§4082 — Exemptions for diesel fuel and kerosene
1 citing cases
Statute Text — 26 U.S.C. §4082
The tax imposed by section 4081 shall not apply to diesel fuel and kerosene—
which the Secretary determines is destined for a nontaxable use,
which is indelibly dyed by mechanical injection in accordance with regulations which the Secretary shall prescribe, and
which meets such marking requirements (if any) as may be prescribed by the Secretary in regulations.
Such regulations shall allow an individual choice of dye color approved by the Secretary or chosen from any list of approved dye colors that the Secretary may publish.
For purposes of this section, the term “nontaxable use” means—
any use which is exempt from the tax imposed by section 4041(a)(1) other than by reason of a prior imposition of tax,
any use in a train, and
any use described in section 4041(a)(1)(C)(iii)(II).
The term “nontaxable use” does not include the use of kerosene in an aircraft and such term shall not include any use described in section 6421(e)(2)(C).
Paragraph (2) of subsection (a) shall not apply with respect to any diesel fuel and kerosene—
removed, entered, or sold in a State for ultimate sale or use in an area of such State during the period such area is exempted from the fuel dyeing requirements under subsection (i) of section 211 of the Clean Air Act (as in effect on the date of the enactment of this subsection) by the Administrator of the Environmental Protection Agency under paragraph (4) of such subsection (i) (as so in effect), and
the use of which is certified pursuant to regulations issued by the Secretary.
Subsection (a)(2) shall not apply to kerosene—
received by pipeline or vessel for use by the person receiving the kerosene in the manufacture or production of any substance (other than gasoline, diesel fuel, or special fuels referred to in section 4041), or
to the extent provided in regulations, removed or entered—
for such a use by the person removing or entering the kerosene, or
for resale by such person for such a use by the purchaser,
but only if the person receiving, removing, or entering the kerosene and such purchaser (if any) are registered under section 4101 with respect to the tax imposed by section 4081.
To the extent provided in regulations, subsection (a)(2) shall not apply to kerosene received by a wholesale distributor of kerosene if such distributor—
is registered under section 4101 with respect to the tax imposed by section 4081 on kerosene, and
sells kerosene exclusively to ultimate vendors described in section 6427(
l
)(5)(B) with respect to kerosene.
In the case of kerosene (other than kerosene with respect to which tax is imposed under section 4043) which is exempt from the tax imposed by section 4041(c) (other than by reason of a prior imposition of tax) and which is removed from any refinery or terminal directly into the fuel tank of an aircraft—
the rate of tax under section 4081(a)(2)(A)(iii) shall be zero, and
if such aircraft is employed in foreign trade or trade between the United States and any of its possessions, the increase in such rate under section 4081(a)(2)(B) shall be zero.
For purposes of this subsection, any removal described in section 4081(a)(3)(A) shall be treated as a removal from a terminal but only if such terminal is located within a secure area of an airport.
Subsection (a) shall not apply to the tax imposed under section 4081 at the Leaking Underground Storage Tank Trust Fund financing rate.
Paragraph (1) shall not apply with respect to any fuel if the Secretary determines that such fuel is destined for export or for use by the purchaser as supplies for vessels (within the meaning of section 4221(d)(3)) employed in foreign trade or trade between the United States and any of its possessions.
The Secretary shall prescribe such regulations as may be necessary to carry out this section, including regulations requiring the conspicuous labeling of retail diesel fuel and kerosene pumps and other delivery facilities to assure that persons are aware of which fuel is available only for nontaxable uses.
For tax on train and certain bus uses of fuel purchased tax-free, see subsections (a)(1) and (d)(3) of section 4041.
Treasury Regulations
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Treas. Reg. §48.4082-1Diesel fuel and kerosene; exemption for dyed fuel
(a) Exemption. Tax is not imposed by section 4081 on the removal, entry, or sale of any diesel fuel or kerosene if—
(1) The person otherwise liable for tax is a taxable fuel registrant;
(2) In the case of a removal from a terminal, the terminal is an approved terminal; and
(3) The diesel fuel or kerosene satisfies the dyeing and marking requirements of paragraphs (b), (c), and (d) of this section.
(b) Dyeing requirements. Diesel fuel or kerosene satisfies the dyeing requirement of this paragraph (b) only if the diesel fuel or kerosene contains—
(1) The dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3.9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of diesel fuel or kerosene; or
(2) Any dye of a type and in a concentration that has been approved by the Commissioner.
