Deprtment of the Tresury Internl Revenue Service Puliction 378 (Rev. Novemer 1999) Ct. No. 46455F Fuel Tx Credits nd Refunds Contents Importnt Chnge for 1999... 1 Introduction... 1 1. Fuels... 2 2. Definitions of Nontxle Uses... 3 3. Filing Clims... 6 4. Alcohol Fuel Credit... 14 5. How To Get More Informtion... 14 Index... 16 Importnt Chnge for 1999 Photogrphs of missing children. The Internl Revenue Service is proud prtner with the Ntionl Center for Missing nd Exploited Children. Photogrphs of missing children selected y the Center my pper in this puliction on pges tht would otherwise e lnk. You cn help ring these children home y looking t the photogrphs nd clling 1 800 THE LOST (1 800 843 5678) if you recognize child. Introduction This puliction covers federl fuel tx credits you my e le to clim on your income tx return. It lso covers fuel tx refunds you cn clim during the yer. This puliction discusses the following sujects. The kinds of fuels tht qulify for refund or credit. The uses of fuels tht qulify for refund or credit. How to clim refund or credit for fuel txes. The lcohol fuels credit. It lso contins n exmple t the end of chpter 3 with filled-in forms. Useful Items You my wnt to see: Puliction 510 Excise Txes for 2000 Form (nd Instructions) 4136 8849 Credit for Federl Tx Pid on Fuels Clim for Refund of Excise Txes 6478 Credit for Alcohol Used s Fuel See chpter 5 for informtion out getting pulictions nd forms.
1. Fuels Federl excise txes re imposed on certin fuels. This chpter covers the fuels on which you my e le to clim credit or refund of the excise tx. The chpter lists the nontxle uses (descried in chpter 2) for ech type of fuel. It lso covers the credit or refund llowed gsohol lenders nd registered ultimte vendors of undyed diesel fuel nd undyed kerosene. The ultimte purchser of specil! motor fuels nd compressed nturl CAUTION gs, other thn liquified petroleum gs used in uses, discussed lter, generlly is not using txed fuel nd no credit or refund would e llowle. These fuels re descried in Puliction 510. Gsoline nd Gsohol The term gsoline mens ll products commonly or commercilly known or sold s gsoline (including gsohol) with n octne rting of 75 or more tht re suitle for use s motor fuel. It includes gsoline lendstocks tht re discussed in Puliction 510. Avition gsoline is discussed lter. Nontxle Uses The following is list of the uses of gsoline nd gsohol for which credit or refund my e llowle to n ultimte purchser. On frm for frming purposes (credit only). Off-highwy usiness use. Export. In ot engged in commercil fishing. In n intercity or locl us. In school us. In vehicle owned y the United Sttes. By nonprofit eductionl orgniztion. By stte or locl government. By n ircrft museum. Gsohol Blending A credit or refund my e llowle to lender of gsohol who uys gsoline txed t the full rte nd uses the gsoline to produce gsohol tht is sold or used in the lender's trde or usiness. The mount you my clim is sed on ech gllon of gsoline used to mke gsohol. You cnnot tke refund or credit if you purchsed the gsoline t reduced rte. Gsohol. Gsohol is mixture of gsoline nd lcohol tht stisfies the lcohol-content requirements immeditely fter the mixture is produced. Alcohol includes ethnol nd methnol ut does not include lcohol produced from petroleum, nturl gs, col (including pet), or ny derivtive or product Pge 2 Chpter 1 Fuels of these items, or lcohol tht is less thn 190 proof. Methnol produced from methne gs formed in wste disposl sites is not lcohol produced from nturl gs. Ethnol used to produce ethyl tertiry utyl ether (ETBE) generlly qulifies s lcohol for these rules. Alcohol-content requirements. To qulify s gsohol the mixture must contin specific mount of lcohol y volume (without rounding). The mount of credit or refund depends on the type of gsohol you lend. There re three types of gsohol. 10% gsohol. This is mixture tht contins t lest 9.8% lcohol. 7.7% gsohol. This is mixture tht contins t lest 7.55%, ut less thn 9.8%, lcohol. 5.7% gsohol. This is mixture tht contins t lest 5.59%, ut less thn 7.55%, lcohol. Figure lcohol content on tch-ytch sis. If you splsh lend tch in n empty tnk, figure the volume of lcohol (without djustment for temperture) y dividing the metered gllons of lcohol y the totl metered gllons of lcohol nd gsoline s shown on ech delivery ticket. However, if you dd the metered gllons to tnk lredy contining more thn 0.5% of its cpcity in liquid, you must include the mount of lcohol nd non-lcohol fuel contined in tht liquid in determining the volume of lcohol in tht tch. Exmple 1. John uses n empty 8,000 gllon tnk to lend lcohol nd gsoline. His delivery tickets show tht he lended tch 1 using 7,200 metered gllons of gsoline nd 800 metered gllons of lcohol. John divides the gllons of lcohol (800) y the totl gllons of lcohol nd gsoline delivered (8,000). Btch 1 qulifies s 10% gsohol. Exmple 2. John lends tch 2 in n empty tnk. According to his delivery tickets, he lended 7,220 gllons of gsoline nd 780 gllons of lcohol. Becuse tch 2 contins only 9.75% lcohol (780 8,000), it qulifies s 7.7% gsohol. Btches contining t lest 9.8% lcohol. If mixture contins t lest 9.8% ut less thn 10% lcohol, prt of the mixture is considered to e 10% gsohol. To figure tht prt, multiply the numer of gllons of lcohol in the mixture y 10. The result is the numer of gllons on which credit or refund my e climed if the gsoline in the mixture ws txed t the full rte. The remining gllons in the mixture re excess liquid on which no credit or refund is llowed. Exmple. John uses n empty 8,000 gllon tnk to lend gsoline nd lcohol. The delivery tickets show tht he purchsed nd lended 7,205 metered gllons of gsoline nd 795 metered gllons of lcohol. The gsoline ws txed t the full rte. The tch contins 9.9375% lcohol (795 8,000). John determines tht 7,950 gllons (10 795) of the mixture qulifies s 10% gsohol. The other 50 gllons is excess liquid. John reduces the mount of gsoline (7,205 gllons) y the excess liquid (50 gllons) to determine the mount of gsoline used to produce the 10% gsohol. He cn clim refund or credit for prt of the excise tx pid on 7,155 gllons of gsoline. He cnnot clim refund or credit on the 50 gllons of excess liquid. Btches contining t lest 7.55% lcohol. If mixture contins t lest 7.55% lcohol ut less thn 7.7% lcohol, prt of the mixture is considered to e 7.7% gsohol. To figure tht prt, multiply the numer of gllons of lcohol in the mixture y 