembled in the United ODC weight. The Table ODC weight of a haler (the person who used the ODC as a States as the first sale or use of an imported product is the weight, determined by the Com- propellant may file a claim), taxable product incorporated in that article if missioner, of the ODCs used as materials in the • Exported (the manufacturer may file a both the following apply. manufacture of the product under the predomi- claim), or • The importer has consistently treated the nant method of manufacturing. The ODC weight • Used as a feedstock (the person who used sale of similar items as the first sale or use is listed in Part II in pounds per single unit of the ODC may file a claim). of similar taxable imported products. product unless otherwise specified. For information on how to file for credits or re- • The importer hasn’t chosen to treat entry Modifying the table. A manufacturer or im- funds, see the Instructions for Form 720 or into the United States as use of the prod- porter of a product may request that the IRS Schedule 6 (Form 8849). uct. add a product and its ODC weight to the table. They also may request the IRS remove a prod- Conditions to allowance for ODCs expor- Imported products table. The table lists all uct from the table, or change or specify the ted. To claim a credit or refund for ODCs that the products that are subject to the tax on im- ODC weight of a product. To request a modifi- are exported, you must have repaid or agreed ported taxable products and specifies the ODC cation, see Regulations section 52.4682-3(g) to repay the tax to the exporter, or obtained the weight (discussed later) of each product. for the mailing address and information that exporter's written consent to allowance of the Each listing in the table identifies a product must be included in the request. credit or refund. You must also have the evi- by name and includes only products that are described by that name. Most listings identify a dence required by the EPA as proof that the Floor Stocks Tax ODCs were exported. product by both name and Harmonized Tariff Schedule (HTS) heading. In those cases, a product is included in that listing only if the Tax is imposed on any ODC held (other than by Imported Taxable Products product is described by that name and the rate the manufacturer or importer of the ODC) on of duty on the product is determined by refer- January 1 for sale or use in further manufactur- An imported product containing or manufac- ence to that HTS heading. A product is included ing. The person holding title (as determined un- tured with ODCs is subject to tax if it's entered in the listing even if it's manufactured with or der local law) to the ODC is liable for the tax, into the United States for consumption, use, or contains a different ODC than the one specified whether or not delivery has been made. warehousing and is listed in the Imported Prod- in the table. ucts Table. The Imported Products Table is lis- Part II of the table lists electronic items that These chemicals are taxable without regard ted in Regulations section 52.4682-3(f)(6). aren’t included within any other list in the table. to the type or size of storage container in which An imported product is included in this list only the ODCs are held. The tax may apply to an The tax is based on the weight of the ODCs if the product meets one of the following tests. ODC whether it's in a 14-ounce can or a used in the manufacture of the product. Use the it's an electronic component whose opera- 30-pound tank. following methods to figure the ODC weight. • tion involves the use of nonmechanical • The actual (exact) weight of each ODC amplification or switching devices such as You are liable for the floor stocks tax if you used as a material in manufacturing the tubes, transistors, and integrated circuits. hold any of the following on January 1. product. • It contains components described in (1), • If the actual weight can't be determined, 1. At least 400 pounds of ODCs other than which account for more than 15% of the the ODC weight listed for the product in the halons or methyl chloroform, cost of the product. Imported Products Table. 2. At least 50 pounds of halons, or These components don’t include passive However, if you can't determine the actual electrical devices, such as resistors and capaci- 3. At least 1,000 pounds of methyl chloro- weight and the table doesn't list an ODC weight tors. Items such as screws, nuts, bolts, plastic form. for the product, the rate of tax is 1% of the entry parts, and similar specially fabricated parts that If you are liable for the tax, prepare an inven- value of the product. may be used to construct an electronic item tory on January 1 of the taxable ODCs held on aren’t themselves included in the listing for that date for sale or for use in further manufac- Taxable event. Tax is imposed on an imported electronic items. taxable product when the product is first sold or turing. You must pay this floor stocks tax by used by its importer. The importer is liable for Rules for listing products. Products are June 30 of each year. Report the tax on Form the tax. listed in the table according to the following 6627 and Part II of Form 720 for the second cal- rules. endar quarter.

1. A product is listed in Part I of the table if it's For the tax rates, see the Form 6627 instruc- Use of imported products. You use an im- a mixture containing ODCs. tions. ported product if you put it into service in a trade or business or for the production of in- 2. A product is listed in Part II of the table if ODCs not subject to floor stocks tax. The come or use it in the making of an article, in- the Commissioner has determined that the floor stocks tax isn't imposed on any of the fol- cluding incorporation into the article. The loss, ODCs used as materials in the manufac- lowing ODCs. destruction, packaging, repackaging, ware- ture of the product under the predominant housing, or repair of an imported product isn't a method are used for purposes of refrigera- 1. ODCs mixed with other ingredients that use of that product. tion or air conditioning, creating an aerosol contribute to achieving the purpose for or foam, or manufacturing electronic com- which the mixture will be used, unless the Entry as use. The importer may choose to ponents. mixture contains only ODCs and one or treat the entry of a product into the United 3. A product is listed in Part III of the table if more stabilizers. States as the use of the product. Tax is im- the Commissioner has determined that the 2. ODCs contained in a manufactured article posed on the date of entry instead of when the product meets both the following tests. in which the ODCs will be used for their in- product is sold or used. The choice applies to tended purpose without being released all imported taxable products that you own and a. It isn't an imported taxable product. from the article. haven’t used when you make the choice and all b. It would otherwise be included within later entries. Make the choice by checking the a list in Part II of the table. 3. ODCs that have been reclaimed or recy- box in Part II of Form 6627. The choice is effec- cled.

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4. ODCs sold in a qualifying sale for: the local telephone service. Bundled service includes plans that provide both local and long a. Use as a feedstock, Communications Tax distance service for either a flat monthly fee or a b. Export, or charge that varies with the elapsed transmis- A 3% tax is imposed on amounts paid for local sion time for which the service is used. Tele- c. Use as a propellant in a metered-dose telephone service and teletypewriter exchange communications companies provide bundled inhaler. service. service for both landlines and wireless (cellular) service. If Voice over Internet Protocol service Local telephone service. This includes ac- provides both local and long distance service cess to a local telephone system and the privi- and the charges aren’t separately stated, such lege of telephonic quality communication with service is bundled service. most people who are part of the system. Local The method for sending or receiving a call, telephone service also includes any facility or such as on a landline telephone, wireless (cellu- 4. services provided in connection with this serv- lar), or some other method, doesn't affect ice. The tax applies to lease payments for cer- whether a service is local-only or bundled. tain customer premises equipment (CPE) even though the lessor doesn't also provide access Long distance service. Long distance Communications to a local telecommunications system. service is telephonic quality communication with persons whose telephones are outside the Local-only service. Local-only service is local telephone system of the caller. and Air local telephone service as described above, provided under a plan that doesn't include long Pre-paid telephone cards (PTC). A PTC distance telephone service or that separately will be treated as bundled service unless a PTC Transportation states the charge for local service on the bill to expressly states it's for local-only service. Gen- customers. Local-only service also includes any erally, the person responsible for collecting the Taxes facility or services provided in connection with tax is the carrier who transfers the PTC to the this service, even though these services and fa- transferee. The transferee is the first person Excise taxes are imposed on amounts paid for cilities may also be used with long-distance that isn't a carrier to whom a PTC is transferred certain facilities and services. If you receive any service. by the carrier. The transferee is the person lia- payment on which tax is imposed, you are re- ble for the tax and is eligible to request a credit Private communication service. Private or refund. For more information, see Regula- quired to collect the tax, file returns, and pay the communication service isn't local telephone tax over to the government. tions section 49.4251-4. service. Private communication service in- The holder is the person that purchases a If you fail to collect and pay over the taxes, you cludes accessory-type services provided in PTC to use and not to resell. Holders aren’t lia- may be liable for the trust fund recovery pen- connection with a Centrex, PBX, or other similar ble for the tax and can't request a credit or re- alty. See chapter 14, later. system for dual use accessory equipment. fund. However, the charge for the service must be stated separately from the charge for the basic Pre-paid cellular telephones. Rules simi- Uncollected Tax Report system, and the accessory must function, in lar to the PTC rules described above apply to whole or in part, in connection with intercommu- pre-paid cellular telephones. The transferee is nication among the subscriber's stations. the person eligible to request the credit or re- A separate report is required to be filed by col- fund. lecting agents of communications services and Teletypewriter exchange service. This in- air transportation taxes if the person from whom cludes access from a teletypewriter or other Installation charges. The tax doesn't apply to the facilities or services tax (the tax) is required data station to a teletypewriter exchange sys- payments received for the installation of any in- to be collected (the taxpayer) refuses to pay the tem and the privilege of intercommunication by strument, wire, pole, switchboard, apparatus, or tax, or it's impossible for the collecting agent to that station with most persons having teletype- equipment. However, the tax does apply to pay- collect the tax. The report must contain the writer or other data stations in the same ex- ments for the repair or replacement of those name and address of the taxpayer, the type of change system. items incidental to ordinary maintenance. facility provided or service rendered, the amount paid for the facility or service (the Figuring the tax. The tax is based on the sum Answering services. The tax doesn't apply to amount on which the tax is based), and the date of all charges for local telephone service inclu- amounts paid for a private line, an answering paid. ded in the bill. However, if the bill groups indi- service, and a one-way paging or message vidual items for billing and tax purposes, the tax service if they don’t provide access to a local Regular method taxpayers. For regular is based on the sum of the individual items telephone system and the privilege of tele- method taxpayers, the report must be filed by within that group. The tax on the remaining phonic communication as part of the local tele- the due date of the Form 720 on which the tax items not included in any group is based on the phone system. would have been reported. charge for each item separately. Don't include in the tax base state or local sales or use taxes Mobile radio telephone service. The tax Alternative method taxpayers. For alterna- that are separately stated on the taxpayer's bill. doesn't apply to payments for a two-way radio tive method taxpayers, the report must be filed service that doesn't provide access to a local by the due date of the Form 720 that includes telephone system. an adjustment to the separate account for the Exemptions uncollected tax. See Alternative method in Coin-operated telephones. The tax for local chapter 11. Payments for certain services or payments from telephone service doesn't apply to payments certain users are exempt from the communica- made for services by inserting coins in public Where to file. Don't file the uncollected tax tions tax. coin-operated telephones. But the tax applies if report with Form 720. Instead, mail the report the coin-operated telephone service is fur- to: Nontaxable service. Nontaxable service nished for a guaranteed amount. Figure the tax means bundled service and long distance serv- on the amount paid under the guarantee plus Department of the Treasury ice. Nontaxable service also includes pre-paid any fixed monthly or other periodic charge. Internal Revenue Service telephone cards and pre-paid cellular service. Cincinnati, OH 45999 Telephone-operated security systems. The Bundled service. Bundled service is local tax doesn't apply to amounts paid for tele- and long distance service provided under a phones used only to originate calls to a limited plan that doesn't separately state the charge for

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number of telephone stations for security entry Federal, state, and local government. The into a building. In addition, the tax doesn't apply tax doesn't apply to communication services to any amounts paid for rented communication provided to the government of the United Air Transportation Taxes equipment used in the security system. States, the government of any state or its political subdivisions, the District of Columbia, or the Taxes are imposed on amounts paid for: News services. The tax on teletypewriter ex- United Nations. Treat an Indian tribal govern- • Transportation of persons by air, change service doesn't apply to charges for the ment as a state for the exemption from the com- • Use of international air travel facilities, and following news services. munications tax only if the services involve the • Transportation of property by air. • Services dealing exclusively with the col- exercise of an essential tribal government func- lection or dissemination of news for or tion. Aircraft Management through the public press or radio or televi- sion broadcasting. Exemption certificate. Any form of exemption Services • Services used exclusively in the collection certificate will be acceptable if it includes all the or dissemination of news by a news ticker information required by the Internal Revenue Amounts paid by an aircraft owner for certain service furnishing a general news service Code and Regulations. See Regulations sec- aircraft management services are exempt from similar to that of the public press. tion 49.4253-11. File the certificate with the pro- the section 4261 and 4271 excise taxes imposed on transportation by air. An aircraft This exemption applies to payments received vider of the communication services. An ex- owner includes a person that owns an aircraft for messages from one member of the news emption certificate isn't required for nontaxable and a person that leases an aircraft for 31 days media to another member (or to or from their services. or more. A person owns an aircraft if the person bona fide correspondents). For the exemption The following users that are exempt from the holds legal title to the aircraft, or if the person to apply, the charge for these services must be communications tax don’t have to file an annual holds substantial incidents of ownership in the billed in writing to the person paying for the exemption certificate after they have filed the in- aircraft for a period of more than 31 days. A les- service and that person must certify in writing itial certificate to claim an exemption from the see of an aircraft includes the beneficiary of an that the services are used for an exempt pur- communications tax. owner trust that holds legal title to the aircraft. pose. • The American National Red Cross and other international organizations. Services not exempted. The tax applies • Nonprofit hospitals. If an aircraft owner pays an amount to an air- to amounts paid by members of the news me- • Nonprofit educational organizations. craft management services provider for flights dia for local telephone service. • Qualified blood collector organizations. on the aircraft owner's aircraft, the amount paid • State and local governments. isn't subject to the section 4261 or 4271 excise International organizations and the Ameri- tax, even if the aircraft owner is not on the flight. The federal government doesn't have to file can Red Cross. The tax doesn't apply to com- However, tax may apply if an aircraft owner any exemption certificate. munication services furnished to an interna- pays an amount to an aircraft management tional organization or to the American National All other organizations must furnish exemp- services provider for flights on a substitute air- Red Cross. tion certificates when required. craft. An allocation is required if an aircraft owner pays an amount to an aircraft manage- Nonprofit hospitals. The tax doesn't apply to Credits or Refunds ment services provider that includes an amount telephone services furnished to income tax-ex- attributable to flights on the aircraft owner's air- empt nonprofit hospitals for their use. Also, the If tax is collected and paid over for nontaxable craft and an amount attributable to flights on a tax doesn't apply to amounts paid by these hos- services, or for certain services or users exempt substitute aircraft. pitals to provide local telephone service in the from the communications tax, the collector or homes of their personnel who must be reached taxpayer may claim a credit or refund if it has re- The aircraft management services exemp- during their off-duty hours. paid the tax to the person from whom the tax tion does not apply to amounts paid by an air- was collected or obtained the consent of that craft owner for aircraft management services Nonprofit educational organizations. The person to the allowance of the credit or refund. related to (i) an aircraft that the aircraft owner tax doesn't apply to payments received for serv- Alternatively, the person who paid the tax may has leased for a period of less than 31 days, (ii) ices and facilities furnished to a nonprofit edu- claim a refund. For more information on how to a fractionally owned aircraft; or (iii) an aircraft cational organization for its use. A nonprofit ed- file for credits or refunds, see the Instructions used for scheduled passenger service for which ucational organization is one that satisfies all for Form 720 or Form 8849. tickets are sold on a seat-by-seat basis to the the following requirements. general public. • It normally maintains a regular faculty and Collectors. The collector may request a credit curriculum. or refund if it has repaid the tax to the person Transportation of • It normally has a regularly enrolled body of from whom the tax was collected, or obtained pupils or students in attendance at the the consent of that person to the allowance of Persons by Air place where its educational activities are the credit or refund. These requirements also regularly carried on. apply to nontaxable service refunds. The tax on transportation of persons by air is • it's exempt from income tax under section made up of the: 501(a). Collectors using the regular method for • Percentage tax, and deposits. Collectors using the regular method • Domestic-segment tax. This includes a school operated by an organiza- for deposits must use Form 720-X to request a tion exempt under section 501(c)(3) if the credit or refund if the collector has repaid the Percentage tax. A tax of 7.5% applies to school meets the above qualifications. tax to the person from whom the tax was collec- amounts paid for taxable transportation of per- ted, or obtained the consent of that person to Qualified blood collector organizations. sons by air. Amounts paid for transportation in- the allowance of the credit or refund. The tax doesn't apply to telephone services fur- clude charges for layover or waiting time and movement of aircraft in deadhead service. nished to qualified blood collector organizations Collectors using the alternative method for their use. A qualified blood collector organi- for deposits. Collectors using the alternative Mileage awards. The percentage tax may zation is one that is: method for deposits must adjust their separate apply to an amount paid (in cash or in kind) to • Described in section 501(c)(3) and exempt accounts for the credit or refund if it has repaid an air carrier (or any related person) for the right from tax under section 501(a), the tax to the person from whom the tax was to provide mileage awards for, or other reduc- • Primarily engaged in the activity of collect- collected, or obtained the consent of that per- tions in the cost of, any transportation of per- ing human blood, son to the allowance of the credit or refund. For sons by air. For example, this applies to mile- • Registered with the IRS, and more information, see the Instructions for Form age awards purchased by credit card • Registered by the Food and Drug Adminis- 720. companies, telephone companies, restaurants, tration to collect blood. hotels, and other businesses.