(c) Marking requirements. [Reserved]
(d) [Reserved]. For further guidance, see § 48.4082-1T(d).
(e) Effective date—(1) Except as provided in paragraph (e)(2) of this section, this section is applicable March 14, 1996.
(2) [Reserved] For further guidance, see § 48.4082-1T(e)(2).
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Treas. Reg. §48.4082-1(a)Exemption.
Exemption. Tax is not imposed by section 4081 on the removal, entry, or sale of any diesel fuel or kerosene if—
(1) The person otherwise liable for tax is a taxable fuel registrant;
(2) In the case of a removal from a terminal, the terminal is an approved terminal; and
(3) The diesel fuel or kerosene satisfies the dyeing and marking requirements of paragraphs (b), (c), and (d) of this section.
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Treas. Reg. §48.4082-1(b)Dyeing requirements.
Dyeing requirements. Diesel fuel or kerosene satisfies the dyeing requirement of this paragraph (b) only if the diesel fuel or kerosene contains—
(1) The dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3.9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of diesel fuel or kerosene; or
(2) Any dye of a type and in a concentration that has been approved by the Commissioner.
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Treas. Reg. §48.4082-1(c)Marking requirements.
Marking requirements. [Reserved]
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Treas. Reg. §48.4082-1(d)§48.4082-1(d)
[Reserved]. For further guidance, see § 48.4082-1T(d).
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Treas. Reg. §48.4082-1(e)Effective date—(1) Except as provided in paragraph (e)(2) of this section, this section is applicable March 14, 1996.
Effective date—(1) Except as provided in paragraph (e)(2) of this section, this section is applicable March 14, 1996.
(2) [Reserved] For further guidance, see § 48.4082-1T(e)(2).
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Treas. Reg. §48.4082-1TDiesel fuel and kerosene; exemption for dyed fuel
(a) through (c) [Reserved]. For further guidance, see § 48.4082-1(a) through (c).
(d) Time and method for adding dye—(1) In general. Except as provided by paragraph (d)(6) of this section, diesel fuel or kerosene satisfies the dyeing requirements of this paragraph (d) only if the dye required by § 48.4082-1(b) is combined with the diesel fuel or kerosene by means of a mechanical injection system that is approved by the Commissioner for use at the facility where the dyeing occurs. Application for approval must be made in the form and manner required by the Commissioner. Rules similar to the rules of § 48.4101-1(g) apply to the Commissioner's action on the applications.
(2) Mechanical injection system; requirements. The Commissioner will approve a mechanical injection system only if—
(i) The system has features that automatically inject an amount of dye that satisfies the concentration requirements of § 48.4082-1(b) into diesel fuel or kerosene as the diesel fuel or kerosene is delivered from the bulk transfer/terminal system into the transport compartment of a truck, trailer, railroad car, or other means of nonbulk transfer;
(ii) The system has calibrated devices that accurately measure and record the amount of dye and the amount of diesel fuel and kerosene that is dispensed for each removal;
(iii) The system has automatic shut-off devices that prevent the removal of more than 100 gallons of undyed diesel fuel or kerosene in the case of a system malfunction;
(iv) The system is secured by either—
(A) Unbroken seals that are issued, installed, and maintained by the terminal operator and secure the measurement devices, shut-off devices, and other access points to the injection system; or
(B) A secured container that controls access to the measurement devices, shut-off devices, and other access points and is secured by an unbroken seal issued, installed, and maintained by the terminal operator;
(v) Each seal securing the system bears a unique identifying number or code and is produced in a manner that provides adequate assurance against duplication; and
(vi) The operator of the facility has written procedures in place for complying with its duty, described in paragraph (d)(4) of this section, to maintain the system's security standards.
(3) Mechanical injection system; basis for approval. In determining whether to approve a mechanical injection system, the Commissioner will take into account the individual circumstances of each facility, including local fire and safety codes, to ensure that the cost of acquiring and maintaining the appropriate levels of security are reasonable for that facility.