12.987. The result is the numer of gllons on which credit or refund my e climed if the gsoline in the mixture ws txed t the full rte. The remining gllons in the mixture re excess liquid on which no credit or refund is llowed. Btches contining t lest 5.59% lcohol. If mixture contins t lest 5.59% ut less thn 5.7% lcohol, prt of the mixture is considered to e 5.7% gsohol. To figure tht prt, multiply the numer of gllons of lcohol in the mixture y 17.544. The result is the numer of gllons on which credit or refund my e climed if the gsoline in the mixture ws txed t the full rte. The remining gllons in the mixture re excess liquid on which no credit or refund is llowed. Avition Gsoline The term vition gsoline mens ll specil grdes of gsoline tht re suitle for use in vition reciprocting engines, s descried in ASTM Specifiction D 910 nd Militry Specifiction MIL-G-5572. Nontxle Uses The following is list of the uses of vition gsoline for which credit or refund my e llowle to n ultimte purchser. On frm for frming purposes (credit only). Export. In foreign trde. In militry ircrft. Certin helicopter nd fixed-wing ir mulnce uses. By nonprofit eductionl orgniztion. By stte or locl government. By n ircrft museum. In commercil vition (other thn foreign trde). Undyed Diesel Fuel nd Undyed Kerosene The term diesel fuel mens ny liquid (other thn gsoline or kerosene) tht, without further processing or lending, is suitle for use s fuel in diesel-powered highwy vehicle or trin. The term kerosene mens the following fuels. The two grdes of kerosene (No. 1 K nd No. 2 K) descried in ASTM Specifiction D 3699. Kerosene-type jet fuel (vition-grde kerosene) descried in ASTM Specifiction D 1655 nd militry specifictions MIL-T-5624R nd MIL-T-83133D (Grdes JP-5 nd JP-8).
Avition-grde kerosene tht is to e! used s fuel in n ircrft is suject CAUTION to the rules for vition fuel, discussed lter. Nontxle Uses No credit or refund is llowle for ny use of dyed diesel fuel nd kerosene. You uy dyed diesel fuel nd kerosene tx free. The following is list of the uses of undyed diesel fuel nd undyed kerosene for which credit or refund my e llowle to n ultimte purchser. Off-highwy usiness use. Export. In n intercity or locl us. In qulified locl us. In school us. Used other thn s fuel. In vehicle owned y the United Sttes. By nonprofit eductionl orgniztion. By n ircrft museum. In trin. Only registered ultimte vendor cn! clim credit or refund for the nontxle use of kerosene if the CAUTION kerosene is sold from locked pump. See Blocked pump, lter. Note: Only registered ultimte vendor (discussed next) cn clim credit or refund for undyed diesel fuel or undyed kerosene tht is used on frm for frming purposes or y stte or locl government. Fuels used for these purposes cnnot e considered s eing used for ny other nontxle use. Registered Ultimte Vendors An ultimte vendor is the person tht sells undyed diesel fuel or undyed kerosene to the user (ultimte purchser) of the fuel for use on frm for frming purposes or y stte or locl government. The ultimte vendor must e registered with the Internl Revenue Service t the time the clim is mde. Diesel fuel. The following is list of the uses of undyed diesel fuel for which credit or refund my e llowle to the registered ultimte vendor tht sold the fuel. On frm for frming purposes. By stte or locl government. Kerosene. The following is list of the uses of undyed kerosene for which credit or refund my e llowle to the registered ultimte vendor tht sold the fuel. On frm for frming purposes. By stte or locl government. Any nontxle use if sold from locked pump. Blocked pump. A locked pump is fuel pump tht meets ll of the following conditions. It is used for retil sles of undyed kerosene for nontxle use. It must hve fixed loction nd cnnot e used to deliver fuel into the fuel supply tnk of diesel-powered highwy vehicle or trin. It hs on it legile nd conspicuous notice stting, UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY. Avition Fuel The term vition fuel mens kerosene nd ny other liquid, other thn gsoline or diesel fuel, tht is suitle for use s fuel in n ircrft. Nontxle Uses The following is list of the uses of vition fuel for which credit or refund my e llowle to n ultimte purchser. On frm for frming purposes. Export. In foreign trde. In militry ircrft. Certin helicopter nd fixed-wing ir mulnce uses. By nonprofit eductionl orgniztion. By stte or locl government. By n ircrft museum. Used other thn s fuel. In commercil vition (other thn foreign trde). Liquified Petroleum Gs The term liquified petroleum gs (LPG) includes propne, utne, nd pentne, or mixtures of those gses. Nontxle Uses The following is list of the uses of LPG for which credit or refund my e llowle to n ultimte purchser. In n intercity or locl us. In qulified locl us. In school us. 2. Definitions of Nontxle Uses This chpter provides definitions of the nontxle uses tht were listed in chpter 1 under ech type of fuel. Frming Purposes tx on fuel used on frm for frming purposes. Frm. A frm includes livestock, diry, fish, poultry, fruit, fur-ering nimls, nd truck frms, orchrds, plnttions, rnches, nurseries, rnges, nd feed yrds for fttening cttle. It lso includes structures such s greenhouses used primrily for the rising of griculturl or horticulturl commodities. A fish frm is n re where fish re grown or rised not merely cught or hrvested. The frm must e operted for profit. It must e locted in ny of the 50 sttes or the District of Columi. Frming purposes. As the owner, tennt, or opertor, you use fuel on frm for frming purposes if you use it in ny of the following wys. 1) To cultivte the soil or to rise or hrvest ny griculturl or horticulturl commodity. 2) To rise, sher, feed, cre for, trin, or mnge livestock, ees, poultry, furering nimls, or wildlife. 3) To operte, mnge, conserve, improve, or mintin your frm, tools, or equipment. 4) To hndle, dry, pck, grde, or store ny rw griculturl or horticulturl commodity. For this use to qulify, you must hve produced more thn hlf the commodity tht ws so treted during the tx yer. Commodity mens single rw product. For exmple, pples nd peches re two seprte commodities. 