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Generally, the percentage tax doesn't apply www.dot.gov and enter the phrase “Essential the person receiving the payment collects the to amounts paid for mileage awards where the Air Service” in the search box. tax, files the returns, and pays the tax over to mileage awards can't, under any circumstan- the government. However, if payment is made ces, be redeemed for air transportation that is Taxable transportation. Taxable transporta- outside the United States for a prepaid order, subject to the tax. Until regulations are issued, tion is transportation by air that meets either of exchange order, or similar order, the person fur- the following rules apply to mileage awards. the following tests. nishing the initial transportation provided for un- • Amounts paid for mileage awards that • It begins and ends either in the United der that order must collect the tax. can't be redeemed for taxable transporta- States or at any place in Canada or Mexico A travel agency that is an independent tion beginning and ending in the United not more than 225 miles from the nearest broker and sells tours on aircraft that it charters States aren’t subject to the tax. For this point on the continental United States must collect the transportation tax, file the re- rule, mileage awards issued by a foreign boundary (this is the 225-mile zone). turns, and pay the tax over to the government. air carrier are considered to be usable only • it's directly or indirectly from one port or However, a travel agency that sells tours as the on that foreign air carrier and thus not re- station in the United States to another port agent of an airline must collect the tax and remit deemable for taxable transportation begin- or station in the United States, but only if it it to the airline for the filing of returns and for the ning and ending in the United States. isn't a part of uninterrupted international air payment of the tax over to the government. An Therefore, amounts paid to a foreign air transportation, discussed later. independent third party that isn't under the air- carrier for mileage awards aren’t subject to line's supervision or control, but is acting on be- Round trip. A round trip is considered two the tax. half of, and receiving compensation from, a separate trips. The first trip is from the point of • Amounts paid by an air carrier to a domes- passenger, isn't required to collect the tax and departure to the destination. The second trip is tic air carrier for mileage awards that can pay it to the government. For more information the return trip from that destination. be redeemed for taxable transportation on resellers of air transportation, see Revenue aren’t subject to the tax to the extent those Uninterrupted international air transpor- Ruling 2006-52. You can find Revenue Ruling miles will be awarded in connection with tation. This means transportation entirely by 2006-52 on page 761 of I.R.B. 2006-43, at the purchase of taxable transportation. air that doesn't begin and end in the United IRS.gov/PUB/IRB/IRB2006-43#RR2006-52. • Amounts paid by an air carrier to a domes- States or in the 225-mile zone if there isn't more The fact that the aircraft doesn't use public tic air carrier for mileage awards that can than a 12-hour scheduled interval between ar- or commercial airports in taking off and landing be redeemed for taxable transportation are rival and departure at any station in the United has no effect on the tax. But see Certain heli- subject to the tax to the extent those miles States. For a special rule that applies to military copter uses, later. won’t be awarded in connection with the personnel, see Exemptions, later. For taxable transportation that begins and purchase of taxable transportation. ends in the United States, the tax applies re- Transportation between the continental gardless of whether the payment is made in or United States and Alaska or Hawaii. This Domestic-segment tax. The domestic-seg- outside the United States. ment tax is a flat dollar amount for each seg- transportation is partially exempt from the tax If the tax isn't paid when payment for the ment of taxable transportation for which an on transportation of persons by air. The tax transportation is made, the air carrier providing amount is paid. However, see Rural airports be- doesn't apply to the part of the trip between the the initial segment of the transportation that below. A segment is a single takeoff and a single point at which the route of transportation leaves gins or ends in the United States becomes lia- landing. or enters the continental United States (or a port or station in the 225-mile zone) and the ble for the tax. Note. Generally, the tax on each domes- point at which it enters or leaves Hawaii or Exemptions. The tax on transportation of per- tic-segment of taxable air transportation increa- Alaska. Leaving or entering occurs when the sons by air doesn't apply in the following situa- ses annually based on adjustments for inflation. route of the transportation passes over either tions. See also Special Rules on Transportation See the Instructions for Form 720 for the tax the United States border or a point 3 nautical Taxes, later. rate. miles (3.45 statute miles) from low tide on the coastline, or when it leaves a port or station in Military personnel on international trips. Charter flights. If an aircraft is chartered, the 225-mile zone. Therefore, this transporta- When traveling in uniform at their own expense, the domestic-segment tax for each segment of tion is subject to the percentage tax on the part United States military personnel on authorized taxable transportation is figured by multiplying of the trip in U.S. airspace, the domestic-seg- leave are deemed to be traveling in uninterrup- the tax by the number of passengers transpor- ment tax for each domestic segment, and the ted international air transportation (defined ear- ted on the aircraft. tax on the use of international air travel facilities, lier) even if the scheduled interval between ar- Rural airports. The domestic-segment tax discussed later. rival and departure at any station in the United States is actually more than 12 hours. However, doesn't apply to a segment to or from a rural air- Transportation within Alaska or Hawaii. such personnel must buy their tickets within 12 port. An airport is a rural airport for a calendar The tax on transportation of persons by air ap- hours after landing at the first domestic airport year if fewer than 100,000 commercial passen- plies to the entire fare paid in the case of flights and accept the first available accommodation of gers departed from the airport by air during the between any of the Hawaiian Islands, and be- the type called for by their tickets. The trip must second preceding calendar year (the 100,000 tween any ports or stations in the Aleutian Is- begin or end outside the United States and the passenger rule), and one of the following is lands or other ports or stations elsewhere in 225-mile zone. true: Alaska. The tax applies even though parts of 1. The airport isn't located within 75 miles of the flights may be over international waters or Certain helicopter uses. The tax doesn't another airport from which 100,000 or over Canada, if no point on the direct line of apply to air transportation by helicopter if the more commercial passengers departed transportation between the ports or stations is helicopter is used for any of the following purpo- during the second preceding calendar more than 225 miles from the United States ses. year, (Hawaii or Alaska). 1. Transporting individuals, equipment, or 2. The airport was receiving essential air Package tours. The air transportation taxes supplies in the exploration for, or the de- service subsidies as of August 5, 1997, or apply to “complimentary” air transportation fur- velopment or removal of, hard minerals, oil, or gas. 3. The airport isn't connected by paved roads nished solely to participants in package holiday to another airport. tours. The amount paid for these package tours 2. Planting, cultivating, cutting, transporting, includes a charge for air transportation even or caring for trees (including logging oper- To apply the 100,000 passenger rule to any though it may be advertised as “free.” This rule ations). airport described in (3) above, only count com- also applies to the tax on the use of interna- mercial passengers departing from the airport tional air travel facilities, discussed later. 3. Providing emergency medical transporta- by air on flight segments of at least 100 miles. tion. An updated list of rural airports can be found Liability for tax. The person paying for taxable on the Department of Transportation website at transportation is liable for the tax and, ordinarily,

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However, during a use described in items begins or ends in the United States, and the tax aircraft departs from or arrives at an airport in (1) or (2), the tax applies if the helicopter takes per person for domestic segments that begins the 225-mile zone). But the tax applies to flights off from, or lands at, a facility eligible for assis- or ends in Alaska or Hawaii (applies to depar- between ports or stations in Alaska and the tance under the Airport and Airway Develop- tures only), are increased annually based on in- Aleutian Islands, as well as between ports or ment Act of 1970, or otherwise uses services flation adjustments. See the Instructions for stations in Hawaii. The tax applies even though provided under section 44509 or 44913(b) or Form 720 for the tax rate. parts of the flights may be over international wa- subchapter I of chapter 471 of title 49, United ters or over Canada, if no point on a line drawn States Code. For item (1), treat each flight seg- from where the route of transportation leaves ment as a separate flight. Transportation of the United States (Alaska) to where it reenters the United States (Alaska) is more than 225 Fixed-wing aircraft uses. The tax doesn't Property by Air miles from the United States. apply to air transportation by fixed-wing aircraft if the fixed-wing aircraft is used for any of the A tax of 6.25% is imposed on amounts paid Seaplanes. The tax doesn't apply to any air following purposes. (whether in or outside the United States) for transportation by seaplane for any segment transportation of property by air. The fact that consisting of a takeoff from, and a landing on, 1. Planting, cultivating, cutting, transporting, the aircraft may not use public or commercial water if the places where the takeoff and land- or caring for trees (including logging oper- airports in taking off and landing has no effect ing occur aren’t receiving financial assistance ations). on the tax. The tax applies only to amounts paid from the Airport and Airways Trust Fund. 2. Providing emergency medical transporta- to a person engaged in the business of trans- tion. The aircraft must be equipped for, porting property by air for hire. Liability for tax. The person paying for taxable transportation is liable for the tax and, ordinarily, and exclusively dedicated on that flight to, The tax applies only to transportation (in- the person engaged in the business of trans- acute care emergency medical services. cluding layover time and movement of aircraft in porting property by air for hire receives the pay- 3. Providing emergency medical transporta- deadhead service) that begins and ends in the ment, collects the tax, files the returns, and tion if the fixed-wing aircraft is equipped United States. Thus, the tax doesn't apply to pays the tax over to the government. for, and exclusively dedicated on that flight transportation of property by air that begins or If tax isn't paid when a payment is made out- to, acute care emergency medical serv- ends outside the United States. side the United States, the person furnishing ices. Exemptions. The tax on transportation of the last segment of taxable transportation col- However, during a use described in item (1), property by air doesn't apply in the following sit- lects the tax from the person to whom the prop- the tax applies if the fixed-wing aircraft takes off uations. See also Special Rules on Transporta- erty is delivered in the United States. from, or lands at, a facility eligible for assistance tion Taxes, later. under the Airport and Airway Development Act Special Rules on of 1970, or otherwise uses services provided Cropdusting and firefighting service. under section 44509 or 44913(b) or subchapter The tax doesn't apply to amounts paid for crop- Transportation Taxes I of chapter 471 of title 49, United States Code. dusting or aerial firefighting service. Aircraft used by affiliated corporations. Skydiving. The tax doesn't apply to any air Exportation. The tax doesn't apply to pay- The taxes don’t apply to payments received by transportation exclusively for the purpose of ments for transportation of property by air in the one member of an affiliated group of corpora- skydiving. course of exportation (including to United tions from another member for services fur- States possessions) by continuous movement, nished in connection with the use of an aircraft. Seaplanes. The tax doesn't apply to any air as evidenced by the execution of Form 1363, However, the aircraft must be owned or leased transportation by seaplane for any segment Export Exemption Certificate. See Form 1363 by a member of the affiliated group and can't be consisting of a takeoff from, and a landing on, for more information. available for hire by a nonmember of the affili- water if the places where the takeoff and land- ated group. Determine whether an aircraft is Certain helicopter and fixed-wing air am- ing occur aren’t receiving financial assistance available for hire by a nonmember of an affili- bulance uses. The tax doesn't apply to from the Airport and Airways Trust Fund. ated group on a flight-by-flight basis. amounts paid for the use of helicopters in con- Bonus tickets. The tax doesn't apply to struction to set heating and air conditioning For this rule, an affiliated group of corpora- free bonus tickets issued by an airline company units on roofs of buildings, to dismantle tower tions is any group of corporations connected to its customers who have satisfied all require- cranes, and to aid in construction of power lines with a common parent corporation through 80% ments to qualify for the bonus tickets. However, and ski lifts. or more of stock ownership. the tax applies to amounts paid by customers The tax also doesn't apply to air transporta- for advance bonus tickets when customers tion by helicopter or fixed-wing aircraft for the Small aircraft. The taxes don’t apply to trans- have traveled insufficient mileage to fully qualify purpose of providing emergency medical serv- portation furnished by an aircraft having a maxi- for the free advance bonus tickets. ices. The fixed-wing aircraft must be equipped mum certificated takeoff weight of 6,000 for, and exclusively dedicated on that flight to, pounds or less. However, the taxes do apply if acute care emergency medical services. the aircraft is operated on an established line. International “Operated on an established line” means the Air Travel Facilities Skydiving. The tax doesn't apply to any air aircraft operates with some degree of regularity transportation exclusively for the purpose of between definite points. However, it doesn't in- A tax per person is imposed (whether in or out- skydiving. clude any time an aircraft is being operated on side the United States) for international flights a flight that is solely for sightseeing. that begin or end in the United States. How- Excess baggage. The tax doesn't apply to Consider an aircraft to be operated on an ever, for a domestic segment that begins or excess baggage accompanying a passenger established line if it's operated on a charter ba- ends in Alaska or Hawaii, a reduced tax per on an aircraft operated on an established line. sis between two cities also served by that car- person applies only to departures. This tax Surtax on fuel used in a fractional own- rier on a regularly scheduled basis. doesn't apply if all the transportation is subject ership program aircraft. The tax doesn't ap- Also, the taxes apply if the aircraft is to the percentage tax, discussed earlier. It also ply if the surtax on fuel used in a fractional own- jet-powered, regardless of its maximum certifi- doesn't apply if the surtax on fuel used in a frac- ership program aircraft (discussed earlier) is cated takeoff weight or whether or not it's oper- tional ownership program aircraft (discussed imposed. ated on an established line. earlier) is imposed. See the Instructions for Form 720 for the tax rates. Alaska and Hawaii. For transportation of Mixed load of persons and property. If a property to and from Alaska and Hawaii, the tax single amount is paid for air transportation of Note. Generally, both the tax on the use of in general doesn't apply to the portion of the persons and property, the payment must be al- international air travel facilities for any interna- transportation that is entirely outside the conti- located between the amount subject to the tax tional air transportation, if the transportation nental United States (or the 225-mile zone if the

