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2011 Federal Tax Filing

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2011 Federal Tax Filing

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The 2011 Federal Tax Filing

2011 federal tax filing 1. 2011 federal tax filing   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. 2011 federal tax filing Gasoline and Aviation GasolineTaxable Events Gasoline Blendstocks Diesel Fuel and KeroseneTaxable Events Dyed Diesel Fuel and Dyed Kerosene Alaska and Feedstocks Back-up Tax Diesel-Water Fuel Emulsion Kerosene for Use in AviationTaxable Events Liability For Tax Surtax on any liquid used in a fractional ownership program aircraft as fuel Certificate for Commercial Aviation and Exempt UsesExempt use. 2011 federal tax filing Reseller statement. 2011 federal tax filing Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. 2011 federal tax filing Deep-draft ocean-going vessels. 2011 federal tax filing Passenger vessels. 2011 federal tax filing Ocean-going barges. 2011 federal tax filing State or local governments. 2011 federal tax filing Cellulosic or Second Generation Biofuel Not Used as Fuel Biodiesel Sold as But Not Used as Fuel Definitions Excise taxes are imposed on all the following fuels. 2011 federal tax filing Gasoline, including aviation gasoline and gasoline blendstocks. 2011 federal tax filing Diesel fuel, including dyed diesel fuel. 2011 federal tax filing Diesel-water fuel emulsion. 2011 federal tax filing Kerosene, including dyed kerosene and kerosene used in aviation. 2011 federal tax filing Other Fuels (including alternative fuels). 2011 federal tax filing Compressed natural gas (CNG). 2011 federal tax filing Fuels used in commercial transportation on inland waterways. 2011 federal tax filing Any liquid used in a fractional ownership program aircraft as fuel. 2011 federal tax filing The following terms are used throughout the discussion of fuel taxes. 2011 federal tax filing Other terms are defined in the discussion of the specific fuels to which they pertain. 2011 federal tax filing Agri-biodiesel. 2011 federal tax filing   Agri-biodiesel means biodiesel derived solely from virgin oils, including esters derived from virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, mustard seeds, and camelina, and from animal fats. 2011 federal tax filing Approved terminal or refinery. 2011 federal tax filing   This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner. 2011 federal tax filing Biodiesel. 2011 federal tax filing   Biodiesel means the monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet the registration requirements for fuels and fuel additives established by the Environmental Protection Agency (EPA) under section 211 of the Clean Air Act, and the requirements of the American Society of Testing Materials (ASTM) D6751. 2011 federal tax filing Blended taxable fuel. 2011 federal tax filing   This means any taxable fuel produced outside the bulk transfer/terminal system by mixing taxable fuel on which excise tax has been imposed and any other liquid on which excise tax has not been imposed. 2011 federal tax filing This does not include a mixture removed or sold during the calendar quarter if all such mixtures removed or sold by the blender contain less than 400 gallons of a liquid on which the tax has not been imposed. 2011 federal tax filing Blender. 2011 federal tax filing   This is the person that produces blended taxable fuel. 2011 federal tax filing Bulk transfer. 2011 federal tax filing   This is the transfer of taxable fuel by pipeline or vessel. 2011 federal tax filing Bulk transfer/terminal system. 2011 federal tax filing   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. 2011 federal tax filing Fuel in the supply tank of any engine, or in any tank car, railcar, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system. 2011 federal tax filing Cellulosic biofuel. 2011 federal tax filing   Cellulosic biofuel means any liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis that meets the registration requirements for fuels and fuel additives established by the EPA under section 211 of the Clean Air Act. 2011 federal tax filing Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). 2011 federal tax filing For fuels sold or used after December 31, 2009, cellulosic biofuel does not include fuel of which more than 4% (determined by weight) is any combination of water and sediment, fuel of which the ash content is more than 1%, or fuel that has an acid number greater than 25. 2011 federal tax filing Also see Second generation biofuel below. 2011 federal tax filing Diesel-water fuel emulsion. 2011 federal tax filing   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. 2011 federal tax filing The emulsion additive used to produce the fuel must be registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. 2011 federal tax filing Dry lease aircraft exchange. 2011 federal tax filing   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. 2011 federal tax filing Enterer. 2011 federal tax filing   This is the importer of record (under customs law) for the taxable fuel. 2011 federal tax filing However, if the importer of record is acting as an agent, such as a customs broker, the person for whom the agent is acting is the enterer. 2011 federal tax filing If there is no importer of record, the owner at the time of entry into the United States is the enterer. 2011 federal tax filing Entry. 2011 federal tax filing   Taxable fuel is entered into the United States when it is brought into the United States and applicable customs law requires that it be entered for consumption, use, or warehousing. 2011 federal tax filing This does not apply to fuel brought into Puerto Rico (which is part of the U. 2011 federal tax filing S. 2011 federal tax filing customs territory), but does apply to fuel brought into the United States from Puerto Rico. 2011 federal tax filing Fractional ownership aircraft program and fractional program aircraft. 2011 federal tax filing   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. 2011 federal tax filing Measurement of taxable fuel. 2011 federal tax filing   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. 2011 federal tax filing Other fuels. 2011 federal tax filing   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. 2011 federal tax filing Pipeline operator. 2011 federal tax filing   This is the person that operates a pipeline within the bulk transfer/terminal system. 2011 federal tax filing Position holder. 2011 federal tax filing   This is the person that holds the inventory position in the taxable fuel in the terminal, as reflected in the records of the terminal operator. 2011 federal tax filing You hold the inventory position when you have a contractual agreement with the terminal operator for the use of the storage facilities and terminaling services for the taxable fuel. 2011 federal tax filing A terminal operator that owns taxable fuel in its terminal is a position holder. 2011 federal tax filing Rack. 2011 federal tax filing   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. 2011 federal tax filing Refiner. 2011 federal tax filing   This is any person that owns, operates, or otherwise controls a refinery. 2011 federal tax filing Refinery. 2011 federal tax filing   This is a facility used to produce taxable fuel and from which taxable fuel may be removed by pipeline, by vessel, or at a rack. 2011 federal tax filing However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. 2011 federal tax filing For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. 2011 federal tax filing Registrant. 2011 federal tax filing   This is a taxable fuel registrant (see Registration Requirements, later). 2011 federal tax filing Removal. 2011 federal tax filing   This is any physical transfer of taxable fuel. 2011 federal tax filing It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. 2011 federal tax filing However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. 2011 federal tax filing Renewable diesel. 2011 federal tax filing   See Renewable Diesel Credits in chapter 2. 2011 federal tax filing Sale. 2011 federal tax filing   For taxable fuel not in a terminal, this is the transfer of title to, or substantial incidents of ownership in, taxable fuel to the buyer for money, services, or other property. 2011 federal tax filing For taxable fuel in a terminal, this is the transfer of the inventory position if the transferee becomes the position holder for that taxable fuel. 2011 federal tax filing Second generation biofuel. 