5) To plnt, cultivte, cre for, or cut trees or to prepre (other thn swing logs into lumer, chipping or other milling) trees for mrket, ut only if the plnting, etc., is incidentl to your frming opertions. Your tree opertions will e incidentl only if they re minor in nture when compred to the totl frming opertions. If ny other person, such s neighor or custom opertor, performs service for ny of the purposes listed in (1) or (2) for you on your frm, you re considered to e the person tht used the fuel on frm for frming purposes. However, see Custom ppliction of fertilizer nd pesticide, lter. If dout exists whether the owner, the tennt, or the opertor of the frm ought the fuel, determine who ore the cost of the fuel. For exmple, if the owner of frm nd the tennt shre the cost of gsoline 50 50, ech cn clim credit for the tx on one-hlf of the fuel used. Custom ppliction of fertilizer nd pesticide. The use of fuel in the eril or other ppliction of fertilizer, pesticides, or other sustnces is use of fuel on frm for frming purposes. You, s the owner, tennt, or opertor, re treted s the ultimte purchser of the fuel. However, you my wive your right to e treted s the ultimte purchser. If you wive your right, the pplictor is treted s hving used the fuel on frm for frming purposes. Chpter 2 Definitions of Nontxle Uses Pge 3
Wiver. To wive your right to e treted s the ultimte purchser, you must tke ll the following ctions. 1) Before the pplictor files his or her clim, execute in writing n irrevocle sttement tht you knowingly give up your right to the credit or refund. You my uthorize n gent, such s coopertive, to sign the wiver for you. 2) Identify clerly the period tht the wiver covers. The effective period of your wiver cnnot extend eyond the lst dy of your tx yer. 3) The pplictor must retin copy of the wiver nd give you copy. Do not send copy to the Internl Revenue Service unless requested to do so. The wiver my e seprte document or it my pper on n invoice or nother document from the pplictor. If the wiver ppers on n invoice or other document, it must e printed in section clerly set off from ll other mteril, nd it must e printed in type sufficiently lrge to put you on notice tht you re wiving your right to the credit or refund. If the wiver ppers s prt of n invoice or other document, it must e signed seprtely from ny other item tht requires your signture. Sign seprte wiver for ech tx yer or prt of tx yer in which the fuel ws used. When the period covered y the wiver extends eyond the pplictor's tx yer, the pplictor must wit until the next tx yer to clim the portion for tht period. Fuel not used for frming. You do not use fuel on frm for frming purposes when you use it in ny of the following wys. Off the frm, such s on the highwy or in noncommercil vition, even if the fuel is used in trnsporting livestock, feed, crops, or equipment. For personl use, such s mowing the lwn. In processing, pckging, freezing, or cnning opertions. In processing crude gum into gum spirits of turpentine or gum resin or in processing mple sp into mple syrup or mple sugr. Off-Highwy Business Use tx on fuel used for n off-highwy usiness use. Off-highwy usiness use is ny use of fuel in trde or usiness or in n incomeproducing ctivity. It does not include use in highwy vehicle registered or required to e registered for use on pulic highwys. Do not consider ny use in ot s n offhighwy usiness use. If undyed diesel fuel or undyed! kerosene is used on frm for frming purposes (discussed erlier) or for CAUTION the exclusive use of stte or locl government, the fuel is not used in n off-highwy usiness use. Pge 4 Chpter 2 Definitions of Nontxle Uses Exmples. Off-highwy usiness use includes fuels used in ny of the following wys. In sttionry mchines such s genertors, compressors, power sws, nd similr equipment. For clening purposes. In forklift trucks, ulldozers, nd erthmovers. In vehicles engged in construction, mining, or timering ctivities if the vehicles re neither registered nor required to e registered. Generlly, it does not include nonusiness, off-highwy use of fuel, such s use y miniikes, snowmoiles, power lwn mowers, chin sws, nd other yrd equipment. Exmple. Jonn owns lndscping usiness. She uses power lwn mowers nd chin sws in her usiness. The gsoline used in the power lwn mowers nd chin sws qulifies s fuel used in n off-highwy usiness use. The gsoline used in her personl lwn mower t home does not qulify. Highwy vehicle. A highwy vehicle is ny self-propelled vehicle designed to crry lod over pulic highwys, whether or not lso designed to perform other functions. Exmples of vehicles designed to crry lod over pulic highwys re pssenger utomoiles, motorcycles, uses, highwy-type trucks, nd truck trctors. A vehicle is highwy vehicle even though the vehicle's design llows it to perform highwy trnsporttion function for only one of the following. A prticulr type of lod, such s pssengers, furnishings, nd personl effects (s in house, office, or utility triler). A specil kind of crgo, goods, supplies, or mterils. Some off-highwy tsk unrelted to highwy trnsporttion, except s discussed next. Vehicles not considered highwy vehicles. Generlly, the following kinds of vehicles re not considered highwy vehicles. 1) Specilly designed moile mchinery for nontrnsporttion functions. A selfpropelled vehicle is not highwy vehicle if ll the following pply. ) The chssis hs permnently mounted to it mchinery or equipment used to perform certin opertions (construction, mnufcturing, drilling, mining, timering, processing, frming, or similr opertions) if the opertion of the mchinery or equipment is unrelted to trnsporttion on or off the pulic highwys. ) The chssis hs een specilly designed to serve only s moile crrige nd mount for the mchinery or equipment, whether or not the mchinery or equipment is in opertion. c) The chssis could not, ecuse of its specil design nd without sustntil structurl modifiction, e used s prt of vehicle designed to crry ny other lod. 2) Vehicles designed for off-highwy trnsporttion. A self-propelled vehicle is not highwy vehicle if oth of the following pply. ) The vehicle is designed primrily to crry specific kind of lod other thn over the pulic highwy for certin opertions (construction, mnufcturing, mining, processing, frming, drilling, timering, or similr opertions). ) The vehicle's use in crrying this lod over pulic highwys is sustntilly limited or impired ecuse of its design. To determine if the use is sustntilly limited or impired, you my tke into ccount whether the vehicle my trvel t regulr highwy speeds, requires specil permit for highwy use, or is overweight, overheight, or overwidth for regulr highwy use. Pulic highwy. A pulic highwy includes ny rod in the United Sttes tht