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on transportation of persons and the amount Use considered sale. A manufacturer who Example. A manufacturer sells a quantity subject to the tax on transportation of property. uses a taxable article is liable for the tax in the of taxable articles and gives the purchaser cer- The allocation must be reasonable and suppor- same manner as if it were sold. tain nontaxable articles as a bonus. The sale ted by adequate records. price of the shipment is $1,500. The normal Lease considered sale. The lease of an sale price is $2,000: $1,500 for the taxable arti- Credits or refunds. If tax is collected and paid article (including any renewal or extension of cles and $500 for the nontaxable articles. Since over for air transportation that isn't taxable air the lease) by the manufacturer is generally con- the taxable items represent 75% of the normal transportation, the collector may claim a credit sidered a taxable sale. However, for the gas sale price, the tax is based on 75% of the actual or refund if it has repaid the tax to the person guzzler tax, only the first lease (excluding any sale price, or $1,125 (75% of $1,500). The re- from whom the tax was collected or obtained renewal or extension) of the automobile by the maining $375 is allocated to the nontaxable arti- the consent of that person to the allowance of manufacturer is considered a sale. cles. the credit or refund. Alternatively, the person who paid the tax may claim a refund. For infor- Manufacturers taxes based on sale price. mation on how to file for credits or refunds, see The manufacturers taxes imposed on the sale Taxable Event the Instructions for Form 720 or Form 8849. of sport fishing equipment, electric outboard motors, and bows are based on the sale price of the article. The taxes imposed on coal are Tax attaches when the title to the article sold based either on the sale price or the weight. passes from the manufacturer to the buyer. The price for which an article is sold in- When the title passes depends on the intention cludes the total consideration paid for the arti- of the parties as gathered from the contract of cle, whether that consideration is in the form of sale. In the absence of expressed intention, the money, services, or other things. However, you legal rules of presumption followed in the juris- 5. include certain charges made when a taxable diction where the sale occurs determine when article is sold and you exclude others. To figure title passes. the price on which you base the tax, use the fol- If the taxable article is used by the manufac- lowing rules. Manufacturers turer, the tax attaches at the time use begins. 1. Include both the following charges in the Taxes price. The manufacturer is liable for the tax. a. Any charge for coverings or contain- Partial payments. The tax applies to each The following discussion of manufacturers ers (regardless of their nature). partial payment received when taxable articles taxes applies to the tax on: b. Any charge incident to placing the ar- are: • Sport fishing equipment; ticle in a condition packed ready for • Leased, • Fishing rods and fishing poles; shipment. • Sold conditionally, • Electric outboard motors; • Sold on installment with chattel mortgage, • Fishing tackle boxes; 2. Exclude all the following amounts from or • Bows, quivers, broadheads, and points; the price. • Sold on installment with title to pass in the • Arrow shafts; a. The manufacturers excise tax, future. • Coal; whether or not it's stated as a sepa- To figure the tax, multiply the partial payment by • Taxable tires; rate charge. • Gas guzzler automobiles; and the tax rate in effect at the time of the payment. • Vaccines. b. The transportation charges pursuant to the sale. The cost of transportation Manufacturer. The term “manufacturer” in- of goods to a warehouse before their Exemptions cludes a producer or importer. A manufacturer bona fide sale isn't excludable. is any person who produces a taxable article The following sales by the manufacturer are ex- c. Delivery, insurance, installation, retail from new or raw material, or from scrap, sal- empt from the manufacturers tax. dealer preparation charges, and other vage, or junk material, by processing or chang- Sale of an article to a state or local govern- charges you incur in placing the arti- • ing the form of an article or by combining or as- ment for the exclusive use of the state or cle in the hands of the purchaser un- sembling two or more articles. If you furnish the local government. This exemption doesn't der a bona fide sale. materials and keep title to those materials and apply to the taxes on coal, gas guzzlers, to the finished article, you are considered the d. Discounts, rebates, and similar allow- and vaccines. State is defined in Defini- manufacturer even though another person ac- ances actually granted to the pur- tions in chapter 1. tually manufactures the taxable article. chaser. • Sale of an article to a nonprofit educational organization for its exclusive use. This ex- A manufacturer who sells a taxable article in e. Local advertising charges. A charge emption doesn't apply to the taxes on coal, knockdown (unassembled) condition is liable made separately when the article is gas guzzlers, and vaccines. Nonprofit edu- for the tax. The person who buys these compo- sold and that qualifies as a charge for cational organization is defined under nent parts and assembles a taxable article may “local advertising” may, within certain Communications Tax in chapter 4. also be liable for tax as a further manufacturer limits, be excluded from the sale Sale of an article to a qualified blood col- depending on the labor, material, and overhead price. • required to assemble the completed article if lector organization. This exemption doesn't the article is assembled for business use. f. Charges for warranty paid at the pur- apply to gas guzzlers, recreational equip- chaser's option. However, a charge ment, and vaccines. Qualified blood col- Importer. An importer is a person who for a warranty of an article that the lector organizations are defined under brings a taxable article into the United States, or manufacturer requires the purchaser Communications Tax in chapter 4. withdraws a taxable article from a customs bon- to pay to obtain the article is included • Sale of an article for use by the purchaser ded warehouse for sale or use in the United in the sale price on which the tax is as supplies for vessels. This exemption States. figured. doesn't apply to the taxes on coal and vaccines. Supplies for vessels means ships' Bonus goods. Allocate the sale price if you Sale. A sale is the transfer of the title to, or the stores, sea stores, or legitimate equipment give free nontaxable goods with the purchase of substantial incidents of ownership in, an article on vessels of war of the United States or taxable merchandise. Figure the tax only on the to a buyer for consideration that may consist of any foreign nation, vessels employed in sale price attributable to the taxable articles. money, services, or other things. the fisheries or whaling business, or vessels actually engaged in foreign trade.

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• Sale of an article for use by the purchaser Proof of export requirement. Within 6 the following applies and that the claimant has for further manufacture, or for resale by the months of the date of sale or shipment by the the required supporting information. purchaser to a second purchaser for use manufacturer, whichever is earlier, the manu- • The claimant sold the article at a tax-exclu- by the second purchaser for further manufacturer must receive proof of exportation. See ded price. facture. This exemption doesn't apply to Regulations section 48.4221-3(d) for evidence • The person has repaid, or agreed to repay, the tax on coal and tires. Use for further that qualifies as proof of exportation. the tax to the ultimate vendor of the article. manufacture means use in the manufac- • The person has obtained the written con- ture or production of an article subject to Proof of resale for further manufacture re- sent of the ultimate vendor to make the the manufacturers excise taxes. If you buy quirement. Within 6 months of the date of sale claim. or shipment by the manufacturer, whichever is articles tax free and resell or use them The ultimate vendor generally is the seller mak- earlier, the manufacturer must receive proof other than in the manufacture of another ing the sale that gives rise to the overpayment that the article has been resold for use in further article, you are liable for the tax on their re- of tax. sale or use just as if you had manufactured manufacture. See Regulations section and sold them. 48.4221-2(c) for evidence that qualifies as proof Claim for further manufacture. To claim • Sale of an article for export or for resale by of resale. a credit or refund for further manufacture the the purchaser to a second purchaser for claimant must include a statement that contains export. The article may be exported to a Information to be furnished to purchaser. the following. foreign country or to a possession of the The manufacturer must indicate to the pur- • The name and address of the manufac- United States. A vaccine shipped to a pos- chaser that the articles normally would be sub- turer and the date of payment. session of the United States isn't consid- ject to tax and are being sold tax free for an ex- • An identification of the article for which the ered to be exported. If an article is sold tax empt purpose because the purchaser has credit or refund is claimed. free for export and the manufacturer provided the required certificate. • The amount of tax paid on the article and doesn't receive proof of export, described the date on which it was paid. later, the manufacturer is liable for the tax. Credits or Refunds • Information indicating that the article was • Sales of articles of native Indian handicraft, used as material in the manufacture or pro- such as bows and arrow shafts, manufac- The manufacturer may be eligible to obtain a duction of, or as a component part of, a tured by Indians on reservations, in Indian credit or refund of the manufacturers tax for cer- second article manufactured or produced schools, or under U.S. jurisdiction in tain uses, sales, exports, and price readjust- by the manufacturer, or was sold on or in Alaska. ments. The claim must set forth in detail the connection with, or with the sale of a sec- • For tire exemptions, see section 4221(e) facts upon which the claim is based. ond article manufactured or produced by (2). the manufacturer. Uses, sales, and exports. A credit or refund • An identification of the second article. Requirements for Exempt (without interest) of the manufacturers taxes For claims by the exporter or shipper, the Sales may be allowable if a tax-paid article is, by any claim must contain the proof of export and a person: statement signed by the person that paid the The following requirements must be met for a • Exported, tax waiving the right to claim a credit or refund. sale to be exempt from the manufacturers tax. • Used or sold for use as supplies for ves- The statement must include the amount of tax sels (except for coal and vaccines), paid, the date of payment, and the office to Registration requirements. The manufac- • Sold to a state or local government for its which it was paid. turer, first purchaser, and second purchaser in exclusive use (except for coal, gas guz- Claim for price readjustment. To claim a the case of resales must be registered. See the zlers, and vaccines), credit or refund for a price readjustment, the Form 637 instructions for more information. • Sold to a nonprofit educational organization for its exclusive use (except for coal, person who paid the tax must include with the Exceptions to registration requirements. gas guzzlers, and vaccines), claim, a statement that contains the following. Registration isn't required for: • Sold to a qualified blood collector organi- • A description of the circumstances that • State or local governments, zation for its exclusive use (except for gas gave rise to the price readjustment. • Foreign purchasers of articles sold or re- guzzlers, recreational equipment, and vac- • An identification of the article whose price sold for export, cines), or was readjusted. • The U.S. Government, or • Used for further manufacture of another ar- • The price at which the article was sold. • Parties to a sale of supplies for vessels ticle subject to the manufacturers taxes • The amount of tax paid on the article and and aircraft. (except for coal). the date on which it was paid. • The name and address of the purchaser. Certification requirement. If the purchaser is Export. If a tax-paid article is exported, the ex- • The amount repaid to the purchaser or required to be registered, the purchaser must porter or shipper may claim a credit or refund if credited to the purchaser's account. give the manufacturer its registration number the manufacturer waives its right to claim the and certify the exempt purpose for which the ar- credit or refund. In the case of a tax-paid article ticle will be used. The information must be in used to make another taxable article, the sub- Sport Fishing Equipment writing and may be noted on the purchase order sequent manufacturer may claim the credit or or other document furnished by the purchaser refund. A tax of 10% of the sale price is imposed on to the seller in connection with the sale. many articles of sport fishing equipment sold by For a sale to a state or local government, an Price readjustments. In addition, a credit or the manufacturer. This includes any parts or ac- exemption certificate must be signed by an offi- refund (without interest) may be allowable for a cessories sold on or in connection with the sale cer or employee authorized by the state or local tax-paid article for which the price is readjusted of those articles. government. See Regulations section by reason of return or repossession of the arti- 48.4221-5(c) for the certificate requirements. cle or a bona fide discount, rebate, or allowance Pay this tax with Form 720. No tax deposits For sales for use as supplies for vessels and for taxes based on price. are required. aircraft, if the manufacturer and purchaser Sport fishing equipment includes all the fol- aren’t registered, the owner or agent of the ves- Conditions to allowance. To claim a credit or lowing items. sel must provide an exemption certificate to the refund in the case of export; supplies for ves- manufacturer before or at the time of sale. See sels; or sales to a state or local government, 1. Fishing rods and poles (and component Regulations section 48.4221-4(d) for the certifi- nonprofit educational organization, or qualified parts), fishing reels, fly fishing lines, and cate requirements. blood collector organization, the person who other fishing lines not over 130 pounds paid the tax must certify on the claim that one of test, fishing spears, spear guns, and spear tips.

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2. Items of terminal tackle, including leaders, draw weight of 30 pounds or more. The tax is Coal will be taxed at the 4.4% rate if the sell- artificial lures, artificial baits, artificial flies, also imposed on the sale of any part or acces- ing price is less than $25 a ton for under- fishing hooks, bobbers, sinkers, snaps, sory suitable for inclusion in or attachment to a ground-mined coal and less than $12.50 a ton drayles, and swivels (but not including nat- taxable bow and any quiver, broadhead, or for surface-mined coal. Apply the tax propor- ural bait or any item of terminal tackle de- point suitable for use with arrows described be- tionately if a sale or use includes a portion of a signed for use and ordinarily used on fish- low. ton. ing lines not described in (1)). Pay this tax with Form 720. No tax deposits Example. If you sell 21,000 pounds (10.5 3. The following items of fishing supplies and are required. tons) of coal from an underground mine for accessories: fish stringers, creels, bags, $525, the price per ton is $50. The tax is $1.10 baskets, and other containers designed to × 10.5 tons ($11.55). hold fish, portable bait containers, fishing Arrow Shafts vests, landing nets, gaff hooks, fishing Coal production. Coal is produced from sur- hook disgorgers, and dressing for fishing face mines if all geological matter (trees, earth, lines and artificial flies. Generally, the section 4161 tax on arrow shafts increases annually based on inflation adjust- rock) above the coal is removed before the coal 4. Fishing tip-ups and tilts. ments. See Form 720 for the tax rate. The tax is is mined. Treat coal removed by auger and coal paid by the manufacturer, producer, or importer reclaimed from coal waste refuse piles as pro- 5. Fishing rod belts, fishing rodholders, fish- duced from a surface mine. ing harnesses, fish fighting chairs, fishing of any arrow shaft (whether sold separately or Treat coal as produced from an under- outriggers, and fishing downriggers. incorporated as part of a finished or unfinished product) of a type used in the manufacture of ground mine when the coal isn't produced from See Revenue Ruling 88-52 in Cumulative Bulle- any arrow that after its assembly meets either of a surface mine. In some cases, a single mine tin 1988-1 for a more complete description of the following conditions. may yield coal from both surface mining and un- the items of taxable equipment. • It measures 18 inches or more in overall derground mining. Determine if the coal is from length. a surface mine or an underground mine for Fishing rods and fishing poles. The tax on • It measures less than 18 inches in overall each ton of coal produced and not on a fishing rods and fishing poles (and component length but is suitable for use with a taxable mine-by-mine basis. parts) is 10% of the sales price not to exceed bow, described earlier. $10 per article. The tax is paid by the manufac- Determining tonnage or selling price. The turer, producer, or importer. Exemption for certain wooden arrows. producer pays the tax on coal at the time of sale The tax doesn't apply to any shaft made of all or use. In figuring the selling price for applying Fishing tackle boxes. The tax on fishing natural wood with no laminations or artificial the tax, the point of sale is f.o.b. (free on board) tackle boxes is 3% of the sales price. The tax is means of enhancing the spine of such shaft mine or f.o.b. cleaning plant if you clean the paid by the manufacturer, producer, or importer. (whether sold separately or incorporated as part coal before selling it. This applies even if you of a finished or unfinished product) and used in sell the coal for a delivered price. The f.o.b. Electric outboard boat motors. A tax of 3% the manufacture of any arrow that after its as- mine or f.o.b. cleaning plant is the point at of the sale price is imposed on the sale by the sembly meets both of the following conditions. which you figure the number of tons sold for ap- manufacturer of electric outboard motors. This • It measures 5/16 of an inch or less in diame- plying the applicable tonnage rate, and the includes any parts or accessories sold on or in ter. point at which you figure the sale price for ap- connection with the sale of those articles. • It isn't suitable for use with a taxable bow, plying the 4.4% rate. described earlier. The tax applies to the full amount of coal Certain equipment resale. The tax on the sold. However, the IRS allows a calculated resale of sport fishing equipment is imposed a Pay this tax with Form 720. No tax deposits duction of the taxable weight of the coal for the second time under the following circumstances. are required. weight of the moisture in excess of the coal's in- If the manufacturer sells a taxable article to any herent moisture content. Include in the sale person, the manufacturer is liable for the tax. If price any additional charge for a freeze-condi- the purchaser or any other person then sells it Coal tioning additive in figuring the tax. to a person who is related (discussed next) to Don't include in the sales price the excise the manufacturer, that related person is liable Section 4121 imposes a tax on the first sale of tax imposed on coal. for a second tax on any subsequent sale of the coal mined in the United States. The producer article. The second tax, however, isn't imposed of the coal is liable for the tax. The producer is Coal used by the producer. The tax on coal if the constructive sale price rules under section the person who has vested ownership of the applies if the coal is used by the producer in 4216(b) apply to the sale by the manufacturer. coal under state law immediately after the coal other than a mining process. A mining process If the second tax is imposed, a credit for tax is severed from the ground. Determine vested means the same for this purpose as for percent- previously paid by the manufacturer is available ownership without regard to any contractual ar- age depletion. For example, the tax doesn't ap- provided the related person can document the rangement for the sale or other disposition of ply if, before selling the coal, you break it, clean tax paid. The documentation requirement is the coal or the payment of any royalties be- it, size it, or apply any other process considered generally satisfied only through submission of tween the producer and third parties. A pro- mining under the rules for depletion. In this copies of actual records of the person that pre- ducer includes any person who extracts coal case, the tax applies only when you sell the viously paid the tax. from coal waste refuse piles (or from the silt coal. The tax doesn't apply to coal used as fuel waste product that results from the wet washing in the coal drying process since it's considered Related person. For the tax on sport fish- of coal). to be used in a mining process. However, the ing equipment, a person is a related person of tax does apply when you use the coal as fuel or the manufacturer if that person and the manu- The tax isn't imposed on coal extracted from as an ingredient in making coke since the coal facturer have a relationship described in section a riverbed by dredging if it can be shown that isn't used in a mining process. 465(b)(3)(C). the coal has been taxed previously. You must use a constructive sale price to figure the tax under the 4.4% rate if you use the Tax rates. The tax on underground-mined coal coal in other than a mining process. Base your Bows, Quivers, is the lower of: constructive sale price on sales of a like kind Broadheads, and Points • $1.10 a ton, or and grade of coal by you or other producers • 4.4% of the sale price. made f.o.b. mine or cleaning plant. Normally, The tax on bows is 11% (.11) of the sales price. The tax on surface-mined coal is the lower you use the same constructive price used to fig- The tax is paid by the manufacturer, producer, of: ure your percentage depletion deduction. or importer. It applies to bows having a peak • 55 cents a ton, or • 4.4% of the sale price.

