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State Income Tax Filing

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State Income Tax Filing

State income tax filing Accelerated Cost Recovery System (ACRS) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: ACRS Defined What Can and Cannot Be Depreciated Under ACRSRecovery Property Nonrecovery Property How To Figure the DeductionUnadjusted Basis Classes of Recovery Property Recovery Periods Alternate ACRS Method (Modified Straight Line Method) ACRS Deduction in Short Tax Year DispositionsEarly dispositions of ACRS property other than 15-, 18-, or 19-year real property. State income tax filing Dispositions — mass asset accounts. State income tax filing Early dispositions — 15-year real property. State income tax filing Early dispositions — 18- and 19-year real property. State income tax filing Depreciation Recapture Topics - This chapter discusses: The definition of ACRS What can and cannot be depreciated under ACRS How to figure the deduction Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization The Accelerated Cost Recovery System (ACRS) applies to property first used before 1987. State income tax filing It is the name given to tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. State income tax filing These rules are mandatory and generally apply to tangible property placed in service after 1980 and before 1987. State income tax filing If you placed property in service during this period, you must continue to figure your depreciation under ACRS. State income tax filing If you used listed property placed in service after June 18, 1984, less than 50% for business in 1995, see Predominant Use Test in chapter 3. State income tax filing Listed property includes cars, other means of transportation, and certain computers. State income tax filing Any additions or improvements placed in service after 1986, including any components of a building (such as plumbing, wiring, storm windows, etc. State income tax filing ), are depreciated using MACRS, discussed in chapter 3 of Publication 946. State income tax filing It does not matter that the underlying property is depreciated under ACRS or one of the other methods. State income tax filing ACRS Defined ACRS consists of accelerated depreciation methods and an alternate ACRS method that could have been elected. State income tax filing The alternate ACRS method used a recovery percentage based on a modified straight line method. State income tax filing The law prescribes fixed percentages to be uses for each class of property. State income tax filing Property depreciable under ACRS is called recovery property. State income tax filing The recovery class of property determines the recovery period. State income tax filing Generally, the class life of property places it in a 3-year, 5-year, 10-year, 15-year, 18-year, or 19-year recovery class. State income tax filing Under ACRS, the prescribed percentages are used to recover the unadjusted basis of recovery property. State income tax filing To figure a depreciation deduction, you multiply the prescribed percentage for the recovery class by the unadjusted basis of the recovery property. State income tax filing You must continue to figure your depreciation under ACRS for property placed in service after 1980 and before 1987. State income tax filing For property you placed in service after 1986, you must use MACRS, discussed in chapter 3 of Publication 946. State income tax filing What Can and Cannot Be Depreciated Under ACRS ACRS applies to most depreciable tangible property placed in service after 1980 and before 1987. State income tax filing It includes new or used and real or personal property. State income tax filing The property must be for use in a trade or business or for the production of income. State income tax filing Property you acquired before 1981 or after 1986 is not ACRS recovery property. State income tax filing For information on depreciating property acquired before 1981, see chapter 2. State income tax filing For information on depreciating property acquired after 1986, see chapter 3 of Publication 946. State income tax filing Recovery Property Recovery property under ACRS is tangible depreciable property placed in service after 1980 and before 1987. State income tax filing It generally includes new or used property that you acquired after 1980 and before 1987 for use in your trade or business or for the production of income. State income tax filing Nonrecovery Property You cannot use ACRS for property you placed in service before 1981 or after 1986. State income tax filing Nonrecovery property also includes: Intangible property, Property you elected to exclude from ACRS that is properly depreciated under a method of depreciation that is not based on a term of years, Certain public utility property, and Certain property acquired and excluded from ACRS because of the antichurning rules. State income tax filing Intangible property. State income tax filing   Intangible property is not depreciated under ACRS. State income tax filing Property depreciated under methods not expressed in a term of years. State income tax filing   Certain property depreciated under a method not expressed in a term of years is not depreciated under ACRS. State income tax filing This included any property: If you made an irrevocable election to exclude such property, and In the first year that you could have claimed depreciation, you properly used the unit-of-production method or any method of depreciation not expressed in a term of years (not including the retirement-replacement-betterment method). State income tax filing Public utility property. State income tax filing   Public utility property for which the taxpayer does not use a normalization method of accounting is excluded from ACRS and is subject to depreciation under a special rule. State income tax filing Additions or improvements to ACRS property after 1986. State income tax filing   Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc. State income tax filing ) are depreciated using MACRS, discussed in chapter 3 of Publication 946. State income tax filing It does not matter that the underlying property is depreciated under ACRS or one of the other methods. State income tax filing How To Figure the Deduction After you determine that your property can be depreciated under ACRS, you are ready to figure your deduction. State income tax filing Because the conventions are built into the percentage table rates, you only need to know the following: The unadjusted basis of your recovery property, The classes of recovery property, The recovery periods, and Whether to use the prescribed percentages based on accelerated methods or percentages based on using the alternate ACRS method. State income tax filing Unadjusted Basis To figure your ACRS deduction, you multiply the unadjusted basis in your recovery property by its applicable percentage for the year. State income tax filing Unadjusted basis is the same amount you would use to figure gain on a sale, but it is figured without taking into account any depreciation taken in earlier years. State income tax filing However, reduce your original basis by the amount of amortization taken on the property and by any section 179 deduction claimed as discussed in chapter 2 of Publication 946. State income tax filing If you buy property, your unadjusted basis is usually its cost minus any amortized amount and minus any section 179 deduction elected. State income tax filing If you acquire property in some other way, such as by inheriting it, getting it as a gift, or building it yourself, you figure your unadjusted basis under other rules. State income tax filing See Publication 551. State income tax filing Classes of Recovery Property All recovery property under ACRS is in one of the following classes. State income tax filing The class for your property was determined when you began to depreciate it. State income tax filing 3-Year Property 3-year property includes automobiles, light-duty trucks (actual unloaded weight less than 13,000 pounds), and tractor units for use over-the-road. State income tax filing Race horses over 2 years old when placed in service are 3-year property. State income tax filing Any other horses over 12 years old when you placed them in service are also included in the 3-year property class. State income tax filing The ACRS percentages for 3-year recovery property are: Recovery Period Percentage 1st year 25% 2nd year 38% 3rd year 37% If you used the percentages above to depreciate your 3-year recovery property, your property, except for certain passenger automobiles, is fully depreciated. State income tax filing You cannot claim depreciation for this property after 1988. State income tax filing 5-Year Property 5-year property includes computers, copiers, and equipment, such as office furniture and fixtures. State income tax filing It also includes single purpose agricultural or horticultural structures and petroleum storage facilities (other than buildings and their structural components). State income tax filing The ACRS percentages for 5-year recovery property are: Recovery period Percentage 1st year 15% 2nd year 22% 3rd through 5th year 21% If you used the percentages above to depreciate your 5-year recovery property, it is fully depreciated. State income tax filing You cannot claim depreciation for this property after 1990. State income tax filing 10-Year Property 10-year property includes certain real property such as theme-park structures and certain public utility property. State income tax filing Manufactured homes (including mobile homes) and railroad tank cars are also 10-year property. State income tax filing You do not treat a building, and its structural components, as 10-year property by reason of a change in use after you placed the property in service. State income tax filing For example, a building (15-year real property) that was placed in service in 1981 and was converted to a theme-park structure in 1986 remains 15-year real property. State income tax filing The ACRS percentages for 10-year recovery property are: Recovery Period Percentage 1st year 8% 2nd year 14% 3rd year 12% 4th through 6th year 10% 7th through 10th year 9% If you used the percentages above, you cannot claim depreciation for this property after 1995. State income tax filing Example. State income tax filing On April 21, 1986, you bought and placed in service a new mobile home for $26,000 to be used as rental property. State income tax filing You paid $10,000 cash and signed a note for $16,000 giving you an unadjusted basis of $26,000. State income tax filing On June 8, 1986, you bought and placed in service a used mobile home for use as rental property at a total cost of $11,500. State income tax filing The total unadjusted basis of your 10-year recovery property placed in service in 1986 was $37,500 ($26,000 + $11,500). State income tax filing Your ACRS deduction was $3,000 (8% × $37,500). State income tax filing In 1987, your ACRS deduction was $5,250 (14% × $37,500). State income tax filing In 1988, your ACRS deduction was $4,500 (12% × $37,500). State income tax filing In 1989, 1990, and 1991, your ACRS deduction was $3,750 (10% × $37,500). State income tax filing In 1992, 1993, 1994, and 1995 your deduction for each year is $3,375 (9% × $37,500). State income tax filing 15-Year Real Property 15-year real property is real property that is recovery property placed in service before March 16, 1984. State income tax filing It includes all real property, such as buildings, other than that designated as 5-year or 10-year property. State income tax filing Unlike the 3-, 5-, or 10-year classes of property, the percentages for 15-year real property depend on when you placed the property in service during your tax year. State income tax filing You could group 15-year real property by month and year placed in service. State income tax filing In Table 1, at the end of this publication in the Appendix, find the month in your tax year that you placed the property in service in your trade or business or for the production of income. State income tax filing You use the percentages listed under that month for each year of the recovery period to determine your depreciation deduction each year. State income tax filing Example. State income tax filing On March 5, 1984, you placed an apartment building in service in your business. State income tax filing It is 15-year real property. State income tax filing After subtracting the value of the land, your unadjusted basis in the building is $250,000. State income tax filing You use the calendar year as your tax year. State income tax filing March is the third month of your tax year. State income tax filing Your ACRS deduction for 1984 was $25,000 (10% × $250,000). State income tax filing For 1985, the percentage for the third month of the second year of the recovery period is 11%. State income tax filing Your deduction was $27,500 (11% × $250,000). State income tax filing For the third, fourth, and fifth years of the recovery period (1986, 1987, and 1988), the percentages are 9%, 8%, and 7%. State income tax filing For 1989 through 1992, the percentage for the third month is 6%. State income tax filing Your deduction each year is $15,000 (6% × $250,000). State income tax filing For 1993, 1994, and 1995, the percentage for the third month is 5%. State income tax filing Your depreciation deduction is $12,500 (5% × $250,000) for 1993, 1994, and 1995. State income tax filing Low-Income Housing Low-income housing that was assigned a 15-year recovery period under ACRS includes the following types of property: Federally assisted housing projects where the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. State income tax filing Low-income rental housing for which a depreciation deduction for rehabilitation expenditures is allowed. State income tax filing Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under the provisions of state or local laws that authorize similar subsidies for low-income families. State income tax filing Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. State income tax filing The ACRS percentages for low-income housing real property, like the regular 15-year real property percentages, depend on when you placed the property in service. State income tax filing Find the month in your tax year in Table 2 or 3 at the end of this publication in the Appendix that you first placed the property in service as rental housing. State income tax filing Use the percentages listed under that month for each year of the recovery period. State income tax filing Table 2 shows percentages for low-income housing placed in service before May 9, 1985. State income tax filing Table 3 shows percentages for low-income housing placed in service after May 8, 1985, and before 1987. State income tax filing Example. State income tax filing In May 1986, you acquired and placed in service a house that qualified as low-income rental housing under item 3) of the above listing. State income tax filing You use the calendar year as your tax year. State income tax filing You use Table C–3 because the property was placed in service after May 8, 1985. State income tax filing Your unadjusted basis for the property, not including the land, was $59,000. State income tax filing Your deduction for 1986 through 2001 is shown in the following table. State income tax filing Year Rate Deduction 1986 8. State income tax filing 9% $5,251 1987 12. State income tax filing 1% 7,139 1988 10. State income tax filing 5% 6,195 1989 9. State income tax filing 1% 5,369 1990 7. State income tax filing 9% 4,661 1991 6. State income tax filing 9% 4,071 1992 5. State income tax filing 9% 3,481 1993 5. State income tax filing 2% 3,068 1994 4. State income tax filing 6% 2,714 1995 4. State income tax filing 6% 2,714 1996 4. State income tax filing 6% 2,714 1997 4. State income tax filing 6% 2,714 1998 4. State income tax filing 6% 2,714 1999 4. State income tax filing 5% 2,655 2000 4. State income tax filing 5% 2,655 2001 1. State income tax filing 5% 885 18-Year Real Property 18-year real property is real property that is recovery property placed in service after March 15, 1984, and before May 9, 1985. State income tax filing It includes real property, such as buildings, other than that designated as 5-year, 10-year, 15-year real property, or low-income housing. State income tax filing The ACRS percentages for 18-year real property depend on when you placed the property in service in your trade or business or for the production of income during your tax year. State income tax filing There are also tables for 18-year real property in the Appendix. State income tax filing Table 4 shows the percentages for 18-year real property you placed in service after June 22, 1984, and before May 9, 1985. State income tax filing Table 5 is for 18-year real property placed in service after March 15, 1984, and before June 23, 1984. State income tax filing Find the month in your tax year that you placed the property in service in a trade or business or for the production of income. State income tax filing Use the percentages listed under that month for each year of the recovery period. State income tax filing Example. State income tax filing On April 28, 1985, you bought and placed in service a rental house. State income tax filing The house, not including the land, cost $95,000. State income tax filing This is your unadjusted basis for the house. State income tax filing You use the calendar year as your tax year. State income tax filing Because the house was placed in service after June 22, 1984, and before May 9, 1985, it is 18-year real property. State income tax filing You use Table 4 to figure your deduction for the house. State income tax filing April is the fourth month of your tax year. State income tax filing Your deduction for 1985 through 2003 is shown in the following table. State income tax filing Year Rate Deduction 1985 7. State income tax filing 0% $6,650 1986 9. State income tax filing 0% 8,550 1987 8. State income tax filing 0% 7,600 1988 7. State income tax filing 0% 6,650 1989 7. State income tax filing 0% 6,650 1990 6. State income tax filing 0% 5,700 1991 5. State income tax filing 0% 4,750 1992 5. State income tax filing 0% 4,750 1993 5. State income tax filing 0% 4,750 1994 5. State income tax filing 0% 4,750 1995 5. State income tax filing 0% 4,750 1996 5. State income tax filing 0% 4,750 1997 5. State income tax filing 0% 4,750 1998 4. State income tax filing 0% 3,800 1999 4. State income tax filing 0% 3,800 2000 4. State income tax filing 0% 3,800 2001 4. State income tax filing 0% 3,800 2002 4. State income tax filing 0% 3,800 2003 1. State income tax filing 0% 950 19-Year Real Property 19-year real property is real property that is recovery property placed in service after May 8, 1985, and before 1987. State income tax filing It includes all real property, other than that designated as 5-year, 10-year, 15-year, or 18-year real property, or low-income housing. State income tax filing The ACRS percentages for 19-year real property depend on when you placed the property in service in a trade or business or for the production of income during your tax year. State income tax filing Table 6 shows the percentages for 19-year real property. State income tax filing You find the month in your tax year that you placed the property in service. State income tax filing You use the percentages listed under that month for each year of the recovery period. State income tax filing Recovery Periods Each item of recovery property is assigned to a class of property. State income tax filing The classes of recovery property establish the recovery periods over which the unadjusted basis of items in a class is recovered. State income tax filing The classes of property are: 3-Year property 5-Year property 10-Year property 15-Year real property Low-income housing 18-Year real property 19-Year real property Alternate ACRS Method (Modified Straight Line Method) ACRS provides an alternate ACRS method that could be elected. State income tax filing This alternate ACRS method uses a recovery percentage based on a modified straight line method. State income tax filing This alternate ACRS method generally uses percentages other than those from the tables. State income tax filing If you elected the alternate ACRS method, you determine the recovery period by using the following schedule. State income tax filing This schedule is for other than 18- and 19-year real property and low-income housing: In the case of: You could have elected a recovery period of: 3-year property 3, 5, or 12 years 5-year property 5, 12, or 25 years 15-year real property 15, 35, or 45 years Percentages. State income tax filing   The straight-line percentages for the alternate ACRS method are: Recovery Period Percentage 5 years 20. State income tax filing 00% 10 years 10. State income tax filing 00% 12 years 8. State income tax filing 333% 15 years 6. State income tax filing 667% 25 years 4. State income tax filing 00% 35 years 2. State income tax filing 857%   You apply the percentage to the unadjusted basis(defined earlier) of the property to figure your ACRS deduction. State income tax filing There are tables for 18- and 19-year real property later in this publication in the Appendix. State income tax filing For 15-year real property, see 15-year real property, later. State income tax filing 3-, 5-, and 10-year property. State income tax filing   If you elected to use an alternate recovery percentage, you have to use the same recovery percentage for all property in that class that you placed in service in that tax year. State income tax filing This applies throughout the recovery period you selected. State income tax filing Half-year