§4081 — Imposition of tax
13 citing cases
Statute Text — 26 U.S.C. §4081
There is hereby imposed a tax at the rate specified in paragraph (2) on—
the removal of a taxable fuel from any refinery,
the removal of a taxable fuel from any terminal,
the entry into the United States of any taxable fuel for consumption, use, or warehousing, and
the sale of a taxable fuel to any person who is not registered under section 4101 unless there was a prior taxable removal or entry of such fuel under clause (i), (ii), or (iii).
The tax imposed by this paragraph shall not apply to any removal or entry of a taxable fuel transferred in bulk by pipeline or vessel to a terminal or refinery if the person removing or entering the taxable fuel, the operator of such pipeline or vessel (except as provided in clause (ii)), and the operator of such terminal or refinery are registered under section 4101.
For purposes of clause (i), a vessel operator is not required to be registered with respect to the entry of a taxable fuel transferred in bulk by a vessel described in section 4042(c)(1).
The rate of the tax imposed by this section is—
in the case of gasoline other than aviation gasoline, 18.3 cents per gallon,
in the case of aviation gasoline, 19.3 cents per gallon, and
in the case of diesel fuel or kerosene, 24.3 cents per gallon.
The rates of tax specified in subparagraph (A) shall each be increased by 0.1 cent per gallon. The increase in tax under this subparagraph shall in this title be referred to as the Leaking Underground Storage Tank Trust Fund financing rate.
In the case of kerosene which is removed from any refinery or terminal directly into the fuel tank of an aircraft for use in aviation, the rate of tax under subparagraph (A)(iii) shall be—
in the case of use for commercial aviation by a person registered for such use under section 4101, 4.3 cents per gallon, and
in the case of use for aviation not described in clause (i), 21.8 cents per gallon.
In the case of diesel-water fuel emulsion at least 14 percent of which is water and with respect to which the emulsion additive is registered by a United States manufacturer with the Environmental Protection Agency pursuant to section 211 of the Clean Air Act (as in effect on March 31, 2003), subparagraph (A)(iii) shall be applied by substituting “19.7 cents” for “24.3 cents”. The preceding sentence shall not apply to the removal, sale, or use of diesel-water fuel emulsion unless the person so removing, selling, or using such fuel is registered under section 4101.
For purposes of paragraph (2)(C), a refueler truck, tanker, or tank wagon shall be treated as part of a terminal if—
such terminal is located within an airport,
any kerosene which is loaded in such truck, tanker, or wagon at such terminal is for delivery only into aircraft at the airport in which such terminal is located,
such truck, tanker, or wagon meets the requirements of subparagraph (B) with respect to such terminal, and
except in the case of exigent circumstances identified by the Secretary in regulations, no vehicle registered for highway use is loaded with kerosene at such terminal.
A refueler truck, tanker, or tank wagon meets the requirements of this subparagraph with respect to a terminal if such truck, tanker, or wagon—
has storage tanks, hose, and coupling equipment designed and used for the purposes of fueling aircraft,
is not registered for highway use, and
is operated by—
the terminal operator of such terminal, or
a person that makes a daily accounting to such terminal operator of each delivery of fuel from such truck, tanker, or wagon.
The Secretary shall require under section 4101(d) reporting by such terminal operator of—
any information obtained under subparagraph (B)(iii)(II), and
any similar information maintained by such terminal operator with respect to deliveries of fuel made by trucks, tankers, or wagons operated by such terminal operator.
For purposes of paragraph (2)(C), in the case of any kerosene treated as removed from a terminal by reason of this paragraph—
the rate of tax specified in paragraph (2)(C)(i) in the case of use described in such paragraph shall apply if such terminal is located within a secured area of an airport, and
the rate of tax specified in paragraph (2)(C)(ii) shall apply in all other cases.
For purposes of paragraph (2)(C)(i), the person who uses the fuel for commercial aviation shall pay the tax imposed under such paragraph. For purposes of the preceding sentence, fuel shall be treated as used when such fuel is removed into the fuel tank.
There is hereby imposed a tax at the rate determined under subsection (a) on taxable fuel removed or sold by the blender thereof.
If—
tax is imposed on the removal or sale of a taxable fuel by reason of paragraph (1), and
the blender establishes the amount of the tax paid with respect to such fuel by reason of subsection (a),
the amount of the tax so paid shall be allowed as a credit against the tax imposed by reason of paragraph (1).
If any person separates the taxable fuel from a diesel-water fuel emulsion on which tax was imposed under subsection (a) at a rate determined under subsection (a)(2)(D) (or with respect to which a credit or payment was allowed or made by reason of section 6427), such person shall be treated as the refiner of such taxable fuel. The amount of tax imposed on any removal of such fuel by such person shall be reduced by the amount of tax imposed (and not credited or refunded) on any prior removal or entry of such fuel.
The rates of tax specified in clauses (i) and (iii) of subsection (a)(2)(A) shall be 4.3 cents per gallon after September 30, 2028.
The rates of tax specified in subsection (a)(2)(A)(ii) and (a)(2)(C)(ii) shall be 4.3 cents per gallon—
after
December 31, 1996
, and before the date which is 7 days after the date of the enactment of the Airport and Airway Trust Fund Tax Reinstatement Act of 1997, and
after
September 30, 2028
.
The Leaking Underground Storage Tank Trust Fund financing rate under subsection (a)(2) shall apply after September 30, 1997, and before October 1, 2028.
Under regulations prescribed by the Secretary, if any person who paid the tax imposed by this section with respect to any taxable fuel establishes to the satisfaction of the Secretary that a prior tax was paid (and not credited or refunded) with respect to such taxable fuel, then an amount equal to the tax paid by such person shall be allowed as a refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by this section.
Treasury Regulations
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Treas. Reg. §48.4081-1Taxable fuel; definitions
(a) Overview. This section provides definitions for purposes of the tax on taxable fuel imposed by section 4081.