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Blending. If you blend surface-mined coal with A taxable tire is any tire of the type used on Also, a credit or refund (without interest) is underground-mined coal during the cleaning highway vehicles if wholly or partially made of allowable on tax-paid tires sold by any person process, you must figure the excise tax on the rubber and if marked according to federal regu- on, or in connection with, any other article that sale of the blended, cleaned coal. Figure the lations for highway use. A biasply tire is a pneu- is sold or used in an activity listed above. tax separately for each type of coal in the blend. matic tire on which the ply cords that extend to The person who paid the tax is eligible to Base the tax on the amount of each type in the the beads are laid at alternate angles substan- make the claim. blend if you can determine the proportion of tially less than 90 degrees to the centerline of each type of coal contained in the final blend. the tread. A super single tire is a tire greater Base the tax on the ratio of each type originally than 13 inches in cross section width designed Gas Guzzler Tax put into the cleaning process if you can't deter- to replace 2 tires in a dual fitment. mine the proportion of each type of coal in the Tax is imposed on the sale by the manufacturer blend. However, the tax is limited to 4.4% of the Special rule, manufacturer's retail stores. of automobiles of a model type that has a fuel sale price per ton of the blended coal. The excise tax on taxable tires is imposed at economy standard as measured by the Envi- the time the taxable tires are delivered to the ronmental Protection Agency (EPA) of less than Exemption from tax. The tax doesn't apply to manufacturer-owned retail stores, not at the 22.5 miles per gallon. If you import an automo- sales of lignite and imported coal. The only time of sale. bile for personal use, you may be liable for this other exemption from the tax on the sale of coal tax. Figure the tax on Form 6197, as discussed Tires on imported articles. The importer of is for coal exported as discussed next. later. The tax rate is based on fuel economy rat- an article equipped with taxable tires is treated ing. The tax rates for the gas guzzler tax are Exported. The tax doesn't apply to the sale as the manufacturer of the tires and is liable for shown on Form 6197. of coal if the coal is in the stream of export when the taxable tire excise tax when the article is sold by the producer and the coal is actually ex- sold (except in the case of an automobile bus A person that lengthens an existing automo- ported. chassis or body with tires). bile is the manufacturer of an automobile. Coal is in the stream of export when sold by the producer if the sale is a step in the exporta- Tires exempt from tax. The tax on taxable Automobiles. An automobile (including limou- tion of the coal to its ultimate destination in a tires doesn't apply to the following items. sines) means any four-wheeled vehicle that is: foreign country. For example, coal is in the • Domestically recapped or retreaded tires if • Rated at an unloaded gross vehicle weight stream of export when: the tires have been sold previously in the of 6,000 pounds or less, 1. The coal is loaded on an export vessel United States and were taxable tires at the • Propelled by an engine powered by gaso- and title is transferred from the producer to time of sale. line or diesel fuel, and a foreign purchaser, or • Tire carcasses not suitable for commercial • Intended for use mainly on public streets, use. roads, and highways. 2. The producer sells the coal to an export • Tires for use on qualifying intercity, local, broker in the United States under terms of and school buses. For tax-free treatment, Vehicles not subject to tax. For the gas a contract showing that the coal is to be the registration requirements discussed guzzler tax, the following vehicles aren’t consid- shipped to a foreign country. earlier under Requirements for Exempt ered automobiles. Proof of export includes any of the following Sales apply. 1. Limousines with a gross unloaded vehicle items. • Tires sold for the exclusive use of the De- weight of more than 6,000 pounds. • A copy of the export bill of lading issued by partment of Defense or the Coast Guard. • Tires of a type used exclusively on mobile 2. Vehicles operated exclusively on a rail or the delivering carrier. rails. • A certificate signed by the export carrier's machinery. A taxable tire used on mobile agent or representative showing actual ex- machinery isn't exempt from tax. 3. Vehicles sold for use and used primarily: portation of the coal. Qualifying intercity or local bus. This is a. As ambulances or combination ambu- • A certificate of landing signed by a cus- any bus used mainly (more than 50%) to trans- lance-hearses, toms officer of the foreign country to which port the general public for a fee and that either the coal is exported. operates on a schedule along regular routes or b. For police or other law enforcement • If the foreign country doesn't have a cus- seats at least 20 adults (excluding the driver). purposes by federal, state, or local toms administrator, a statement of the for- governments, or Qualifying school bus. This is any bus eign consignee showing receipt of the c. For firefighting purposes. coal. substantially all the use (85% or more) of which is to transport students and employees of 4. Vehicles treated under 49 U.S.C. 32901 schools. (1978) as non-passenger automobiles. Taxable Tires This includes limousines manufactured Credit or refund. A credit or refund (without primarily to transport more than 10 per- Taxable tires are divided into three cat- interest) is allowable on tax-paid tires if the tires sons. egories for reporting and figuring the have been: ! The manufacturer can sell a vehicle descri- CAUTION tax as described below. • Exported; • Sold to a state or local government for its bed in item (3) tax free only when the sale is exclusive use; made directly to a purchaser for the described A tax is imposed on taxable tires sold by the emergency use and the manufacturer and pur- manufacturer, producer, or importer at the rate • Sold to a nonprofit educational organization for its exclusive use (as defined under chaser (other than a state or local government) of $.0945 ($.04725 in the case of a biasply tire are registered. or super single tire) for each 10 pounds of the Communications Tax in chapter 4); • Sold to a qualified blood collector organi- Treat an Indian tribal government as a state maximum rated load capacity over 3,500 only if the police or other law enforcement pur- pounds. The three categories for reporting the zation (as defined under Communications Tax in chapter 4) for its exclusive use in poses are an essential tribal government func- tax and the tax rate are listed below. tion. • Taxable tires other than biasply or super connection with a vehicle the organization single tires at $.0945. certifies will be primarily used in the collection, storage, or transportation of blood; Model type. Model type is a particular class of • Taxable tires, biasply or super single tires automobile as determined by EPA regulations. (other than super single tires designed for • Used or sold for use as supplies for vessels; or steering) at $.04725. Fuel economy. Fuel economy is the average • Taxable tires, super single tires designed • Sold in connection with qualified intercity, local, or school buses. number of miles an automobile travels on a gal- for steering at $.0945. lon of gasoline (or diesel fuel) rounded to the nearest 0.1 mile as figured by the EPA.

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Imported automobiles. The tax also ap- • Any vaccine against rotavirus gastroenteri- • Tractors of the kind chiefly used for high- plies to automobiles that don’t have a proto- tis. way transportation in combination with a type-based fuel economy rating assigned by • Any HIB vaccine. trailer or semitrailer. the EPA. An automobile imported into the Uni- • Any conjugate vaccine against streptococ- A truck is a highway vehicle primarily designed ted States without a certificate of conformity to cus pneumoniae. to transport its load on the same chassis as the United States emission standards and that has • Any trivalent vaccine against influenza or engine, even if it's equipped to tow a vehicle, no assigned fuel economy rating must be ei- any other vaccine against influenza. such as a trailer or semitrailer. ther: • Any meningococcal vaccine. • Converted by installation of emission con- • Any vaccine against the human papilloma- A tractor is a highway vehicle designed to tow a trols to conform in all material respects to virus. vehicle, such as a trailer or semitrailer. A tractor an automobile already certified for sale in The effective date for the tax on any vaccine may carry incidental items of cargo when tow- the United States, or against influenza, other than trivalent influenza ing or limited amounts of cargo when not tow- Modified by installation of emission control • vaccines, is the later of August 1, 2013, or the ing. components and individually tested to date the Secretary of Health and Human Serv- demonstrate emission compliance. A sale of a truck, truck trailer, or semitrailer is ices lists a vaccine against seasonal influenza considered a sale of a chassis and a body. An imported automobile that has been con- for purposes of compensation for any vac- verted to conform to an automobile already cer- cine-related injury or death through the Vaccine The seller is liable for the tax. tified for sale in the United States may use the Injury Compensation Trust Fund. fuel economy rating assigned to that certified Chassis or body. A chassis or body is taxable The tax is $.75 per dose of each taxable automobile. only if you sell it for use as a component part of vaccine. The tax per dose on a vaccine that A fuel economy rating isn't generally availa- a highway vehicle that is a truck, truck trailer or contains more than one taxable vaccine is $.75 ble for modified imported automobiles because semitrailer, or a tractor of the kind chiefly used times the number of taxable vaccines. the EPA doesn't require a highway fuel econ- for highway transportation in combination with a trailer or semitrailer. omy test on them. A separate highway fuel Taxable use. Any manufacturer (including a economy test would be required to devise a fuel governmental entity) that uses a taxable vac- Highway vehicle. A highway vehicle is any economy rating (otherwise the automobile is cine before it's sold will be liable for the tax in self-propelled vehicle designed to carry a load presumed to fall within the lowest fuel economy the same manner as if the vaccine was sold by over public highways, whether or not it's also rating category). the manufacturer. designed to perform other functions. Examples For more information about fuel economy of vehicles designed to carry a load over public ratings for imported automobiles, see Revenue Credit or refund. A credit or refund (without highways are passenger automobiles, motorcy- Ruling 86-20 and Revenue Procedure 86-9 in interest) is available if the vaccine is: cles, buses, and highway-type trucks and truck Cumulative Bulletin 1986-1, and Revenue Pro- • Returned to the person who paid the tax tractors. A vehicle is a highway vehicle even cedure 87-10 in Cumulative Bulletin 1987-1. (other than for resale), or though the vehicle's design allows it to perform • Destroyed. a highway transportation function for only one of Exemptions. No one is exempt from the gas the following. guzzler tax, including the federal government, The claim for a credit or refund must be filed • A particular type of load, such as passen- state and local governments, qualified blood within 6 months after the vaccine is returned or gers, furnishings, and personal effects (as collector organizations, and nonprofit educa- destroyed. in a house, office, or utility trailer). tional organizations. However, see Vehicles not Conditions to allowance. To claim a • A special kind of cargo, goods, supplies, or subject to tax, earlier. credit or refund, the person who paid the tax materials. must have repaid or agreed to repay the tax to Some off-highway task unrelated to high- Form 6197. Use Form 6197 to figure your tax • the ultimate purchaser of the vaccine or ob- way transportation, except as discussed liability for each quarter. Attach Form 6197 to tained the written consent of such purchaser to next. your Form 720 for the quarter. See the Form allowance of the credit or refund. 6197 instructions for more information and the Vehicles not considered highway vehi- one-time filing rules. cles. Generally, the following kinds of vehicles aren’t considered highway vehicles for purpo- Credit or refund. If the manufacturer paid the ses of the retail tax. tax on a vehicle that is used or resold for an emergency use (see item (3) under Vehicles not 1. Specially designed mobile machinery subject to tax), the manufacturer can claim a for nontransportation functions. A credit or refund. For information about how to 6. self-propelled vehicle isn't a highway vehi- file for credits or refunds, see the Instructions cle if all the following apply. for Form 720 or Form 8849. a. The chassis has permanently mounted to it machinery or equipment used Retail Tax on to perform certain operations (con- Vaccines struction, manufacturing, drilling, min- Heavy Trucks, ing, timbering, processing, farming, or Tax is imposed on certain vaccines sold by the similar operations) if the operation of manufacturer in the United States. A taxable the machinery or equipment is unrela- vaccine means any of the following vaccines. Trailers, and ted to transportation on or off the pub- • Any vaccine containing diphtheria toxoid. lic highways. • Any vaccine containing tetanus toxoid. Tractors b. The chassis has been specially de- • Any vaccine containing pertussis bacteria, signed to serve only as a mobile car- extracted or partial cell bacteria, or specific riage and mount (and power source, if pertussis antigens. applicable) for the machinery or A tax of 12% of the sales price is imposed on • Any vaccine containing polio virus. equipment, whether or not the machi- the first retail sale of the following articles, in- • Any vaccine against measles. nery or equipment is in operation. • Any vaccine against mumps. cluding related parts and accessories sold on or • Any vaccine against rubella. in connection with, or with the sale of, the arti- c. The chassis couldn’t, because of its • Any vaccine against hepatitis A. cles. special design and without substantial • Any vaccine against hepatitis B. • Truck chassis and bodies. structural modification, be used as • Any vaccine against chicken pox. • Truck trailer and semitrailer chassis and part of a vehicle designed to carry any bodies. other load.