convention. State income tax filing   If you elected the alternate method, only a half-year of depreciation was deducted for the year you placed the property in service. State income tax filing This applied regardless of when in the tax year you placed the property in service. State income tax filing For each of the remaining years in the recovery period, you take a full year's deduction. State income tax filing If you hold the property for the entire recovery period, a half-year of depreciation is allowable for the year following the end of the recovery period. State income tax filing Example. State income tax filing You operate a small upholstery business. State income tax filing On March 19, 1986, you bought and placed in service a $13,000 light-duty panel truck to be used in your business and a $500 electric saw. State income tax filing You elected to use the alternate ACRS method. State income tax filing You did not elect to take a section 179 deduction. State income tax filing You decided to recover the cost of the truck, which is 3-year recovery property, over 5 years. State income tax filing The saw is 5-year property, but you decided to recover its cost over 12 years. State income tax filing For 1986, your ACRS deduction reflected the half-year convention. State income tax filing In the first year, you deducted half of the amount determined for a full year. State income tax filing Your ACRS deduction for 1986 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. State income tax filing 00     Electric saw   12 years straight line = 8. State income tax filing 333% 8. State income tax filing 333% ÷ $500 = $41. State income tax filing 67 Half-year convention -½ of $41. State income tax filing 67= 20. State income tax filing 84 Total ACRS deduction for 1986 $1,320. State income tax filing 84       You take a full year of depreciation for both the truck and the saw for the years 1987 through 1990. State income tax filing Your ACRS deduction for each of those years is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600     Electric saw     12 years straight line = 8. State income tax filing 333% 8. State income tax filing 333% ÷ $500 = $41. State income tax filing 67 Total annual ACRS deduction for 1987 through 1990 $2,641. State income tax filing 67       In 1991, you take a half-year of depreciation for the truck and a full year of depreciation for the saw. State income tax filing Your ACRS deduction for 1991 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. State income tax filing 00     Electric saw   12 years straight line = 8. State income tax filing 333% 8. State income tax filing 333% ÷ $500 = $41. State income tax filing 67 Total ACRS deduction for 1991 $1,341. State income tax filing 67       The truck is fully depreciated after 1991. State income tax filing You take a full year of depreciation for the saw for the years 1992 through 1997. State income tax filing Your ACRS deduction for each of those years is as follows: Electric saw     12 years straight line = 8. State income tax filing 333% 8. State income tax filing 333% ÷ $500 = $41. State income tax filing 67 Total annual ACRS deduction for 1992 through 1997 $41. State income tax filing 67       You take a half-year of depreciation for the saw for 1998. State income tax filing Your ACRS deduction for 1998 is as follows: Electric saw   12 years straight line = 8. State income tax filing 333% 8. State income tax filing 333% ÷ $500 = $41. State income tax filing 67 Half-year convention -½ of $41. State income tax filing 67= 20. State income tax filing 84 Total ACRS deduction for 1998 $20. State income tax filing 84       The saw is fully depreciated after 1998. State income tax filing 15-year real property. State income tax filing   Under ACRS, you could also elect to use the alternate ACRS method for 15-year real property. State income tax filing The alternate ACRS method allows you to depreciate your 15-year real property using the straight line ACRS method over the alternate recovery periods of 15, 35, or 45 years. State income tax filing If you selected a 15-year recovery period, you use the percentage (6. State income tax filing 667%) from the schedule above. State income tax filing You prorate this percentage for the number of months the property was in service in the first year. State income tax filing If you selected a 35- or 45-year recovery period, you use either Table 11 or 15. State income tax filing Alternate periods for 18-year real property. State income tax filing   For 18-year real property, the alternate recovery periods are 18, 35, or 45 years. State income tax filing The percentages for 18-year real property under the alternate method are in Tables 7, 8, 10, 11, 14, and 15 in the Appendix. State income tax filing There are two tables for each alternate recovery period. State income tax filing One table shows the percentage for property placed in service after June 22, 1984. State income tax filing The other table has the percentages for property placed in service after March 15, 1984, and before June 23, 1984. State income tax filing Alternate periods for 19-year real property. State income tax filing   For 19-year real property, the alternate recovery periods are 19, 35, or 45 years. State income tax filing If you selected a 19-year recovery period, use Table 9 to determine your deduction. State income tax filing If you select a 35- or 45-year recovery period, use either Table 13 or 14. State income tax filing Example. State income tax filing You placed in service an apartment building on August 3, 1986. State income tax filing The building is 19-year real property. State income tax filing The sales contract allocated $300,000 to the building and $100,000 to the land. State income tax filing You use the calendar year as your tax year. State income tax filing You chose the alternate ACRS method over a recovery period of 35 years. State income tax filing For 1986, you figure your ACRS deduction usingTable 13. State income tax filing August is the eighth month of your tax year. State income tax filing The percentage from Table 13 for the eighth month is 1. State income tax filing 1%. State income tax filing Your deduction was $3,300 ($300,000 ÷ 1. State income tax filing 1%). State income tax filing The deduction rate from ACRS Table 13 for years 2 through 20 is 2. State income tax filing 9% so that your deduction in 1987 through 2005 is $8,700 ($300,000 ÷ 2. State income tax filing 9%). State income tax filing Alternate periods for low-income housing. State income tax filing   For low-income housing, the alternate recovery periods are 15, 35, or 45 years. State income tax filing If you selected a 15-year period for this property, use 6. State income tax filing 667% as the percentage. State income tax filing If you selected a 35- or 45-year period, use either Table 11, 12, or 15. State income tax filing Election. State income tax filing   You had to make the election to use the alternate ACRS method by the return due date (including extensions) for the tax year you placed the property in service. State income tax filing Revocation of election. State income tax filing   Your election to use an alternate ACRS method, once made, can be changed only with the consent of the Commissioner. State income tax filing The Commissioner grants consent only in extraordinary circumstances. State income tax filing Any request for a revocation will be considered a request for a ruling. State income tax filing ACRS Deduction in Short Tax Year For a tax year that is less than 12 months, the ACRS deduction is prorated on a 12-month basis. State income tax filing Figure the amount of the ACRS deduction for a short tax year as follows: First, you figure the ACRS deduction for a full year. State income tax filing You figure this by multiplying the unadjusted basis by the recovery percentage. State income tax filing You then multiply the ACRS deduction determined for a full tax year by a fraction. State income tax filing The numerator (top number) of the fraction is the number of months in the short tax year and the denominator (bottom number) is 12. State income tax filing For example, a corporation placed in service in June 1986 an item of 3-year property with an unadjusted basis of $10,000. State income tax filing The corporation files a tax return, because of a change in its accounting period, for the 6-month short tax year ending June 30, 1986. State income tax filing The full year's ACRS deduction for this item is $2,500 ($10,000 ÷ 25%), the first year percentage from the 3-year table. State income tax filing The ACRS deduction for the short tax year is $1,250 ($2,500 ÷ 6/12). State income tax filing You use the full ACRS percentages during the remaining years of the recovery period. State income tax filing For the first tax year after the recovery period, the unrecovered basis will be deductible. State income tax filing Exception. State income tax filing   For the tax year in which you placed 15-, 18-, or 19-year real property in service or in the tax year you dispose of it, you compute the ACRS deduction for the number of months that the property is in service during that tax year. State income tax filing You compute the number of months using either a full month or mid-month convention. State income tax filing This is true regardless of the number of months in the tax year and the recovery period and method used. State income tax filing Dispositions A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. State income tax filing You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. State income tax filing You generally recognize gain or loss on the disposition of an asset by sale. State income tax filing However, nonrecognition rules can allow you to postpone some gain. State income tax filing See Publication 544. State income tax filing If you physically abandon property, you can deduct as a loss the adjusted basis of the asset at the time of its abandonment. State income tax filing Your intent must be to discard the asset so that you will not use it again or retrieve it for sale, exchange, or other disposition. State income tax filing Early dispositions. State income tax filing   The disposal of an asset before the end of its specified recovery period, is referred to as an early disposition. State income tax filing When an early disposition occurs, the depreciation deduction in the year of disposition depends on the class of property involved. State income tax filing Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. State income tax filing   Generally, you get no ACRS deduction for the tax year in which you dispose of or retire recovery property, except for 15-, 18-, and 19-year real property. State income tax filing This means there is no depreciation deduction under ACRS in the year you dispose of or retire any of your 3-, 5-, or 10-year recovery property. State income tax filing Dispositions — mass asset accounts. State income tax filing   The law provides a special rule to avoid the calculation of gain on the disposition of assets from mass asset accounts. State income tax filing A mass asset account includes items usually minor in value in relation to the group, numerous in quantity, impractical to separately identify, and not usually accounted for on a separate basis, but on a total dollar value. State income tax filing Examples of mass assets include minor items of office, plant, and store furniture and fixtures. State income tax filing   Under the special rule, if you elected to use a mass asset account, you recognize gain to the extent of the proceeds from the disposition of the asset. State income tax filing You leave the unadjusted basis of the property in the account until recovered in future years. State income tax filing If you did this, include the total proceeds realized from the disposition in income on the tax return for the year of disposition. State income tax filing Early dispositions — 15-year real property. State income tax filing   If you dispose of 15-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. State income tax filing You use a full-month convention. State income tax filing For a disposition at any time during a particular month before the end of the recovery period, no deduction is allowed for the month of disposition. State income tax filing This applies whether you use the regular ACRS method or elected the alternate ACRS method. State income tax filing Example. State income tax filing You purchased and placed in service a rental house on March 2, 1984, for $98,000 (not including the cost of land). State income tax filing You file your return based on a calendar year. State income tax filing Your rate from Table 1 for the third month is 10%. State income tax filing Your ACRS deduction for 1984 was $9,800 ($98. State income tax filing 000 ÷ 10%). State income tax filing For 1985 through 1988, you figured your ACRS deductions using 11%, 9%, 8%, and 7% ÷ $98,000. State income tax filing For 1989 through 1992, you figured your ACRS deductions using 6% for each year. State income tax filing The deduction each year was $98,000 ÷ 6%. State income tax filing For 1993 and 1994, the ACRS deduction is ($98,000 ÷ 5%) $4,900 for each year. State income tax filing You sell the house on June 1, 1995. State income tax filing You figure your ACRS deduction for 1995 for the full year and then prorate that amount for the months of use. State income tax filing The full ACRS deduction for 1995 is $4,900 ($98,000 ÷ 5%). State income tax filing You then prorate this amount to the 5 months in 1995 during which it was rented. State income tax filing Your ACRS deduction for 1995 is $2,042 ($4,900 ÷ 5/12). State income tax filing Early dispositions — 18- and 19-year real property. State income tax filing   If you dispose of 18- or 19-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. State income tax filing For 18-year property placed in service before June 23, 1984, use a full-month convention on a disposition. State income tax filing For 18-year property placed in service after June 22, 1984, and for 19-year property, determine the number of months in use by using the mid-month convention. State income tax filing Under the mid-month convention,treat real property disposed of any time during a month as disposed of in the middle of that month. State income tax filing Count the month of disposition as half a month of use. State income tax filing Example. State income tax filing You purchased and placed in service a rental house on July 2, 1984, for $100,000 (not including the cost of land). State income tax filing You file your return based on a calendar year. State income tax filing Your rate from Table 4 for the seventh month is 4%. State income tax filing You figured your ACRS deduction for 1984 was $4,000 ($100,000 ÷ 4%). State income tax filing In 1985 through 1994, your ACRS deductions were 9%, 8%, 8%, 7%, 6%, 6%, 5%, 5%, and 5% ÷ $100,000. State income tax filing You sell the house on September 24, 1995. State income tax filing Figure your ACRS deduction for 1995 for the months of use. State income tax filing The full ACRS deduction for 1995 is $5,000 ($100,000 ÷ 5%). State income tax filing Prorate this amount for the 8. State income tax filing 5 months in 1995 that you held the property. State income tax filing Under the mid-month convention, you count September as half a month. State income tax filing Your ACRS deduction for 1995 is $3,542 ($5,000 ÷ 8. State income tax filing 5/12). State income tax filing Depreciation Recapture If you dispose of property depreciated under ACRS that is section 1245 recovery property, you will generally recognize gain or loss. State income tax filing Gain recognized on a disposition is ordinary income to the extent of prior depreciation deductions taken. State income tax filing This recapture rule applies to all personal property in the 3-year, 5-year, and 10-year classes. State income tax filing You recapture gain on manufactured homes and theme park structures in the 10-year class as section 1245 property. State income tax filing Section 1245 property generally includes all personal property. State income tax filing See Section 1245 property in chapter 4 of Publication 544 for more information. State income tax filing You treat dispositions of section 1250 real property on which you have a gain as section 1245 recovery property. State income tax filing You recognize gain on this property as ordinary income to the extent of prior depreciation deductions taken. State income tax filing Section 1250 property includes most real property. State income tax filing See Section 1250 property in chapter 4 of Publication 544 for more information. State income tax filing This rule applies to all section 1250 real property except the following property: Any 15-, 18-, or 19-year real property that is residential rental property. State income tax filing Any 15-, 18-, or 19-year real property that you elected to depreciate using the alternate ACRS method. State income tax filing Any 15-, 18-, or 19-year real property that is subsidized low-income housing. State income tax filing For these recapture rules, you treat the section 179 deduction and 50% of the investment credit that reduced your basis as depreciation. State income tax filing See Publication 544 for further discussion of dispositions of section 1245 and 1250 property. State income tax filing Prev  Up  Next   Home   More Online Publications
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CP 91 - Final Notice Before Levy on Social Security Benefits

Details About This Notice:
Sample Content: Page 1, Page 2
Purpose:   We send CP 91 to inform the recipient of our intent to levy on their Social Security Benefits.
Reason for Issuance:   The recipient has a balance due on their account that we've previously sent a notice about. That balance due is still unpaid. We send a CP 91 to inform the recipient that the amount is still due, that we intend to take up to 15% of their their Social Security Benefits to pay it, and what steps they need to take within 30 days to prevent us from taking this action.
Account Balance:   Balance Due
     

Frequently Asked Questions About This Notice

Page Last Reviewed or Updated: 25-Feb-2014

The State Income Tax Filing

State income tax filing 1. State income tax filing   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. State income 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. State income tax filing Reseller statement. State income tax filing Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. State income tax filing Deep-draft ocean-going vessels. State income tax filing Passenger vessels. State income tax filing Ocean-going barges. State income tax filing State or local governments. State income 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. State income tax filing Gasoline, including aviation gasoline and gasoline blendstocks. State income tax filing Diesel fuel, including dyed diesel fuel. State income tax filing Diesel-water fuel emulsion. State income tax filing Kerosene, including dyed kerosene and kerosene used in aviation. State income tax filing Other Fuels (including alternative fuels). State income tax filing Compressed natural gas (CNG). State income tax filing Fuels used in commercial transportation on inland waterways. State income tax filing Any liquid used in a fractional ownership program aircraft as fuel. State income tax filing The following terms are used throughout the discussion of fuel taxes. State income tax filing Other terms are defined in the discussion of the specific fuels to which they pertain. State income tax filing Agri-biodiesel. State income 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. State income tax filing Approved terminal or refinery. State income 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. State income tax filing Biodiesel. State income 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. State income tax filing Blended taxable fuel. State income 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. State income 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. State income tax filing Blender. State income tax filing   This is the person that produces blended taxable fuel. State income tax filing Bulk transfer. State income tax filing   This is the transfer of taxable fuel by pipeline or vessel. State income tax filing Bulk transfer/terminal system. State income tax filing   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. State income 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. State income tax filing Cellulosic biofuel. State income 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. State income tax filing Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). State income 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. State income tax filing Also see Second generation biofuel below. State income tax filing Diesel-water fuel emulsion. State income tax filing   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. State income 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. State income tax filing Dry lease aircraft exchange. State income tax filing   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. State income tax filing Enterer. State income tax filing   This is the importer of record (under customs law) for the taxable fuel. State income 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. State income tax filing If there is no importer of record, the owner at the time of entry into the United States is the enterer. State income tax filing Entry. State income 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. State income tax filing This does not apply to fuel brought into Puerto Rico (which is part of the U. State income tax filing S. State income tax filing customs