Publication 510 - Excise Taxes For 2005 - Department Of Treasury (Page 19 of 47) in pdf

Credits or Refunds

Tax rate. The special motor fuels tax rate de-

Motor vehicle. For this purpose, motor vehi-

cle has the same meaning as given under Spe-

pends on the type of fuel involved. The tax rate

A claim may be made by the ultimate purchaser

cial Motor Fuels, earlier.

for LPG is shown on Form 720 (IRS No. 61). The

for taxed aviation-grade kerosene used for a

tax rates for all other special motor fuels are

nontaxable use or for use in a commercial avia-

shown in the Form 720 instructions for other

tion. A claim may be made by a registered ulti-

Nontaxable Uses

fuels (IRS No. 79).

mate vendor for certain sales. For more

The following are nontaxable uses of CNG.

information, see Publication 378.

Nontaxable Uses

•

In an off-highway business use, as dis-

Special Motor Fuels

cussed earlier under Special Motor Fuels.

The following are nontaxable uses of special

•

Special motor fuel means any liquid fuel includ-

motor fuels.

Use in a boat engaged in commercial fish-

ing liquefied petroleum gas, liquefied natural

ing.

•

In an off-highway business use (discussed

gas, benzol, benzene, and naptha. However,

•

Use in a school bus or qualified local bus,

gasoline, diesel fuel, kerosene, gas oil, and fuel

later).

as discussed earlier under Diesel Fuel and

oil do not qualify as special motor fuel.

•

Use in a boat engaged in commercial fish-

Kerosene.

ing.

•

Qualified methanol and ethanol fuels. A

Use on a farm for farming purposes, as

•

special rate applies to these fuels. Qualified eth-

Use on a farm for farming purposes, as

discussed earlier under Diesel Fuel and

anol and methanol means any liquid at least 85

discussed earlier under Diesel Fuel and

Kerosene.

percent of which consists of alcohol produced

Kerosene.

•

Exclusive use by a state, as defined ear-

from coal, including peat.

•

Exclusive use by a state, as defined ear-

lier under Definitions.

Partially exempt methanol and ethanol fuels.

lier under Definitions.

•

By nonprofit educational organizations for

A special rate applies to these fuels. Partially

•

their exclusive use, as discussed earlier

By nonprofit educational organizations for

exempt ethanol and methanol means any liquid

under Communications Tax.

their exclusive use, as discussed earlier

at least 85 percent of which consists of alcohol

•

under Communications Tax.

produced from natural gas.

Official use by the United Nations.

•

Official use by the United Nations.

Use in a vehicle owned by an aircraft mu-

Motor vehicle. For the purpose of applying

•

seum.

the tax on the delivery of special motor fuels,

Use in a vehicle owned by an aircraft mu-

•

motor vehicles include all types of vehicles,

seum.

Use in any boat operated by the United

whether or not registered (or required to be

•

States for its exclusive use or any vessel

Use in any boat operated by the United

registered) for highway use, that have both the

of war of any foreign nation.

States for its exclusive use or any vessel

following characteristics.

of war of any foreign nation.

•

There is no tax on a delivery in connection

They are propelled by a motor.

with a sale of CNG only if, by the time of sale, the

•

They are designed for carrying or towing

Off-highway business use. This is use in a

seller meets both the following conditions.

loads from one place to another, regard-

highway vehicle that is not registered (or re-

•

less of the type of material or load carried

The seller has an unexpired certificate

quired to be registered) for highway use under

or towed.

from the buyer.

the laws of any state or foreign country and is

•

used in the operator’s trade or business or for

Motor vehicles do not include any vehicle that

The seller has no reason to believe any

the production of income. It also includes use in

moves exclusively on rails, or any of the follow-

information in the certificate is false.

a vehicle owned by the United States that is not

ing items: farm tractors, trench diggers, power

used on a highway.

shovels, bulldozers, road graders, road rollers,

Certificate. The certificate from the buyer cer-

and similar equipment that does not carry or tow

tifies the CNG will be used in a nontaxable use

a load.

(listed earlier). The certificate may be included

as part of any business records normally used

Compressed Natural Gas

Taxable Event

for a sale. A model certificate is shown in Appen-

dix A as Model Certificate J. Your certificate

Tax is imposed on the delivery of special motor

Taxable Event

must contain all information necessary to com-

fuels into the fuel supply tank of the propulsion

plete the model.

engine of a motor vehicle or motorboat. How-

Tax is imposed on the delivery of compressed

A certificate expires on the earliest of the

ever, there is no tax on the delivery if tax was

natural gas (CNG) into the fuel supply tank of the

following dates.

imposed under the bulk sales rule, discussed

propulsion engine of a motor vehicle or motor-

later, or the delivery is for a nontaxable use,

boat. See Form 720 for the tax rate. However,

•

The date 1 year after the effective date

listed later. If the delivery is in connection with a

there is no tax on the delivery if tax was imposed

(which may be no earlier than the date

sale, the seller is liable for the tax. If it is not in

under the bulk sales rule discussed next, or the

signed) of the certificate.

connection with a sale, the operator of the vehi-

delivery is for a nontaxable use, listed later. If the

•

cle or boat is liable for the tax.

The date a new certificate is provided to

delivery is in connection with a sale, the seller is

the seller.

liable for the tax. If it is not in connection with a

Liquefied petroleum gas (LPG). Tax is im-

•

sale, the operator of the boat or vehicle is liable

The date the seller is notified the buyer’s

posed on the delivery of LPG into the fuel supply

for the tax.

right to provide a certificate has been with-

tank of certain vehicles and must be reported on

drawn.

Form 720. A credit or refund may be allowable

for taxed LPG used for certain nontaxable uses.

Bulk sales. Tax is imposed on the sale of

See Pub. 378.

CNG that is not in connection with delivery into

Fuels Used on Inland

the fuel supply tank of the propulsion engine of a

Waterways

Bulk sales. Tax is imposed on the sale of

motor vehicle or motorboat if the buyer furnishes

special motor fuels that is not in connection with

a written statement to the seller that the entire

delivery into the fuel supply tank of the propul-

Tax applies to liquid fuel used in the propulsion

quantity of the CNG covered by the sale is for

sion engine of a motor vehicle or motorboat if the

system of commercial transportation vessels

use as a fuel in a motor vehicle or motorboat and

buyer furnishes a written statement to the seller

while traveling on certain inland and intracoastal

the seller has given the buyer a written acknowl-

stating the entire quantity of the fuel covered by

waterways. The tax generally applies to all types

edgement of receipt of the statement. The seller

the sale is for other than a nontaxable use, listed

of vessels, including ships, barges, and tug-

later. The seller is liable for this tax.

of the CNG is liable for the tax.

boats.

Page 19

Publication 510 - Excise Taxes For 2005 - Department Of Treasury Page 19

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