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2. Vehicles specially designed for Parts or accessories. The tax applies to parts and accessories (and installation charges) dur- off-highway transportation. A vehicle or accessories sold on or in connection with, or ing that period. isn't treated as a highway vehicle if the ve- with the sale of, a taxable article. For example, hicle is specially designed for the primary if at the time of the sale by the retailer, the part Example. You bought a taxable vehicle function of transporting a particular type of or accessory has been ordered from the re- and placed it in service on April 8. On May 3, load other than over the public highway tailer, the part or accessory will be considered you bought and installed parts and accessories and because of this special design, the ve- as sold in connection with the sale of the vehi- at a cost of $850. On July 15, you bought and hicles's capability to transport a load over cle. The tax applies in this case whether or not installed parts and accessories for $300. Tax of a public highway is substantially limited or the retailer bills the parts or accessories sepa- $138 (12% of $1,150) applies on July 15. Also, impaired. rately. tax will apply to any costs of additional parts To make this determination, you can If the retailer sells a taxable chassis, body, and accessories installed on the vehicle before take into account the vehicle's size, or tractor without parts or accessories consid- October 8. whether the vehicle is subject to licensing, ered essential for the operation or appearance safety, or other requirements, and whether of the taxable article, the sale of the parts or ac- First retail sale defined. The sale of an article the vehicle can transport a load at a sus- cessories by the retailer to the purchaser is con- is treated as the first retail sale, and the seller tained speed of at least 25 miles per hour. sidered made in connection with the sale of the will be liable for the tax imposed on the sale un- It doesn't matter that the vehicle can carry taxable article even though they are shipped less one of the following exceptions applies. heavier loads off highway than it's allowed separately, at the same time, or on a different • There has been a prior taxable sale, lease, to carry over the highway. date. The tax applies unless there is evidence or use of the article (however, see Tax on to the contrary. For example, if a retailer sells to resale of tax-paid trailers and semitrailers, 3. Nontransportation trailers and later). semitrailers. A trailer or semitrailer isn't any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth • The sale qualifies as a tax-free sale under treated as a highway vehicle if it's spe- section 4221 (see Sales exempt from tax, cially designed to function only as an en- wheel and attachments, the tax applies to the parts or accessories regardless of the method later). closed stationary shelter for carrying on a • The seller in good faith accepts from the nontransportation function at an off-high- of billing or the time at which the shipments were made. The tax doesn't apply to parts and purchaser a statement signed under penal- way site. For example, a trailer that is ca- ties of perjury and executed in good faith pable only of functioning as an office for accessories that are spares or replacements. The tax imposed on parts and accessories that the purchaser intends to resell the arti- an off-highway construction operation isn't cle or lease it on a long-term basis. There a highway vehicle. sold on or in connection with the taxable articles listed earlier and the tax imposed on the sepa- is no registration requirement. Gross vehicle weight. The tax doesn't apply rate purchase of parts and accessories (dis- Leases. A long-term lease (a lease with a to truck chassis and bodies suitable for use with cussed next) for the taxable articles listed ear- term of 1 year or more, taking into account op- a vehicle that has a gross vehicle weight (de- lier don’t apply to an idling reduction device or tions to renew) before a first retail sale is treated fined below) of 33,000 pounds or less. It also insulation that has an R value of at least R35 as a taxable sale. The tax is imposed on the doesn't apply to truck trailer and semitrailer per inch. lessor at the time of the lease. chassis and bodies suitable for use with a trailer Idling reduction device. An idling reduc- A short-term lease (a lease with a term of or semitrailer that has a gross vehicle weight of tion device is any device or system of devices less than 1 year, taking into account options to 26,000 pounds or less. Tractors that have a that provide the tractor with services, such as renew) before a first retail sale is treated as a gross vehicle weight of 19,500 pounds or less heat, air conditioning, and electricity, without taxable use. The tax is imposed on the lessor at and a gross combined weight of 33,000 pounds the use of the main drive engine while the trac- the time of the lease. or less are excluded from the 12% retail tax. tor is temporarily parked or stationary. The de- Exported vehicle. A vehicle exported be- The following four classifications of truck vice must be affixed to the tractor and deter- body types meet the suitable for use stand- fore its first retail sale, used in a foreign country, mined by the Administrator of the EPA, in and then returned to the United States is sub- ard and will be excluded from the retail excise consultation with the Secretary of Energy and tax. ject to the retail tax on its first domestic use or Secretary of Transportation, to reduce idling retail sale after importation. • Platform truck bodies 21 feet or less in while parked or stationary. The EPA discusses length. idling reduction technologies on its website at Tax on resale of tax-paid trailers and • Dry freight and refrigerated truck van bod- www.epa.gov/smartway/technology/idling.htm. semitrailers. The tax applies to a trailer or ies 24 feet or less in length. semitrailer resold within 6 months after having • Dump truck bodies with load capacities of Separate purchase. The tax generally ap- been sold in a taxable sale. The seller liable for 8 cubic yards or less. plies to the price of a part or accessory and its the tax on the resale can claim a credit equal to • Refuse packer truck bodies with load ca- installation if the following conditions are met. the tax paid on the prior taxable sale. The credit pacities of 20 cubic yards or less. • The owner, lessee, or operator of any vehi- can't exceed the tax on the resale. See Regula- cle that contains a taxable article installs For more information on these classifications, tions section 145.4052-1(a)(4) for information any part or accessory on the vehicle. see Revenue Procedure 2005-19, which is on on the conditions to allowance for the credit. • The installation occurs within 6 months af- page 832 of I.R.B. 2005-14 at ter the vehicle is first placed in service. Use treated as sale. If any person uses a IRS.gov/PUB/IRB/IRB2015-14#RR2005-19. taxable article before the first retail sale of the The owners of the trade or business instal- The gross vehicle weight means the maxi- article, that person is liable for the tax as if the ling the parts or accessories are secondarily lia- mum total weight of a loaded vehicle. Gener- article had been sold at retail by that person. ble for the tax. ally, this maximum total weight is the gross ve- Figure the tax on the price at which similar arti- A vehicle is placed in service on the date the hicle weight rating provided by the cles are sold in the ordinary course of trade by owner takes actual possession of the vehicle. manufacturer or determined by the seller of the retailers. The tax attaches when the use begins. This date is established by a signed delivery completed article. The seller's gross vehicle If the seller of an article regularly sells the ar- ticket or other comparable document indicating weight rating is determined solely on the basis ticles at retail in arm's-length transactions, fig- delivery to and acceptance by the owner. of the strength of the chassis frame and the axle ure the tax on its use on the lowest established The tax doesn't apply if the installed part or capacity and placement. The seller may not retail price for the articles in effect at the time of accessory is a replacement part or accessory. take into account any readily attachable compo- the taxable use. The tax also doesn't apply if the total price of nents (such as tires or rim assemblies) in deter- If the seller of an article doesn't regularly sell the parts and accessories, including installation mining the gross vehicle weight. See Regula- the articles at retail in arm's-length transactions, charges, during the 6-month period is $1,000 or tions section 145.4051-1(e)(3) for more a constructive price on which the tax is figured less. However, if the total price is more than information. will be determined by the IRS after considering $1,000, the tax applies to the cost of all parts the selling practices and price structures of sell- ers of similar articles.

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If a seller of an article incurs liability for tax which the article was sold to the lessor plus the or purchaser. Also exclude the value of any on the use of the article and later sells or leases cost of parts and accessories installed by the used component of the article furnished by the the article in a transaction that otherwise would lessor and a presumed markup percentage. first user of the article. be taxable, liability for tax isn't incurred on the Exclude charges for transportation, delivery, later sale or lease. Related person. A related person is any insurance, and installation (other than installa- member of the same controlled group as the tion charges for parts and accessories, dis- Presumptive retail sales price. There are manufacturer, producer, or importer. Don't treat cussed earlier) and other expenses incurred in rules to ensure that the tax base of transactions as a related person a person that sells the arti- connection with the delivery of an article to a considered to be taxable sales includes either cles through a permanent retail establishment purchaser. These expenses are those incurred an actual or presumed markup percentage. If in the normal course of being a retailer if that in delivery from the retail dealer to the cus- the person liable for tax is the vehicle's manu- person has records to prove the article was sold tomer. In the case of delivery directly from the facturer, producer, or importer, the following for a price that included a markup equal to or manufacturer to the dealer's customer, include discussions show how you figure the presump- greater than the presumed markup percentage. the transportation and delivery charges to the tive retail sales price depending on the type of extent the charges don't exceed what it would General rule for sales by dealers to the con- transaction and the persons involved in the have cost to ship the article to the dealer. transaction. Table 6-1 outlines the appropriate sumer. For a taxable sale, other than a Exclude amounts charged for machinery or tax base calculation for various transactions. long-term lease, by a person other than a man- equipment that doesn't contribute to the high- ufacturer, producer, importer, or related person, The presumed markup percentage to be way transportation function of the vehicle, provi- your tax base is the retail sales price as dis- used for trucks and truck-tractors is 4%. But for ded those charges are supported by adequate cussed next under Determination of tax base. truck trailers and semitrailers and remanufac- records. For example, for an industrial vacuum tured trucks and tractors, the presumed markup When you sell an article to the consumer, loader vehicle, exclude amounts charged for percentage is zero. generally you don’t add a presumed markup to the vacuum pump and hose, filter system, ma- the tax base. However, you do add a markup if terial separator, silencer or muffler, control cabi- Sale. For a taxable sale by a manufacturer, all the following apply. net, and ladder. Similarly, for a sewer cleaning producer, importer, or related person, you gen- • You don’t perform any significant activities vehicle, exclude amounts charged for the high erally figure the tax on a tax base of the sales relating to the processing of the sale of a pressure water pump, hose components, and price plus an amount equal to the presumed taxable article. the vacuum pipe. markup percentage times that sales price. • The main reason for processing the sale through you is to avoid or evade the pre- Sales not at arm's length. For any taxable Long-term lease. In the case of a sumed markup. article sold (not at arm's length) at less than the long-term lease by a manufacturer, producer, • You don’t have records proving that the ar- fair market price, figure the excise tax on the importer, or related person, figure the tax on a ticle was sold for a price that included a price for which similar articles are sold at retail tax base of the constructive sales price plus an markup equal to or greater than the pre- in the ordinary course of trade. amount equal to the presumed markup percent- sumed markup percentage. A sale isn't at arm's length if either of the fol- age times the constructive sales price. lowing apply. In these situations, your tax base is the sales One of the parties is controlled (in law or in Short-term lease. When a manufacturer, price plus an amount equal to the presumed • fact) by the other or there is common con- producer, importer, or related person leases an markup percentage times that selling price. article in a short-term lease considered a taxa- trol, whether or not the control is actually ble use, figure the tax on a constructive sales Determination of tax base. These rules apply exercised to influence the sales price. price at which those or similar articles generally to both normal retail sales price and presump- • The sale is made under special arrange- are sold in the ordinary course of trade by retail- tive retail sales price computations. To arrive at ments between a seller and a purchaser. ers. the tax base, the price is the total consideration Installment sales. If the first retail sale is But if the lessor in this situation regularly paid (including trade-in allowance) for the item an installment sale, or other form of sale in sells articles at retail in arm's-length transac- and includes any charge incident to placing the which the sales price is paid in installments, tax tions, figure the tax on the lowest established article in a condition ready for use. However, liability arises at the time of the sale. The tax is retail price in effect at the time of the taxable see Presumptive retail sales price, earlier. figured on the entire sales price. No part of the use. Exclusions from tax base. Exclude from tax is deferred because the sales price is paid If a person other than the manufacturer, pro- in installments. ducer, importer, or related person leases an ar- the tax base the retail excise tax imposed on ticle in a short-term lease considered a taxable the sale. Exclude any state or local retail sales Repairs and modifications. The tax use, figure the tax on a tax base of the price for tax if stated as a separate charge from the price doesn't apply to the sale or use of an article that whether the sales tax is imposed on the seller has been repaired or modified unless the cost of the repairs and modifications is more than Table 6-1. Tax Base 75% of the retail price of a comparable new article. This includes modifications that change the IF the transaction is a... THEN figure the base by using the... transportation function of an article or restore a Sale by the manufacturer, producer, Sales price plus (presumed markup wrecked article to a functional condition. How- importer, or related person percentage × sales price) ever, this exception generally doesn't apply to an article that wasn't subject to the tax when it Sale by the dealer Total consideration paid for the item including was new. any charges incident to placing it in a condition ready for use Further manufacture. The tax doesn't apply to the use by a person of a taxable article as Long-term lease by the manufacturer, Constructive sales price plus (presumed material in the manufacture or production of, or producer, importer, or related person markup percentage × constructive sales price) as a component part of, another article to be Short-term lease by the manufacturer, Constructive sales price at which such or manufactured or produced by that person. Don't producer, importer, or related person similar articles are sold treat a person as engaged in the manufacture of any article merely because that person com- Long- or Short-term lease by a lessor other Price for which the article was sold to the bines the article with a: than the manufacturer, producer, importer, lessor plus the cost of parts and accessories • Coupling device (including any fifth wheel); or related person installed by the lessor plus a presumed • Wrecker crane; markup percentage • Loading and unloading equipment (includ- Short-term lease where the articles are Lowest established retail price in effect at the ing any crane, hoist, winch, or power lift- gate); regularly sold at arm's length time of the taxable use