2011 federal tax filing   This is any liquid fuel derived by, or from, qualified feedstocks, and meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U. 2011 federal tax filing S. 2011 federal tax filing C. 2011 federal tax filing 7545). 2011 federal tax filing It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. 2011 federal tax filing It is not alcohol of less than 150 proof (disregard any added denaturants). 2011 federal tax filing See Form 6478 for more information. 2011 federal tax filing State. 2011 federal tax filing   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. 2011 federal tax filing An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. 2011 federal tax filing Taxable fuel. 2011 federal tax filing   This means gasoline, diesel fuel, and kerosene. 2011 federal tax filing Terminal. 2011 federal tax filing   This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. 2011 federal tax filing It does not include a facility at which gasoline blendstocks are used in the manufacture of products other than finished gasoline if no gasoline is removed from the facility. 2011 federal tax filing A terminal does not include any facility where finished gasoline, diesel fuel, or kerosene is stored if the facility is operated by a registrant and all such taxable fuel stored at the facility has been previously taxed upon removal from a refinery or terminal. 2011 federal tax filing Terminal operator. 2011 federal tax filing   This is any person that owns, operates, or otherwise controls a terminal. 2011 federal tax filing Throughputter. 2011 federal tax filing   This is any person that is a position holder or that owns taxable fuel within the bulk transfer/terminal system (other than in a terminal). 2011 federal tax filing Vessel operator. 2011 federal tax filing   This is the person that operates a vessel within the bulk transfer/terminal system. 2011 federal tax filing However, vessel does not include a deep draft ocean-going vessel. 2011 federal tax filing Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. 2011 federal tax filing A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. 2011 federal tax filing For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. 2011 federal tax filing The returns are due the last day of the month following the month in which the transaction occurs. 2011 federal tax filing Generally, these returns can be filed on paper or electronically. 2011 federal tax filing For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. 2011 federal tax filing Publication 3536 is only available on the IRS website. 2011 federal tax filing Form 720-TO. 2011 federal tax filing   This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. 2011 federal tax filing Each terminal operator must file a separate form for each approved terminal. 2011 federal tax filing Form 720-CS. 2011 federal tax filing   This information return must be filed by bulk transport carriers (barges, vessels, and pipelines) who receive liquid product from an approved terminal or deliver liquid product to an approved terminal. 2011 federal tax filing Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. 2011 federal tax filing See Form 637 for other persons who must register and for more information about registration. 2011 federal tax filing Persons that are required to be registered. 2011 federal tax filing   You are required to be registered if you are a: Blender; Enterer; Pipeline operator; Position holder; Refiner; Terminal operator; Vessel operator; Producer or importer of alcohol, biodiesel, agri-biodiesel, and renewable diesel; or Producer of cellulosic or second generation biofuel. 2011 federal tax filing Persons that may register. 2011 federal tax filing   You may, but are not required to, register if you are a: Feedstock user, Industrial user, Throughputter that is not a position holder, Ultimate vendor, Diesel-water fuel emulsion producer, Credit card issuer, or Alternative fuel claimant. 2011 federal tax filing Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. 2011 federal tax filing However, they must be registered to file claims for certain sales and uses of fuel. 2011 federal tax filing See Form 637 for more information. 2011 federal tax filing Taxable fuel registrant. 2011 federal tax filing   This is an enterer, an industrial user, a refiner, a terminal operator, or a throughputter who received a Letter of Registration under the excise tax registration provisions and whose registration has not been revoked or suspended. 2011 federal tax filing The term registrant as used in the discussions of these fuels means a taxable fuel registrant. 2011 federal tax filing Additional information. 2011 federal tax filing   See the Form 637 instructions for the information you must submit when you apply for registration. 2011 federal tax filing Failure to register. 2011 federal tax filing   The penalty for failure to register if you must register, unless due to reasonable cause, is $10,000 for the initial failure, and then $1,000 each day thereafter you fail to register. 2011 federal tax filing Gasoline and Aviation Gasoline Gasoline. 2011 federal tax filing   Gasoline means all products commonly or commercially known or sold as gasoline with an octane rating of 75 or more that are suitable for use as a motor fuel. 2011 federal tax filing Gasoline includes any gasoline blend other than: Qualified ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from coal, including peat), Partially exempt ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from natural gas), or Denatured alcohol. 2011 federal tax filing Gasoline also includes gasoline blendstocks, discussed later. 2011 federal tax filing Aviation gasoline. 2011 federal tax filing   This means all special grades of gasoline suitable for use in aviation reciprocating engines and covered by ASTM specification D910 or military specification MIL-G-5572. 2011 federal tax filing Taxable Events The tax on gasoline is $. 2011 federal tax filing 184 per gallon. 2011 federal tax filing The tax on aviation gasoline is $. 2011 federal tax filing 194 per gallon. 2011 federal tax filing When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. 2011 federal tax filing 141 per gallon. 2011 federal tax filing See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. 2011 federal tax filing Tax is imposed on the removal, entry, or sale of gasoline. 2011 federal tax filing Each of these events is discussed later. 2011 federal tax filing Also, see the special rules that apply to gasoline blendstocks, later. 2011 federal tax filing If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. 2011 federal tax filing See Refunds of Second Tax in chapter 2. 2011 federal tax filing Removal from terminal. 2011 federal tax filing   All removals of gasoline at a terminal rack are taxable. 2011 federal tax filing The position holder for that gasoline is liable for the tax. 2011 federal tax filing Two-party exchanges. 2011 federal tax filing   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. 2011 federal tax filing A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. 2011 federal tax filing The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. 2011 federal tax filing The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. 2011 federal tax filing The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. 2011 federal tax filing The transaction is subject to a written contract. 2011 federal tax filing Terminal operator's liability. 2011 federal tax filing   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. 2011 federal tax filing   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. 2011 federal tax filing The terminal operator is a registrant. 2011 federal tax filing The terminal operator has an unexpired notification certificate (discussed later) from the position holder. 2011 federal tax filing The terminal operator has no reason to believe any information on the certificate is false. 2011 federal tax filing Removal from refinery. 2011 federal tax filing   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. 2011 federal tax filing It is made by bulk transfer and the refiner, the owner of the gasoline immediately before the removal, or the operator of the pipeline or vessel is not a registrant. 2011 federal tax filing It is made at the refinery rack. 2011 federal tax filing The refiner is liable for the tax. 2011 federal tax filing Exception. 2011 federal tax filing   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. 2011 federal tax filing The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. 