Publication 378 |
2000 Tax Year |
Undyed Diesel Fuel & Undyed Kerosene
The term diesel fuel means any liquid that, without
further processing or blending, is suitable for use as a fuel in a
diesel-powered highway vehicle or train. Diesel fuel does not include
gasoline, kerosene, excluded liquid, No. 5 and No. 6 fuel oils covered
by ASTM specification D 396, or F-76 (Fuel Naval Distillate) covered
by military specification MIL-F-16884.
An excluded liquid
is either of the following.
- A liquid that contains less than 4% normal paraffins.
- A liquid with all the following properties.
- Distillation range of 125 degrees Fahrenheit or less.
- Sulfur content of 10 ppm or less.
- Minimum color of +27 Saybolt.
The term kerosene is any of the following liquids.
- One of the two grades of kerosene (No. 1-K and No.
2-K) covered by ASTM specification D 3699.
- Kerosene-type jet fuel (aviation-grade kerosene) covered by
ASTM specification D 1655 or military specification MIL-DTL-5624T
(Grade JP-5) or MIL-DTL-83133E (Grade JP-8).
Kerosene also includes any liquid that would meet these
specifications but for the presence of a dye of the type used to dye
kerosene for a nontaxable use.
However, kerosene does not include excluded liquid, discussed
earlier.
Aviation-grade kerosene that is to be used as fuel in an aircraft
is treated as aviation fuel, discussed later.
Nontaxable Uses
The following are the uses of undyed diesel fuel and
undyed kerosene for which a credit or refund may be
allowable to an ultimate purchaser.
- Off-highway business use.
- Export.
- In an intercity or local bus.
- In a qualified local bus.
- In a school bus.
- Used other than as a fuel.
- In a vehicle owned by the United States.
- By a nonprofit educational organization.
- By an aircraft museum.
- In a train.
Only a registered ultimate vendor (blocked pump), discussed later,
can claim a credit or refund for the nontaxable use of undyed kerosene
if the kerosene is sold from a blocked pump.
Note:
Only a registered ultimate vendor (farming and state use) can claim
a credit or refund for undyed diesel fuel or undyed kerosene used on a
farm for farming purposes or used by a state or local government.
Fuels used for these purposes cannot be considered as being used for
any other nontaxable use.
No credit or refund is allowable for any use of dyed
diesel fuel and dyed kerosene. You buy these fuels excise
tax free. See Publication 510
for more information about these dyed
fuels.
Registered Ultimate Vendors
A registered ultimate vendor (farming and state use) may be allowed
a credit or refund of the excise tax imposed on undyed diesel fuel and
undyed kerosene. A registered ultimate vendor (blocked pump) and a
registered ultimate vendor (blending) may be allowed a credit or
refund of the excise tax imposed on undyed kerosene.
Registered ultimate vendor (farming and state use).
This is a person that sells undyed diesel fuel or undyed kerosene
to any of the following.
- The owner, tenant, or operator of a farm for use by that
person on a farm for farming purposes.
- A person other than the owner, tenant, or operator of a farm
for use by that person on a farm in connection with cultivating,
raising, or harvesting.
- A state or local government.
The person must be registered by the IRS as an ultimate vendor.
A credit or refund may be allowable to the registered ultimate
vendor if the vendor sold undyed diesel fuel or undyed kerosene to any
of the users listed.
Registered ultimate vendor (blocked pump).
This is a person that sells undyed kerosene from a blocked pump.
The person must be registered by the IRS as an ultimate vendor
(blocked pump).
A credit or refund may be allowable to a registered ultimate vendor
(blocked pump) if the vendor sold undyed kerosene from a blocked pump
for its buyer's use other than as a fuel in a diesel-powered highway
vehicle or train and the vendor had no reason to believe the kerosene
would not be used in that manner.
Blocked pump.
A blocked pump is a fuel pump that meets all the following
requirements.
- It is used to make retail sales of undyed kerosene for use
by the buyer in any nontaxable use.
- It is at a fixed location.
- It is identified with a legible and conspicuous notice
stating, "UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY."
- It meets either of the following conditions.
- It cannot reasonably be used to dispense fuel directly into
the fuel supply tank of a diesel-powered highway vehicle or
train.
- It is locked by the vendor after each sale and unlocked by
the vendor only in response to a buyer's request for undyed kerosene
for use other than as a fuel in a diesel-powered highway vehicle or
train.
Publication 510),
a
registered ultimate vendor, or a registered ultimate vendor (blocked
pump).
A credit or refund may be allowable to a registered ultimate vendor
(blending) if the vendor sold undyed kerosene in an area described in
an IRS declaration of extreme cold for the production of a cold
weather blend.
Cold weather blend.
This is a blend of kerosene and diesel fuel produced in an area
described in an IRS declaration of extreme cold and sold for use or
used for heating purposes.
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