Federal excise taxes are imposed on certain fuels. This chapter lists the nontaxable uses (defined in chapter 2) of each fuel
for which a credit or
refund of the excise tax may be allowed to an ultimate purchaser. It also covers the credit or refund allowed for gasohol
blending and for certain
sales by registered ultimate vendors of undyed diesel fuel and undyed kerosene.
The ultimate purchaser of compressed natural gas and special motor fuels other than liquefied petroleum gas used in buses,
discussed later,
generally does not use taxed fuel for a nontaxable use and no credit or refund would be allowable. These fuels are described
in Publication 510.
Type of use table.
The nontaxable uses listed under each fuel are from
Table 1–1. The first column of the table is the number you enter on Form 4136
(Nos. 1–11) or Form 8849 (Nos. 1–16) for that type of use.
Table 1–1. Type of Use Table
| No. |
Type of Use (See Chapter 2 for
definition of terms)
|
| 1 |
On a farm for farming purposes |
| 2 |
Off-highway business use (for business use other than in a highway vehicle registered or required to be
registered for highway use)
|
| 3 |
Export |
| 4 |
In a boat engaged in commercial fishing |
| 5 |
In certain intercity and local buses |
| 6 |
For diesel fuel in a qualified local bus |
| 7 |
In a bus transporting students and employees of schools (school buses) |
| 8 |
For diesel fuel and kerosene used other than as a fuel in the propulsion engine of a train or diesel-powered highway
vehicle (but not off-highway business use)
|
| 9 |
In foreign trade |
| 10 |
Certain helicopter and fixed-wing air ambulance uses |
| 11 |
For aviation fuel used other than as a fuel in the propulsion engine of an aircraft |
| 12 |
In a highway vehicle owned by the United States that is not used on a highway |
| 13 |
Exclusive use by a nonprofit educational organization |
| 14 |
Exclusive use by a state, political subdivision of a state, or the District of Columbia |
| 15 |
In an aircraft or vehicle owned by an aircraft museum |
| 16 |
In military aircraft |
Gasoline means all products (including gasohol) commonly or commercially known or sold as gasoline with an octane rating of 75 or
more
that are suitable for use as a motor fuel. It includes gasoline blendstocks, discussed in Publication 510. Aviation gasoline
is discussed below.
Gasohol means a mixture of gasoline and alcohol that satisfies the alcohol-content requirements immediately after the mixture is
produced. Alcohol includes ethanol and methanol. Generally, this includes ethanol used to produce ethyl tertiary butyl ether
(ETBE) and methanol
produced from methane gas formed in waste disposal sites. However, alcohol produced from petroleum, natural gas, coal (including
peat), or any
derivative or product of these items, and alcohol that is less than 190 proof, do not qualify as alcohol for these rules.
See Publication 510 for a
complete discussion of gasohol.
The following are the uses of gasoline and gasohol for which a credit or refund may be allowable to an ultimate purchaser.
-
On a farm for farming purposes (credit only).
-
Off-highway business use.
-
Export.
-
In a boat engaged in commercial fishing.
-
In an intercity or local bus.
-
In a school bus.
-
In a highway vehicle owned by the United States that is not used on a highway.
-
Exclusive use by a nonprofit educational organization.
-
Exclusive use by a state, political subdivision of a state, or the District of Columbia.
-
In an aircraft or vehicle owned by an aircraft museum.
A gasohol blender is any person that regularly produces gasohol outside of the bulk transfer/terminal system for sale or use in the
blender's trade or business. A gasohol blender may be allowed a credit or refund for part of the excise tax imposed on gasoline
the blender uses to
produce gasohol.
The amount you may claim is based on the gallons of gasoline used to make gasohol. You cannot take a refund or credit if the
gasoline was taxed at
a reduced rate. See Publication 510 for a complete discussion of gasohol.
Aviation gasoline means all special grades of gasoline suitable for use in aviation reciprocating engines and covered by ASTM
specification D 910 or military specification MIL-G-5572.
The following are the uses of aviation gasoline for which a credit or refund may be allowable to an ultimate purchaser.
-
On a farm for farming purposes (credit only).
-
Export.
-
In foreign trade.
-
Certain helicopter and fixed-wing air ambulance uses.
-
In commercial aviation (other than foreign trade).
-
Exclusive use by a nonprofit educational organization.
-
Exclusive use by a state, political subdivision of a state, or the District of Columbia.
-
In a aircraft owned by an aircraft museum.
-
In military aircraft.
Undyed Diesel Fuel and Undyed Kerosene
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. A liquid is suitable for this use if the liquid has practical and commercial fitness for use in the propulsion
engine of a
diesel-powered highway vehicle or diesel-powered train. A liquid may possess this practical and commercial fitness even though
the specified use is
not the liquid´s predominant use. However, a liquid does not possess this practical and commercial fitness solely by reason
of its possible or rare
use as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered 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.
Kerosene means 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 be described above but for the presence of a dye of the type used to dye kerosene
for a nontaxable
use.
However, kerosene does not include an excluded liquid, discussed above.
The following are the uses of undyed diesel fuel 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 train.
-
In a highway vehicle owned by the United States that is not used on a highway.
-
Exclusive use by a nonprofit educational organization.
-
In a vehicle owned by an aircraft museum.
The following are the uses of undyed kerosene for which a credit or refund may be allowable to an ultimate purchaser.
-
Off-highway business use.
-
Export.
-
In a school bus.
-
Used other than as a fuel.
-
In a highway vehicle owned by the United States that is not used on a highway.
-
Exclusive use by a nonprofit educational organization.
-
In a vehicle owned by an aircraft museum.
Only a registered ultimate vendor (defined below), can claim a credit or refund for:
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 dyed fuels.
Sales by Registered Ultimate Vendors
The following are the sales for which a credit or refund may be allowable to the registered ultimate vendor only.
-
Undyed diesel fuel or undyed kerosene sold for use on a farm for farming purposes or for exclusive use by a state or local
government,
-
Undyed kerosene sold from a blocked pump (defined below), or
-
Undyed kerosene sold for blending.
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 for its exclusive use.
The person must be registered by the IRS as an ultimate vendor. See Publication 510 for a discussion of the registration
requirements.
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 to a buyer undyed
kerosene from a blocked
pump for use other than as a fuel in a diesel-powered highway vehicle 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.
Registered ultimate vendor (blending).
This is a taxable fuel registrant (discussed in 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.
Aviation fuel means any liquid, other than gasoline or diesel fuel, that is suitable for use as a fuel in an aircraft.
The following are the uses of aviation fuel for which a credit or refund may be allowable to an ultimate purchaser.
-
On a farm for farming purposes.
-
Export.
-
In foreign trade.
-
Certain helicopter and fixed-wing air ambulance uses.
-
Used other than as a fuel.
-
In commercial aviation (other than foreign trade).
-
Exclusive use by a nonprofit educational organization.
-
Exclusive use by a state, political subdivision of a state, or the District of Columbia.
-
In a aircraft owned by an aircraft museum.
-
In military aircraft.
Liquefied petroleum gas (LPG) includes propane, butane, and pentane, or mixtures of those gases.
The following are the uses of LPG for which a credit or refund may be allowable to an ultimate purchaser.