(4) Mechanical injection system; duty of the operator of a mechanical injection system to maintain the system's security standards. Each operator of a mechanical injection system must—
(i) Maintain a record for each seal, including its identifying number or code, the location of the seal, the date(s) on which the seal was issued and installed, and the reason for the installation;
(ii) Visually inspect each installed seal not less than once during every 24 hour period to ascertain that each seal and lock mechanism, if applicable, has not been physically altered;
(iii) Check the identifying number or code for each seal against the records maintained by the terminal operator no less frequently than once during each seven day period and record each inspection and verification;
(iv) Promptly notify the Commissioner if inspection of a seal reveals any inconsistency in the records pertaining to that seal, or if the seal has been damaged or removed (other than a removal authorized by the operator for testing or maintenance);
(v) Maintain a record of each seal that has been replaced to include the seal number or code, the date the seal was issued, the location of the seal, the date the seal was replaced, and the reason the seal was replaced;
(vi) Promptly destroy and replace seals that have been removed from the system;
(vii) Restrict access to unused seal inventory to individuals specifically designated by the operator and maintain a record of such individuals;
(viii) Maintain a record of each installation, inspection, and destruction described in this paragraph (d)(4), including the name of the individual who conducts the installation, inspection, or destruction;
(ix) Make available for the Commissioner's immediate inspection the seals and records described in this paragraph (d)(4); and
(x) Promptly notify the Commissioner if, and when, the dye injection system is placed out of service.
(5) Mechanical injection system; revocation or suspension of approval. The Commissioner may revoke or suspend its approval of a dye injection system if the Commissioner determines that the system does not meet the standards of paragraph (d)(2) of this section or if the operator of the system has not complied with the requirements of paragraph (d)(4) of this section.
(6) Sales and entries. For purposes of determining whether tax is imposed by section 4081 on a sale or entry of diesel fuel or kerosene, such fuel satisfies the dyeing requirements of this paragraph (d) only if the dye required by § 48.4082-1(b) is combined with the fuel before the sale or entry and the seller or enterer has in its records evidence (such as a certificate from the terminal operator providing the fuel) establishing that the dye was combined with the fuel by means of a mechanical injection system. Thus, for example, diesel fuel or kerosene that is entered into the United States by means of nonbulk transfer (such as a railroad car) does not satisfy the requirements of this paragraph (d) if the required dye and marker are combined with diesel fuel or kerosene after the diesel fuel or kerosene has been entered into the United States.
(7) Cross reference. For the penalty relating to mechanical dye injection systems, see section 6715A.
(e) and (e)(1) [Reserved]. For further guidance, see § 48.4082-1(e) and (e)(1).
(2) This section is applicable on October 24, 2005.
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Treas. Reg. §48.4082-1T(a)§48.4082-1T(a)
through (c) [Reserved]. For further guidance, see § 48.4082-1(a) through (c).
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Treas. Reg. §48.4082-1T(d)Time and method for adding dye—(1) In general.
Time and method for adding dye—(1) In general. Except as provided by paragraph (d)(6) of this section, diesel fuel or kerosene satisfies the dyeing requirements of this paragraph (d) only if the dye required by § 48.4082-1(b) is combined with the diesel fuel or kerosene by means of a mechanical injection system that is approved by the Commissioner for use at the facility where the dyeing occurs. Application for approval must be made in the form and manner required by the Commissioner. Rules similar to the rules of § 48.4101-1(g) apply to the Commissioner's action on the applications.
(2) Mechanical injection system; requirements. The Commissioner will approve a mechanical injection system only if—
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Treas. Reg. §48.4082-1T(e)§48.4082-1T(e)
and (e)(1) [Reserved]. For further guidance, see § 48.4082-1(e) and (e)(1).
(2) This section is applicable on October 24, 2005.
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Treas. Reg. §48.4082-1T(i)§48.4082-1T(i)
Maintain a record for each seal, including its identifying number or code, the location of the seal, the date(s) on which the seal was issued and installed, and the reason for the installation;
(ii) Visually inspect each installed seal not less than once during every 24 hour period to ascertain that each seal and lock mechanism, if applicable, has not been physically altered;
(iii) Check the identifying number or code for each seal against the records maintained by the terminal operator no less frequently than once during each seven day period and record each inspection and verification;
(iv) Promptly notify the Commissioner if inspection of a seal reveals any inconsistency in the records pertaining to that seal, or if the seal has been damaged or removed (other than a removal authorized by the operator for testing or maintenance);
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Treas. Reg. §48.4082-1T(v)§48.4082-1T(v)
Maintain a record of each seal that has been replaced to include the seal number or code, the date the seal was issued, the location of the seal, the date the seal was replaced, and the reason the seal was replaced;
(vi) Promptly destroy and replace seals that have been removed from the system;
(vii) Restrict access to unused seal inventory to individuals specifically designated by the operator and maintain a record of such individuals;
(viii) Maintain a record of each installation, inspection, and destruction described in this paragraph (d)(4), including the name of the individual who conducts the installation, inspection, or destruction;
(ix) Make available for the Commissioner's immediate inspection the seals and records described in this paragraph (d)(4); and
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Treas. Reg. §48.4082-1T(x)Promptly notify the Commissioner if, and when, the dye injection system is placed out of service.
