Publication 595 |
2001 Tax Year |
How Do You Claim Fuel Tax Credits & Refunds?
You may be eligible to claim a credit on your income tax return for
federal excise tax imposed on certain fuels used for a nontaxable use.
You may also be eligible to claim a quarterly refund of the fuel taxes
during the year, instead of waiting to claim a credit on your income
tax return.
Instead of paying the fuel tax and filing for a credit or refund,
you may be able to buy certain fuel tax free. For more information,
see How To Buy Fuel Tax Free, later.
Nontaxable Uses
This section discusses the nontaxable uses that may be of
particular interest to fishermen. For information about other
nontaxable uses (not discussed in this section) for which a credit or
refund may be claimed, see Publication 378.
Commercial fishing.
You may be eligible to claim a credit or refund of excise tax on
gasoline used in a boat engaged in commercial fishing.
Boats engaged in commercial fishing include only watercraft used in
taking, catching, processing, or transporting fish, shellfish, or
other aquatic life for commercial purposes, such as selling or
processing the catch, on a specific trip basis. They include boats
used in both fresh and salt water fishing. They do not include boats
used for both sport fishing and commercial fishing on the same trip.
Fuel used in aircraft to locate fish is not fuel used in commercial
fishing.
Off-highway business use.
You may be eligible to claim a credit or refund of excise tax on
fuel if you use the fuel for off-highway business use.
What is off-highway business use?
It is any use of fuel in a trade or business or in any
income-producing activity other than use in a highway vehicle
registered or required to be registered for use on public highways.
Off-highway business use includes fuels used in the following ways.
- In stationary engines to operate generators, compressors,
and similar equipment.
- For cleaning purposes.
Fuel used in a motor boat does not qualify as fuel used for an
off-highway business use.
How To Claim
a Credit or Refund
This section tells you when and how to claim a credit or refund of
excise taxes on fuels you use for a nontaxable use.
Credit or refund.
A credit is an amount you claim on your income tax return when you
file it at the end of the year. If you meet certain requirements, you
can claim a refund during the year instead of waiting until you file
your tax return. See Claiming a Refund, later.
Credit only.
The following taxes can only be claimed as a credit.
- Tax on fuels you used for nontaxable uses if the total for
the tax year is less than $750.
- Tax on fuel you did not include in any claim for refund
previously filed for the tax year.
Claiming a Credit
You make a claim for credit on Form 4136 and attach it
to your income tax return. Do not claim a credit for any amount for
which you have filed a refund claim.
When to claim a credit.
You can claim a fuel tax credit on your income tax return for the
year you used the fuel.
Once you have filed a Form 4136, you cannot file an amended return
to show an increase in the number of gallons of fuel reported on a
line of that form. See the following discussion for when you can file
a claim on an amended return.
Fuel tax claim on amended return.
You may be able to make a fuel tax claim on an amended return for
the year you used the fuel. Generally, if you are allowed to file an
amended return, you must file it by the later of 3 years
from the date you filed your original income tax return or within 2
years from the time you paid the income tax. A return filed early is
considered to have been filed on the due date.
You can file an amended return to claim a fuel tax credit if any of
the following apply.
- You did not claim any credit for fuel taxes on Form 4136 for
the tax year.
- Your credit is for gasohol blending, as discussed in
Publication 378.
- Your credit is for a claim group, explained next, for which
you did not previously file a claim on Form 4136 for the tax
year.
Claims on Form 4136 (other than for gasohol blending) are separated
into seven claim groups. Once you file Form 4136 with a
claim for a group, you cannot file an amended return with another
claim for that group. However, you can file an amended return with a
claim for another group.
Claim group table.
Tables 2 and 3 show which claims are in each
group. The numbers in the second column of each table refer to the
line numbers on Form 4136. The numbers in the third column are from
the Type of Use Table in the Form 4136 instructions.
