You buy dyed diesel fuel and dyed kerosene excise tax free. You must use them only for a nontaxable use, including use on a farm for farming purposes. If you use the dyed fuel for a taxable use, you could be subject to the excise tax and a penalty. For example, if a truck used on a farm for farming purposes is also used on the highways (even though in connection with operating the farm), tax applies to the diesel fuel used (or sold for use) in operating the truck on the highways. The fuel was used off the farm for a taxable use.

You can buy undyed diesel fuel and undyed kerosene tax free for use on a farm for farming purposes from a registered ultimate vendor. This applies to fuel bought by any of the following persons.

• The owner, tenant, or operator of a farm for use on a farm for any of the purposes listed earlier under Farming purposes.
• Any other person for use on a farm for any of the purposes in items (1) and (2) listed earlier under Farming purposes.

You must give the vendor a signed certificate, which should be substantially the same as the sample certificate shown in Table 18-3. You can include the certificate as part of any business records you normally keep to document a sale and purchase.

You cannot claim a credit or refund for the excise tax on diesel fuel or kerosene used on a farm for farming purposes. The registered ultimate vendor who sells you the fuel claims the credit or refund.

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