Promptly notify the Commissioner if, and when, the dye injection system is placed out of service.
(5) Mechanical injection system; revocation or suspension of approval. The Commissioner may revoke or suspend its approval of a dye injection system if the Commissioner determines that the system does not meet the standards of paragraph (d)(2) of this section or if the operator of the system has not complied with the requirements of paragraph (d)(4) of this section.
(6) Sales and entries. For purposes of determining whether tax is imposed by section 4081 on a sale or entry of diesel fuel or kerosene, such fuel satisfies the dyeing requirements of this paragraph (d) only if the dye required by § 48.4082-1(b) is combined with the fuel before the sale or entry and the seller or enterer has in its records evidence (such as a certificate from the terminal operator providing the fuel) establishing that the dye was combined with the fuel by means of a mechanical injection system. Thus, for example, diesel fuel or kerosene that is entered into the United States by means of nonbulk transfer (such as a railroad car) does not satisfy the requirements of this paragraph (d) if the required dye and marker are combined with diesel fuel or kerosene after the diesel fuel or kerosene has been entered into the United States.
(7) Cross reference. For the penalty relating to mechanical dye injection systems, see section 6715A.
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Treas. Reg. §48.4082-2Diesel fuel and kerosene; notice required for dyed fuel
(a) In general. A legible and conspicuous notice stating “DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE” must be posted by a seller on any retail pump or other delivery facility where it sells dyed diesel fuel for use by its buyer. A legible and conspicuous notice stating “DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE” must be posted by a seller on any retail pump or other delivery facility where it sells dyed kerosene for use by its buyer. Any seller that fails to post the required notice on any retail pump or other delivery facility where it sells dyed fuel is, for purposes of the penalty imposed by section 6715, presumed to know that the fuel will not be used for a nontaxable use.
(b) Cross reference; terminal operators. For the requirement that terminal operators provide a notice with respect to dyed fuel, see § 48.4101-1(h)(3) (relating to terms and conditions of registration for terminal operators).
(c) Effective date. This section is applicable with respect to diesel fuel after December 31, 1993, and with respect to kerosene after June 30, 1998.
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Treas. Reg. §48.4082-2(a)In general.
In general. A legible and conspicuous notice stating “DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE” must be posted by a seller on any retail pump or other delivery facility where it sells dyed diesel fuel for use by its buyer. A legible and conspicuous notice stating “DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE” must be posted by a seller on any retail pump or other delivery facility where it sells dyed kerosene for use by its buyer. Any seller that fails to post the required notice on any retail pump or other delivery facility where it sells dyed fuel is, for purposes of the penalty imposed by section 6715, presumed to know that the fuel will not be used for a nontaxable use.
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Treas. Reg. §48.4082-2(b)Cross reference; terminal operators.
Cross reference; terminal operators. For the requirement that terminal operators provide a notice with respect to dyed fuel, see § 48.4101-1(h)(3) (relating to terms and conditions of registration for terminal operators).
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Treas. Reg. §48.4082-2(c)Effective date.
Effective date. This section is applicable with respect to diesel fuel after December 31, 1993, and with respect to kerosene after June 30, 1998.
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Treas. Reg. §48.4082-4Diesel fuel and kerosene; back-up tax
(a) Imposition of tax—(1) In general. Tax is imposed by section 4041 on the delivery into the fuel supply tank of the propulsion engine of a diesel-powered highway vehicle (other than a diesel-powered bus) of—
(i) Any diesel fuel or kerosene on which tax has not been imposed by section 4081;
(ii) Any diesel fuel or kerosene for which a credit or payment has been allowed under section 6427; or
(iii) Any liquid (other than taxable fuel) for use as fuel.
(2) Liability for tax—(i) In general. The operator of the highway vehicle into which the fuel is delivered is liable for the tax imposed under paragraph (a)(1) of this section.
(ii) Joint and several liability of the seller. The seller of the fuel is jointly and severally liable for the tax imposed under paragraph (a)(1) of this section if the seller knows or has reason to know that the fuel will not be used in a nontaxable use.
(3) Rate of tax. The rate of tax is the rate imposed on diesel fuel by section 4081(a).