(b) Definitions.
Approved terminal or refinery means a terminal or refinery that is operated, respectively, by a taxable fuel registrant that is a terminal operator, or by a taxable fuel registrant that is a refiner.
Aviation gasoline means all special grades of gasoline that are suitable for use in aviation reciprocating engines and covered by ASTM specification D 910 or military specification MIL-G-5572. For availability of ASTM and military specifications, see paragraph (d) of this section.
Blender means any person that produces blended taxable fuel.
Bulk transfer means any transfer of taxable fuel by pipeline or vessel.
Bulk transfer/terminal system means the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Thus, taxable fuel in a refinery, pipeline, vessel, or terminal is in the bulk transfer/terminal system. Taxable fuel in the fuel supply tank of any engine, or in any tank car, rail car, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system.
Bus means automobile bus.
Diesel-powered bus means any bus that is propelled by a diesel-powered engine.
Diesel-powered highway vehicle means a highway vehicle, as defined in § 48.4061(a)-1(d), that is propelled by a diesel-powered engine.
Diesel-powered train means any diesel-powered equipment or machinery that rides on rails. Thus, for example, the term includes a locomotive, work train, switching engine, and track maintenance machine.
Enterer generally means the importer of record (under customs law) with respect to the taxable fuel, except that—
(1) If the importer of record is a customs broker engaged by the owner of the taxable fuel, the person for whom the broker is acting is the enterer; and
(2) If there is no importer of record for taxable fuel entered into the United States, the owner of the taxable fuel at the time it is brought into the United States is the enterer.
Entry of taxable fuel into the United States occurs when—
(1) The taxable fuel is brought into the United States and applicable customs law requires that the taxable fuel be entered into the United States for consumption, use, or warehousing; or
(2) The taxable fuel is brought into the United States from Puerto Rico and applicable customs law would require that the taxable fuel be entered into the United States for consumption, use, or warehousing if the taxable fuel were brought into the United States from somewhere other than Puerto Rico.
Excluded liquid means any liquid that—
(1) Contains less than four percent normal paraffins; or
(2) Has a—
(i) Distillation range of 125 °F. or less;
(ii) Sulfur content of 10 ppm or less; and
(iii) Minimum color of + 27 Saybolt.
Finished gasoline means all products (including gasohol (as defined in § 48.4081-6(b)(2))) that are commonly or commercially known or sold as gasoline and are suitable for use as a motor fuel, other than products that have an ASTM octane number of less than 75 as determined by the motor method.
Gasoline means finished gasoline and gasoline blendstocks.
Industrial user means any person that receives gasoline blendstocks by bulk transfer for its own use in the manufacture of any product other than finished gasoline.
Kerosene means any liquid that meets the specifications for kerosene or would meet those specifications but for the presence in the liquid of a dye of the type described in § 48.4082-1(b). A liquid meets the specifications for kerosene if it is one of the two grades of kerosene (No. 1-K and No. 2-K) covered by ASTM specification D 3699, or kerosene-type jet fuel covered by ASTM specification D 1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8). For availability of ASTM and military specifications, see paragraph (d) of this section. However, the term does not include excluded liquid.
Position holder means, with respect to taxable fuel in a terminal, the person that holds the inventory position in the taxable fuel, as reflected on the records of the terminal operator. A person holds the inventory position in taxable fuel when that person has a contractual agreement with the terminal operator for the use of storage facilities and terminaling services at a terminal with respect to the taxable fuel. The term also includes a terminal operator that owns taxable fuel in its terminal.
Rack means a mechanism capable of delivering taxable fuel into a means of transport other than a pipeline or vessel.
Refiner means any person that owns, operates, or otherwise controls a refinery.
Refinery means a facility used to produce taxable fuel and from which taxable fuel may be removed by pipeline, by vessel, or at a rack. However, the term does not include a facility where only blended fuel or gasohol (as defined in § 48.4081-6(b)(2)), and no other type of taxable fuel, is produced. For this purpose blended fuel is any mixture that, if produced outside the bulk transfer/terminal system, would be blended taxable fuel.
Removal means any physical transfer of taxable fuel, and any use of taxable fuel other than as a material in the production of taxable fuel or special fuels. However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed.
Sale means—
(1) The transfer of title to, or substantial incidents of ownership in, taxable fuel (other than taxable fuel in a terminal) to the buyer for a consideration, which may consist of money, services, or other property; or
(2) The transfer of the inventory position in the taxable fuel in a terminal if the transferee becomes the position holder with respect to the taxable fuel.
State includes any State, any political subdivision of a State, the District of Columbia, the American Red Cross, and, to the extent provided by section 7871, any Indian tribal government.
Taxable fuel means gasoline, diesel fuel, and kerosene.
Taxable fuel registrant means an enterer, industrial user, refiner, terminal operator, or throughputter that is registered as such under section 4101.
Terminal means a taxable fuel storage and distribution facility that is supplied by pipeline or vessel and from which taxable fuel may be removed at a rack. However, the term does not include any facility at which gasoline blendstocks are used in the manufacture of products other than finished gasoline and from which no gasoline is removed. Also, effective January 2, 1998, the term does not include any facility where finished gasoline, undyed diesel fuel, or undyed kerosene is stored if the facility is operated by a taxable fuel registrant and all such taxable fuel stored at the facility has been previously taxed under section 4081 upon removal from a refinery or terminal.
Terminal operator means any person that owns, operates, or otherwise controls a terminal.
Throughputter means any person that—
(1) Owns taxable fuel within the bulk transfer/terminal system (other than in a terminal); or
(2) Is a position holder.
Vessel means a waterborne taxable fuel transporting vessel.