2011 federal tax filing The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. 2011 federal tax filing The removal from the refinery is by railcar. 2011 federal tax filing The same person operates the refinery and the facility at which the gasoline is received. 2011 federal tax filing Entry into the United States. 2011 federal tax filing   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. 2011 federal tax filing It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. 2011 federal tax filing It is not made by bulk transfer. 2011 federal tax filing The enterer is liable for the tax. 2011 federal tax filing Importer of record's liability. 2011 federal tax filing   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. 2011 federal tax filing   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. 2011 federal tax filing The importer of record has an unexpired notification certificate (discussed later) from the enterer. 2011 federal tax filing The importer of record has no reason to believe any information in the certificate is false. 2011 federal tax filing Customs bond. 2011 federal tax filing   The customs bond will not be charged for the tax imposed on the entry of the gasoline if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. 2011 federal tax filing Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. 2011 federal tax filing   The removal by bulk transfer of gasoline from a terminal is taxable if the position holder for the gasoline or the operator of the pipeline or vessel is not a registrant. 2011 federal tax filing The position holder is liable for the tax. 2011 federal tax filing The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. 2011 federal tax filing However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. 2011 federal tax filing Bulk transfers not received at approved terminal or refinery. 2011 federal tax filing   The removal by bulk transfer of gasoline from a terminal or refinery, or the entry of gasoline by bulk transfer into the United States, is taxable if the following conditions apply. 2011 federal tax filing No tax was previously imposed (as discussed earlier) on any of the following events. 2011 federal tax filing The removal from the refinery. 2011 federal tax filing The entry into the United States. 2011 federal tax filing The removal from a terminal by an unregistered position holder. 2011 federal tax filing Upon removal from the pipeline or vessel, the gasoline is not received at an approved terminal or refinery (or at another pipeline or vessel). 2011 federal tax filing   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. 2011 federal tax filing However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. 2011 federal tax filing The owner is a registrant. 2011 federal tax filing The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. 2011 federal tax filing The owner has no reason to believe any information on the certificate is false. 2011 federal tax filing The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. 2011 federal tax filing The operator is jointly and severally liable if the owner does not meet these conditions. 2011 federal tax filing Sales to unregistered person. 2011 federal tax filing   The sale of gasoline located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. 2011 federal tax filing   The seller is liable for the tax. 2011 federal tax filing However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. 2011 federal tax filing   The seller is a registrant. 2011 federal tax filing The seller has an unexpired notification certificate (discussed later) from the buyer. 2011 federal tax filing The seller has no reason to believe any information on the certificate is false. 2011 federal tax filing The buyer of the gasoline is liable for the tax if the seller meets these conditions. 2011 federal tax filing The buyer is jointly and severally liable if the seller does not meet these conditions. 2011 federal tax filing Exception. 2011 federal tax filing   The tax does not apply to a sale if all of the following apply. 2011 federal tax filing The buyer's principal place of business is not in the United States. 2011 federal tax filing The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. 2011 federal tax filing The seller is a registrant and the exporter of record. 2011 federal tax filing The fuel was exported. 2011 federal tax filing Removal or sale of blended gasoline. 2011 federal tax filing   The removal or sale of blended gasoline by the blender is taxable. 2011 federal tax filing See Blended taxable fuel under Definitions, earlier. 2011 federal tax filing   The blender is liable for the tax. 2011 federal tax filing The tax is figured on the number of gallons not previously subject to the tax on gasoline. 2011 federal tax filing   Persons who blend alcohol with gasoline to produce an alcohol fuel mixture outside the bulk transfer/terminal system must pay the gasoline tax on the volume of alcohol in the mixture. 2011 federal tax filing See Form 720 to report this tax. 2011 federal tax filing You also must be registered with the IRS as a blender. 2011 federal tax filing See Form 637. 2011 federal tax filing   However, if an untaxed liquid is sold as taxed taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. 2011 federal tax filing Notification certificate. 2011 federal tax filing   The notification certificate is used to notify a person of the registration status of the registrant. 2011 federal tax filing A copy of the registrant's letter of registration cannot be used as a notification certificate. 2011 federal tax filing A model notification certificate is shown in the Appendix as Model Certificate C. 2011 federal tax filing A notification certificate must contain all information necessary to complete the model. 2011 federal tax filing   The certificate may be included as part of any business records normally used for a sale. 2011 federal tax filing A certificate expires on the earlier of the date the registrant provides a new certificate, or the date the recipient of the certificate is notified that the registrant's registration has been revoked or suspended. 2011 federal tax filing The registrant must provide a new certificate if any information on a certificate has changed. 2011 federal tax filing Additional persons liable. 2011 federal tax filing   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax is imposed on: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty, or Anyone who willfully causes the person to fail to pay the tax. 2011 federal tax filing Gasoline Blendstocks Gasoline blendstocks may be subject to $. 2011 federal tax filing 001 per gallon LUST tax as discussed below. 2011 federal tax filing Gasoline includes gasoline blendstocks. 2011 federal tax filing The previous discussions apply to these blendstocks. 2011 federal tax filing However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. 2011 federal tax filing 001 per gallon or are not subject to the excise tax. 2011 federal tax filing Blendstocks. 2011 federal tax filing   Gasoline blendstocks are: Alkylate, Butane, Butene, Catalytically cracked gasoline, Coker gasoline, Ethyl tertiary butyl ether (ETBE), Hexane, Hydrocrackate, Isomerate, Methyl tertiary butyl ether (MTBE), Mixed xylene (not including any separated isomer of xylene), Natural gasoline, Pentane, Pentane mixture, Polymer gasoline, Raffinate, Reformate, Straight-run gasoline, Straight-run naphtha, Tertiary amyl methyl ether (TAME), Tertiary butyl alcohol (gasoline grade) (TBA), Thermally cracked gasoline, and Toluene. 2011 federal tax filing   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. 2011 federal tax filing Not used to produce finished gasoline. 2011 federal tax filing   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. 2011 federal tax filing Removals and entries not connected to sale. 2011 federal tax filing   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant. 2011 federal tax filing Removals and entries connected to sale. 2011 federal tax filing   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant, and at the time of the sale, meets the following requirements. 2011 federal tax filing The person has an unexpired certificate (discussed later) from the buyer. 2011 federal tax filing The person has no reason to believe any information in the certificate is false. 2011 federal tax filing Sales after removal or entry. 2011 federal tax filing   The sale of a gasoline blendstock that was not subject to tax on its nonbulk removal or entry, as discussed earlier, is taxable. 