Publication 510 - Excise Taxes For 2005 - Department Of Treasury (Page 15 of 47) in pdf

•

osene is not taxable if all the following require-

stock purpose when it is used to power machin-

It contains any dye of a type and in a

ments are satisfied.

concentration that has been approved by

ery at a factory where paint is produced. A

the Commissioner.

feedstock user is a person that uses kerosene

1. The person otherwise liable for the tax (po-

for a feedstock purpose. A registered feed-

sition holder, refiner, or enterer):

stock user is a person that has been registered

Notice required. A legible and conspicuous

by the IRS as a feedstock user. See Registration

notice stating either: DYED DIESEL FUEL,

a. Is a registrant,

Requirements, earlier.

NONTAXABLE USE ONLY, PENALTY FOR

b. Can show satisfactory evidence of the

TAXABLE USE or DYED KEROSENE,

Later sales. The excise tax applies to ker-

nontaxable nature of the transaction,

NONTAXABLE USE ONLY, PENALTY FOR

osene sold for use by the buyer for a feedstock

and

TAXABLE USE must be:

purpose (item (3)(b)) if the buyer in that sale

c. Has no reason to believe the evidence

later sells the kerosene. The tax is imposed at

1. Provided by the terminal operator to any

is false.

the time of the later sale and that seller is liable

person that receives dyed diesel fuel or

for the tax.

dyed kerosene at a terminal rack of that

2. In the case of a removal from a terminal,

operator, and

the terminal is an approved terminal.

Certificate. The certificate from the buyer

certifies the buyer is a registered feedstock user

2. Posted by a seller on any retail pump or

3. The owner of the fuel immediately after the

and the kerosene will be used by the buyer for a

other delivery facility where it sells dyed

removal or entry holds the fuel for its own

feedstock purpose. The certificate may be in-

diesel fuel or dyed kerosene for use by its

use in a nontaxable use (discussed later)

buyer.

cluded as part of any business records normally

or is a qualified dealer.

used for a sale. A model certificate is shown in

The notice under item (1) must be provided

A qualified dealer is any person that holds a

Appendix A as Model Certificate G. Your certifi-

by the time of the removal and must appear on

qualified dealer license from the state of Alaska

cate must contain all information necessary to

all shipping papers, bills of lading, and similar

or has been registered by the IRS as a qualified

complete the model.

documents accompanying the removal of the

retailer. Satisfactory evidence may include

A certificate expires on the earliest of the

fuel.

copies of qualified dealer licenses or exemption

following dates.

Any seller that fails to post the required no-

certificates obtained for state tax purposes.

tice under item (2) is presumed to know that the

•

The date 1 year after the effective date

Later sales. The excise tax applies to diesel

fuel will be used for a taxable use (a use other

(not earlier than the date signed) of the

fuel or kerosene sold by a qualified dealer after

than a nontaxable use listed later). That seller is

certificate.

the removal or entry. The tax is imposed at the

subject to the penalty described next.

time of the sale and the qualified dealer is liable

•

The date the seller is provided a new cer-

for the tax. However, the sale is not taxable if all

Penalty. A penalty is imposed on a person if

tificate or notice that the current certificate

the following requirements are met.

any of the following situations apply.

is invalid.

•

The fuel is sold in an exempt area of

•

1. Any dyed fuel is sold or held for sale by the

The date the seller is notified the buyer’s

Alaska.

person for a use the person knows or has

registration has been revoked or sus-

•

reason to know is not a nontaxable use of

The buyer buys the fuel for its own use in

pended.

the fuel.

a nontaxable use or is a qualified dealer.

The buyer must provide a new certificate if

•

2. Any dyed fuel is held for use or used by

The seller can show satisfactory evidence

any information on a certificate has changed.

the person for a use other than a nontax-

of the nontaxable nature of the transaction

able use and the person knew, or had rea-

and has no reason to believe the evidence

son to know, that the fuel was dyed.

is false.

Credits or Refunds

3. The person willfully alters, chemically or

A credit or refund is allowable to the ultimate

otherwise, or attempts to so alter, the

Kerosene used for feedstock purposes.

purchaser or registered ultimate vendor for the

strength or composition of any dye in dyed

The excise tax on kerosene is not imposed on

fuel.

tax on undyed diesel fuel or undyed kerosene

the removal or entry of kerosene if all the follow-

used for a nontaxable use. See Publication 378.

ing conditions are met.

4. The person has knowledge that a dyed

fuel which has been altered, as described

1. The person otherwise liable for tax (posi-

in (3) above, sells or holds for sale such

Dyed Diesel Fuel

tion holder, refiner, or enterer) is a regis-

fuel for any use for which the person

trant.

and Dyed Kerosene

knows or has reason to know is not a non-

2. In the case of a removal from a terminal,

taxable use of the fuel.

The excise tax is not imposed on the removal,

the terminal is an approved terminal.

entry, or sale of diesel fuel or kerosene if all the

The penalty is the greater of $1,000 or $10

3. Either:

following tests are met.

per gallon of the dyed diesel fuel or dyed ker-

osene involved. After the first violation, the

•

The person otherwise liable for tax (for

a. The person otherwise liable for tax uses

$1,000 portion of the penalty increases depend-

the kerosene for a feedstock purpose,

example, the position holder) is a regis-

ing on the number of violations.

trant.

This penalty is in addition to any tax imposed

•

on the fuel.

b. The kerosene is sold for use by the

In the case of a removal from a terminal,

If the penalty is imposed, each officer, em-

buyer for a feedstock purpose and, at

the terminal is an approved terminal.

ployee, or agent of a business entity who willfully

the time of the sale, the person other-

•

The diesel fuel or kerosene satisfies the

participated in any act giving rise to the penalty

wise liable for tax has an unexpired cer-

dyeing requirements (described next).

is jointly and severally liable with that entity for

tificate (described later) from the buyer

the penalty.

and has no reason to believe any infor-

mation on the certificate is false.

There is no administrative appeal or review

Dyeing requirements. Diesel fuel or ker-

allowed for the third and subsequent penalty

osene satisfies the dyeing requirements only if it

Kerosene is used for a feedstock purpose

imposed by section 6715 on any person for

satisfies one of the following requirements.

when it is used for nonfuel purposes in the man-

penalties imposed after October 22, 2004, ex-

•

It contains the dye Solvent Red 164 (and

ufacture or production of any substance other

cept for:

no other dye) at a concentration spectrally

than gasoline, diesel fuel, or special fuels. For

•

Fraud or a mistake in the chemical analy-

equivalent to at least 3.9 pounds of the

example, kerosene is used for a feedstock pur-

sis or

solid dye standard Solvent Red 26 per

pose when it is used as an ingredient in the

•

production of paint, but is not used for a feed-

thousand barrels of fuel.

Mathematical calculation of the penalty.

Page 15

Publication 510 - Excise Taxes For 2005 - Department Of Treasury Page 15

Related Articles

Related forms

Related Categories