territory), but does apply to fuel brought into the United States from Puerto Rico. State income tax filing Fractional ownership aircraft program and fractional program aircraft. State income tax filing   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. State income tax filing Measurement of taxable fuel. State income tax filing   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. State income tax filing Other fuels. State income tax filing   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. State income tax filing Pipeline operator. State income tax filing   This is the person that operates a pipeline within the bulk transfer/terminal system. State income tax filing Position holder. State income 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. State income 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. State income tax filing A terminal operator that owns taxable fuel in its terminal is a position holder. State income tax filing Rack. State income tax filing   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. State income tax filing Refiner. State income tax filing   This is any person that owns, operates, or otherwise controls a refinery. State income tax filing Refinery. State income 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. State income tax filing However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. State income tax filing For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. State income tax filing Registrant. State income tax filing   This is a taxable fuel registrant (see Registration Requirements, later). State income tax filing Removal. State income tax filing   This is any physical transfer of taxable fuel. State income tax filing It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. State income tax filing However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. State income tax filing Renewable diesel. State income tax filing   See Renewable Diesel Credits in chapter 2. State income tax filing Sale. State income 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. State income 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. State income tax filing Second generation biofuel. State income 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. State income tax filing S. State income tax filing C. State income tax filing 7545). State income tax filing It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. State income tax filing It is not alcohol of less than 150 proof (disregard any added denaturants). State income tax filing See Form 6478 for more information. State income tax filing State. State income tax filing   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. State income tax filing An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. State income tax filing Taxable fuel. State income tax filing   This means gasoline, diesel fuel, and kerosene. State income tax filing Terminal. State income 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. State income 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. State income 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. State income tax filing Terminal operator. State income tax filing   This is any person that owns, operates, or otherwise controls a terminal. State income tax filing Throughputter. State income 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). State income tax filing Vessel operator. State income tax filing   This is the person that operates a vessel within the bulk transfer/terminal system. State income tax filing However, vessel does not include a deep draft ocean-going vessel. State income tax filing Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. State income tax filing A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. State income tax filing For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. State income tax filing The returns are due the last day of the month following the month in which the transaction occurs. State income tax filing Generally, these returns can be filed on paper or electronically. State income tax filing For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. State income tax filing Publication 3536 is only available on the IRS website. State income tax filing Form 720-TO. State income 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. State income tax filing Each terminal operator must file a separate form for each approved terminal. State income tax filing Form 720-CS. State income 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. State income tax filing Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. State income tax filing See Form 637 for other persons who must register and for more information about registration. State income tax filing Persons that are required to be registered. State income 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. State income tax filing Persons that may register. State income 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. State income tax filing Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. State income tax filing However, they must be registered to file claims for certain sales and uses of fuel. State income tax filing See Form 637 for more information. State income tax filing Taxable fuel registrant. State income 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. State income tax filing The term registrant as used in the discussions of these fuels means a taxable fuel registrant. State income tax filing Additional information. State income tax filing   See the Form 637 instructions for the information you must submit when you apply for registration. State income tax filing Failure to register. State income 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. State income tax filing Gasoline and Aviation Gasoline Gasoline. State income 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. State income 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. State income tax filing Gasoline also includes gasoline blendstocks, discussed later. State income tax filing Aviation gasoline. State income 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. State income tax filing Taxable Events The tax on gasoline is $. State income tax filing 184 per gallon. State income tax filing The tax on aviation gasoline is $. State income tax filing 194 per gallon. State income tax filing When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. State income tax filing 141 per gallon. State income tax filing See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. State income tax filing Tax is imposed on the removal, entry, or sale of gasoline. State income tax filing Each of these events is discussed later. State income tax filing Also, see the special rules that apply to gasoline blendstocks, later. State income 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. State income tax filing See Refunds of Second Tax in chapter 2. State income tax filing Removal from terminal. State income tax filing   All removals of gasoline at a terminal rack are taxable. State income tax filing The position holder for that gasoline is liable for the tax. State income tax filing Two-party exchanges. State income 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. State income 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. State income 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. State income tax filing The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. State income 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. State income tax filing The transaction is subject to a written contract. State income tax filing Terminal operator's liability. State income 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. State income tax filing   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. State income tax filing The terminal operator is a registrant. State income tax filing The terminal operator has an unexpired notification certificate (discussed later) from the position holder. State income tax filing The terminal operator has no reason to believe any information on the certificate is false. State income tax filing Removal from refinery. State income tax filing   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. State income 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. State income tax filing It is made at the refinery rack. State income tax filing The refiner is liable for the tax. State income tax filing Exception. State income tax filing   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. State income tax filing The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. State income tax filing The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. State income tax filing The removal from the refinery is by railcar. State income tax filing The same person operates the refinery and the facility at which the gasoline is received. State income tax filing Entry into the United States. State income tax filing   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. State income tax filing It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. State income tax filing It is not made by bulk transfer. State income tax filing The enterer is liable for the tax. State income tax filing Importer of record's liability. State income 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. State income 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. State income tax filing The importer of record has an unexpired notification certificate (discussed later) from the enterer. State income tax filing The importer of record has no reason to believe any information in the certificate is false. State income tax filing Customs bond. State income 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. State income tax filing Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. State income 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. State income tax filing The position holder is liable for the tax. State income 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. State income tax filing However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. State income tax filing Bulk transfers not received at approved terminal or refinery. State income 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. State income tax filing No tax was previously imposed (as discussed earlier) on any of the following events. State income tax filing The removal from the refinery. State income tax filing The entry into the United States. State income tax filing The removal from a terminal by an unregistered position holder. State income 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). State income tax filing   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. State income tax filing However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. State income tax filing The owner is a registrant. State income tax filing The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. State