2011 federal tax filing The seller is liable for the tax. 2011 federal tax filing However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. 2011 federal tax filing The seller has an unexpired certificate (discussed next) from the buyer. 2011 federal tax filing The seller has no reason to believe any information in the certificate is false. 2011 federal tax filing Certificate of buyer. 2011 federal tax filing   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. 2011 federal tax filing The certificate may be included as part of any business records normally used for a sale. 2011 federal tax filing A model certificate is shown in the Appendix as Model Certificate D. 2011 federal tax filing The certificate must contain all information necessary to complete the model. 2011 federal tax filing   A certificate expires on the earliest of the following dates. 2011 federal tax filing The date 1 year after the effective date (not earlier than the date signed) of the certificate. 2011 federal tax filing The date a new certificate is provided to the seller. 2011 federal tax filing The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. 2011 federal tax filing The buyer must provide a new certificate if any information on a certificate has changed. 2011 federal tax filing   The IRS may withdraw the buyer's right to provide a certificate if that buyer uses the gasoline blendstocks in the production of finished gasoline or resells the blendstocks without getting a certificate from its buyer. 2011 federal tax filing Received at approved terminal or refinery. 2011 federal tax filing   The nonbulk removal or entry of gasoline blendstocks received at an approved terminal or refinery is not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) meets all the following requirements. 2011 federal tax filing The person is a registrant. 2011 federal tax filing The person has an unexpired notification certificate (discussed earlier) from the operator of the terminal or refinery where the gasoline blendstocks are received. 2011 federal tax filing The person has no reason to believe any information on the certificate is false. 2011 federal tax filing Bulk transfers to registered industrial user. 2011 federal tax filing   The removal of gasoline blendstocks from a pipeline or vessel is not taxable (other than LUST) if the blendstocks are received by a registrant that is an industrial user. 2011 federal tax filing An industrial user is any person that receives gasoline blendstocks by bulk transfer for its own use in the manufacture of any product other than finished gasoline. 2011 federal tax filing Credits or Refunds. 2011 federal tax filing   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. 2011 federal tax filing For more information, see chapter 2. 2011 federal tax filing Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). 2011 federal tax filing However, special rules (discussed later) apply to dyed diesel fuel and dyed kerosene, and to undyed diesel fuel and undyed kerosene sold or used in Alaska for certain nontaxable uses and undyed kerosene used for a feedstock purpose. 2011 federal tax filing 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 train, and Transmix. 2011 federal tax filing 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. 2011 federal tax filing A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. 2011 federal tax filing 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. 2011 federal tax filing Diesel fuel does not include gasoline, kerosene, excluded liquid, No. 2011 federal tax filing 5 and No. 2011 federal tax filing 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. 2011 federal tax filing An excluded liquid is either of the following. 2011 federal tax filing A liquid that contains less than 4% normal paraffins. 2011 federal tax filing A liquid with all the following properties. 2011 federal tax filing Distillation range of 125 degrees Fahrenheit or less. 2011 federal tax filing Sulfur content of 10 ppm or less. 2011 federal tax filing Minimum color of +27 Saybolt. 2011 federal tax filing Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. 2011 federal tax filing Kerosene. 2011 federal tax filing   This means any of the following liquids. 2011 federal tax filing One of the two grades of kerosene (No. 2011 federal tax filing 1-K and No. 2011 federal tax filing 2-K) covered by ASTM specification D3699. 2011 federal tax filing Kerosene-type jet fuel covered by ASTM specification D1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8). 2011 federal tax filing See Kerosene for Use in Aviation, later. 2011 federal tax filing   However, kerosene does not include excluded liquid, discussed earlier. 2011 federal tax filing   Kerosene also includes any liquid that would be described above but for the presence of a dye of the type used to dye kerosene for a nontaxable use. 2011 federal tax filing Diesel-powered highway vehicle. 2011 federal tax filing   This is any self-propelled vehicle designed to carry a load over public highways (whether or not also designed to perform other functions) and propelled by a diesel-powered engine. 2011 federal tax filing Specially designed mobile machinery for nontransportation functions and vehicles specially designed for off-highway transportation are generally not considered diesel-powered highway vehicles. 2011 federal tax filing For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. 2011 federal tax filing 2) in chapter 2. 2011 federal tax filing Diesel-powered train. 2011 federal tax filing   This is any diesel-powered equipment or machinery that rides on rails. 2011 federal tax filing The term includes a locomotive, work train, switching engine, and track maintenance machine. 2011 federal tax filing Taxable Events The tax on diesel fuel and kerosene is $. 2011 federal tax filing 244 per gallon. 2011 federal tax filing It is imposed on the removal, entry, or sale of diesel fuel and kerosene. 2011 federal tax filing Each of these events is discussed later. 2011 federal tax filing Only the $. 2011 federal tax filing 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. 2011 federal tax filing If the tax is paid on the diesel fuel or kerosene in more than one event, a refund may be allowed for the “second” tax paid. 2011 federal tax filing See Refunds of Second Tax in chapter 2. 2011 federal tax filing Use in certain intercity and local buses. 2011 federal tax filing   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. 2011 federal tax filing A claim for $. 2011 federal tax filing 17 per gallon may be made by the registered ultimate vendor (under certain conditions) or the ultimate purchaser for undyed diesel fuel or undyed kerosene sold for use in certain intercity or local buses. 2011 federal tax filing An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. 2011 federal tax filing The bus must be engaged in one of the following activities. 2011 federal tax filing Scheduled transportation along regular routes regardless of the size of the bus. 2011 federal tax filing Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). 2011 federal tax filing 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. 2011 federal tax filing Removal from terminal. 2011 federal tax filing   All removals of diesel fuel and kerosene at a terminal rack are taxable. 2011 federal tax filing The position holder for that fuel is liable for the tax. 2011 federal tax filing Two-party exchanges. 2011 federal tax filing   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. 2011 federal tax filing A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. 2011 federal tax filing The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. 2011 federal tax filing The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. 2011 federal tax filing The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. 2011 federal tax filing The transaction is subject to a written contract. 2011 federal tax filing Terminal operator's liability. 2011 federal tax filing   The terminal operator is jointly and severally liable for the tax if the terminal operator provides any person with any bill of lading, shipping paper, or similar document indicating that diesel fuel or kerosene is dyed (discussed later). 2011 federal tax filing   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. 2011 federal tax filing However, a terminal operator will not be liable for the tax in this situation if, at the time of the removal, the following conditions are met. 2011 federal tax filing The terminal operator is a registrant. 2011 federal tax filing The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. 