Table 2. Claim Groups for
Tax Years Before 2001
Group |
Line
Number |
Type of
Use |
I |
1b, 1d-f, 2b |
1 |
II |
1a, 1d-f |
2 |
|
2a |
See line instructions |
III |
1c-f |
5, 7 |
IV |
1c-f, 2b |
3, 4, 9 |
V |
3c, 7 |
5, 7 |
VI |
3a-b, 4, 5, 6 |
See line instructions |
VII |
2b |
10 |
Table 3. Claim Groups for
Tax Years After 2000
Group |
Line Number |
Type
of Use |
I |
1b, 1d-f, 2b |
1 |
II |
1a, 1d-f |
2 |
|
2a |
See line instructions |
III |
1c-f |
5, 7 |
IV |
1c-f, 2b |
3, 4, 9 |
V |
3c, 4c, 8 |
5, 7 |
VI |
3a-b, 4a-b,
5, 6, 7 |
See line instructions |
VII |
2b |
10 |
For each tax year, you can make only one claim for each group.
Example.
You file your income tax return and claim a fuel tax credit. Form
4136 shows an amount on line 1c for use of gasoline in a boat engaged
in commercial fishing. This is a Group IV claim. You cannot amend your
return to claim a credit for an amount on line 1d for use of gasohol
in a boat engaged in commercial fishing (Type of Use 4), since that is
also a Group IV claim. However, if you used the gasohol in an
off-highway business use, you can amend your return to claim the
credit for that fuel tax because that would be a Group II claim.
How to claim a credit.
As an individual, you claim the credit on line 65 of Form 1040.
Check box "b" on line 65. If you would not otherwise have to file
an income tax return, you must do so to claim a fuel tax credit.
Claiming a Refund
You can file a claim for refund for any quarter of your tax year
for which you can claim $750 or more. This amount is the excise tax on
all fuels used for any nontaxable use during that quarter or any prior
quarter (for which no other claim has been filed) during the tax year.
If you cannot claim at least $750 at the end of a quarter, you
carry the amount over to the next quarter of your tax year to
determine if you can claim at least $750 for that quarter. If you
cannot claim at least $750 at the end of the fourth quarter of your
tax year, you must claim a credit on your income tax return, using
Form 4136. Only one claim can be filed for a quarter.
How to file a quarterly claim.
You make a claim for a refund on Form 8849. File the claim by
filling out Schedule 1 (Form 8849) and attaching it to Form 8849. Send
it to the address shown in the instructions.
When to file a quarterly claim.
You must file a quarterly claim by the last day of the quarter
following the last quarter included in the claim. If you do not file a
timely refund claim for the fourth quarter of your tax year, you will
have to claim a credit for that amount on your income tax return, as
discussed earlier.
Including the Credit or Refund in Income
Include any credit or refund of excise taxes on fuels in your gross
income if you claimed the total cost of the fuel (including the excise
taxes) as an expense deduction that reduced your income tax liability.
If you use the cash method of accounting and file a claim for
refund, include the refund in your gross income for the tax
year in which you receive the refund. If you claim a credit
on your income tax return, include the credit in gross income for the
tax year in which you file Form 4136. If you file an amended
return and claim a credit, include the credit in gross income
for the tax year in which you receive the credit.
Example.
Ed Brown, a cash basis fisherman, filed his 2000 Form 1040 on March
1, 2001. On his Schedule C, Ed deducted the total cost of gasoline
(including $110 of excise taxes) used in his boat while engaged in
commercial fishing operations. Then, on Form 4136, he claimed the $110
as a credit. Ed reports the $110 as additional income on his 2001
Schedule C.
How To Buy Fuel Tax Free
Instead of paying the fuel tax and filing a claim for credit or
refund when the fuel is used for a nontaxable use, you may be eligible
to buy it tax free.
Gasoline.
Your supplier may be able to sell you gasoline at a tax-free price
only for use in a boat engaged in commercial fishing.
Your supplier may be eligible to claim a credit or refund of the
excise tax on the gasoline sold to you at a tax-free price. Refer your
supplier to Credits and Refunds under Gasoline
in Publication 510,
Excise Taxes for 2002, for
details.
To buy gasoline at a tax-free price, give your supplier a signed
certificate identifying you and stating that you will use the gasoline
in a boat engaged in commercial fishing. You do not need to renew the
certificate as long as the information it contains continues to be
correct. See Table 4 for a sample exemption certificate.
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