income tax filing The owner has no reason to believe any information on the certificate is false. State income tax filing The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. State income tax filing The operator is jointly and severally liable if the owner does not meet these conditions. State income tax filing Sales to unregistered person. State income 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. State income tax filing   The seller is liable for the tax. State income tax filing However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. State income tax filing   The seller is a registrant. State income tax filing The seller has an unexpired notification certificate (discussed later) from the buyer. State income tax filing The seller has no reason to believe any information on the certificate is false. State income tax filing The buyer of the gasoline is liable for the tax if the seller meets these conditions. State income tax filing The buyer is jointly and severally liable if the seller does not meet these conditions. State income tax filing Exception. State income tax filing   The tax does not apply to a sale if all of the following apply. State income tax filing The buyer's principal place of business is not in the United States. State income 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. State income tax filing The seller is a registrant and the exporter of record. State income tax filing The fuel was exported. State income tax filing Removal or sale of blended gasoline. State income tax filing   The removal or sale of blended gasoline by the blender is taxable. State income tax filing See Blended taxable fuel under Definitions, earlier. State income tax filing   The blender is liable for the tax. State income tax filing The tax is figured on the number of gallons not previously subject to the tax on gasoline. State income 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. State income tax filing See Form 720 to report this tax. State income tax filing You also must be registered with the IRS as a blender. State income tax filing See Form 637. State income 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. State income tax filing Notification certificate. State income tax filing   The notification certificate is used to notify a person of the registration status of the registrant. State income tax filing A copy of the registrant's letter of registration cannot be used as a notification certificate. State income tax filing A model notification certificate is shown in the Appendix as Model Certificate C. State income tax filing A notification certificate must contain all information necessary to complete the model. State income tax filing   The certificate may be included as part of any business records normally used for a sale. State income 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. State income tax filing The registrant must provide a new certificate if any information on a certificate has changed. State income tax filing Additional persons liable. State income 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. State income tax filing Gasoline Blendstocks Gasoline blendstocks may be subject to $. State income tax filing 001 per gallon LUST tax as discussed below. State income tax filing Gasoline includes gasoline blendstocks. State income tax filing The previous discussions apply to these blendstocks. State income tax filing However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. State income tax filing 001 per gallon or are not subject to the excise tax. State income tax filing Blendstocks. State income 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. State income tax filing   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. State income tax filing Not used to produce finished gasoline. State income tax filing   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. State income tax filing Removals and entries not connected to sale. State income 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. State income tax filing Removals and entries connected to sale. State income 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. State income tax filing The person has an unexpired certificate (discussed later) from the buyer. State income tax filing The person has no reason to believe any information in the certificate is false. State income tax filing Sales after removal or entry. State income 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. State income tax filing The seller is liable for the tax. State income tax filing However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. State income tax filing The seller has an unexpired certificate (discussed next) from the buyer. State income tax filing The seller has no reason to believe any information in the certificate is false. State income tax filing Certificate of buyer. State income tax filing   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. State income tax filing The certificate may be included as part of any business records normally used for a sale. State income tax filing A model certificate is shown in the Appendix as Model Certificate D. State income tax filing The certificate must contain all information necessary to complete the model. State income tax filing   A certificate expires on the earliest of the following dates. State income tax filing The date 1 year after the effective date (not earlier than the date signed) of the certificate. State income tax filing The date a new certificate is provided to the seller. State income tax filing The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. State income tax filing The buyer must provide a new certificate if any information on a certificate has changed. State income 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. State income tax filing Received at approved terminal or refinery. State income 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. State income tax filing The person is a registrant. State income 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. State income tax filing The person has no reason to believe any information on the certificate is false. State income tax filing Bulk transfers to registered industrial user. State income 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. State income 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. State income tax filing Credits or Refunds. State income tax filing   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. State income tax filing For more information, see chapter 2. State income tax filing Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). State income 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. State income 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. State income 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. State income tax filing A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. State income 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. State income tax filing Diesel fuel does not include gasoline, kerosene, excluded liquid, No. State income tax filing 5 and No. State income tax filing 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. State income tax filing An excluded liquid is either of the following. State income tax filing A liquid that contains less than 4% normal paraffins. State income tax filing A liquid with all the following properties. State income tax filing Distillation range of 125 degrees Fahrenheit or less. State income tax filing Sulfur content of 10 ppm or less. State income tax filing Minimum color of +27 Saybolt. State income tax filing Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. State income tax filing Kerosene. State income tax filing   This means any of the following liquids. State income tax filing One of the two grades of kerosene (No. State income tax filing 1-K and No. State income tax filing 2-K) covered by ASTM specification D3699. State income 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). State income tax filing See Kerosene for Use in Aviation, later. State income tax filing   However, kerosene does not include excluded liquid, discussed earlier. State income 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. State income tax filing Diesel-powered highway vehicle. State income 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. State income 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. State income tax filing For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. State income tax filing 2) in chapter 2. State income tax filing Diesel-powered train. State income tax filing   This is any diesel-powered equipment or machinery that rides on rails. State income tax filing The term includes a locomotive, work train, switching engine, and track maintenance machine. State income tax filing Taxable Events The tax on diesel fuel and kerosene is $. State income tax filing 244 per gallon. State income tax filing It is imposed on the removal, entry, or sale of diesel fuel and kerosene. State income tax filing Each of these events is discussed later. State income tax filing Only the $. State income tax filing 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. State income 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. State income tax filing See Refunds of Second Tax in chapter 2. State income tax filing Use in certain intercity and local buses. State income tax filing   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. State income tax filing A claim for $. State income 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. State income tax filing An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. State income tax filing The bus must be engaged in one of the following activities. State income tax filing Scheduled transportation along regular routes regardless of the size of the bus. State income tax filing Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). State income 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. State income tax filing Removal from terminal. State income tax filing   All removals of diesel fuel and kerosene at a terminal rack are taxable. State income tax filing The position holder for that fuel is liable for the tax. State income tax filing Two-party exchanges. State income 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. State income 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. State income 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. State income tax filing The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. State income 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. State income tax filing The transaction is subject to a written contract. State income tax filing Terminal operator's liability. State income 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). State income 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. State