2011 federal tax filing The terminal operator has no reason to believe any information on the certificate is false. 2011 federal tax filing Removal from refinery. 2011 federal tax filing   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. 2011 federal tax filing It is made by bulk transfer and the refiner, the owner of the fuel immediately before the removal, or the operator of the pipeline or vessel is not a registrant. 2011 federal tax filing It is made at the refinery rack. 2011 federal tax filing The refiner is liable for the tax. 2011 federal tax filing Exception. 2011 federal tax filing   The tax does not apply to a removal of diesel fuel or kerosene at the refinery rack if all the following conditions are met. 2011 federal tax filing The diesel fuel or kerosene is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. 2011 federal tax filing The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. 2011 federal tax filing The removal from the refinery is by: Railcar and the same person operates the refinery and the facility at which the diesel fuel or kerosene is received, or For diesel fuel only, a trailer or semi-trailer used exclusively to transport the diesel fuel from a refinery (described in (1)) to a facility (described in (2)) less than 20 miles from the refinery. 2011 federal tax filing Entry into the United States. 2011 federal tax filing   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. 2011 federal tax filing It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. 2011 federal tax filing It is not made by bulk transfer. 2011 federal tax filing The enterer is liable for the tax. 2011 federal tax filing Importer of record's liability. 2011 federal tax filing   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. 2011 federal tax filing   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. 2011 federal tax filing The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. 2011 federal tax filing The importer of record has no reason to believe any information in the certificate is false. 2011 federal tax filing Customs bond. 2011 federal tax filing   The customs bond will not be charged for the tax imposed on the entry of the diesel fuel or kerosene if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. 2011 federal tax filing Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. 2011 federal tax filing   The removal by bulk transfer of diesel fuel or kerosene from a terminal is taxable if the position holder for that fuel or the operator of the pipeline or vessel is not a registrant. 2011 federal tax filing The position holder is liable for the tax. 2011 federal tax filing The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. 2011 federal tax filing However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. 2011 federal tax filing Bulk transfers not received at approved terminal or refinery. 2011 federal tax filing   The removal by bulk transfer of diesel fuel or kerosene from a terminal or refinery or the entry of diesel fuel or kerosene by bulk transfer into the United States is taxable if the following conditions apply. 2011 federal tax filing No tax was previously imposed (as discussed earlier) on any of the following events. 2011 federal tax filing The removal from the refinery. 2011 federal tax filing The entry into the United States. 2011 federal tax filing The removal from a terminal by an unregistered position holder. 2011 federal tax filing Upon removal from the pipeline or vessel, the diesel fuel or kerosene is not received at an approved terminal or refinery (or at another pipeline or vessel). 2011 federal tax filing   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. 2011 federal tax filing However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. 2011 federal tax filing The owner is a registrant. 2011 federal tax filing The owner has an unexpired notification certificate (discussed under Gasoline) from the operator of the terminal or refinery where the diesel fuel or kerosene is received. 2011 federal tax filing The owner has no reason to believe any information on the certificate is false. 2011 federal tax filing The operator of the facility where the diesel fuel or kerosene is received is liable for the tax if the owner meets these conditions. 2011 federal tax filing The operator is jointly and severally liable if the owner does not meet these conditions. 2011 federal tax filing Sales to unregistered person. 2011 federal tax filing   The sale of diesel fuel or kerosene located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. 2011 federal tax filing   The seller is liable for the tax. 2011 federal tax filing However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. 2011 federal tax filing The seller is a registrant. 2011 federal tax filing The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. 2011 federal tax filing The seller has no reason to believe any information on the certificate is false. 2011 federal tax filing The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. 2011 federal tax filing The buyer is jointly and severally liable if the seller does not meet these conditions. 2011 federal tax filing Exception. 2011 federal tax filing   The tax does not apply to a sale if all of the following apply. 2011 federal tax filing The buyer's principal place of business is not in the United States. 2011 federal tax filing The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. 2011 federal tax filing The seller is a registrant and the exporter of record. 2011 federal tax filing The fuel was exported. 2011 federal tax filing Removal or sale of blended diesel fuel or kerosene. 2011 federal tax filing   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. 2011 federal tax filing Blended taxable fuel produced using biodiesel is subject to the tax. 2011 federal tax filing See Blended taxable fuel under Definitions, earlier. 2011 federal tax filing   The blender is liable for the tax. 2011 federal tax filing The tax is figured on the number of gallons not previously subject to the tax. 2011 federal tax filing   Persons who blend biodiesel with undyed diesel fuel to produce and sell or use a biodiesel mixture outside the bulk transfer/terminal system must pay the diesel fuel tax on the volume of biodiesel in the mixture. 2011 federal tax filing Generally, the biodiesel mixture must be diesel fuel (defined earlier). 2011 federal tax filing See Form 720 to report this tax. 2011 federal tax filing You also must be registered by the IRS as a blender. 2011 federal tax filing See Form 637 for more information. 2011 federal tax filing   However, if an untaxed liquid is sold as taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. 2011 federal tax filing Additional persons liable. 2011 federal tax filing   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax applies to: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty; or Anyone who willfully causes the person to fail to pay the tax. 2011 federal tax filing Credits or Refunds. 2011 federal tax filing   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. 2011 federal tax filing For more information, see chapter 2. 2011 federal tax filing Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. 2011 federal tax filing 001 per gallon LUST tax as discussed below, unless the fuel is for export. 2011 federal tax filing The excise tax is not imposed on the removal, entry, or sale of diesel fuel or kerosene (other than the LUST tax) if all the following tests are met. 2011 federal tax filing The person otherwise liable for tax (for example, the position holder) is a registrant. 2011 federal tax filing In the case of a removal from a terminal, the terminal is an approved terminal. 2011 federal tax filing The diesel fuel or kerosene satisfies the dyeing requirements (described next). 2011 federal tax filing Dyeing requirements. 2011 federal tax filing   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. 2011 federal tax filing It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. 2011 federal tax filing 9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of fuel or any dye of a type and in a concentration that has been approved by the Commissioner. 2011 federal tax filing Is indelibly dyed by mechanical injection. 2011 federal tax filing See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. 2011 federal tax filing Notice required. 2011 federal tax filing   A legible and conspicuous notice stating either: DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE or DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE must be: Provided by the terminal operator to any person that receives dyed diesel fuel or dyed kerosene at a terminal rack of that operator, and Posted by a seller on any retail pump or other delivery facility where it sells dyed diesel fuel or dyed kerosene for use by its buyer. 