is not privte rodwy. This includes federl, stte, county, nd city rods nd streets. Registered. A vehicle is considered registered when it is registered or required to e registered for highwy use under the lw of ny stte, the District of Columi, or ny foreign country in which it is operted or situted. Any highwy vehicle operted under deler's tg, license, or permit is considered registered. A highwy vehicle is not considered registered solely ecuse specil permit llows the vehicle to e operted t prticulr times nd under specified conditions. Fuel used for power tke-offs. Off-highwy usiness use does not include ny fuel used in the propulsion motor of registered highwy vehicle even though tht motor lso opertes specil equipment y power tke-off or power trnsfer. It does not mtter if the specil equipment is mounted on the vehicle. Exmple. The motor of registered concrete-mixer truck opertes oth the engine nd the mixing unit y power tke-off. The fuel used in the motor to run the mixer is not used in n off-highwy usiness use. Seprte motor. Off-highwy usiness use includes fuel used in seprte motor to operte specil equipment, such s refrigertion unit, pump, genertor, or mixing unit. If you drw fuel from the sme tnk to operte oth motors, you must figure the quntity used in the seprte motor operting the specil equipment. You my mke resonle estimte sed on your operting experience nd supported y your records. You cn use devices tht mesure the miles the vehicle hs trveled (such s huometers) to figure the gllons of fuel used to propel the vehicle. Add to this mount the fuel consumed while idling or wrming up the motor efore propelling the vehicle. The difference etween your totl fuel used nd the fuel used to propel the vehicle is the fuel used in the seprte motor. Exmple. Sr owns refrigerted truck. It hs seprte motor for the refrigertion unit. The sme tnk supplies oth motors. Using the truck's huometer, Sr figures tht 90% of the fuel ws used to propel the truck. Therefore, 10% of the fuel is used in n offhighwy usiness use.
Fuel lost or destroyed. You cnnot tret fuel lost or destroyed through spillge, fire, or other csulty s fuel used in n offhighwy usiness use. Export tx on fuel tht is exported. Fuel is exported when it is shipped from the United Sttes to foreign country or possession of the United Sttes with the intention tht the fuel remin in the foreign country or possession of the United Sttes. Commercil Fishing tx on fuel used in ot engged in commercil fishing. Bots engged in commercil fishing include only wtercrft used in tking, ctching, processing, or trnsporting fish, shellfish, or other qutic life for commercil purposes, such s selling or processing the ctch, on specific trip sis. They include ots used in oth fresh nd slt wter fishing. They do not include ots used for oth sport fishing nd commercil fishing on the sme trip.! CAUTION Fuel used in ircrft to locte fish is not fuel used in commercil fishing. Buses tx on fuel used in certin uses. Intercity or Locl Bus Fuel is used in n intercity or locl us when the us is used to furnish (for compenstion) pssenger lnd trnsporttion tht is ville to the generl pulic. The us must e engged in one of the following ctivities. Scheduled trnsporttion long regulr routes regrdless of the size of the us. Nonscheduled (chrter) opertions if the seting cpcity of the us is t lest 20 dults, not including the driver. Vns nd similr vehicles used for vn-pooling or txi service do not qulify. Aville to the generl pulic mens tht you offer service to more thn limited numer of persons or orgniztions. If us opertor normlly provides chrter opertions through trvel gencies ut hs uses ville for chrtering y the generl pulic, this service is ville to the generl pulic. A us does not qulify when its opertor uses it to provide exclusive services to only one person, group, or orgniztion. Qulified Locl Bus Fuel is used in qulified locl us when the us meets ll the following requirements. Furnishes (for compenstion) intrcity pssenger lnd trnsporttion ville to the generl pulic. Opertes long scheduled, regulr routes. Hs seting cpcity of t lest 20 dults (excluding the driver). Is under contrct with or receiving more thn nominl susidy from ny stte or locl government to furnish the trnsporttion. Intrcity pssenger lnd trnsporttion. This is the lnd trnsporttion of pssengers etween points locted within the sme metropolitn re. It includes trnsporttion long routes tht cross stte, city, or county oundries if the routes remin within the metropolitn re. Under contrct. A us is under contrct with stte or locl government only if the contrct imposes on fide oligtion on the us opertor to furnish the trnsporttion. A susidy is more thn nominl if it is resonly expected to exceed n mount equl to 3 cents multiplied y the numer of gllons of fuel used in uses on susidized routes. A compny tht opertes its uses long susidized nd unsusidized intrcity routes my consider its uses qulified locl uses only when the uses re used on the susidized intrcity routes. School Bus Fuel is used in school us when the us is trnsporting students or school employees. A school is n eductionl orgniztion with regulr fculty nd curriculum nd regulrly enrolled ody of students who ttend the plce where the eductionl ctivities occur. Used Other Thn s Fuel tx on fuel used other thn s fuel in propulsion engine. Diesel Fuel or Kerosene This nontxle use pplies to diesel fuel or kerosene used other thn s fuel in the propulsion engine of trin or diesel-powered highwy vehicle. This use does not include off-highwy usiness use, discussed erlier. This use pplies to diesel fuel or kerosene used in the following wys. 1) For home heting, lighting, nd cooking. 2) In ots. 3) For ny of the following nonusiness uses. ) In sttionry mchines, such s genertors nd compressors. ) For clening purposes. c) In miniikes nd snowmoiles. Avition Fuel This nontxle use pplies to vition fuel used other thn s fuel in the propulsion engine of n ircrft. This use pplies, for exmple, to vition fuel used in the following wys. In sttionry mchines, such s genertors nd compressors. For clening purposes. In vehicles. Foreign Trde tx on fuel used in foreign trde. Fuel is used in foreign trde when it is used in civil ircrft employed in foreign trde or trde etween the United Sttes nd ny of its possessions. In the cse of ircrft registered in foreign country, such country must llow reciprocl enefits for ircrft registered in the United Sttes. Militry Aircrft tx on fuel used in militry ircrft. Fuel is used in militry ircrft when the ircrft is owned y the United Sttes or y ny foreign ntion nd constitutes prt of their rmed forces. Helicopter nd Fixed-Wing Air Amulnce tx on fuel used for certin helicopter nd fixed-wing ir mulnce uses. Certin helicopter uses. Fuel is used in qulifying helicopter use when the helicopter is used for ny of the following purposes. 