(c) Blended taxable fuel, diesel fuel, and gasoline blendstocks; definitions—(1) Blended taxable fuel—(i) In general. Except as provided in paragraphs (c)(1)(ii) and (c)(1)(iii) of this section, blended taxable fuel means any taxable fuel that is produced outside the bulk transfer/terminal system by mixing—
(A) Taxable fuel with respect to which tax has been imposed under section 4041(a)(1) or 4081(a) (other than taxable fuel for which a credit or payment has been allowed); and
(B) Any other liquid on which tax has not been imposed under section 4081.
(ii) Exclusion; minor blending. A mixture described in paragraph (c)(1)(i) of this section is not blended taxable fuel if, during the calendar quarter in which the blender removes or sells the mixture, all such mixtures removed or sold by the blender contain, in the aggregate, less than 400 gallons of liquid described in paragraph (c)(1)(i)(B) of this section.
(iii) Exclusion; gasohol. Blended taxable fuel does not include any gasohol (as defined in § 48.4081-6(b)(2)) if, disregarding the alcohol, the gasohol is not blended taxable fuel and contains, in addition to permitted amounts of liquids described in paragraph (c)(1)(i)(B) of this section, only gasoline with respect to which—
(A) Tax was imposed under section 4081(a) at a rate described in § 48.4081-6(e) (relating to the gasohol production tax rate and the gasohol tax rate); or
(B) A valid claim is made under section 6427(f).
(2) Diesel fuel—(i) In general. Except as provided in paragraph (c)(2)(ii) of this section, 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 diesel-powered 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.
(ii) Exclusion. 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. For availability of ASTM and military specifications, see paragraph (d) of this section.
(3) Gasoline blendstocks—(i) In general. Except as provided in paragraph (c)(3)(ii) of this section, gasoline blendstocks means—
(A) Alkylate;
(B) Butane;
(C) Butene;
(D) Catalytically cracked gasoline;
(E) Coker gasoline;
(F) Ethyl tertiary butyl ether (ETBE);
(G) Hexane;
(H) Hydrocrackate;
(I) Isomerate;
(J) Methyl tertiary butyl ether (MTBE);
(K) Mixed xylene (not including any separated isomer of xylene);
(L) Natural gasoline;
(M) Pentane;
(N) Pentane mixture;
(O) Polymer gasoline;
(P) Raffinate;
(Q) Reformate;
(R) Straight-run gasoline;
(S) Straight-run naphtha;
(T) Tertiary amyl methyl ether (TAME);
(U) Tertiary butyl alcohol (gasoline grade) (TBA);
(V) Thermally cracked gasoline;
(W) Toluene; and
(X) Transmix containing gasoline.
(ii) Exclusion. Gasoline blendstocks does not include any product that cannot, without further processing, be used in the production of finished gasoline. For example, a mixed hydrocarbon stream that is produced in a natural gas processing plant is not a gasoline blendstock if the stream cannot be used to produce finished gasoline without further processing.
(d) ASTM and military specifications. ASTM specifications may be obtained from the American Society for Testing and Materials, 100 Barr Harbor Drive, West Conshohocken, PA 19428. Military specifications may be obtained from the Standardization Document Order Desk, Building 4, Section D, 700 Robbins Avenue, Philadelphia, PA 19111.
(e) Other definitions. For other definitions relating to taxable fuel, see §§ 48.4081-6(b), 48.4082-5(b), 48.4082-6(b), 48.4082-7(b), 48.4101-1(b), 48.6427-9(b), 48.6427-10(b), and 48.6427-11(b).
(f) Effective date. (1) Except as provided in paragraph (f)(2) of this section, this section is applicable after December 31, 1993.
(2) In paragraph (b) of this section the definition of aviation gasoline and the third sentence in the definition of terminal are applicable after January 1, 1998, the definition of kerosene, excluded liquid, and taxable fuel are applicable after June 30, 1998, and the definition of enterer is applicable to entries of taxable fuel after September 27, 2004. Paragraph (c)(2) of this section is applicable after December 31, 1997.
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Treas. Reg. §48.4081-1(a)Overview.
Overview. This section provides definitions for purposes of the tax on taxable fuel imposed by section 4081.
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Treas. Reg. §48.4081-1(b)Definitions.
Definitions.
Approved terminal or refinery means a terminal or refinery that is operated, respectively, by a taxable fuel registrant that is a terminal operator, or by a taxable fuel registrant that is a refiner.
Aviation gasoline means all special grades of gasoline that are suitable for use in aviation reciprocating engines and covered by ASTM specification D 910 or military specification MIL-G-5572. For availability of ASTM and military specifications, see paragraph (d) of this section.
Blender means any person that produces blended taxable fuel.
Bulk transfer means any transfer of taxable fuel by pipeline or vessel.
Bulk transfer/terminal system means the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Thus, taxable fuel in a refinery, pipeline, vessel, or terminal is in the bulk transfer/terminal system. Taxable fuel in the fuel supply tank of any engine, or in any tank car, rail car, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system.
Bus means automobile bus.
Diesel-powered bus means any bus that is propelled by a diesel-powered engine.
Diesel-powered highway vehicle means a highway vehicle, as defined in § 48.4061(a)-1(d), that is propelled by a diesel-powered engine.
Diesel-powered train means any diesel-powered equipment or machinery that rides on rails. Thus, for example, the term includes a locomotive, work train, switching engine, and track maintenance machine.
Enterer generally means the importer of record (under customs law) with respect to the taxable fuel, except that—
(1) If the importer of record is a customs broker engaged by the owner of the taxable fuel, the person for whom the broker is acting is the enterer; and
(2) If there is no importer of record for taxable fuel entered into the United States, the owner of the taxable fuel at the time it is brought into the United States is the enterer.