2011 federal tax filing   The notice under item (1) must be provided by the time of the removal and must appear on all shipping papers, bills of lading, and similar documents accompanying the removal of the fuel. 2011 federal tax filing   Any seller that fails to post the required notice under item (2) is presumed to know that the fuel will be used for a taxable use (a use other than a nontaxable use listed later). 2011 federal tax filing That seller is subject to the penalty described next. 2011 federal tax filing Penalty. 2011 federal tax filing   A penalty is imposed on a person if any of the following situations apply. 2011 federal tax filing Any dyed fuel is sold or held for sale by the person for a use the person knows or has reason to know is not a nontaxable use of the fuel. 2011 federal tax filing Any dyed fuel is held for use or used by the person for a use other than a nontaxable use and the person knew, or had reason to know, that the fuel was dyed. 2011 federal tax filing The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. 2011 federal tax filing The person has knowledge that a dyed fuel that has been altered, as described in (3) above, sells or holds for sale such fuel for any use for which the person knows or has reason to know is not a nontaxable use of the fuel. 2011 federal tax filing   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. 2011 federal tax filing After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. 2011 federal tax filing   This penalty is in addition to any tax imposed on the fuel. 2011 federal tax filing   If the penalty is imposed, each officer, employee, or agent of a business entity who willfully participated in any act giving rise to the penalty is jointly and severally liable with that entity for the penalty. 2011 federal tax filing   There is no administrative appeal or review allowed for the third and subsequent penalty imposed by section 6715 on any person except for: Fraud or a mistake in the chemical analysis, or Mathematical calculation of the penalty. 2011 federal tax filing   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. 2011 federal tax filing However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. 2011 federal tax filing The penalty may apply if the fuel is held for sale or use for a taxable use while the back-up tax does not apply unless the fuel is delivered into a fuel supply tank. 2011 federal tax filing Exception to penalty. 2011 federal tax filing   The penalty under item (3) will not apply in any of the following situations. 2011 federal tax filing Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any undyed liquid and the resulting product meets the dyeing requirements. 2011 federal tax filing Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any other liquid (other than diesel fuel or kerosene) that contains the type and amount of dye required to meet the dyeing requirements. 2011 federal tax filing The alteration or attempted alteration occurs in an exempt area of Alaska. 2011 federal tax filing See Removal for sale or use in Alaska, later. 2011 federal tax filing Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with diesel fuel or kerosene not meeting the dyeing requirements and the blending occurs as part of a nontaxable use (other than export), discussed later. 2011 federal tax filing Alaska and Feedstocks Tax of $. 2011 federal tax filing 001 per gallon is imposed on: Undyed diesel fuel or undyed kerosene sold or used in Alaska for certain nontaxable uses (see Later sales on page 10). 2011 federal tax filing Undyed kerosene used for feedstock purposes. 2011 federal tax filing Removal for sale or use in Alaska. 2011 federal tax filing   No tax is imposed on the removal, entry, or sale of diesel fuel or kerosene in Alaska for ultimate sale or use in certain areas of Alaska for certain nontaxable uses. 2011 federal tax filing The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. 2011 federal tax filing The person otherwise liable for the tax (position holder, refiner, or enterer): Is a registrant, Can show satisfactory evidence of the nontaxable nature of the transaction, and Has no reason to believe the evidence is false. 2011 federal tax filing In the case of a removal from a terminal, the terminal is an approved terminal. 2011 federal tax filing The owner of the fuel immediately after the removal or entry holds the fuel for its own use in a nontaxable use (discussed later) or is a qualified dealer. 2011 federal tax filing   If all three of the requirements above are not met, then tax is imposed at $. 2011 federal tax filing 244 per gallon. 2011 federal tax filing   A qualified dealer is any person that holds a qualified dealer license from the state of Alaska or has been registered by the IRS as a qualified retailer. 2011 federal tax filing Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. 2011 federal tax filing Later sales. 2011 federal tax filing   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. 2011 federal tax filing The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. 2011 federal tax filing However, the sale is not taxable (other than the LUST tax at $. 2011 federal tax filing 001 per gallon) if all the following requirements are met. 2011 federal tax filing The fuel is sold in Alaska for certain nontaxable uses. 2011 federal tax filing The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. 2011 federal tax filing The seller can show satisfactory evidence of the nontaxable nature of the transaction and has no reason to believe the evidence is false. 2011 federal tax filing Feedstock purposes. 2011 federal tax filing   The $. 2011 federal tax filing 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. 2011 federal tax filing The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. 2011 federal tax filing In the case of a removal from a terminal, the terminal is an approved terminal. 2011 federal tax filing Either: The person otherwise liable for tax uses the kerosene for a feedstock purpose, or The kerosene is sold for use by the buyer for a feedstock purpose and, at the time of the sale, the person otherwise liable for tax has an unexpired certificate (described later) from the buyer and has no reason to believe any information on the certificate is false. 2011 federal tax filing   If all of the requirements above are not met, then tax is imposed at $. 2011 federal tax filing 244 per gallon. 2011 federal tax filing   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. 2011 federal tax filing For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. 2011 federal tax filing A feedstock user is a person that uses kerosene for a feedstock purpose. 2011 federal tax filing A registered feedstock user is a person that has been registered by the IRS as a feedstock user. 2011 federal tax filing See Registration Requirements, earlier. 2011 federal tax filing Later sales. 2011 federal tax filing   The excise tax ($. 2011 federal tax filing 244 per gallon) applies to kerosene sold for use by the buyer for a feedstock purpose (item (3)(b) above) if the buyer in that sale later sells the kerosene. 2011 federal tax filing The tax is imposed at the time of the later sale and that seller is liable for the tax. 2011 federal tax filing Certificate. 2011 federal tax filing   The certificate from the buyer certifies the buyer is a registered feedstock user and the kerosene will be used by the buyer for a feedstock purpose. 2011 federal tax filing The certificate may be included as part of any business records normally used for a sale. 2011 federal tax filing A model certificate is shown in the Appendix as Model Certificate G. 2011 federal tax filing Your certificate must contain all information necessary to complete the model. 2011 federal tax filing   A certificate expires on the earliest of the following dates. 2011 federal tax filing The date 1 year after the effective date (not earlier than the date signed) of the certificate. 2011 federal tax filing The date the seller is provided a new certificate or notice that the current certificate is invalid. 2011 federal tax filing The date the seller is notified the buyer's registration has been revoked or suspended. 2011 federal tax filing   The buyer must provide a new certificate if any information on a certificate has changed. 