1) Trnsporting individuls, equipment, or supplies in the explortion for, or the development or removl of, hrd minerls, oil, or gs. 2) Plnting, cultivting, cutting, trnsporting, or cring for trees (including logging opertions). 3) Providing trnsporttion for emergency medicl services. For items (1) nd (2), the helicopter must not tke off from, or lnd t, fcility eligile for ssistnce under the Airport nd Airwy Development Act of 1970, or otherwise use services provided pursunt to section 44509 or 44913() or suchpter I of chpter 471 of title 49, United Sttes Code, during tht use. For item (1), tret ech flight segment s seprte flight. Fixed-wing ir mulnce uses. Fuel is used in qulifying fixed-wing ir mulnce use when the ircrft is providing emergency medicl services. The ircrft must e equipped for nd exclusively dedicted on tht flight to cute cre emergency medicl services. Vehicle Owned y the United Sttes tx on fuel used in highwy vehicle owned y the United Sttes. Chpter 2 Definitions of Nontxle Uses Pge 5
This nontxle use only pplies if the vehicle ws not used on pulic highwys during the period covered y the clim. This use pplies whether or not the vehicle is registered for highwy use. Nonprofit Eductionl Orgniztion tx on fuel used y nonprofit eductionl orgniztion. The fuel must e purchsed y the orgniztion for its exclusive use. A nonprofit eductionl orgniztion is n orgniztion exempt from income tx under section 501() of the Code tht meets oth of the following tests. It hs regulr fculty nd curriculum. It hs regulrly enrolled ody of students who ttend the plce where the instruction normlly occurs. A nonprofit eductionl orgniztion lso includes school operted y church or other orgniztion descried in section 501(c)(3) of the Code tht meets the ove tests. Stte or Locl Government tx on fuel used y stte or locl government. The fuel must e purchsed y the stte or locl government for its exclusive use. A stte or locl government is ny stte, ny politicl sudivision thereof, or the District of Columi. An Indin tril government is treted s stte only if the fuel is used in n ctivity tht involves the exercise of n essentil tril government function. The use of gsoline, diesel fuel, nd kerosene y the Americn Red Cross is considered to e the use of these fuels y stte. Aircrft Museum tx on fuel used in n ircrft or vehicle owned y n ircrft museum. An ircrft museum is n orgniztion tht meets ll the following requirements. 1) It is exempt from income tx s n orgniztion descried in section 501(c)(3) of the Code. 2) It is operted s museum under stte (or District of Columi) chrter. 3) It is operted exclusively for cquiring, exhiiting, nd cring for ircrft of the type used for comt or trnsport in World Wr II. The ircrft or vehicle (such s ground servicing vehicle for ircrft) must e used exclusively for the purposes descried in item (3). Pge 6 Chpter 3 Filing Clims Commercil Avition tx on fuel used in commercil vition (other thn foreign trde). Commercil vition mens the use of n ircrft in the usiness of trnsporting persons or property y ir for py. However, commercil vition does not include ny of the following. Any use of n ircrft tht hs mximum certificted tkeoff weight of 6,000 pounds or less unless the ircrft is operted on n estlished line. Any use exclusively for the purpose of skydiving. Any use in n ircrft owned or lesed y memer of n ffilited group nd unville for hire y nonmemers of the group. The determintion of whether n ircrft is ville for hire y nonmemers is mde on flight-y-flight sis. Trin tx on fuel used in trin. Fuel is used in trin when it is used in the propulsion engine of equipment or mchinery tht rides on rils. This includes use in locomotive, work trin, switching engine, nd trck mintennce mchine. 3. Filing Clims This chpter tells you how nd when to mke clim for credit or refund of excise txes on fuels. This chpter lso covers recordkeeping requirements, interest nd penlty provisions, nd the income tx tretment of credit or refund. Generl Informtion Generlly, you will provide ll the informtion tht is needed when you properly complete the form to clim credit or refund. In some cses, you will hve to ttch dditionl informtion. You need to keep records tht support your clim for credit or refund. Keep t your principl plce of usiness ll records needed to enle the RECORDS IRS to verify the mount you climed. No specil form is required, ut the records should estlish ll the following informtion. The numer of gllons purchsed nd used during the period covered y your clim. The dtes of the purchses. The nmes nd ddresses of suppliers nd mounts purchsed from ech in the period covered y your clim. The nontxle use for which you used the fuel. The numer of gllons used for ech nontxle use. It is importnt tht your records show seprtely the numer of gllons used for ech nontxle use tht qulifies s clim. If the fuel is exported, you must hve proof of exporttion. If you re gsohol lender, you must lso keep the following informtion for ech tch of gsohol. The nme nd ddress of the person tht sold you the gsoline. The dte nd loction of the purchse of the gsoline. The numer of gllons of gsoline. The nme nd ddress of the person tht sold you the lcohol. The dte nd loction of the purchse of the lcohol. The numer of gllons nd type of lcohol. If you re registered ultimte vendor who sells undyed diesel fuel or undyed kerosene for use on frm for frming purposes or y stte or locl government, you must lso keep the following informtion. The nme nd txpyer identifiction numer of ech person (frmer, custom hrvester, or government unit) tht ought the undyed fuel. The numer of gllons sold to ech person. An exemption certificte from the uyer. A Model Exemption Certificte is shown on the next pge. To mke clim, the diesel fuel or kerosene must hve een sold t tx-excluded price, tx must hve een repid to the uyer, or the uyer must hve given written consent to the clim. Txpyer identifiction numer. To file clim, you must hve txpyer identifiction numer. Your txpyer identifiction numer cn e ny of the following. Employer identifiction numer (EIN). Socil security numer (SSN). Individul txpyer identifiction numer (ITIN), if you re n lien individul nd do not hve nd re not eligile to get n SSN. If you normlly file only U.S. individul income tx return (such s Form 1040 or 1040NR), use your SSN or ITIN. You get n SSN y filing Form SS 5, Appliction for Socil Security Crd, with the Socil Security Administrtion. To get n ITIN, file Form W 7, Appliction for IRS Individul Txpyer Identifiction Numer, with the IRS. If you operte usiness, use your EIN. You get n EIN y filing Form SS 4, Appliction for Employer Identifiction Numer, with the IRS. Credit or refund. A credit is n mount tht you clim on your income tx return when you file it t the end of the yer. If you meet cer-
