Hepatitis A is added to the list of taxable vaccines for sales after November 30, 2004. For sales made before December 1, 2004, and delivered after December 1, 2004, the delivery date is the sales date.

The 11% tax on bows will apply to bows having a peak draw weight of 30 pounds or more. This replaces the current law which applies to bows having a peak draw weight of 10 pounds or more. Broadheads suitable for use with certain arrows will be taxed as a part and accessory at the 11% bow tax rate. The effective date for both provisions is for articles sold after November 21, 2004.

The tax on arrows that was in effect for arrows sold after November 21, 2004, and before December 23, 2004, has been repealed. The rules used prior to November 22, 2004, for arrow components still apply for the 4th quarter of 2004. Any tax that was imposed by the manufacturer, producer, or importer on arrows after November 21, 2004, and before December 23, 2004, may have to be refunded to the purchaser. See Changes Effective for the Second Quarter of 2005 for details on the tax on arrow shafts effective after March 31, 2005.

New subsection 7701(a)(48) of the Internal Revenue Code provides that a vehicle with certain described features for off-highway transportation is not treated as a highway vehicle. This provision applies to taxable periods beginning after October 22, 2004.

For amounts paid during 2005, the tax on the use of international air travel facilities will be $14.10 per person for flights that begin or end in the United States, or $7.00 per person for domestic segments that begin or end in Alaska or Hawaii (applies only to departures). For amounts paid for each domestic segment of taxable transportation of persons by air, the domestic segment tax is $3.20 per segment for transportation that begins in 2005.

The 4.4 cents per gallon tax on dyed diesel fuel used in trains phases out. The phase out is as follows:

The reduced rate on the use of dyed diesel fuel in intercity or local buses has been eliminated. IRS No. 78 will be deleted from Form 720. Undyed diesel must be purchased at the full rate of tax. Registered ultimate vendors or the ultimate purchaser may make a claim for a refund or credit of 17 cents per gallon if certain conditions are met.

The 24.4 cents per gallon rate on diesel fuel used in commercial transportation on inland waterways is reduced as follows:

The reduced rates for gasohol and gasoline removed for the production of gasohol (IRS Nos. 58, 59, 73, 74, 75, and 76) and the gasohol related credits and refunds are eliminated. These lines will be deleted from Form 720. Tax is imposed by Code section 4081 on gasoline, including gasoline removed for the production of gasohol and gasohol, at the full rate of 18.4 cents per gallon and is reported on Form 720.

Two new credits, the alcohol fuel mixture credit and the biodiesel mixture credit, are allowed against the amount of tax imposed on taxable fuels under section 4081.

The rate of tax imposed on the manufacturer, producer, or importer of fishing tackle boxes (IRS No. 104) is reduced from 10% to 3%.

The 3% tax imposed on the manufacturer, producer, or importer of sonar devices suitable for finding fish is repealed.

Tires will be taxed based on the maximum rated load capacity. The tax is 9.45 cents (4.725 cents for biasply and super single tires) for each 10 pounds over the maximum rated load capacity in excess of 3,500 pounds. A taxable tire is defined to mean any tire of the type used on highway vehicles if wholly or partially made of rubber that are marked pursuant to Federal regulations for highway use. Tires sold for the exclusive use of the Department of Defense or the Coast Guard are exempted from the tax.

The tax imposed by Code section 4081 on aviation fuel is repealed and replaced by a tax on aviation-grade kerosene under Code section 4081.

Gasoline registered ultimate vendors can claim a refund of gasoline sold to nonprofit educational organizations or state and local governments, instead of wholesale distributors, if certain conditions are met. Provisions related to “gasoline wholesale distributor” have been removed. Schedule 4 (Form 8849) will be eliminated. Gasoline registered ultimate vendor claims will be made on Schedule 2 (Form 8849). The claim rate will be 18.4 cents per gallon.

A tax on the manufacturer, producer, or importer of arrow shafts (IRS No. 106) will apply effective after March 31, 2005. The tax is 39 cents per shaft and applies to any shaft used in the production of any arrow which after assembly measures 18 inches or more in overall length. The tax also applies to arrow shafts less than 18 inches in overall length if the arrow is suitable for use with a bow having a peak draw weight of 30 pounds or more. The tax is indexed for inflation after 2005.

Any trivalent vaccine against influenza will be added to the list of taxable vaccines after Health and Human Services (HHS) lists the influenza vaccine for compensation from the trust fund. HHS is expected to list the vaccine in July of 2005.

The following changes apply beginning with the period July 1, 2005, through June 30, 2006.

The IRS expects to issue future guidance on other provisions affecting Form 2290.