income 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. State income tax filing The terminal operator is a registrant. State income tax filing The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. State income tax filing The terminal operator has no reason to believe any information on the certificate is false. State income tax filing Removal from refinery. State income tax filing   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. State income 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. State income tax filing It is made at the refinery rack. State income tax filing The refiner is liable for the tax. State income tax filing Exception. State income 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. State income 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. State income tax filing The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. State income 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. State income tax filing Entry into the United States. State income tax filing   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. State income tax filing It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. State income tax filing It is not made by bulk transfer. State income tax filing The enterer is liable for the tax. State income tax filing Importer of record's liability. State income 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. State income 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. State income tax filing The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. State income tax filing The importer of record has no reason to believe any information in the certificate is false. State income tax filing Customs bond. State income 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. State income tax filing Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. State income 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. State income tax filing The position holder is liable for the tax. State income 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. State income tax filing However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. State income tax filing Bulk transfers not received at approved terminal or refinery. State income 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. State income tax filing No tax was previously imposed (as discussed earlier) on any of the following events. State income tax filing The removal from the refinery. State income tax filing The entry into the United States. State income tax filing The removal from a terminal by an unregistered position holder. State income 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). State income tax filing   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. State income tax filing However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. State income tax filing The owner is a registrant. State income 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. State income tax filing The owner has no reason to believe any information on the certificate is false. State income 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. State income tax filing The operator is jointly and severally liable if the owner does not meet these conditions. State income tax filing Sales to unregistered person. State income 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. State income tax filing   The seller is liable for the tax. State income tax filing However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. State income tax filing The seller is a registrant. State income tax filing The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. State income tax filing The seller has no reason to believe any information on the certificate is false. State income tax filing The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. State income tax filing The buyer is jointly and severally liable if the seller does not meet these conditions. State income tax filing Exception. State income tax filing   The tax does not apply to a sale if all of the following apply. State income tax filing The buyer's principal place of business is not in the United States. State income 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. State income tax filing The seller is a registrant and the exporter of record. State income tax filing The fuel was exported. State income tax filing Removal or sale of blended diesel fuel or kerosene. State income tax filing   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. State income tax filing Blended taxable fuel produced using biodiesel is subject to the tax. State income tax filing See Blended taxable fuel under Definitions, earlier. State income tax filing   The blender is liable for the tax. State income tax filing The tax is figured on the number of gallons not previously subject to the tax. State income 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. State income tax filing Generally, the biodiesel mixture must be diesel fuel (defined earlier). State income tax filing See Form 720 to report this tax. State income tax filing You also must be registered by the IRS as a blender. State income tax filing See Form 637 for more information. State income 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. State income tax filing Additional persons liable. State income 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. State income tax filing Credits or Refunds. State income tax filing   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. State income tax filing For more information, see chapter 2. State income tax filing Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. State income tax filing 001 per gallon LUST tax as discussed below, unless the fuel is for export. State income 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. State income tax filing The person otherwise liable for tax (for example, the position holder) is a registrant. State income tax filing In the case of a removal from a terminal, the terminal is an approved terminal. State income tax filing The diesel fuel or kerosene satisfies the dyeing requirements (described next). State income tax filing Dyeing requirements. State income tax filing   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. State income tax filing It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. State income 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. State income tax filing Is indelibly dyed by mechanical injection. State income tax filing See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. State income tax filing Notice required. State income 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. State income 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. State income 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). State income tax filing That seller is subject to the penalty described next. State income tax filing Penalty. State income tax filing   A penalty is imposed on a person if any of the following situations apply. State income 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. State income 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. State income tax filing The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. State income 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. State income tax filing   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. State income tax filing After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. State income tax filing   This penalty is in addition to any tax imposed on the fuel. State income 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. State income 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. State income tax filing   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. State income tax filing However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. State income 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. State income tax filing Exception to penalty. State income tax filing   The penalty under item (3) will not apply in any of the following situations. State income 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. State income 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. State income tax filing The alteration or attempted alteration occurs in an exempt area of Alaska. State income tax filing See Removal for sale or use in Alaska, later. State income 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. State income tax filing Alaska and Feedstocks Tax of $. State income 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). State income tax filing Undyed kerosene used for feedstock purposes. State income tax filing Removal for sale or use in Alaska. State income 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. State income tax filing The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. State income 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. State income tax filing In the case of a removal from a terminal, the terminal is an approved terminal. State income 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. State income tax filing   If all three of the requirements above are not met, then tax is imposed at $. State income tax filing 244 per gallon. State income 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. State income tax filing Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. State income tax filing Later sales. State income tax filing   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. State income tax filing The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. State income tax filing However, the sale is not taxable (other than the LUST tax at $. State income tax filing 001 per gallon) if all the following requirements are met. State income tax filing The fuel is sold in Alaska for certain nontaxable uses. State income tax filing The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. State income 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. State income tax filing Feedstock purposes. State income tax filing   The $. State income tax filing 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. State income tax filing The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. State income tax filing In the case of a removal from a terminal, the terminal is an approved terminal. State income 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. State income tax filing   If all of the requirements above are not met, then tax is imposed at $. State income tax filing 244 per gallon. State income tax filing   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. State income tax filing For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. State income tax filing A feedstock user is a person that uses kerosene for a feedstock purpose. State income tax filing A registered feedstock user is a person that has been registered by the IRS as a feedstock user. State income tax filing See Registration