Model Exemption Certificte EXEMPTION CERTIFICATE (To support vendor s clim for credit or pyment under section 6427 of the Internl Revenue Code) Nme, Address, nd Employer Identifiction Numer of Vendor The undersigned uyer ( Buyer ) herey certifies the following under penlties of perjury: A. Buyer will use the diesel fuel or kerosene to which this certificte reltes (check one): 1. On frm for frming purposes (s defined in 48.6420-4 of the Mnufcturers nd Retilers Excise Tx Regultions) nd Buyer is the owner, tennt, or opertor of the frm on which the fuel will e used; 2. On frm (s defined in 48.6420-4(c)) for ny of the purposes descried in (d) of tht section (relting to cultivting, rising, or hrvesting) nd Buyer is not the owner, tennt, or opertor of the frm on which the fuel will e used; or 3. For the exclusive use of Stte or locl government, or the District of Columi. B. This certificte pplies to the following (complete s pplicle): 1. If this is single purchse certificte, check here nd enter:. Invoice or delivery ticket numer. Numer of gllons 2. If this is certificte covering ll purchses under specified ccount or order numer, check here nd enter:. Effective dte. Expirtion dte (period not to exceed 1 yer fter effective dte) c. Buyer ccount or order numer Buyer will provide new certificte to the vendor if ny informtion in this certificte chnges. If Buyer uses the diesel fuel or kerosene to which this certificte reltes for purpose other thn stted in the certificte, Buyer will e lile for ny tx. Buyer understnds tht the frudulent use of this certificte my suject Buyer nd ll prties mking such frudulent use of this certificte to fine or imprisonment, or oth, together with the costs of prosecution. Printed or typed nme of person signing Title of person signing Nme of Buyer Employer identifiction numer Address of Buyer Signture nd dte signed tin requirements (discussed lter), you cn clim refund during the yer. Credit only. The following txes cn only e climed s credit. Tx on gsoline you used on frm for frming purposes. Tx on fuels used for nontxle uses if the totl for the tx yer is less thn 750. Tx on fuel tht ws not included in ny clim for refund previously filed for the tx yer. Climing Credit You mke clim for credit on Form 4136 nd ttch it to your income tx return. Do not clim credit for ny mount for which you hve filed refund clim. When. You cn clim fuel tx credit on your income tx return for the yer you used the fuels (or sold the fuels in the cse of gsohol lender or registered ultimte vendor clims). Once you hve filed Form 4136, you! cnnot file n mended return to CAUTION show n increse in the numer of gllons reported on line. See the following discussion for when you cn file clim on n mended return. Fuel tx clim on mended return. You my e le to mke fuel tx clim on n mended return for the yer you used or sold the fuels. Generlly, you must file n mended return y the lter of 3 yers from the dte you filed your originl income tx return or within 2 yers from the time you pid the income tx. A return filed erly is considered to hve een filed on the due dte. You cn file n mended return to clim fuel tx credit if ny of the following pply. You did not clim ny credit for fuel txes on Form 4136 for the tx yer. Your credit is for gsohol lending discussed in chpter 1. Your credit is for clim group, explined next, for which you did not previously file clim on Form 4136 for the tx yer. Clims on Form 4136 (other thn for gsohol lending, line 8) re seprted into seven clim groups sed on the type of fuel nd the use of tht fuel. Once you file Form 4136 with clim for group, you cnnot file n mended return with nother clim for tht group. However, you cn file n mended return with clim for nother group. The following tle shows wht clims re in ech group. The numers in the second column refer to the line numers on Form 4136. The numers in the third column re from the Type of Use Tle in the Form 4136 instructions. Group Line No. Type of Use I 1, 1d-f, 2 1 II 1, 1d-f, 2 2 III 1c-f 5, 7 IV 1c-f, 2 3, 4, 9 V 3c, 7 5, 7 VI 3-, 4, 5, 6 See line instructions VII 2 10 For ech tx yer, you cn mke only one clim for ech group. Exmple. You file your income tx return nd clim fuel tx credit. Your Form 4136 shows n mount on line 1 for use of gsoline on frm for frming purposes. This is Group I clim. You cnnot mend your return to clim credit for n mount on line 2 for use of vition gsoline on frm for frming purposes (Type of Use 1) since tht is lso Group I clim. However, if you used vition fuel on frm for frming purposes, you cn mend your return to clim the credit for tht fuel tx ecuse tht would e Group VI clim reported on line 4 (Type of Use 1). How to clim credit. How you clim credit depends on whether you re n individul, prtnership, corportion, S corportion, or frmers' coopertive. Individuls. You clim the credit on line 63 of Form 1040. Check ox on line 63. If you would not otherwise hve to file n income tx return, you must do so to get fuel tx credit. See the instructions for Form 1040. Chpter 3 Filing Clims Pge 7