2011 federal tax filing Back-up Tax Tax is imposed on the delivery of any of the following into the fuel supply tank of a diesel-powered highway vehicle. 2011 federal tax filing Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. 2011 federal tax filing Any undyed diesel fuel or undyed kerosene on which a credit or refund (for fuel used for a nontaxable purpose) has been allowed. 2011 federal tax filing Any liquid other than gasoline, diesel fuel, or kerosene. 2011 federal tax filing Generally, this back-up tax is imposed at a rate of $. 2011 federal tax filing 244 per gallon. 2011 federal tax filing Liability for tax. 2011 federal tax filing   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. 2011 federal tax filing In addition, the seller of the diesel fuel or kerosene is jointly and severally liable for the tax if the seller knows or has reason to know that the fuel will be used for other than a nontaxable use. 2011 federal tax filing Exemptions from the back-up tax. 2011 federal tax filing   The back-up tax does not apply to a delivery of diesel fuel or kerosene for uses 1, 2, 6, 7, 12, 13, 14, and 15 listed under Definitions of Nontaxable Uses in chapter 2. 2011 federal tax filing   In addition, since the back-up tax is imposed only on the delivery into the fuel supply tank of a diesel-powered vehicle or train, the tax does not apply to diesel fuel or kerosene used as heating oil or in stationary engines. 2011 federal tax filing Diesel-Water Fuel Emulsion Diesel-water fuel emulsion means diesel fuel at least 14% of which is water and for which the emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. 2011 federal tax filing A reduced tax rate of $. 2011 federal tax filing 198 per gallon is imposed on a diesel-water fuel emulsion. 2011 federal tax filing To be eligible for the reduced rate, the person who sells, removes, or uses the diesel-water fuel emulsion must be registered by the IRS. 2011 federal tax filing If the diesel-water fuel emulsion does not meet the requirements above, or if the person who sells, removes, or uses the fuel is not registered, the diesel-water fuel emulsion is taxed at $. 2011 federal tax filing 244 per gallon. 2011 federal tax filing Credits or refunds. 2011 federal tax filing   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. 2011 federal tax filing Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. 2011 federal tax filing 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). 2011 federal tax filing For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $. 2011 federal tax filing 219. 2011 federal tax filing The rate of $. 2011 federal tax filing 219 also applies if kerosene is removed into any aircraft from a qualified refueler truck, tanker, or tank wagon that is loaded with the kerosene from a terminal that is located within an airport. 2011 federal tax filing The airport terminal does not need to be a secured airport terminal for this rate to apply. 2011 federal tax filing However, the refueler truck, tanker, or tank wagon must meet the requirements discussed under Certain refueler trucks, tankers, and tank wagons, treated as terminals, later. 2011 federal tax filing For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. 2011 federal tax filing 044 per gallon. 2011 federal tax filing For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. 2011 federal tax filing 044 rate applies only if the truck, tanker, or tank wagon is loaded at a terminal that is located in a secured area of the airport. 2011 federal tax filing See Terminal located within a secured area of an airport, later. 2011 federal tax filing In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. 2011 federal tax filing For kerosene removed directly into the fuel tank of an aircraft for a use exempt from tax under section 4041(c) (such as use in an aircraft for the exclusive use of a state or local government), the rate of tax is $. 2011 federal tax filing 001. 2011 federal tax filing There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. 2011 federal tax filing The kerosene must be removed from a qualifying refueler truck, tanker, or tank wagon loaded at a terminal located within a secured area of an airport. 2011 federal tax filing See Terminal located within a secured area of an airport, later. 2011 federal tax filing In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. 2011 federal tax filing The position holder is liable for the $. 2011 federal tax filing 001 per gallon tax. 2011 federal tax filing For kerosene removed directly from a terminal into the fuel tank of an fractional ownership program aircraft after March 31, 2012, a surtax of $. 2011 federal tax filing 141 per gallon applies. 2011 federal tax filing Certain refueler trucks, tankers, and tank wagons treated as terminals. 2011 federal tax filing   For purposes of the tax imposed on kerosene for use in aviation removed directly into the fuel tank of an aircraft for use in commercial aviation, certain refueler trucks, tankers, and tank wagons are treated as part of a terminal if the following conditions are met. 2011 federal tax filing Such terminal is located within an area of an airport. 2011 federal tax filing Any kerosene for use in aviation that is loaded in a refueler truck, tanker, or tank wagon at a terminal is for delivery into aircraft at the airport in which the terminal is located. 2011 federal tax filing Except in exigent circumstances, such as those identified in Notice 2005-80, no vehicle registered for highway use is loaded with kerosene for use in aviation at the terminal. 2011 federal tax filing The refueler truck, tanker, or tank wagon meets the following requirements: Has storage tanks, hose, and coupling equipment designed and used for fueling aircraft, Is not registered for highway use, and Is operated by the terminal operator or a person that makes a daily accounting to the terminal operator of each delivery of fuel from the refueler truck, tanker, or tank wagon. 2011 federal tax filing Information reporting will be required by terminal operators regarding this provision. 2011 federal tax filing Until the format of this information reporting is issued, taxpayers are required to retain records regarding the daily accounting, but are not required to report such information. 2011 federal tax filing Terminal located within a secured area of an airport. 2011 federal tax filing   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. 2011 federal tax filing This list refers to fueling operations at airport terminals as it applies to the federal excise tax on kerosene for use in aviation, and has nothing to do with the general security of airports either included or not included in the list. 2011 federal tax filing Liability For Tax If the kerosene is removed directly into the fuel tank of an aircraft for use in commercial aviation, the operator of the aircraft in commercial aviation is liable for the tax on the removal at the rate of $. 2011 federal tax filing 044 per gallon. 2011 federal tax filing However, the position holder is liable for the LUST tax for kerosene for use in aviation removed directly into the fuel tank of an aircraft for use exempt from tax under section 4041(c) (except foreign trade). 2011 federal tax filing For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. 2011 federal tax filing For the aircraft operator to be liable for the tax $. 2011 federal tax filing 044 rate, the position holder must meet the following requirements: Is a taxable fuel registrant, Has an unexpired certificate (a model certificate is shown in the Appendix as Model Certificate K) from the operator of the aircraft, and Has no reason to believe any of the information in the certificate is false. 2011 federal tax filing Commercial aviation. 2011 federal tax filing   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. 2011 federal tax filing However, commercial aviation does not include any of the following uses. 2011 federal tax filing Any use exclusively for the purpose of skydiving. 2011 federal tax filing Certain air transportation by seaplane. 2011 federal tax filing See Seaplanes under Transportation of Persons by Air in chapter 4. 2011 federal tax filing Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. 2011 federal tax filing For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. 2011 federal tax filing Any use of an aircraft that has a maximum certificated takeoff weight of 6,000 pounds or less, unless the aircraft is operated on an established line. 2011 federal tax filing For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. 2011 federal tax filing Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. 