Entry of taxable fuel into the United States occurs when—
(1) The taxable fuel is brought into the United States and applicable customs law requires that the taxable fuel be entered into the United States for consumption, use, or warehousing; or
(2) The taxable fuel is brought into the United States from Puerto Rico and applicable customs law would require that the taxable fuel be entered into the United States for consumption, use, or warehousing if the taxable fuel were brought into the United States from somewhere other than Puerto Rico.
Excluded liquid means any liquid that—
(1) Contains less than four percent normal paraffins; or
(2) Has a—
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Treas. Reg. §48.4081-1(c)Blended taxable fuel, diesel fuel, and gasoline blendstocks; definitions—(1) Blended taxable fuel—(i) In general.
Blended taxable fuel, diesel fuel, and gasoline blendstocks; definitions—(1) Blended taxable fuel—(i) In general. Except as provided in paragraphs (c)(1)(ii) and (c)(1)(iii) of this section, blended taxable fuel means any taxable fuel that is produced outside the bulk transfer/terminal system by mixing—
(A) Taxable fuel with respect to which tax has been imposed under section 4041(a)(1) or 4081(a) (other than taxable fuel for which a credit or payment has been allowed); and
(B) Any other liquid on which tax has not been imposed under section 4081.
(ii) Exclusion; minor blending. A mixture described in paragraph (c)(1)(i) of this section is not blended taxable fuel if, during the calendar quarter in which the blender removes or sells the mixture, all such mixtures removed or sold by the blender contain, in the aggregate, less than 400 gallons of liquid described in paragraph (c)(1)(i)(B) of this section.
(iii) Exclusion; gasohol. Blended taxable fuel does not include any gasohol (as defined in § 48.4081-6(b)(2)) if, disregarding the alcohol, the gasohol is not blended taxable fuel and contains, in addition to permitted amounts of liquids described in paragraph (c)(1)(i)(B) of this section, only gasoline with respect to which—
(A) Tax was imposed under section 4081(a) at a rate described in § 48.4081-6(e) (relating to the gasohol production tax rate and the gasohol tax rate); or
(B) A valid claim is made under section 6427(f).
(2) Diesel fuel—(i) In general. Except as provided in paragraph (c)(2)(ii) of this section, 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 diesel-powered 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.
(ii) Exclusion. 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. For availability of ASTM and military specifications, see paragraph (d) of this section.
(3) Gasoline blendstocks—(i) In general. Except as provided in paragraph (c)(3)(ii) of this section, gasoline blendstocks means—
(A) Alkylate;
(B) Butane;
(C) Butene;
(D) Catalytically cracked gasoline;
(E) Coker gasoline;
(F) Ethyl tertiary butyl ether (ETBE);
(G) Hexane;
(H) Hydrocrackate;
(I) Isomerate;
(J) Methyl tertiary butyl ether (MTBE);
(K) Mixed xylene (not including any separated isomer of xylene);
(L) Natural gasoline;
(M) Pentane;
(N) Pentane mixture;
(O) Polymer gasoline;
(P) Raffinate;
(Q) Reformate;
(R) Straight-run gasoline;
(S) Straight-run naphtha;
(T) Tertiary amyl methyl ether (TAME);
(U) Tertiary butyl alcohol (gasoline grade) (TBA);
(V) Thermally cracked gasoline;
(W) Toluene; and
(X) Transmix containing gasoline.
(ii) Exclusion. Gasoline blendstocks does not include any product that cannot, without further processing, be used in the production of finished gasoline. For example, a mixed hydrocarbon stream that is produced in a natural gas processing plant is not a gasoline blendstock if the stream cannot be used to produce finished gasoline without further processing.
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Treas. Reg. §48.4081-1(d)ASTM and military specifications.
ASTM and military specifications. ASTM specifications may be obtained from the American Society for Testing and Materials, 100 Barr Harbor Drive, West Conshohocken, PA 19428. Military specifications may be obtained from the Standardization Document Order Desk, Building 4, Section D, 700 Robbins Avenue, Philadelphia, PA 19111.
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Treas. Reg. §48.4081-1(e)Other definitions.
Other definitions. For other definitions relating to taxable fuel, see §§ 48.4081-6(b), 48.4082-5(b), 48.4082-6(b), 48.4082-7(b), 48.4101-1(b), 48.6427-9(b), 48.6427-10(b), and 48.6427-11(b).
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Treas. Reg. §48.4081-1(f)Effective date.
Effective date. (1) Except as provided in paragraph (f)(2) of this section, this section is applicable after December 31, 1993.
(2) In paragraph (b) of this section the definition of aviation gasoline and the third sentence in the definition of terminal are applicable after January 1, 1998, the definition of kerosene, excluded liquid, and taxable fuel are applicable after June 30, 1998, and the definition of enterer is applicable to entries of taxable fuel after September 27, 2004. Paragraph (c)(2) of this section is applicable after December 31, 1997.
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Treas. Reg. §48.4081-1(i)Distillation range of 125 °F.
Distillation range of 125 °F. or less;
(ii) Sulfur content of 10 ppm or less; and
(iii) Minimum color of + 27 Saybolt.
Finished gasoline means all products (including gasohol (as defined in § 48.4081-6(b)(2))) that are commonly or commercially known or sold as gasoline and are suitable for use as a motor fuel, other than products that have an ASTM octane number of less than 75 as determined by the motor method.
Gasoline means finished gasoline and gasoline blendstocks.
Industrial user means any person that receives gasoline blendstocks by bulk transfer for its own use in the manufacture of any product other than finished gasoline.
Kerosene means any liquid that meets the specifications for kerosene or would meet those specifications but for the presence in the liquid of a dye of the type described in § 48.4082-1(b). A liquid meets the specifications for kerosene if it is one of the two grades of kerosene (No. 1-K and No. 2-K) covered by ASTM specification D 3699, or kerosene-type jet fuel covered by ASTM specification D 1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8). For availability of ASTM and military specifications, see paragraph (d) of this section. However, the term does not include excluded liquid.