Prtnerships. A prtnership cnnot clim the credit on Form 1065, U.S. Prtnership Return of Income. The prtnership must ttch sttement to Form 1065 showing the numer of gllons llocted to ech prtner nd the rte tht pplies. Ech prtner clims the credit on his or her income tx return for his or her shre of the fuel used y the prtnership. An electing lrge prtnership cn clim the credit on line 27 of Form 1065 B, U.S. Return of Income for Electing Lrge Prtnerships. Corportions. To clim the credit, corportions use either line 32g of Form 1120, U.S. Corportion Income Tx Return, or line 28g of Form 1120 A, U.S. Corportion Short-Form Income Tx Return. S corportions. To clim the credit, S corportions use line 23c of Form 1120S, U.S. Income Tx Return for n S Corportion. Frmers' coopertive ssocitions. If the coopertive must file Form 990 C, Frmers' Coopertive Assocition Income Tx Return, it uses line 32g to clim the credit. Trusts. Trusts required to file Form 1041, U.S. Income Tx Return for Esttes nd Trusts, use line 24g to clim the credit. Climing Refund You mke clim for refund on Form 8849. Complete nd ttch to Form 8849 the pproprite Form 8849 schedules. If you file Form 720, you cn use the Schedule C portion of Form 720 for your refund clims. (See the Form 720 instructions.) Nontxle Uses You cn clim refund for the excise tx on fuels tht you purchse nd use for nontxle use. You cn file clim for refund for ny qurter of your tx yer for which you cn clim 750 or more. This mount is the excise tx on ll fuels used for ny nontxle use during tht qurter or ny prior qurter (for which no other clim hs een filed) during the tx yer. If you cnnot clim t lest 750 t the end of qurter, you crry the mount over to the next qurter of your tx yer to determine if you cn clim t lest 750 for tht qurter. If you cnnot clim t lest 750 t the end of the fourth qurter of your tx yer, you must clim credit on your income tx return. File the clim y filling out Schedule 1 (Form 8849) nd ttching it to Form 8849. Send it to the ddress shown in the instructions. Exmple. You purchsed gsoline nd undyed diesel fuel. For the first qurter of your tx yer, the excise tx on fuel you use for n off-highwy usiness use is 184 for gsoline nd 244 for diesel fuel. You cnnot file clim for refund since the totl mount (428) is less thn 750. For the second qurter, the excise tx on fuel you use for n off-highwy usiness use is 92 for gsoline nd 244 for diesel fuel. You dd the mount from the first qurter (428) to the totl mount from the second qurter (336) nd determine tht you cn file clim for refund since the totl (764) is more thn 750. Pge 8 Chpter 3 Filing Clims When. You must file qurterly clim y the lst dy of the first qurter following the lst qurter included in the clim. If you do not file timely refund clim for the fourth qurter of your tx yer, you will hve to clim credit for tht mount on your income tx return, s discussed erlier. Gsohol Blending File the clim y filling out Schedule 3 (Form 8849) nd ttching it to Form 8849. The Form 8849 cnnot hve ny other schedule ttched if the Schedule 3 is ttched. Send it to the ddress shown in the instructions. Write Gsohol Clim on the envelope. The following clim requirements lso pply. The clim must e for gsohol sold or used during period of t lest 1 week. The clim must e for t lest 200. The clim cn only e mde y the gsohol lender. When. The clim must e filed y the lst dy of the first qurter following the erliest qurter included in the clim. If you do not meet the requirements or file timely refund clim, you will hve to clim credit on your income tx return, s discussed erlier.! CAUTION You cnnot comine this clim with ny other clim on Form 8849. Registered Ultimte Vendors File the clim y filling out Schedule 2 (Form 8849) nd ttching it to Form 8849. The Form 8849 cnnot hve ny other schedule ttched if Schedule 2 is ttched. Send it to the ddress shown in the instructions. Write Diesel Fuel/Kerosene Clim on the envelope. Undyed diesel fuel. You must meet the following requirements for this clim. The clim must e for undyed diesel fuel sold for use on frm for frming purposes or y stte or locl government. The clim must e for sles during period of t lest 1 week. The clim must e for t lest 200. Clims for sles y registered ultimte vendor of undyed kerosene my e comined with clims for sles of undyed diesel fuel to meet this requirement. Undyed kerosene. You must meet the following requirements for this clim. The clim must e for undyed kerosene sold for use on frm for frming purposes, for use y stte or locl government, or from locked pump. The clim must e for sles during period of t lest 1 week. The clim must e for t lest 100. When. The clim must e filed y the lst dy of the first qurter following the erliest qurter included in the clim. If you do not meet the requirements or file timely refund clim, you will hve to clim credit on your income tx return, s discussed erlier.! CAUTION You cnnot comine this clim with ny other clim on Form 8849. Ultimte Purchsers Not Suject to Income Tx The following cn file n nnul clim for refund on Form 8849 (Schedule 1) regrdless of the mount. A deprtment, gency, or instrumentlity of the United Sttes. A stte (including n Indin tril government), county, city, or other sudivision of stte. An gency or instrumentlity of one or more sttes, counties, cities, etc. An orgniztion grnted n exemption from the income tx nd not required to file n income tx return. If t the close of your tx yer, you re eligile for n mount for which you hve not filed qurterly refund clim, you cn file n nnul refund clim for these mounts within the time llowed for filing clim for refund of overpyment of income tx. A tx yer is the 12-month period normlly used to keep your finncil records. If you hve no regulrly estlished tx yer, the tx yer is the clendr yer. Interest IRS pys no interest on refunds descried in this puliction other thn expedited refunds not pid within 20 dys to gsohol lenders nd registered ultimte vendors (discussed erlier). Refunds resulting from credits climed on income tx returns my qulify for interest. Penlties There re criminl penlties for flse or frudulent clims. In ddition, ny person who files refund clim, discussed erlier, for n excessive mount (without resonle cuse) my hve to py penlty. The penlty is the greter of two times the excessive mount or 10. Including the Credit or Refund in Income Include ny credit or refund of excise txes on fuels in your gross income if you included the cost of the fuel s n expense deduction tht reduced your income tx liility. The yer you include credit or refund in gross income depends on whether you use the csh or ccrul method of ccounting. Csh method. If you use the csh method nd file clim for refund, include the refund in your gross income for the tx yer in which you receive the refund. If you clim credit on your income tx return, include the credit in gross income for the tx yer in which you file Form 4136. If you file n mended return nd clim credit, include the credit in gross income for the tx yer in which you receive the credit.