Requirements, earlier. State income tax filing Later sales. State income tax filing   The excise tax ($. State income 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. State income tax filing The tax is imposed at the time of the later sale and that seller is liable for the tax. State income tax filing Certificate. State income 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. State income tax filing The certificate may be included as part of any business records normally used for a sale. State income tax filing A model certificate is shown in the Appendix as Model Certificate G. State income tax filing Your certificate must contain all information necessary to complete the model. State income tax filing   A certificate expires on the earliest of the following dates. State income tax filing The date 1 year after the effective date (not earlier than the date signed) of the certificate. State income tax filing The date the seller is provided a new certificate or notice that the current certificate is invalid. State income tax filing The date the seller is notified the buyer's registration has been revoked or suspended. State income tax filing   The buyer must provide a new certificate if any information on a certificate has changed. State income 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. State income tax filing Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. State income 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. State income tax filing Any liquid other than gasoline, diesel fuel, or kerosene. State income tax filing Generally, this back-up tax is imposed at a rate of $. State income tax filing 244 per gallon. State income tax filing Liability for tax. State income tax filing   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. State income 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. State income tax filing Exemptions from the back-up tax. State income 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. State income 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. State income 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. State income tax filing A reduced tax rate of $. State income tax filing 198 per gallon is imposed on a diesel-water fuel emulsion. State income 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. State income 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 $. State income tax filing 244 per gallon. State income tax filing Credits or refunds. State income tax filing   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. State income tax filing Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. State income tax filing 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). State income 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 $. State income tax filing 219. State income tax filing The rate of $. State income 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. State income tax filing The airport terminal does not need to be a secured airport terminal for this rate to apply. State income 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. State income tax filing For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. State income tax filing 044 per gallon. State income tax filing For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. State income 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. State income tax filing See Terminal located within a secured area of an airport, later. State income tax filing In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. State income 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 $. State income tax filing 001. State income tax filing There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. State income 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. State income tax filing See Terminal located within a secured area of an airport, later. State income tax filing In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. State income tax filing The position holder is liable for the $. State income tax filing 001 per gallon tax. State income 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 $. State income tax filing 141 per gallon applies. State income tax filing Certain refueler trucks, tankers, and tank wagons treated as terminals. State income 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. State income tax filing Such terminal is located within an area of an airport. State income 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. State income 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. State income 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. State income tax filing Information reporting will be required by terminal operators regarding this provision. State income 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. State income tax filing Terminal located within a secured area of an airport. State income tax filing   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. State income 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. State income 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 $. State income tax filing 044 per gallon. State income 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). State income tax filing For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. State income tax filing For the aircraft operator to be liable for the tax $. State income 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. State income tax filing Commercial aviation. State income tax filing   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. State income tax filing However, commercial aviation does not include any of the following uses. State income tax filing Any use exclusively for the purpose of skydiving. State income tax filing Certain air transportation by seaplane. State income tax filing See Seaplanes under Transportation of Persons by Air in chapter 4. State income tax filing Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. State income tax filing For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. State income 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. State income tax filing For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. State income tax filing Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. State income tax filing See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. State income 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 $. State income tax filing 141 per gallon. State income tax filing The fractional ownership program manager is liable for the tax. State income tax filing The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. State income tax filing If the surtax is imposed, the following air transportation taxes do not apply. State income tax filing Transportation of persons by air. State income tax filing Transportation of property by air. State income tax filing Use of international air travel facilities. State income tax filing These taxes are described under Air Transportation Taxes, later. State income 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. State income 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. State income tax filing Fractional program aircraft. State income 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. State income tax filing S. State income 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. State income tax filing In such situations, the flight is not commercial aviation. State income tax filing Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. State income tax filing Fractional owner. State income tax filing   Any person owning any interest (including the entire interest) in a fractional program aircraft. State income tax filing Dry lease aircraft exchange. State income 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. State income tax filing Special rule relating to deadhead service. State income 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. State income tax filing More information. State income tax filing   See section 4043 for more information on the surtax. State income 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. State income tax filing Certificate. State income tax filing   The certificate may be included as part of any business records normally used for a sale. State income tax filing See Model Certificate K in the Appendix. State income tax filing   A certificate expires on the earliest of the following dates. State income tax filing The date 1 year after the effective date (not earlier than the date signed) of the certificate. State income tax filing The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. State income tax filing The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. State income tax filing   The buyer must provide a new certificate if any information on a certificate has changed. State income 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. State income tax filing Exempt use. State income tax filing   The rate on kerosene for use in aviation is $. State income 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. State income tax filing An exempt use includes kerosene for the exclusive use of a state or local government. State income tax filing There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. State income tax filing Flash title transaction. State income 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. State income 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. State income 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. State income tax filing Reseller statement. State income 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. State income tax filing Credits or Refunds. State income 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). State income tax filing A claim may be made by a registered ultimate vendor for certain sales. State income tax filing For more information, see chapter 2. State income tax filing Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. State income tax filing Other Fuels include alternative fuels. State income 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. State income tax filing Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. State income tax filing Qualified methanol and ethanol fuels. State income tax filing   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. State income tax filing The tax rates are listed in the Instructions for Form 720. State income tax filing Partially exempt methanol and ethanol fuels. State income tax filing   A reduced tax rate applies to these fuels. State income tax filing Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. State income tax filing The tax rates are listed in the Instructions for Form 720. State income tax filing Motor vehicles. State income 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. State income tax filing They are propelled by a motor. State income 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