Position holder means, with respect to taxable fuel in a terminal, the person that holds the inventory position in the taxable fuel, as reflected on the records of the terminal operator. A person holds the inventory position in taxable fuel when that person has a contractual agreement with the terminal operator for the use of storage facilities and terminaling services at a terminal with respect to the taxable fuel. The term also includes a terminal operator that owns taxable fuel in its terminal.
Rack means a mechanism capable of delivering taxable fuel into a means of transport other than a pipeline or vessel.
Refiner means any person that owns, operates, or otherwise controls a refinery.
Refinery means a facility used to produce taxable fuel and from which taxable fuel may be removed by pipeline, by vessel, or at a rack. However, the term does not include a facility where only blended fuel or gasohol (as defined in § 48.4081-6(b)(2)), and no other type of taxable fuel, is produced. For this purpose blended fuel is any mixture that, if produced outside the bulk transfer/terminal system, would be blended taxable fuel.
Removal means any physical transfer of taxable fuel, and any use of taxable fuel other than as a material in the production of taxable fuel or special fuels. However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed.
Sale means—
(1) The transfer of title to, or substantial incidents of ownership in, taxable fuel (other than taxable fuel in a terminal) to the buyer for a consideration, which may consist of money, services, or other property; or
(2) The transfer of the inventory position in the taxable fuel in a terminal if the transferee becomes the position holder with respect to the taxable fuel.
State includes any State, any political subdivision of a State, the District of Columbia, the American Red Cross, and, to the extent provided by section 7871, any Indian tribal government.
Taxable fuel means gasoline, diesel fuel, and kerosene.
Taxable fuel registrant means an enterer, industrial user, refiner, terminal operator, or throughputter that is registered as such under section 4101.
Terminal means a taxable fuel storage and distribution facility that is supplied by pipeline or vessel and from which taxable fuel may be removed at a rack. However, the term does not include any facility at which gasoline blendstocks are used in the manufacture of products other than finished gasoline and from which no gasoline is removed. Also, effective January 2, 1998, the term does not include any facility where finished gasoline, undyed diesel fuel, or undyed kerosene is stored if the facility is operated by a taxable fuel registrant and all such taxable fuel stored at the facility has been previously taxed under section 4081 upon removal from a refinery or terminal.
Terminal operator means any person that owns, operates, or otherwise controls a terminal.
Throughputter means any person that—
(1) Owns taxable fuel within the bulk transfer/terminal system (other than in a terminal); or
(2) Is a position holder.
Vessel means a waterborne taxable fuel transporting vessel.
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Treas. Reg. §48.4081-2Taxable fuel; tax on removal at a terminal rack
(a) Overview. This section provides the general rule that all removals of taxable fuel at a terminal rack are subject to tax and the position holder with respect to the fuel is liable for the tax.
(b) Imposition of tax. Tax is imposed on the removal of taxable fuel from a terminal if the taxable fuel is removed at the rack.
(c) Liability for tax—(1) In general. The position holder with respect to the taxable fuel is liable for the tax imposed under paragraph (b) of this section.
(2) Joint and several liability of terminal operator; unregistered position holder—(i) In general. The terminal operator is jointly and severally liable for the tax imposed under paragraph (b) of this section if—
(A) The position holder with respect to the taxable fuel is a person other than the terminal operator and is not a taxable fuel registrant; and
(B) The terminal operator has not met the conditions of paragraph (c)(2)(ii) of this section.
(ii) Conditions for avoidance of liability. A terminal operator is not liable for tax under this paragraph (c)(2) if, at the time of the removal, the terminal operator—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (as described in § 48.4081-5) from the position holder; and
(C) Has no reason to believe that any information in the notification certificate is false.
(3) Joint and several liability of terminal operator; incorrect information provided. The terminal operator is jointly and severally liable for the tax imposed under paragraph (b) of this section if, in connection with the removal of diesel fuel or kerosene that is not dyed and marked in accordance with § 48.4082-1, the terminal operator provides any person (including the position holder with respect to the fuel) with any bill of lading, shipping paper, record, or similar document indicating that the diesel fuel or kerosene is dyed and marked in accordance with § 48.4082-1.
(4) Example. The following example illustrates this paragraph (c) and § 48.4082-1:
(d) Rate of tax. For the rate of tax generally, see section 4081(a). For the rate of tax on gasohol and on gasoline removed for gasohol production, see § 48.4081-6.
(e) Exemptions. For exemptions from the tax imposed under this section, see §§ 48.4081-4 (relating to gasoline blendstocks), 48.4082-1 (relating to dyed diesel fuel and dyed kerosene), 48.4082-5 (relating to diesel fuel and kerosene used in Alaska), 48.4082-6 (relating to aviation-grade kerosene), and 48.4082-7 (relating to kerosene used for a feedstock purpose).
(f) Effective date. This section is applicable after December 31, 1993.
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Treas. Reg. §48.4081-2(a)Overview.
Overview. This section provides the general rule that all removals of taxable fuel at a terminal rack are subject to tax and the position holder with respect to the fuel is liable for the tax.
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Treas. Reg. §48.4081-2(b)Imposition of tax.
Imposition of tax. Tax is imposed on the removal of taxable fuel from a terminal if the taxable fuel is removed at the rack.
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Treas. Reg. §48.4081-2(c)Liability for tax—(1) In general.
Liability for tax—(1) In general. The position holder with respect to the taxable fuel is liable for the tax imposed under paragraph (b) of this section.
(2) Joint and several liability of terminal operator; unregistered position holder—(i) In general. The terminal operator is jointly and severally liable for the tax imposed under paragraph (b) of this section if—
(A) The position holder with respect to the taxable fuel is a person other than the terminal operator and is not a taxable fuel registrant; and
(B) The terminal operator has not met the conditions of paragraph (c)(2)(ii) of this section.