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• Aerial ladder or tower; process or prepare concrete. This exemption the sale of the article. The credit is equal to the • Ice and snow control equipment; doesn't apply to the chassis on which the article manufacturers excise tax imposed on the taxa- • Earth moving, excavation, and construc- is mounted. ble tires (discussed earlier). This is the section tion equipment; 4051(d) taxable tire credit and is claimed on • Spreader; Sales exempt from tax. The following sales Schedule C (Form 720) for the same quarter for • Sleeper cab; are ordinarily exempt from tax. which the tax on the heavy vehicle is reported. • Cab shield; or • Sales to a state or local government for its • Wood or metal floor. exclusive use. Sales to Indian tribal governments, but Combining an article with an item in this list • only if the transaction involves the exercise doesn't give rise to taxability. However, see of an essential tribal government function. Parts or accessories discussed earlier. • Sales to a nonprofit educational organiza- Articles exempt from tax. The tax on heavy tion for its exclusive use. 7. trucks, trailers, and tractors doesn't apply to • Sales to a qualified blood collector organi- sales of the articles described in the following zation (as defined under Communications discussions. Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of Ship Passenger Rail trailers and rail vans. This is any blood. chassis or body of a trailer or semitrailer de- • Sales for use by the purchaser for further signed for use both as a highway vehicle and a manufacture of other taxable articles (see Tax railroad car (including any parts and accesso- below). ries designed primarily for use on and in con- • Sales for export or for resale by the pur- A tax of $3 per passenger is imposed on certain nection with it). Don't treat a piggyback trailer or chaser to a second purchaser for export. ship voyages, as explained later under Taxable semitrailer as designed for use as a railroad • Sales to the United Nations for official use. situations. The tax is imposed only once for car. each passenger, either at the time of first em- Registration requirement. In general, the barkation or disembarkation in the United Parts and accessories. This is any part or seller and buyer must be registered for a sale to States. accessory sold separately from the truck or be tax free. See the Form 637 instructions for trailer, except as described earlier under Parts more information. Certain registration excep- The person providing the voyage (the operator or accessories and Separate purchase. tions apply in the case of sales to state and lo- of the vessel) is liable for the tax. cal governments, sales to foreign purchasers Trash containers. This is any box, con- for export, and sales for resale or long term Voyage. A voyage is the vessel's journey that tainer, receptacle, bin, or similar article that leasing. includes the outward and homeward trips or meets all the following conditions. passages. The voyage starts when the vessel • it's designed to be used as a trash con- Further manufacture. If you buy articles begins to load passengers and continues until tainer. tax free and resell or use them other than in the the vessel has completed at least one outward • It isn't designed to carry freight other than manufacture of another article, you are liable for and one homeward passage. The tax may be trash. the tax on their resale or use just as if you had imposed even if a passenger doesn't make both • It isn't designed to be permanently moun- manufactured and made the first retail sale of an outward and a homeward passage as long ted on or affixed to a truck chassis or body. them. as the voyage begins or ends in the United States. House trailers. This is any house trailer Credits or refunds. A credit or refund (without (regardless of size) suitable for use in connec- interest) of the retail tax on the taxable articles Passenger. A passenger is an individual car- tion with either passenger automobiles or described earlier may be allowable if the tax trucks. ried on the vessel other than the master or a has been paid with respect to an article and, be- crew member or other individual engaged in the Camper coaches or bodies for self-pro- fore any other use, such article is used by any business of the vessel or its owners. pelled mobile homes. This is any article de- person as a component part of another taxable signed to be mounted or placed on trucks, truck article manufactured or produced. The person Example 1. John Smith works as a guest chassis, or automobile chassis and to be used using the article as a component part is eligible lecturer. The cruise line hired him for the benefit primarily as living quarters or camping accom- for the credit or refund. of the passengers. Therefore, he is engaged in modations. Further, the tax doesn't apply to A credit or refund is allowable if, before any the business of the vessel and isn't a passen- chassis specifically designed and constructed other use, an article is, by any person: ger. to accommodate and transport self-propelled • Exported, mobile home bodies. • Used or sold for use as supplies for ves- Example 2. Marian Green is a travel agent. sels, She is taking the cruise as a promotional trip to Farm feed, seed, and fertilizer equip- • Sold to a state or local government for its determine if she wants to offer it to her clients. ment. This is any body primarily designed to exclusive use, She is a passenger. process or prepare, haul, spread, load, or un- • Sold to a nonprofit educational organiza- load feed, seed, or fertilizer to or on farms. This tion for its exclusive use, or Taxable situations. There are two taxable sit- exemption applies only to the farm equipment • Sold to a qualified blood collector organi- uations. The first situation involves voyages on body (and parts and accessories) and not to the zation (as defined underCommunications commercial passenger vessels extending over chassis upon which the farm equipment is Tax in chapter 4) for its exclusive use in the one or more nights. A voyage extends over one mounted. collection, storage, or transportation of or more nights if it extends for more than 24 blood. hours. A passenger vessel is any vessel with Ambulances and hearses. This is any stateroom or berth accommodations for more ambulance, hearse, or combination ambu- A credit or refund is also allowable if there is a than 16 passengers. lance-hearse. price readjustment by reason of the return or repossession of an article or by reason of a bona The second situation involves voyages on a Truck-tractors. This is any truck-tractor fide discount, rebate, or allowance. commercial vessel transporting passengers en- specifically designed for use in shifting semi- See also Conditions to allowance in chap- gaged in gambling on the vessel beyond the trailers in and around freight yards and freight ter 5. territorial waters of the United States. Territorial terminals. waters of the United States are those waters Tire credit. A credit is allowed against the re- within the international boundary line between Concrete mixers. This is any article de- the United States and any contiguous foreign signed to be placed or mounted on a truck, tail tax on the taxable articles described earlier if taxable tires are sold on or in connection with country or within 3 nautical miles (3.45 statute truck trailer, or semitrailer chassis to be used to miles) from low tide on the coastline. If

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passengers participate as players in any policy similar recipient designated by the foreign in- game or other lottery, or any other game of surer or reinsurer) or to any nonresident agent, chance for money or other thing of value that solicitor, or broker. A person can pay the tax be- the owner or operator of the vessel (or their em- fore the liability attaches if the person keeps re- 9. ployee, agent, or franchisee) conducts, spon- cords consistent with that practice. sors, or operates, the voyage is subject to the ship passenger tax. The tax applies regardless Who must file. The person who pays the pre- of the duration of the voyage. A casual, friendly mium to the foreign insurer (or to any nonresi- Obligations Not game of chance with other passengers that isn't dent person such as a foreign broker) must pay conducted, sponsored, or operated by the the tax and file the return. Otherwise, any per- in Registered owner or operator isn't gambling for determining son who issued or sold the policy, or who is in- if the voyage is subject to the ship passenger sured under the policy, is required to pay the tax. tax and file the return. Form The person liable for this tax must keep Exemptions. The tax doesn't apply when a Tax is imposed on any person who issues a accurate records that identify each pol- vessel is on a voyage of less than 12 hours be- registration-required obligation not in registered RECORDS icy or instrument subject to tax. These tween two points in the United States or if a form. The tax is: records must clearly establish the type of policy vessel is owned or operated by a state or local • 1% of the principal of the obligation, multi- or instrument, the gross premium paid, the government. plied by identity of the insured and insurer, and the total • The number of calendar years (or portions premium charged. If the premium is to be paid of calendar years) during the period start- in installments, the records must also establish ing on the date the obligation was issued the amount and anniversary date of each in- and ending on the date it matures. stallment. The records must be kept at the place of A registration-required obligation is any obliga- 8. business or other convenient location for at tion other than one that meets any of the follow- least 3 years after the later of the date any part ing conditions. of the tax became due, or the date any part of 1. It's issued by a natural person. the tax was paid. During this period, the records Foreign must be readily accessible to the IRS. 2. It isn't of a type offered to the public. The person having control or possession of 3. It has a maturity (at issue) of not more than a policy or instrument subject to this tax must 1 year. Insurance Taxes keep the policy for at least 3 years after the date 4. It's a tax-exempt bond. any part of the tax on it was paid. Tax is imposed on insurance policies issued by 5. It's issued under an arrangement reasona- For information on reinsurance premi- foreign insurers. Any person who makes, signs, bly designed to ensure that the obligation TIP ums paid from one foreign insurer to issues, or sells any of the documents and in- will be sold only to foreign persons. struments subject to the tax, or for whose use or another foreign insurer, see Rev. Rul. benefit they are made, signed, issued, or sold, 2008-15. You can find Rev. Rul. 2008-15 on For item (5), if the obligation isn't in registered is liable for the tax. page 633 of I.R.B. 2008-12 at form, the interest on the obligation must be pay- IRS.gov/PUB/IRB/IRB2008-12#RR2008-15. able only outside the United States and its pos- The following tax rates apply to each dollar (or sessions. Also, the obligation must state on its fraction thereof) of the premium paid. Treaty-based positions under IRC 6114. face that any U.S. person who holds it shall be subject to limits under the U.S. income tax laws. 1. Casualty insurance and indemnity, fidelity, You may have to file an annual report disclosing and surety bonds: 4 cents. For example, the amount of premiums exempt from U.S. ex- on a premium payment of $10.10, the tax cise tax as a result of the application of a treaty is 44 cents. with the United States that overrides (or otherwise modifies) any provision of the Internal Rev- 2. Life, sickness, and accident insurance, enue Code. and annuity contracts: 1 cent. For exam- Attach any disclosure statement to the first ple, on a premium payment of $10.10, the quarter Form 720. You may be able to use Form 10. tax is 11 cents. 8833, Treaty-Based Return Position Disclosure 3. Reinsurance policies covering any of the Under Section 6114 or 7701(b), as a disclosure taxable contracts described in items (1) statement. See the Instructions for Form 720 for and (2): 1 cent. information on how and where to file. Indoor Tanning See Revenue Procedure 92-14 in Cumula- However, the tax doesn't apply to casualty in- tive Bulletin 1992-1 for procedures you can use Services Tax surance premiums paid to foreign insurers for to claim a refund of this tax under certain U.S. coverage of export goods in transit to foreign treaties. destinations. The tax on indoor tanning service is 10% of the amount paid for that service. The tax is paid by Premium. Premium means the agreed the person paying for the services and is collec- price or consideration for assuming and carry- ted by the person receiving payment for the in- ing the risk or obligation. It includes any addi- door tanning services. tional charge or assessment payable under the contract, whether in one sum or installments. If Definition of indoor tanning services. In- premiums are refunded, claim the tax paid on door tanning service means a service employ- those premiums as an overpayment against tax ing any electronic product designed to incorpo- due on other premiums paid or file a claim for rate one or more ultraviolet lamps and intended refund. for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 When liability attaches. The liability for this and 400 nanometers, to induce skin tanning. tax attaches when the premium payment is The term doesn't include phototherapy service transferred to the foreign insurer or reinsurer (including transfers to any bank, trust fund, or

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performed by, and on the premises of, a li- of applicable self-insured health plans (section Reporting and paying the fee. File Form 720 censed medical professional (such as a derma- 4376) for policy and plan years ending on or af- annually to report and pay the fee on the sec- tologist, psychologist, or registered nurse). See ter October 1, 2012. Generally, references to ond quarter Form 720 no later than July 31 of regulations section 49.5000B-1 for more infor- taxes on Form 720 include this fee. the calendar year immediately following the last mation, and special rules for qualified physical day of the policy year or plan year to which the fitness facilities, undesignated payment cards, Specified health insurance policies. See fee applies. If you file Form 720 only to report and bundled payments. the Instructions for Form 720 revised for the the fee, don’t file Form 720 for the first, third, or second quarter of each year for information on fourth quarters of the year. If you file Form 720 File Form 720. The person receiving the pay- the fee amount. Generally, issuers of specified to report quarterly excise tax liability for the first, ment for indoor tanning services (collector) health insurance polices must use one of the third, or fourth quarter of the year (for example, must collect and remit the tax and file the return. following four alternative methods to determine filers reporting the foreign insurance tax (IRS If the tax isn't collected for any reason, the col- the average number of lives covered under a No. 30)), don’t make an entry on the line for IRS lector is liable for the tax. The collector isn't re- policy for the policy year No. 133 on those filings. quired to make semimonthly deposits of the tax. 1. The actual count method. Deposits aren’t required for this fee, so issuers and plan sponsors aren’t required to pay the 2. The snapshot method. fee using Electronic Federal Tax Payment Sys- 3. The member months method. tem (EFTPS). However, if the fee is paid using EFTPS, the 4. The state form method. payment should be applied to the second quarter. See Electronic deposit requirement under 11. Applicable self-insured health plans. See How To Make Deposits in chapter 13, later. the Instructions for Form 720 revised for the second quarter of each year for information on More information. For more information, in- the fee amount. Generally, plan sponsors of ap- cluding methods for calculating the average Patient-Centered plicable self-insured health plans must use one number of lives covered, see the Instructions for of the following three alternative methods to de- Form 720, sections 4375, 4376, 4377 and Reg- termine the average number of lives covered ulations 46.4375-1; also see T.D. 9602, which Outcomes under a plan for the plan year. is on page 746 of I.R.B. 2012-52 at Research Fee 1. Actual count method. IRS.gov/PUB/IRB/IRB2012-52#TD9602. 2. Snapshot method. The patient-centered outcomes research fee is 3. Form 5500 method. imposed on issuers of specified health insurance policies (section 4375) and plan sponsors

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Part Three.

Quarterly Filing Information

a. Repaid the tax to the person from you are making your payment by check or whom it was collected, or money 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- Payment of ing Form 720 electronically, visit the IRS e-file c. Attached the written consent of the ul- website at IRS.gov/eFile. timate purchaser to the allowance of the adjustment. Taxes You may be required to file your returns on a 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 • Part I consists of excise taxes generally re- However, no deposit is required for the situa- 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). Taxes, later). Form 720. • Part II consists of excise taxes that aren’t • The net liability for taxes listed in Part I Final return. File a final return if: (Form 720) doesn't exceed $2,500 for the required to be deposited. • You go out of business, or • Part III is used to figure your tax liability for quarter. • 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. due or overpayment. one-time filing. • The liability is for taxes listed in Part II • Schedule A, Excise Tax Liability, is used Due dates. Form 720 must be filed by the fol- (Form 720), except for the floor stocks tax to record your net tax liability for each sem- lowing due dates. imonthly period in a quarter. Complete it if which generally requires a single deposit. 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 are reporting a liability in Part I April, May, June ...... July 31 Electronic deposit requirement. You must or Part II. July, August, September ...... October 31 use electronic funds transfer to make excise tax • Schedule T, Two-Party Exchange Infor- October, November, deposits. Generally, electronic funds transfers mation Reporting, is used to report certain December ...... January 31 exchanges of taxable fuel before or in con- are made using the EFTPS. If you don’t want to use EFTPS, you can arrange for your tax pro- nection with the removal at the terminal If any due date falls on a Saturday, Sunday, fessional, financial institution, payroll service, or rack. or legal holiday, you can file the return on the other trusted third party to make deposits on next business day. Attachments to Form 720. You may have your behalf. Also, you may arrange for your fi- to attach the following forms. nancial institution to submit a same-day wire One-time filing. If you import a gas guzzling • Form 6197 for the gas guzzler tax. payment on your behalf. • Form 6627 for environmental taxes. automobile, you may be eligible to make a one-time filing using your SSN if you: EFTPS is a free service provided by the De- • Don't import gas guzzling automobiles in partment of Treasury. Services provided by Form 720-X. This form is used to make adjust- your tax professional, financial institution, payments to Forms 720 filed in prior quarters. You the course of your trade or business, and • Aren’t required to file Form 720 reporting roll service, or other third party may have a fee. can file Form 720-X by itself or, if it shows a de- To get more information about EFTPS or to en- crease in tax, you can attach it to Form 720. other excise taxes for the calendar quarter, except for a one-time filing. roll in EFTPS, visit www.eftps.gov or call See Form 720-X for more information. 1-800-555-4477. Additional information about If you meet both requirements above, see Conditions to allowance. For tax decrea- EFTPS is also available in Publication 966, Gas guzzler tax (IRS No. 40) in the Instructions ses, the claimant must check the appropriate Electronic Federal Tax Payment System: A for Form 720 for how to file and pay the tax. box on Form 720-X stating that: Guide to Getting Started. 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 line 10 of Form 720 and (by 8:00 p.m. Eastern time).