2011 federal tax filing See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. 2011 federal tax filing Surtax on any liquid used in a fractional ownership program aircraft as fuel Fuel used in a fractional ownership program aircraft (as defined below) after March 31, 2012, is subject to a surtax of $. 2011 federal tax filing 141 per gallon. 2011 federal tax filing The fractional ownership program manager is liable for the tax. 2011 federal tax filing The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. 2011 federal tax filing If the surtax is imposed, the following air transportation taxes do not apply. 2011 federal tax filing Transportation of persons by air. 2011 federal tax filing Transportation of property by air. 2011 federal tax filing Use of international air travel facilities. 2011 federal tax filing These taxes are described under Air Transportation Taxes, later. 2011 federal tax filing A fractional ownership program aircraft flight is considered noncommercial aviation, for the rules for kerosene used in noncommercial aviation, see Kerosene for Use in Aviation above. 2011 federal tax filing Fractional ownership aircraft program    is a program under which:  A single fractional ownership program manager provides fractional ownership program management services on behalf of the fractional owners; There are one or more fractional owners per fractional program aircraft, with at least one fractional program aircraft having more than one owner; For at least two fractional program aircraft, none of the ownership interests in the aircraft are less than the minimum fractional ownership interest or held by the program manager; There exists a dry-lease aircraft exchange arrangement among all of the fractional owners; and There are multi-year program agreements covering the fractional ownership, fractional ownership program management services, and dry-lease aircraft exchange aspects of the program. 2011 federal tax filing Fractional program aircraft. 2011 federal tax filing   Any aircraft that, in any fractional ownership aircraft program, is listed as a fractional program aircraft in the management specifications issued to the manager of such program by Federal Aviation Administration under subpart K of part 91 title 14, Code of Federal Regulations, and is registered in the U. 2011 federal tax filing S. 2011 federal tax filing   Fractional program aircraft are not considered used for transportation of a qualified fractional owner, or on account of such qualified fractional owner when they are used for flight demonstration, maintenance or crew training. 2011 federal tax filing In such situations, the flight is not commercial aviation. 2011 federal tax filing Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. 2011 federal tax filing Fractional owner. 2011 federal tax filing   Any person owning any interest (including the entire interest) in a fractional program aircraft. 2011 federal tax filing Dry lease aircraft exchange. 2011 federal tax filing   An agreement, documented by the written program agreements, under which the fractional program aircraft are available, on an as-needed basis without crew, to each fractional owner. 2011 federal tax filing Special rule relating to deadhead service. 2011 federal tax filing   A fractional program aircraft will not be considered to be used on account of a qualified fractional owner when it is used in deadhead service and a person other than a qualified fractional owner is separately charged for such service. 2011 federal tax filing More information. 2011 federal tax filing   See section 4043 for more information on the surtax. 2011 federal tax filing Certificate for Commercial Aviation and Exempt Uses A certificate is required from the aircraft operator: To support aircraft operator liability for tax on removal of kerosene for use in aviation directly into the fuel tank of an aircraft in commercial aviation, or For exempt uses. 2011 federal tax filing Certificate. 2011 federal tax filing   The certificate may be included as part of any business records normally used for a sale. 2011 federal tax filing See Model Certificate K in the Appendix. 2011 federal tax filing   A certificate expires on the earliest of the following dates. 2011 federal tax filing The date 1 year after the effective date (not earlier than the date signed) of the certificate. 2011 federal tax filing The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. 2011 federal tax filing The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. 2011 federal tax filing   The buyer must provide a new certificate if any information on a certificate has changed. 2011 federal tax filing   The IRS may withdraw the buyer's right to provide a certificate if the buyer uses the kerosene for use in aviation to which a certificate relates other than as stated in the certificate. 2011 federal tax filing Exempt use. 2011 federal tax filing   The rate on kerosene for use in aviation is $. 2011 federal tax filing 001 (LUST tax) if it is removed from any refinery or terminal directly into the fuel tank of an aircraft for an exempt use. 2011 federal tax filing An exempt use includes kerosene for the exclusive use of a state or local government. 2011 federal tax filing There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. 2011 federal tax filing Flash title transaction. 2011 federal tax filing   A position holder is not liable for tax if, among other conditions, it obtains a certificate (described above) from the operator of the aircraft into which the kerosene is delivered. 2011 federal tax filing In a “flash title transaction” the position holder sells the kerosene to a wholesale distributor (reseller) that in turn sells the kerosene to the aircraft operator as the kerosene is being removed from a terminal into the fuel tank of an aircraft. 2011 federal tax filing In this case, the position holder will be treated as having a certificate from the operator of the aircraft if: The aircraft operator puts the reseller's name, address, and EIN on the certificate in place of the position holder's information; and The reseller provides the position holder with a statement of the kerosene reseller. 2011 federal tax filing Reseller statement. 2011 federal tax filing   This is a statement that is signed under penalties of perjury by a person with authority to bind the reseller; is provided at the bottom or on the back of the certificate (or in an attached document); and contains: The reseller's name, address, and EIN; The position holder's name, address, and EIN; and A statement that the reseller has no reason to believe that any information in the accompanying aircraft operator's certificate is false. 2011 federal tax filing Credits or Refunds. 2011 federal tax filing   A claim may be made by the ultimate purchaser (the operator) for taxed kerosene for use in aviation used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia). 2011 federal tax filing A claim may be made by a registered ultimate vendor for certain sales. 2011 federal tax filing For more information, see chapter 2. 2011 federal tax filing Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. 2011 federal tax filing Other Fuels include alternative fuels. 2011 federal tax filing Alternative fuels are: Liquefied petroleum gas (LPG), “P Series” fuels, Compressed natural gas (CNG) (discussed later), Liquefied hydrogen, Any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, Liquid fuel derived from biomass, Liquefied natural gas (LNG), and Liquefied gas derived from biomass. 2011 federal tax filing Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. 2011 federal tax filing Qualified methanol and ethanol fuels. 2011 federal tax filing   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. 2011 federal tax filing The tax rates are listed in the Instructions for Form 720. 2011 federal tax filing Partially exempt methanol and ethanol fuels. 2011 federal tax filing   A reduced tax rate applies to these fuels. 2011 federal tax filing Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. 2011 federal tax filing The tax rates are listed in the Instructions for Form 720. 2011 federal tax filing Motor vehicles. 2011 federal tax filing   Motor vehicles include all types of vehicles, whether or not registered (or required to be registered) for highway use, that have both the following characteristics. 2011 federal tax filing They are propelled by a motor. 2011 federal tax filing They are designed for carrying or towing loads from one place to another, regardless of the type of material or load carried or t