(ii) Conditions for avoidance of liability. A terminal operator is not liable for tax under this paragraph (c)(2) if, at the time of the removal, the terminal operator—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (as described in § 48.4081-5) from the position holder; and
(C) Has no reason to believe that any information in the notification certificate is false.
(3) Joint and several liability of terminal operator; incorrect information provided. The terminal operator is jointly and severally liable for the tax imposed under paragraph (b) of this section if, in connection with the removal of diesel fuel or kerosene that is not dyed and marked in accordance with § 48.4082-1, the terminal operator provides any person (including the position holder with respect to the fuel) with any bill of lading, shipping paper, record, or similar document indicating that the diesel fuel or kerosene is dyed and marked in accordance with § 48.4082-1.
(4) Example. The following example illustrates this paragraph (c) and § 48.4082-1:
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Treas. Reg. §48.4081-2(d)Rate of tax.
Rate of tax. For the rate of tax generally, see section 4081(a). For the rate of tax on gasohol and on gasoline removed for gasohol production, see § 48.4081-6.
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Treas. Reg. §48.4081-2(e)Exemptions.
Exemptions. For exemptions from the tax imposed under this section, see §§ 48.4081-4 (relating to gasoline blendstocks), 48.4082-1 (relating to dyed diesel fuel and dyed kerosene), 48.4082-5 (relating to diesel fuel and kerosene used in Alaska), 48.4082-6 (relating to aviation-grade kerosene), and 48.4082-7 (relating to kerosene used for a feedstock purpose).
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Treas. Reg. §48.4081-2(f)Effective date.
Effective date. This section is applicable after December 31, 1993.
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Treas. Reg. §48.4081-3Taxable fuel; taxable events other than removal at the terminal rack
(a) Overview. Although tax is imposed when taxable fuel is removed from the terminal at the rack, tax also is imposed in certain other situations described in this section.
(b) Tax on removal from a refinery—(1) Imposition of tax. Tax is imposed on the following removals from a refinery:
(i) A removal of taxable fuel by bulk transfer if the refiner or the owner of the taxable fuel immediately before the removal is not a taxable fuel registrant.
(ii) A removal of taxable fuel at the rack.
(iii) After September 30, 1995, a removal of a batch of gasohol from an approved refinery by bulk transfer if the refiner treats itself with respect to the removal as a person that is not registered under section 4101. See § 48.4101-1(a). For the rule providing that no deposit is required in the case of the tax imposed under this paragraph (b)(1)(iii), see § 40.6302(c)-1(f)(4) of this chapter. For the rule allowing inspections of facilities where gasohol is produced, see section 4083.
(2) Exception for certain refineries. The tax imposed under paragraph (b)(1)(ii) of this section does not apply to a removal of taxable fuel if—
(i) The taxable fuel is removed from an approved refinery that is not served by pipeline (other than a pipeline for the receipt of crude oil) or vessel;
(ii) The taxable fuel is received at a facility that is operated by a taxable fuel registrant and is located within the bulk transfer/terminal system;
(iii) The removal from the refinery is by—
(A) Rail car; or
(B) In the case of diesel fuel, a trailer or semi-trailer that is used exclusively for the transport service described in paragraphs (b)(2)(i) and (b)(2)(ii) of this section;
(iv) In the case of taxable fuel removed by rail car, the facility at which the fuel is received is operated by the same person that operates the refinery from which the fuel was removed; and
(v) In the case of diesel fuel removed by a trailer or semi-trailer, the facility at which the fuel is received is less than 20 miles from the refinery from which the diesel fuel was removed.
(3) Liability for tax. The refiner is liable for the tax imposed under paragraph (b)(1) of this section.
(c) Tax on entry into the United States—(1) Imposition of tax. Tax is imposed on the entry of taxable fuel into the United States if—
(i) The entry is by bulk transfer and the enterer is not a taxable fuel registrant; or
(ii) The entry is not by bulk transfer.
(2) Liability for tax—(i) In general. The enterer is liable for the tax imposed under paragraph (c)(1) of this section.
(ii) Joint and several liability of the importer of record. The importer of record with respect to the taxable fuel is jointly and severally liable with the enterer for the tax imposed under paragraph (c)(1) of this section if—
(A) The importer of record is not the enterer of the taxable fuel; and
(B) The enterer is not a taxable fuel registrant.
(iii) Conditions for avoidance of liability. The importer of record is not liable for the tax under paragraph (c)(2)(ii) of this section if, at the time of the entry, the importer of record—
(A) Has an unexpired notification certificate (as described in § 48.4081-5) from the enterer; and
(B) Has no reason to believe that any information in the notification certificate is false.
(iv) Customs bond. The Customs bond posted with respect to the importation of the fuel will not be charged for the tax imposed on the entry of the fuel if the enterer is a taxable fuel registrant. A Customs bond will not be charged for the tax imposed on the entry of the fuel covered by the bond, if at the time of entry, the surety—
(A) Has an unexpired notification certificate (as described in § 48.4081-5) from the enterer; and
(B) Has no reason to believe that any information in the notification certificate is false.
(d) Tax on bulk transfers from a terminal by an unregistered position holder—(1) Imposition of tax. Tax is imposed on the removal by bulk transfer of taxable fuel from a terminal if the position holder with respect to the taxable fuel is not a taxable fuel registrant.
(2) Liability for tax—(i) In general. The position holder with respect to the taxable fuel is liable for the tax imposed under paragraph (d)(1) of this section.
(ii) Joint and several liability of terminal operator. The terminal operator is jointly and severally liable for the tax imposed under paragraph (d)(1) of this section if—
(A) The position holder with respect to the taxable fuel is a person other than the terminal operator; and
(B) The terminal operator has not met the conditions of paragraph (d)(2)(iii) of this section.