Exmple 1. Ed Brown, csh sis frmer, filed his 1999 Form 1040 on Mrch 1, 2000. On his Schedule F, Ed deducted the totl cost of gsoline (including 110 of excise txes) used on the frm. Then, on Form 4136, Ed climed the 110 s credit. Ed reports the 110 s dditionl income on his 2000 Schedule F. Exmple 2. Mrch Corportion uses the clendr yer s its tx yer. For 1999, the corportion climed the following mounts of excise tx on gsoline it used ech qurter: Jnury 1 through Mrch 31 1,300 April 1 through June 30 1,100 July 1 through Septemer 30 400 Octoer 1 through Decemer 31 300 The corportion deducts the entire cost of the gsoline (including the 3,100 in excise txes) it used during the yer s usiness expense on its corportion income tx return, therey reducing its corporte income tx liility for tht yer. Form 8849. Mrch Corportion files qurterly refund clims for the first two qurters (ending Mrch 31 nd June 30). It cnnot file qurterly refund clim for the third or fourth qurter ecuse it did not meet the required mounts. Since Mrch Corportion uses the csh method of ccounting, the corportion includes 2,400 (1,300 + 1,100) in its gross income for the tx yer in which it receives the refunds (1999). Form 4136. The corportion clims the remining mounts s credit (400 + 300) on its 1999 income tx return y ttching Form 4136. It includes this credit (700) in its 2000 gross income. Accrul method. If you use n ccrul method, include the mount in gross income for the tx yer in which you used the fuels (or sold the fuels in the cse of registered ultimte vendors). It does not mtter if n ccrul-sis txpyer filed for qurterly refund or climed the entire mount s credit. Exmple 3. Todd Green uses n ccrul method. He files his 1999 return on April 17, 2000. On Schedule C he deducts the totl cost of gsoline (including 155 of excise txes) used in n off-highwy usiness vehicle during 1999. On Form 4136, Todd clims the 155 s credit. He reports the 155 s dditionl income on his 1999 Schedule C. Exmple 4. Use the sme fcts s in Exmple 2 ove. However, Mrch Corportion uses n ccrul method of ccounting. Since the nontxle use occurred in 1999, the corportion reports 3,100 s income on its 1999 income tx return. This consists of the 2,400 it filed for on Form 8849 nd the 700 it filed for on Form 4136. Exmple Steven S. Snds used undyed diesel fuel in vehicles used off the highwy in his construction usiness. The vehicles were not registered (or required to e registered) for highwy use. In the fourth qurter of his 1999 income tx yer, which ends in Decemer, he used 3,000 gllons of fuel. The excise tx on the 3,000 gllons of fuel he used ws 732 (24.4 cents per gllon). Becuse the tx is less thn 750, Steven must clim credit for the tx on his 1999 income tx return. He fills out Form 4136 (shown lter) nd ttches it to his 1999 income tx return. He enters the 732 on line 63 of his Form 1040. Steven uses the csh method of ccounting. On his 1999 Schedule C (Form 1040), he deducts the totl cost of the fuel, including the tx. When Steven files his 2000 Form 1040, he will include the 732 credit shown on his 1999 Form 4136 s dditionl income on his 2000 Schedule C. For the first two qurters of 2000, Steven's records show the following. Qurter Gllons Used Tx Rte Clim Amount First 2,750.244 671 Second 2,500.244 610 Steven could not file clim for refund for the first qurter ecuse the mount of the clim ws less thn 750. He dds the first qurter mount (671) to the second qurter mount (610) nd clims refund of 1,281 for oth qurters on July 15 y filling out Form 8849 nd Schedule 1 (Form 8849), which re shown lter. He will hve to include the 1,281 excise tx refund s dditionl income on his Schedule C (Form 1040) for 2000. Chpter 3 Filing Clims Pge 9
Form 4136 Deprtment of the Tresury Internl Revenue Service (99) Nme (s shown on your income tx return) 1 Credit for Federl Tx Pid on Fuels See the Instructions for Form 4136. Attch this form to your income tx return. Steven S. Snds 514-00-3894 Cution: You cnnot clim ny mounts on Form 4136 tht you climed on Form 8849 or Schedule C (Form 720). Nontxle Use of Gsoline nd Gsohol Off-highwy usiness use of gsoline 10% gsohol 7.7% gsohol f 5.7% gsohol 2 Nontxle Use of Avition Gsoline 3 c d e Use of gsoline on frm for frming purposes Other nontxle use of gsoline () Type Use in commercil vition (other thn foreign trde) Other nontxle use () Type Nontxle Use of Undyed Diesel Fuel nd Undyed Kerosene 2 () Rte Txpyer identifiction numer (c) Gllons (c) Gllons 3,000 OMB No. 1545-0162 Attchment Sequence No. 23 (d) Amount of credit Climnt certifies tht the fuel did not contin visile evidence of dye. Exception. If ny of the fuel included in this clim did contin visile evidence of dye, ttch detiled explntion nd check here () Rte (c) Gllons (d) Amount of credit Climnt hs the nme nd ddress of the person(s) who sold the fuel to the climnt nd the dte(s) of the purchse(s) nd if exported, the required proof of export. Cution: Clims cnnot e mde on line 3 for fuel used on frm for frming purposes or for kerosene sold from locked pump. Only registered ultimte vendors my mke those clims. Nontxle use () Type.184.184.184.184.13.14242.15322.15.194.194 () Rte.244.244 1999 (d) Amount of credit 732 00 301 312 307 303 Use in trins.20 305 c 4 Use in certin intercity nd locl uses Nontxle Use of Avition Fuel (other thn gsoline) () Type.17 () Rte (c) Gllons (d) Amount of credit 303 Use in commercil vition (other thn foreign trde) Other nontxle use.175.219.219 310 For Pperwork Reduction Act Notice, see the instructions. Ct. No. 12625R Form 4136 (1999) Pge 10 Chpter 3 Filing Clims