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Same-day wire payment option. If you fail to and February are considered collected during be at least 1/6 (16.67%) of the net tax liability submit a deposit transaction on EFTPS by 8:00 January, February, and March and are reported reported for the look-back quarter. p.m. Eastern time the day before the date a de- on Form 720 as the tax for the first quarter of posit is due, you can still make your deposit on the calendar year. Exceptions. The safe harbor rule doesn't time by using the Federal Tax Collection Serv- apply to: The separate account for each month must ice (FTCS). To use the same-day wire payment • The first and second quarters beginning on reflect: method, you will need to make arrangements or after the effective date of an increase in with your financial institution ahead of time. 1. All items of tax included in amounts billed the rate of tax unless the deposit of taxes Please check with your financial institution re- or tickets sold during the month, and for each semimonthly period in the calen- garding availability, deadlines, and costs. Your dar quarter is at least 1/6 (16.67%) of the 2. Other items of adjustment relating to tax financial institution may charge you a fee for tax liability you would have had for the for prior months (within the statute of limi- payments made this way. To learn more about look-back quarter if the increased rate of tations on credits or refunds). the information you will need to provide your fi- tax had been in effect for that look-back quarter, nancial institution to make a same-day wire The separate account for any month can't Any quarter if liability includes any tax not payment, visit IRS.gov/Payments and click on include an adjustment resulting from a refusal to • in effect throughout the look-back quarter, Same-day wire. pay or inability to collect unless the refusal has or been reported to the IRS. See Uncollected Tax You will automatically be enrolled in For deposits under the alternative method, Report in chapter 4. • TIP EFTPS when you apply for an EIN. You any quarter if liability includes any tax not will receive a separate mailing contain- The net amount of tax that is considered col- in effect throughout the look-back quarter ing instructions for activating your EFTPS en- lected during the semimonthly period must be and the month preceding the look-back rollment after you receive your EIN. either: quarter. • The net amount of tax reflected in the separate account for the corresponding semi- Requirements to be met. For the safe harbor When To Make Deposits monthly period of the preceding month, or rule to apply, you must: • One-half of the net amount of tax reflected • Make each deposit timely at an authorized in the separate account for the preceding financial institution, and There are two methods for determining depos- month. • Pay any underpayment for the current its: the regular method and the alternative quarter by the due date of the return. method. Special rule for deposits of taxes in Sep- The IRS may withdraw the right to tember. See the Instructions for Form 720 for a The regular method applies to all taxes in make deposits of tax using the safe special rule on deposits made in September. Part I of Form 720 except for communications harbor rule from any person not com- and air transportation taxes if deposits are plying with these rules. based on amounts billed or tickets sold, rather than on amounts actually collected. See Alter- Amount of Deposits Tax rate increases. You must modify the safe native method below. Deposits for a semimonthly period generally harbor rule if there has been an increase in the If you are depositing more than one tax un- must be at least 95% of the net tax liability for rate of tax. You must figure your tax liability in der a method, combine all the taxes under the that period unless the safe harbor rule (dis- the look-back quarter as if the increased rate method and make one deposit for the semi- cussed later) applies. Generally, you don't have had been in effect. To qualify for the safe harbor 1 monthly period. to make a deposit for a period in which you in- rule, your deposits can't be less than /6 of the curred no tax liability. refigured tax liability. Regular method. The deposit of tax for a semimonthly period is due by the 14th day following Net tax liability. Your net tax liability is your that period. Generally, this is the 29th day of a tax liability for the period minus any claims on month for the first semimonthly period and the Schedule C (Form 720) for the period. You may 14th day of the following month for the second figure your net tax liability for a semimonthly pe- semimonthly period. If the 14th or the 29th day riod by dividing your net liability incurred during falls on a Saturday, Sunday, or legal holiday, the calendar month by two. If you use this 14. you must make the deposit by the immediately method, you must use it for all semimonthly pe- preceding day that isn't a Saturday, Sunday, or riods in the calendar quarter. legal holiday. Don't reduce your liability by any Penalties Alternative method (IRS Nos. 22, 26, 27, ! amounts from Form 720-X. and 28). Deposits of communications and air CAUTION transportation taxes may be based on taxes in- and Interest cluded in amounts billed or tickets sold during a Safe Harbor Rule semimonthly period instead of on taxes actually Penalties and interest may result from any of the following acts. collected during the period. Under the alterna- The safe harbor rule applies separately to de- • Failing to collect and pay over tax as the tive method, the tax included in amounts billed posits under the regular method and the alter- collecting agent (see Trust fund recovery or tickets sold during a semimonthly period is native method. Persons who filed Form 720 for penalty, later). considered collected during the first 7 days of the look-back quarter (the second calendar • Failing to keep adequate records. the second following semimonthly period. The quarter preceding the current quarter) are con- • Failing to file returns. deposit of tax is due by the third banking day af- sidered to meet the semimonthly deposit re- • Failing to pay taxes. ter the seventh day of that period. quirement if the deposit for each semimonthly • Filing returns late. For an example of the alternative method, period in the current quarter is at least 1/6 • Filing false or fraudulent returns. see the Instructions for Form 720. (16.67%) of the net tax liability reported for the • Paying taxes late. look-back quarter. To use the alternative method, you must • Failing to make deposits. keep a separate account of the tax included in For the semimonthly period for which the • Depositing taxes late. amounts billed or tickets sold during the month additional deposit is required, the additional de- • Making false statements relating to tax. and report on Form 720 the tax included in posit must be at least 11/90 (12.23%), 10/90 • Failing to register. amounts billed or tickets sold and not the (11.12%) for non-EFTPS, of the net tax liability • Misrepresenting that tax is excluded from amount of tax that is actually collected. For ex- reported for the look-back quarter. Also, the the price of an article. ample, amounts billed in December, January, total deposit for that semimonthly period must

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Failure to register. The civil penalty for failure Appeal Rights, and Claims for Refund. An un- filing your return online or in your local commun- to register if you are required to register, unless agreed case involving an excise tax covered in ity, if you qualify, which include the following. due to reasonable cause, is $10,000 for the ini- this publication differs from other tax cases in • Free File. This program lets you prepare tial failure, and then $1,000 each day thereafter that you can only contest it in court after pay- and file your federal individual income tax you fail to register. ment of the tax by filing suit for a refund in the return for free using brand-name tax-prep- United States District Court or the United States aration-and-filing software or Free File filla- Claims. There are criminal penalties for false Court of Federal Claims. 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. tance (VITA) program offers free tax help The penalty is the greater of two times the ex- 16. 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 preparing their own tax returns. Go to taxable communications, air transportation Rulings Program IRS.gov/VITA, download the free IRS2Go services, or indoor tanning services, you have app, or call 800-906-9887 for information to collect excise taxes (as discussed earlier) The IRS has a program for assisting taxpayers on free tax return preparation. from those persons who pay you for those serv- who have technical problems with tax laws and • TCE. The Tax Counseling for the Elderly ices. You must pay over these taxes to the U.S. regulations. The IRS will answer inquiries from (TCE) program offers free tax help for all Government. individuals and organizations about the tax ef- taxpayers, particularly those who are 60 If you willfully fail to collect or pay over these fect of their acts or transactions. The National years of age and older. TCE volunteers taxes, or if you evade or defeat them in any Office of the IRS issues rulings on those mat- specialize in answering questions about way, the trust fund recovery penalty may apply. ters. pensions and retirement-related issues Willfully means voluntarily, consciously, and in- unique to seniors. Go to IRS.gov/TCE , tentionally. The trust fund recovery penalty A ruling is a written statement to a taxpayer that download the free IRS2Go app, or call equals 100% of the taxes not collected or not interprets and applies tax laws to the taxpayer's 888-227-7669 for information on free tax paid over to the U.S. Government. specific set of facts. There are also determina- return preparation. The trust fund recovery penalty may be im- tion letters issued by IRS directors and informa- • MilTax. Members of the U.S. Armed posed on any person responsible for collecting, tion letters issued by IRS directors or the Na- Forces and qualified veterans may use Mil- accounting for, and paying over these taxes. If tional Office. Tax, a free tax service offered by the De- this person knows that these required actions partment of Defense through Military One- There is a fee for most types of determination aren’t taking place for whatever reason, the per- Source. letters and rulings. For complete information on son is acting willfully. Paying other expenses of Also, the IRS offers Free Fillable the rulings program, see the first Internal Reve- the business instead of paying the taxes is will- Forms, which can be completed online and nue Bulletin published each year. ful behavior. then filed electronically regardless of in- A responsible person can be an officer or come. employee of a corporation, a partner or employee of a partnership, or any other person Using online tools to help prepare your re- who had responsibility for certain aspects of the turn. Go to IRS.gov/Tools for the following. business and financial affairs of the employer • The Earned Income Tax Credit Assistant (or business). This may include accountants, (IRS.gov/EITCAssistant) determines if trustees in bankruptcy, members of a board, 17. you’re eligible for the earned income credit banks, insurance companies, or sureties. The (EIC). responsible person could even be another cor- • The Online EIN Application (IRS.gov/EIN) poration—in other words, anyone who has the helps you get an employer identification duty and the ability to direct, account for, or pay How To Get Tax number (EIN). over the money. Having signature power on the • Tax Withholding Estimator (IRS.gov/ business checking account could be a signifi- Help W4app) makes it easier for everyone to cant factor in determining responsibility. pay the correct amount of tax during the year. The tool is a convenient, online way If you have questions about a tax issue, need to check and tailor your withholding. It’s help preparing your tax return, or want to down- more user-friendly for taxpayers, including load free publications, forms, or instructions, go retirees and self-employed individuals. The to IRS.gov and find resources that can help you features include the following. right away. – Easy to understand language. – The ability to switch between screens, 15. Preparing and filing your tax return. After receiving all your wage and earnings state- correct previous entries, and skip ments (Form W-2, W-2G, 1099-R, 1099-MISC, screens that don’t apply. 1099-NEC, etc.); unemployment compensation – Tips and links to help you determine if Examination and statements (by mail or in a digital format) or you qualify for tax credits and deduc- other government payment statements (Form tions. 1099-G); and interest, dividend, and retirement – A progress tracker. Appeal statements from banks and investment firms – A self-employment tax feature. (Forms 1099), you have several options to – Automatic calculation of taxable social Procedures choose from to prepare and file your tax return. security benefits. You can prepare the tax return yourself, see if • The First Time Homebuyer Credit Account If your excise tax return is examined and you you qualify for free tax preparation, or hire a tax Look-Up (IRS.gov/HomeBuyer) tool pro- disagree with the findings, you can get informa- professional to prepare your return. vides information on your repayments and tion about audit and appeal procedures from account balance. Publication 556, Examination of Returns, Free options for tax preparation. Go to IRS.gov to see your options for preparing and

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• The Sales Tax Deduction Calculator information with you. Don’t post your SSN or • The IRS doesn’t initiate contact with tax- (IRS.gov/SalesTax) figures the amount you other confidential information on social media payers by email or telephone to request can claim if you itemized deductions on sites. Always protect your identity when using personal or financial information. This in- Schedule A (Form 1040). any social networking site. cludes requests for personal identification numbers (PINs), passwords, or similar in- Getting answers to your tax law The following IRS YouTube channels pro- formation for credit cards, banks or other fi- questions. On IRS.gov, get up-to-date vide short, informative videos on various tax-re- nancial accounts. information on current events and lated topics in English, Spanish, and ASL. Youtube.com/irsvideos. • Go to IRS.gov/IdentityTheft, the IRS Iden- changes in tax law. • • Youtube.com/irsvideosmultilingua . tity Theft Central webpage, for information • IRS.gov/Help A variety of tools that will • Youtube.com/irsvideosASL . on identity theft and data security protec- help you get answers to some of the most tion for taxpayers, tax professionals and common tax questions. Watching IRS Videos. The IRS Video portal businesses. If your SSN has been lost or • IRS.gov/ITA The Interactive Tax Assistant, (IRSVideos.gov) contains video and audio pre- stolen or you suspect you’re a victim of a tool that will ask you questions on a num- sentations for individuals, small businesses, tax-related identity theft, you can learn ber of tax law topics and provide answers. and tax professionals. what steps you should take. • IRS.gov/Forms Find forms, instructions, • Get an Identity Protection PIN (IP PIN). IP and publications. You will find details on Online tax information in other languages. PINs are six-digit numbers assigned to eli- 2021 tax changes and hundreds of interac- You can find information on IRS.gov/ gible taxpayers to help prevent the misuse tive links to help you find answers to your MyLanguage if English isn’t your native lan- of their SSNs on fraudulent federal income questions. guage. tax returns. When you have an IP PIN, it • You may be able to access tax law infor- prevents someone else from filing a tax re- mation in your electronic filing software. Free interpreter service. Multilingual assis- turn with your SSN. To learn more, go to tance, provided by the IRS, is available at Tax- IRS.gov/IPPIN . payer Assistance Centers (TACs) and other Need someone to prepare your tax return? IRS offices. Over-the-phone interpreter service Checking on the status of a refund. There are various types of tax return preparers, is accessible in more than 350 languages. • Go to IRS.gov/Refunds . including tax preparers, enrolled agents, certi- • The IRS can’t issue refunds before fied public accountants (CPAs), attorneys, and Getting tax forms and publications. Go to mid-February 2021 for returns that properly many others who don’t have professional cre- IRS.gov/Forms to view, download, or print all claimed the EIC or the additional child tax dentials. If you choose to have someone pre- the forms and publications you may need. You credit (ACTC). This applies to the entire re- pare your tax return, choose that preparer can also download and view popular tax publi- fund, not just the portion associated with wisely. A paid tax preparer is: cations and instructions (including the 1040 and these credits. • Primarily responsible for the overall sub- 1040-SR instructions) on mobile devices as an • Download the official IRS2Go app to your stantive accuracy of your return, eBook at no charge at IRS.gov/eBooks. Or, you mobile device to check your refund status. • Required to sign the return, and can go to IRS.gov/OrderForms to place an or- • Call the automated refund hotline at • Required to include their preparer tax iden- der and have them mailed to you within 10 busi- 1-800-829-1954. tification number (PTIN). ness days. Making a tax payment. The IRS uses the lat- Although the tax preparer always signs the re- Access your online account (Individual tax- est encryption technology to ensure your elec- turn, you're ultimately responsible for providing payers only). Go to IRS.gov/Account to se- tronic payments are safe and secure. You can all the information required for the preparer to curely access information about your federal tax make electronic payments online, by phone, accurately prepare your return. Anyone paid to account. and from a mobile device using the IRS2Go prepare tax returns for others should have a • View the amount you owe, pay online or app. Paying electronically is quick, easy, and thorough understanding of tax matters. For set up an online payment agreement. faster than mailing in a check or money order. more information on how to choose a tax pre- • Access your tax records online. Go to IRS.gov/Payments to make a payment parer, go to Tips for Choosing a Tax Preparer • Review the past 24 months of your pay- using any of the following options. on IRS.gov ment history. • IRS Direct Pay: Pay your individual tax bill • Go to IRS.gov/SecureAccess to review the or estimated tax payment directly from Coronavirus. Go to IRS.gov/Coronavirus for required identity authentication process. your checking or savings account at no links to information on the impact of the corona- cost to you. virus, as well as tax relief available for individu- Using direct deposit. The fastest way to re- • Debit or Credit Card: Choose an approved als and families, small and large businesses, ceive a tax refund is by combining direct de- payment processor to pay online, by and tax-exempt organizations. posit and IRS e-file. Direct deposit securely and phone, and by mobile device. electronically transfers your refund directly into • Electronic Funds Withdrawal: Offered only Tax reform. Tax reform legislation affects in- your financial account. Eight in 10 taxpayers when filing your federal taxes using tax dividuals, businesses, and tax-exempt and gov- use direct deposit to receive their refund. The preparation software or through a tax pro- ernment entities. Go to IRS.gov/TaxReform for IRS issues more than 90% of refunds in less fessional. information and updates on how this legislation than 21 days. • Electronic Federal Tax Payment System: affects your taxes. Best option for businesses. Enrollment is Getting a transcript or copy of a return. The required. Employers can register to use Business quickest way to get a copy of your tax transcript • Check or money order: Mail your payment Services Online. The Social Security Adminis- is to go to IRS.gov/Transcripts. Click on either to the address listed on the notice or in- tration (SSA) offers online service at SSA.gov/ "Get Transcript Online" or "Get Transcript by structions. employer for fast, free, and secure online W-2 Mail" to order a copy of your transcript. If you • Cash: You may be able to pay your taxes filing options to CPAs, accountants, enrolled prefer, you can order your transcript by calling with cash at a participating retail store. agents, and individuals who process Form W-2, 800-908-9946. • Same-Day Wire: You may be able to do a Wage and Tax Statement, and Form W-2c, same-day wire from your financial institu- Corrected Wage and Tax Statement. Resolving tax-related identity theft issues. tion. Contact your financial institution for • Tax-related identity theft happens when availability, cost, and cut-off times. IRS social media. Go to IRS.gov/SocialMedia someone steals your personal information to see the various social media tools the IRS to commit tax fraud. Your taxes can be af- uses to share the latest information on tax fected if your SSN is used to file a fraudu- changes, scam alerts, initiatives, products, and lent return or to claim a refund or credit. services. At the IRS, privacy and security are paramount. We use these tools to share public