(iii) Conditions for avoidance of liability. A terminal operator is not liable for tax under this paragraph (d)(2) if, at the time of the bulk transfer, the terminal operator—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (described in § 48.4081-5) from the position holder; and
(C) Has no reason to believe that any information in the notification certificate is false.
(e) Tax on bulk transfers not received at an approved terminal or refinery—(1) Imposition of tax. Tax on taxable fuel is imposed if—
(i) Taxable fuel is removed by bulk transfer from a refinery or terminal, or entered by bulk transfer into the United States;
(ii) No tax was imposed on such removal or entry under paragraph (b), (c), or (d) of this section; and
(iii) Upon removal from the pipeline or vessel, the taxable fuel is not received at an approved terminal or refinery (or at another pipeline or vessel).
(2) Liability for tax—(i) In general. The owner of the taxable fuel when it is removed from the pipeline or vessel is liable for the tax imposed under paragraph (e)(1) of this section if the owner has not met the conditions of paragraph (e)(2)(ii) of this section.
(ii) Conditions for avoidance of liability. An owner of taxable fuel is not liable for tax under paragraph (e)(2)(i) of this section if, at the time the taxable fuel is removed from the pipeline or vessel, the owner of the taxable fuel—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (described in § 48.4081-5) from the operator of the terminal or refinery where the taxable fuel is received; and
(C) Has no reason to believe that any information in the notification certificate is false.
(iii) Liability of the operator of the facility where the taxable fuel is received. The operator of the facility where the taxable fuel is received is liable for the tax imposed under paragraph (e)(1) of this section if the owner of the taxable fuel has met the conditions of paragraph (e)(2)(ii) of this section and is jointly and severally liable for the tax if the owner has not met such conditions.
(f) Tax on sales within the bulk transfer/terminal system—(1) Imposition of tax. Tax is imposed on the sale of taxable fuel located within the bulk transfer/terminal system if the sale is to a person that is not a taxable fuel registrant and tax has not been imposed on such taxable fuel under § 48.4081-2, or paragraph (b), (c), (d), or (e) of this section.
(2) Exception for certain sales of taxable fuel for export. The tax imposed under paragraph (f)(1) of this section does not apply to a sale of taxable fuel if—
(i) The buyer's principal place of business is not within the United States;
(ii) The sale of the fuel occurs as the fuel is delivered into a transport vessel;
(iii) The vessel has a capacity of at least 20,000 barrels of fuel;
(iv) The seller is a taxable fuel registrant and the exporter of record of the fuel; and
(v) The fuel was exported in due course.
(3) Liability for tax—(i) In general. The seller of the taxable fuel is liable for the tax imposed under paragraph (f)(1) of this section if the seller has not met the conditions of paragraph (f)(3)(ii) of this section.
(ii) Conditions for avoidance of liability. A seller is not liable for tax under paragraph (f)(3)(i) of this section if, at the time of the sale, the seller—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (described in § 48.4081-5) from the buyer; and
(C) Has no reason to believe that any information in the certificate is false.
(iii) Liability of the buyer. The buyer of the taxable fuel is liable for the tax imposed under paragraph (f)(1) of this section if the seller of the taxable fuel has met the conditions of paragraph (f)(3)(ii) of this section and is jointly and severally liable for the tax if the seller has not met such conditions.
(4) Example. The following example illustrates this paragraph (f) and the definition of the term sale in § 48.4081-1:
(g) Tax on removal or sale of blended taxable fuel by the blender—(1) Imposition of tax. A tax is imposed on the removal or sale of blended taxable fuel by the blender thereof. Tax is computed on the difference between the total number of gallons of blended taxable fuel removed or sold and the number of gallons of previously taxed taxable fuel used to produce the blended taxable fuel. For this purpose, the alcohol in gasohol is treated as previously taxed taxable fuel.
(2) Liability for tax—(i) Liability of the blender. The blender is liable for the tax imposed under paragraph (g)(1) of this section.
(ii) Liability of seller of untaxed liquid. On and after April 2, 2003, a person that sells any liquid that is used to produce blended taxable fuel is jointly and severally liable for the tax imposed under paragraph (g)(1) of this section on the removal or sale of that blended taxable fuel if the liquid—
(A) Is described in § 48.4081-1(c)(1)(i)(B) (relating to liquids on which tax has not been imposed under section 4081); and
(B) Is sold by that person as gasoline, diesel fuel, or kerosene that has been taxed under section 4081.
(3) Examples. The following examples illustrate the provisions of this paragraph (g) and the definitions of blended taxable fuel and diesel fuel in § 48.4081-1(c):
(h) Rate of tax. For the rate of tax generally imposed under this section, see section 4081(a). For the rate of tax on gasohol and on gasoline removed or entered for gasohol production, see § 48.4081-6.
(i) Exemptions. For exemptions from the taxes imposed under this section, see §§ 48.4081-4 (relating to gasoline blendstocks), 48.4082-1 (relating to dyed diesel fuel and dyed kerosene), 48.4082-5 (relating to diesel fuel and kerosene used in Alaska), 48.4082-6 (relating to aviation-grade kerosene), and 48.4082-7 (relating to kerosene used for a feedstock purpose).
(j) Effective/applicability date: This section is applicable January 1, 1994, except that paragraphs (c)(2)(ii) through (iv) of this section are applicable to entries of taxable fuel after September 27, 2004.
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Treas. Reg. §48.4081-3(a)Overview.
Overview. Although tax is imposed when taxable fuel is removed from the terminal at the rack, tax also is imposed in certain other situations described in this section.
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Treas. Reg. §48.4081-3(b)Tax on removal from a refinery—(1) Imposition of tax.
Tax on removal from a refinery—(1) Imposition of tax. Tax is imposed on the following removals from a refinery:
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Treas. Reg. §48.4081-3(c)Tax on entry into the United States—(1) Imposition of tax.