(b) Tax on diesel fuel and kerosene; buses and trains—(1) In general. Tax is imposed by section 4041 on the delivery into the fuel supply tank of the propulsion engine of a diesel-powered bus or a diesel-powered train of—
(i) Any diesel fuel or kerosene on which tax has not been imposed by section 4081;
(ii) Any diesel fuel or kerosene for which a credit or payment has been allowed under section 6427; or
(iii) Any liquid (other than taxable fuel) for use as fuel.
(2) Liability for tax—(i) In general. Except as provided in paragraph (b)(2)(ii) of this section, the operator of the bus or train into which the fuel is delivered is liable for the tax imposed under paragraph (b)(1) of this section.
(ii) Special rule for certain train operators. The person that delivers the fuel into the fuel supply tank of a train, rather than the train operator, is liable for the tax imposed under paragraph (b)(1) of this section if, at the time of the delivery—
(A) The deliverer of the fuel and the operator of the train are both registered as train operators under § 48.4101-1; and
(B) A written agreement between the deliverer of the fuel and the operator requires the deliverer to pay the tax imposed under paragraph (b)(1) of this section.
(3) Rate of tax—(i) Buses—(A) In general. The rate of tax under paragraph (b)(1) of this section is the sum of the rates described in sections 4041(a)(1)(C)(iii)(I) and 4041(d)(1) (the bus rate) if the bus is used to furnish (for compensation) passenger land transportation available to the general public and either such transportation is scheduled and along regular routes or the seating capacity of the bus is at least 20 adults (not including the driver). A bus is available to the general public if the bus is available for hire to more than a limited number of persons, groups, or organizations.
(B) Other uses. The rate of tax under paragraph (b)(1) of this section is the rate of tax imposed on diesel fuel by section 4081(a) if the bus is used for a purpose other than that described in paragraph (b)(3)(i)(A) of this section.
(ii) Trains. The rate of tax under paragraph (b)(1) of this section is the rate prescribed in section 4041 for diesel fuel sold for use in a train (the train rate).
(4) Cross reference. For the registration requirement relating to certain bus and train operators, see § 48.4101-1(c)(2).
(c) Exemptions. The taxes imposed under paragraphs (a) and (b) of this section do not apply to a delivery of any liquid for—
(1) Use on a farm for farming purposes as that term and related terms are defined in § 48.6420-4 (a) through (g);
(2) The exclusive use of a State;
(3) Use described in section 4041(h) (relating to use in a vehicle owned by an aircraft museum);
(4) Use in a bus while the bus is engaged in the transportation of students and employees of schools (as defined in the last sentence of section 4221(d)(7)(C));
(5) Use in a qualified local bus (as defined in section 6427(b)(2)(D)) while the bus is engaged in furnishing (for compensation) intracity passenger land transportation that is available to the general public and is scheduled and along regular routes;
(6) Use in a highway vehicle that—
(i) Is not registered (and is not required to be registered) for highway use under the laws of any State or foreign country; and
(ii) Is used in the operator's trade or business or in an activity of the operator described in section 212 (relating to the production of income);
(7) The exclusive use of a nonprofit educational organization, as defined in § 48.4221-6(b); or
(8) Use in a highway vehicle that is owned by the United States and is not used on the highway.
(d) Effective date. This section is applicable after December 31, 1993, except that references to kerosene are applicable after June 30, 1998.
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Treas. Reg. §48.4082-4(a)Imposition of tax—(1) In general.
Imposition of tax—(1) In general. Tax is imposed by section 4041 on the delivery into the fuel supply tank of the propulsion engine of a diesel-powered highway vehicle (other than a diesel-powered bus) of—
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Treas. Reg. §48.4082-4(b)Tax on diesel fuel and kerosene; buses and trains—(1) In general.
Tax on diesel fuel and kerosene; buses and trains—(1) In general. Tax is imposed by section 4041 on the delivery into the fuel supply tank of the propulsion engine of a diesel-powered bus or a diesel-powered train of—
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Treas. Reg. §48.4082-4(c)Exemptions.
Exemptions. The taxes imposed under paragraphs (a) and (b) of this section do not apply to a delivery of any liquid for—
(1) Use on a farm for farming purposes as that term and related terms are defined in § 48.6420-4 (a) through (g);
(2) The exclusive use of a State;
(3) Use described in section 4041(h) (relating to use in a vehicle owned by an aircraft museum);
(4) Use in a bus while the bus is engaged in the transportation of students and employees of schools (as defined in the last sentence of section 4221(d)(7)(C));
(5) Use in a qualified local bus (as defined in section 6427(b)(2)(D)) while the bus is engaged in furnishing (for compensation) intracity passenger land transportation that is available to the general public and is scheduled and along regular routes;
(6) Use in a highway vehicle that—
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Treas. Reg. §48.4082-4(d)Effective date.