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What if I can’t pay now? Go to IRS.gov/ and protects taxpayer rights. Our job is to en- Low Income Taxpayer Payments for more information about your op- sure that every taxpayer is treated fairly and tions. that you know and understand your rights under Clinics (LITCs) Apply for an online payment agreement the Taxpayer Bill of Rights. • LITCs are independent from the IRS. LITCs (IRS.gov/OPA) to meet your tax obligation represent individuals whose income is below a in monthly installments if you can’t pay How Can You Learn About Your certain level and need to resolve tax problems your taxes in full today. Once you complete Taxpayer Rights? with the IRS, such as audits, appeals, and tax the online process, you will receive imme- collection disputes. In addition, clinics can pro- diate notification of whether your agree- The Taxpayer Bill of Rights describes 10 basic vide information about taxpayer rights and re- ment has been approved. rights that all taxpayers have when dealing with sponsibilities in different languages for individu- Use the Offer in Compromise Pre-Qualifier • the IRS. Go to TaxpayerAdvocate.IRS.gov to als who speak English as a second language. to see if you can settle your tax debt for help you understand what these rights mean to Services are offered for free or a small fee. To less than the full amount you owe. For you and how they apply. These are your rights. find a clinic near you, visit IRS.gov/LITC or see more information on the Offer in Compro- Know them. Use them. IRS Publication 4134, Low Income Taxpayer mise program, go to IRS.gov/OIC. Clinic List. Filing an amended return. You can now file What Can the TAS Do For You? Form 1040-X electronically with tax filing software to amend 2019 Forms 1040 and 1040-SR. TAS can help you resolve problems that you To do so you must have e-filed your original can’t resolve with the IRS. And their service is 2019 return. Amended returns for all prior years free. If you qualify for their assistance, you will must be mailed. See Tips for taxpayers who be assigned to one advocate who will work with need to file an amended return tax return and you throughout the process and will do every- 18. go to IRS.gov/Form1040X for information and thing possible to resolve your issue. TAS can updates. help you if: • Your problem is causing financial difficulty Checking the status of an amended return. for you, your family, or your business; Appendix Go to IRS.gov/WMAR to track the status of • You face (or your business is facing) an Form 1040-X amended returns. Please note immediate threat of adverse action; or This appendix contains models of the certifi- that it can take up to 3 weeks from the date you • You’ve tried repeatedly to contact the IRS cates, waivers, reports, and statements dis- mailed your amended return for it to show up in but no one has responded, or the IRS cussed in Part One. our system and processing it can take up to 16 hasn’t responded by the date promised. weeks. How Can You Reach TAS? Understanding an IRS notice or letter. Go to IRS.gov/Notices to find additional information TAS has offices in every state, the District of about responding to an IRS notice or letter. Columbia, and Puerto Rico. Your local advocate’s number is in your local directory and at Contacting your local IRS office. Keep in TaxpayerAdvocate.IRS.gov/Contact-Us. You mind, many questions can be answered on can also call us at 877-777-4778. IRS.gov without visiting an IRS Tax Assistance Center (TAC). Go to IRS.gov/LetUsHelp for the How Else Does TAS Help topics people ask about most. If you still need Taxpayers? help, IRS TACs provide tax help when a tax issue can’t be handled online or by phone. All TAS works to resolve large-scale problems that TACs now provide service by appointment so affect many taxpayers. If you know of one of you’ll know in advance that you can get the these broad issues, please report it to us at service you need without long wait times. Be- IRS.gov/SAMS. fore you visit, go to IRS.gov/TACLocator to find the nearest TAC, check hours, available serv- TAS also has a website, Tax Reform ices, and appointment options. Or, on the Changes, which shows you how the new tax IRS2Go app, under the Stay Connected tab, law may change your future tax filings and helps choose the Contact Us option and click on “Lo- you plan for these changes. The information is cal Offices.” categorized by tax topic in the order of the IRS Form 1040 or 1040-SR. Go to TaxChanges.us The Taxpayer Advocate for more information. Service (TAS) Is Here To TAS to Tax Professionals

Help You TAS can provide a variety of information for tax professionals, including tax law updates and What is TAS? guidance, TAS programs, and ways to let TAS know about systemic problems you’ve seen in your practice. TAS is an independent organization within the Internal Revenue Service that helps taxpayers

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Model Certificate A

STATEMENT OF SUBSEQUENT SELLER 1.

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

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 are 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 are 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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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

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)

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.

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.

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)

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

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.

Fixed-wing aircraft 28 Tax on diesel fuel or kerosene 9 Biodiesel, defined 4 A Hawaii 27, 28 Alcohol and tobacco taxes 3 Blended taxable fuel, defined 4 Affiliated corporations 28 Helicopters 27, 28 Alternative fuel, defined 4 Blender, defined 4 Agri-biodiesel, defined 4 International air travel Alternative fuel credit 20 Blocked pump 15 Aircraft 19 facilities 28 American Red Cross 26 Blood collector organizations, Affiliated corporations 28 Military personnel 27 Answering service 25 qualified 19, 26 Small planes 28 Package tours 27 Appeal procedures 41 Boats 18 Aircraft museum 19 Persons by air 26 Approved refinery, defined 4 Bonus tickets 28 Air transportation taxes 26 Persons liable 27, 28 Approved terminal, defined 4 Bows, Quivers, Broadheads, and 225-mile-zone rule 27 Property by air 28 Arrow shafts 31 Points 31 Alaska 27, 28 Taxable transportation 27 Assistance (See Tax help) Bulk transfer, defined 4 Baggage 28 Tax rates 26 Aviation gasoline, defined 5 Bulk transfer/terminal system, Bonus tickets 28 Travel agency 27 defined 4 Credits or refunds 29 Uninterrupted international 27 Buses 18 Exemptions 27 Alaska: B Tire tax 32 Export 28 Air transportation taxes 27 Back-up tax 10

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Exempt communication services: Fuels: C American Red Cross 26 Alternative fuel 12 M Chemicals, ozone-depleting 23 Answering service 25 Diesel 7 Manufacturer, defined 29 Claims: Coin-operated telephones 25 Diesel-water fuel emulsion 10 Manufacturers taxes: Claiming a credit 21 Installation charges 25 For use in aviation 10 Arrow shafts 31 Claiming a refund 21 International organizations 26 Gasoline 5 Bows, Quivers, Broadheads, and Filing claims 20 Mobile radio telephone Kerosene 7 Points 31 Coal: service 25 Other Fuels 12 Coal 31 Blending 32 News services 26 Used on inland waterways 12 Credits or refunds 30 Exemptions 32 Nonprofit educational Exemptions 29 Producer 31 organizations 26 Gas guzzler tax 32 Production 31 Nonprofit hospitals 26 G Lease 29 Selling price 31 Private communication Gambling 36 Lease payments 29 Tax rates 31 service 25 Gas guzzler tax: Partial payments 29 Coin-operated telephones 25 Qualified blood collector Automobiles 32 Registration 30 Comments 2 organizations 26 Credit or refund 33 Related person 31 Commercial aviation 19 Radio broadcasts 26 Limousines 32 Requirements for exempt Commercial fishing 18 Security systems 25 Vehicles not subject to tax 32 sales 30 Commercial waterway Exemptions: Gasoline, defined 5 Sale 29 transportation 12 Air transportation taxes 27 Gasoline blendstocks 6 Sport fishing equipment 30 Communications taxes: Bonus tickets 28 Taxable Tires 32 Credits or refunds 26 Coal 32 Vaccines 33 Exemptions 25 Communications taxes 25 H Military aircraft 19 Figuring the tax 25 Federal government 26 Hawaii, air transportation Mobile radio telephone Local-only service 25 Fixed-wing aircraft 28 taxes 27 service 25 Local telephone service 25 For export 29 Heavy Motor Vehicle User Fee 3 Private communication Further manufacturing 29 Heavy trucks: service 25 Helicopters 27 First retail sale, defined 34 N Teletypewriter exchange Indian handicrafts 29 Further manufacture 35 News services 26 service 25 Indian tribal governments 26 Installment sales 35 Nonprofit educational Credit card purchases: Military personnel 27 Parts or accessories 34 organization 19 Aviation gasoline 14 Nonprofit educational Presumptive retail sales Nonprofit educational Gasoline 14 organizations 26, 29 price 35 organizations 26 Kerosene for use in aviation 16 Qualified blood collector Related persons 35 Nonprofit educational Undyed diesel fuel 15 organizations 29 Separate purchases 34 organization use and state Undyed kerosene 15 State and local Tax base 35 use 20 Credit or refund: governments 26, 29 Tax rate 33 Nontaxable uses, definitions 17 Gas guzzler tax 33 Taxable tires 32 Helicopter 19 Nontaxable uses, type of use Manufacturers taxes 30 Vessel supplies 29 Help (See Tax help) table 17 Resale of tax-paid Exempt sales, heavy trucks 36 Highway vehicle 17, 19 semitrailers 34 Export 18 Highway vehicle Retail tax 36 Exported taxable fuel 14 (Diesel-powered) 7 O Tire tax 32 Obligations not in registered Vaccines 33 form 37 Credits 21 F I Off-highway use 17 Farming 17 Identifying number 21 Oil spill liability 23 Federal government 26 Identity theft 42 Other fuels, defined 4 D Fishing 18 Imported taxable products Other Fuels (Including Deposits, How to make 39 Fishing rods and fishing (ODCs) 24 Alternative Fuels) 12 Deposits: poles. 31 Income, include in 22 Ozone-depleting chemicals: Net tax liability 40 Fishing tackle boxes 31 Indoor tanning services 37 Floor stocks tax 24 Diesel fuel: Fixed-wing aircraft 28 Information returns, liquid Imported taxable products 24 Definitions 7 Floor stocks, ODCs 23 products 5 Exported 7 Floor stocks tax: Inland and intracoasal Diesel-water fuel emulsion, Ozone-depleting chemicals 24 waterways 12 P defined 4 Foreign trade 19 Inland waterways 12 Patient-centered outcomes Dyed diesel fuel 9 Form: Intercity and local buses 18 research fee 38 Dyed kerosene 9 1363 28 Interest and penalties 40 Payment of taxes 39 4136 21 International air travel Penalties: 6197 32, 33, 39 facilities 28 Dyed diesel fuel 9 E 637 2 Dyed kerosene 9 Electric outboard motors 31 6627 23, 39 Pipeline operator, defined 4 Enterer, defined 4 720 21, 33, 39 K Position holder, defined 4 Entry, defined 4 720-X 39 Kerosene: Publications (See Tax help) Environmental taxes: 8849 21 Definitions 7 Credit or refund 24 8864 13 Exported 7 Exceptions 23 Form 720: For use in aviation 10 Q Attachments 39 Ozone-depleting chemicals Qualified local bus 18 (ODCs) 23 Due dates 39 United States (defined) 23 Final return 39 L Examination procedures 41 Schedule A 39 Liquid products, information Schedule C 39 R Excluded liquid 7 returns 5 Rack, defined 4 Schedule T 39 Exempt articles, retail tax 36 Local-only service 25 Radio broadcasts 26 Free tax services 41 Local telephone service 25

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Records 20 Insurance costs 29 Tax rate 31 Uninterrupted international air Refiner, defined 4 Local advertising charges 29 Air transportation of persons 26 transportation 27 Refinery, defined 4 Manufacturers excise tax 29 Air transportation of property 28 Used other than as a fuel: Refunds 21 Rebates 29 Arrow shafts 31 Diesel fuel and kerosene 18 Refunds of second tax 16 Retail dealer preparation Bows, Quivers, Broadheads, and Uses, nontaxable: Registered ultimate vendor 15, costs 29 Points 31 Alternative fuels 16 20 Warranty charges 29 Coal 31 Aviation gasoline 14 Registrant 5 School bus 18 Electric outboard motor 31 Diesel fuel 14 Registrant, defined 4 Second generation biofuel 4 International air travel Diesel-water fuel emulsion 15 Registration 5 Security systems 25 facilities 28 Gasoline 14 Form 637 2 Ship passenger tax 36 Obligations not in registered Kerosene 14 Registration-required Special September rule, When to form 37 Kerosene for use in aviation 15 obligations 37 deposit 40 Policies issued by foreign Liquefied petroleum gas Related persons: Sport fishing equipment: persons 37 (LPG) 16 Heavy trucks 35 List of equipment 30 Ship passenger tax 36 Other Fuels 16 Sport fishing equipment 31 Resales 31 Sport fishing equipment 30 Removal, defined 4 State, defined 5 Trucks 33 Retail tax: State and local governments 26 Teletypewriter exchange V Credits or refunds 36 State or local governments 19 service 25 Vaccines: Heavy trucks 33 State or nonprofit educational Terminal, defined 5 Credit or refund 33 Rulings Program 41 organization use 14 Terminal operator, defined 5 Manufacturers tax 33 Rural airports 27 State use 15, 20 Throughputter, defined 5 Vehicles: Suggestions 2 Tires: Gas guzzler 32 Credit against heavy truck Imported 33 S tax 36 Law enforcement 32 Sale, defined 4 T Credit or refund of tax 32 Vendors, registered ultimate 15, Sales by registered ultimate Tanning tax 37 Train 19 20 vendors, gasoline 14 Taxable fuel registrant 5 Train (Diesel-powered) 7 Vessel operator, defined 5 Sales by registered ultimate Taxable Tires: Transmix 7 vendors, kerosene for use in Taxable tires: Travel agency 27 aviation 16 Exemptions 32 TTY/TDD information 41 W Sales price: Manufacturers taxes 32 Two-party exchanges 5, 8 Wagering and occupational Bonus goods 29 Taxes, Payment of 39 wagering fee 3 Cost of transportation 29 Tax help 41 When to deposit 40 Delivery costs 29 Taxpayer identification U Discounts 29 number 21 Ultimate purchaser 20 Installation costs 29

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