Tax on entry into the United States—(1) Imposition of tax. Tax is imposed on the entry of taxable fuel into the United States if—
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Treas. Reg. §48.4081-3(d)Tax on bulk transfers from a terminal by an unregistered position holder—(1) Imposition of tax.
Tax on bulk transfers from a terminal by an unregistered position holder—(1) Imposition of tax. Tax is imposed on the removal by bulk transfer of taxable fuel from a terminal if the position holder with respect to the taxable fuel is not a taxable fuel registrant.
(2) Liability for tax—(i) In general. The position holder with respect to the taxable fuel is liable for the tax imposed under paragraph (d)(1) of this section.
(ii) Joint and several liability of terminal operator. The terminal operator is jointly and severally liable for the tax imposed under paragraph (d)(1) of this section if—
(A) The position holder with respect to the taxable fuel is a person other than the terminal operator; and
(B) The terminal operator has not met the conditions of paragraph (d)(2)(iii) of this section.
(iii) Conditions for avoidance of liability. A terminal operator is not liable for tax under this paragraph (d)(2) if, at the time of the bulk transfer, the terminal operator—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (described in § 48.4081-5) from the position holder; and
(C) Has no reason to believe that any information in the notification certificate is false.
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Treas. Reg. §48.4081-3(e)Tax on bulk transfers not received at an approved terminal or refinery—(1) Imposition of tax.
Tax on bulk transfers not received at an approved terminal or refinery—(1) Imposition of tax. Tax on taxable fuel is imposed if—
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Treas. Reg. §48.4081-3(f)Tax on sales within the bulk transfer/terminal system—(1) Imposition of tax.
Tax on sales within the bulk transfer/terminal system—(1) Imposition of tax. Tax is imposed on the sale of taxable fuel located within the bulk transfer/terminal system if the sale is to a person that is not a taxable fuel registrant and tax has not been imposed on such taxable fuel under § 48.4081-2, or paragraph (b), (c), (d), or (e) of this section.
(2) Exception for certain sales of taxable fuel for export. The tax imposed under paragraph (f)(1) of this section does not apply to a sale of taxable fuel if—
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Treas. Reg. §48.4081-3(g)Tax on removal or sale of blended taxable fuel by the blender—(1) Imposition of tax.
Tax on removal or sale of blended taxable fuel by the blender—(1) Imposition of tax. A tax is imposed on the removal or sale of blended taxable fuel by the blender thereof. Tax is computed on the difference between the total number of gallons of blended taxable fuel removed or sold and the number of gallons of previously taxed taxable fuel used to produce the blended taxable fuel. For this purpose, the alcohol in gasohol is treated as previously taxed taxable fuel.
(2) Liability for tax—(i) Liability of the blender. The blender is liable for the tax imposed under paragraph (g)(1) of this section.
(ii) Liability of seller of untaxed liquid. On and after April 2, 2003, a person that sells any liquid that is used to produce blended taxable fuel is jointly and severally liable for the tax imposed under paragraph (g)(1) of this section on the removal or sale of that blended taxable fuel if the liquid—
(A) Is described in § 48.4081-1(c)(1)(i)(B) (relating to liquids on which tax has not been imposed under section 4081); and
(B) Is sold by that person as gasoline, diesel fuel, or kerosene that has been taxed under section 4081.
(3) Examples. The following examples illustrate the provisions of this paragraph (g) and the definitions of blended taxable fuel and diesel fuel in § 48.4081-1(c):
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Treas. Reg. §48.4081-3(h)Rate of tax.
Rate of tax. For the rate of tax generally imposed under this section, see section 4081(a). For the rate of tax on gasohol and on gasoline removed or entered for gasohol production, see § 48.4081-6.
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Treas. Reg. §48.4081-3(i)Exemptions.
Exemptions. For exemptions from the taxes imposed under this section, see §§ 48.4081-4 (relating to gasoline blendstocks), 48.4082-1 (relating to dyed diesel fuel and dyed kerosene), 48.4082-5 (relating to diesel fuel and kerosene used in Alaska), 48.4082-6 (relating to aviation-grade kerosene), and 48.4082-7 (relating to kerosene used for a feedstock purpose).
13 Citing Cases
It did so because claiming the section 6426 excise tax credits against its section 4081 excise tax liabilities was administratively easier than using the income tax credits and provided a quarterly financial benefit, as opposed to the annual financial benefit that would have been provided by general business credits claimed on an income tax return. Petitioner’s entitlement to these credits is not in dispute. As a taxable fuel position holder, petitioner was required to, and did, file Form 720, Q
d persons. The routes Ps’ drivers traveled were determined with respect to daily manifests generated every evening that accommodated the transportation needs of their clients. Ps claimed a credit under sec. 34, I.R.C., for gasoline taxes paid under sec. 4081, I.R.C. R asserted deficiencies denying them the sec. 34, I.R.C. credit. R denied the credit because according to R’s notice of deficiency, Ps’ service did not meet the requirements under sec. 6421, I.R.C., which sec. 34, I.R.C. cross- refer
* # s}: if: jjí Hí the Secretary shall pay (without interest) to the ultimate purchaser of such gasoline an amount equal to the product of the number of gallons of gasoline so used multiplied by the rate at which tax was imposed on such gasoline by section 4081. (2) Limitation in case of nonscheduled intercity or local buses. — Paragraph (1)(A) shall not apply in respect of gasoline used in any automobile bus while engaged in furnishing transportation which is not scheduled and not along regular
way business use, the Secretary shall pay (without interest) to the ultimate purchaser of such gasoline an amount equal to the amount determined by multiplying the number of gallons so used by the rate at which tax was imposed on such gasoline under section 4081. * * * Section 6421(e)(2)(A) provides the definition of off-highway business use as: any use by a person in a trade or business of such person or in an activity of such person described in section 212 * * * otherwise than as a fuel in a