Effective date. This section is applicable after December 31, 1993, except that references to kerosene are applicable after June 30, 1998.
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Treas. Reg. §48.4082-4(i)§48.4082-4(i)
Is not registered (and is not required to be registered) for highway use under the laws of any State or foreign country; and
(ii) Is used in the operator's trade or business or in an activity of the operator described in section 212 (relating to the production of income);
(7) The exclusive use of a nonprofit educational organization, as defined in § 48.4221-6(b); or
(8) Use in a highway vehicle that is owned by the United States and is not used on the highway.
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Treas. Reg. §48.4082-5Diesel fuel and kerosene; Alaska
(a) Application. This section applies to diesel fuel or kerosene removed, entered, or sold in Alaska for ultimate sale or use in an exempt area of Alaska.
(b) Definitions.
Exempt area of Alaska means the area of Alaska in which the sulfur content requirements for diesel fuel (see section 211(i) of the Clean Air Act (42 U.S.C. 7545(i))) do not apply because the Administrator of the Environmental Protection Agency has granted an exemption under section 211(i)(4) of that Act.
Nontaxable use means a use described in section 4082(b).
Qualified dealer means any person that holds a qualified dealer license from the state of Alaska or has been registered by the district director as a qualified retailer. The district director will register a person as a qualified retailer only if the district director—
(1) Determines that the person, in the course of its trade or business, regularly sells diesel fuel or kerosene for use by its buyer in a nontaxable use; and
(2) Is satisfied with the filing, deposit, payment, and claim history for all federal taxes of the person and any related person.
(c) Tax-free removals and entries. Notwithstanding § 48.4082-1, tax is not imposed by section 4081 on the removal or entry of any diesel fuel or kerosene in an exempt area of Alaska if—
(1) The person that would be liable for tax under § 48.4081-2 or 48.4081-3 is a taxable fuel registrant and satisfies the requirements of paragraph (e) of this section;
(2) In the case of a removal from a terminal, the terminal is an approved terminal; and
(3) The owner of the diesel fuel or kerosene immediately after the removal or entry holds the fuel for its own use in a nontaxable use or is a qualified dealer.
(d) Sales after removals and entries—(1) In general. Paragraph (c) of this section does not apply with respect to diesel fuel or kerosene that is subsequently sold by a qualified dealer unless—
(i) The fuel is sold in an exempt area of Alaska;
(ii) The buyer purchases the fuel for its own use in a nontaxable use or is a qualified dealer; and
(iii) The seller satisfies the requirements of paragraph (e) of this section.
(2) Tax imposed at time of sale; liability for tax. Notwithstanding §§ 48.4081-2 and 48.4081-3, in any case in which paragraph (c) of this section does not apply with respect to diesel fuel or kerosene because of a subsequent sale by a qualified dealer, the tax with respect to that fuel is imposed at the time of the subsequent sale and the qualified dealer is liable for the tax.
(3) Rate of tax. For the rate of tax, see section 4081.
(e) Evidence of tax-free transactions. The requirements of section 4082(c)(2) (relating to certification) and this paragraph (e) are satisfied if the person otherwise liable for tax is able to show the district director satisfactory evidence of the exempt nature of the transaction and has no reason to believe that the evidence is false. Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes.
(f) Registration. With respect to each person that has been registered as a qualified retailer by the district director, the rules of § 48.4101-1(g), (h), and (i) apply.
(g) Cross reference. For the tax on previously untaxed diesel fuel or kerosene that is used for a taxable purpose, see § 48.4082-4.
(h) Effective date. This section is applicable with respect to diesel fuel removed or entered after December 31, 1996, and with respect to kerosene removed or entered after June 30, 1998. A person registered by the district director as a qualified retailer before April 2, 1998 may be treated, to the extent the district director determines appropriate, as a qualified dealer for the period before that date.
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Treas. Reg. §48.4082-5(a)Application.
Application. This section applies to diesel fuel or kerosene removed, entered, or sold in Alaska for ultimate sale or use in an exempt area of Alaska.
1 Citing Cases
This Opinion does not address the excise tax COGS calculation of a fuel blender that is otherwise liable for tax under section 4081 but that generates mixture credits described in section 6426 in that blender’s trade or business solely by blending into nontaxable fuels (e.g., into dyed diesel fuel). 5 Claimed alcohol fuel mixture credits 6