Publication 510 Contents (Rev. April 2005)

Cat. No. 15014I What’s New ..................... 2 Department

of the Important Reminders .............. 2 Treasury

Internal Excise Taxes Introduction ..................... 2

Revenue

Service Excise Taxes Not Covered .......... 2 for 2005

Registration for Certain Activities ..... 3

Environmental Taxes .............. 3

ODCs ...................... 3

Imported Taxable Products ........ 3

Floor Stocks Tax ............... 4

Communications and Air

Transportation Taxes ........... 5

Uncollected Tax Report ........... 5

Communications Tax ............ 5

Air Transportation Taxes .......... 6

Fuel Taxes ...................... 9

Items To Note ................. 9

Definitions ................... 9

Information Returns ............. 10

Registration Requirements ......... 10

Refunds of Second Tax ........... 10

Gasoline ..................... 11

Diesel Fuel and Kerosene ......... 13

Aviation-Grade Kerosene ......... 17

Special Motor Fuels ............. 19

Compressed Natural Gas ......... 19

Fuels Used on Inland Waterways .... 19

Alcohol Sold as Fuel But Not

Used as Fuel ............... 20

Biodiesel Sold as Fuel But Not

Used as Fuel ............... 20

Manufacturers Taxes .............. 21

Taxable Event ................. 21

Exemptions ................... 21

Credits or Refunds .............. 22

Sport Fishing Equipment .......... 22

Bows, Quivers, Broadheads, and

Points .................... 23

Arrow Shafts .................. 23

Coal ....................... 23

Taxable Tires ................. 24

Gas Guzzler Tax ............... 24

Vaccines .................... 25

Retail Tax on Heavy Trucks,

Trailers, and Tractors ........... 25

Ship Passenger Tax ............... 28

Foreign Insurance Taxes ........... 28

Obligations Not in Registered

Form ....................... 29

Filing Form 720 .................. 29

Get forms and other information Payment of Taxes ................ 29

faster and easier by:

Tax on Wagering ................. 31

Internet • www.irs.gov Penalties and Interest .............. 32

FAX • 703–368–9694 (from your fax machine) Examination and Appeal

Procedures .................. 32
Rulings Program ................. 32 Retail tax on heavy trucks, trailers, and trac- ❏ 2290 Heavy Highway Vehicle Use Tax

tors. Four classifications of truck body types Return

How To Get Tax Help .............. 33 have been designated as meeting the suitable ❏ 2290-SP Declaracion del Impuesto sobre for use standard and will be excluded from the el Uso de Vehiculos Pesados en Appendix A ..................... 34 retail tax. See Gross vehicle weight on page 25. las Carreteras

Index .......................... 46 Fuel Taxes. See Fuel Taxes on page 9 for fuel ❏ 2290-FR Declaration d’Impot sur tax changes. L’utilisation des Vehicules Lourds

sur les Routes.

What’s New ❏ 4136 Credit for Federal Tax Paid on

Fuels Important Reminders

❏ 6197 Gas Guzzler Tax Use of international air travel facilities. The

Photographs of missing children. The Inter- tax on use of international air travel facilities has ❏ 6478 Credit for Alcohol Used as Fuel nal Revenue Service is a proud partner with the increased for amounts paid during 2005 to: National Center for Missing and Exploited Chil- ❏ 6627 Environmental Taxes

• $14.10 per person for flights that begin or dren. Photographs of missing children selected ❏ 8849 Claim for Refund of Excise Taxes, end in the United States or by the Center may appear in this publication on and Schedules 1-3, 5, and 6 pages that would otherwise be blank. You can • $7.00 per person for domestic segments help bring these children home by looking at the ❏ 8864 (new) Biodiesel Fuels Credit

that begin or end in Alaska or Hawaii (ap- photographs and calling 1-800-THE-LOST plies only to departures). (1-800-843-5678) if you recognize a child. Information Returns

• Form 720-TO, Terminal Operator Report Domestic segment tax. For amounts paid for

each domestic segment of taxable transporta- • Form 720-CS, Carrier Summary Report

tion of persons by air, the domestic segment tax Introduction

is $3.20 per segment for transportation that be- This publication covers the excise taxes for Notices

gins in 2005. which you may be liable during 2005. It covers • Notice 2005-4. You can find Notice 2005-4

Imported products table. The imported prod- the excise taxes reported on Form 720. It also on page 289 of Internal Revenue Bulletin

ucts table has been deleted from Appendix A of provides information on wagering activities re- 2005-2 at www.irs.gov/pub/irs-irbs/

Pub. 510. It can be found in Regulations section ported on Forms 11-C and 730. irb05-02.pdf.

52.4682-3(f)(6). Comments and suggestions. We welcome • Notice 2005-24. You can find Notice

Communication and air transportation your comments about this publication and your 2005-24 on page 757 of Internal Revenue

suggestions for future editions. Bulletin 2005-12 at www.irs.gov/pub/ taxes—uncollected tax report. Instructions

You can email us at *taxforms@irs.gov. irs-irbs/irb05-12.pdf. have been added regarding the separate report

Please put “Publications Comment” on the sub- that is required to be filed by collecting agents of

ject line. See How To Get Tax Help near the end of this communications services and air transportation

You can write to us at the following address: publication for information about getting publica- taxes if the person from whom the facilities or tions and forms. services tax (the tax) is required to be collected Internal Revenue Service (the taxpayer) refuses to pay the tax, or it is TE/GE and Specialty Forms and Publica- impossible for the collecting agent to collect the tions Branch tax. See Uncollected Tax Report on page 5. SE:W:CAR:MP:T:T Excise Taxes

Sonar devices suitable for finding fish. The 1111 Constitution Ave. NW, IR-6406

tax on sonar devices has been repealed. See Washington, DC 20224 Not Covered

Sports Fishing Equipment on page 22. In addition to the taxes discussed in this publica- We respond to many letters by telephone. Fishing tackle boxes. The rate of tax on fish- tion, you may have to report certain other excise Therefore, it would be helpful if you would in- ing tackle boxes has been decreased to 3% of taxes. clude your daytime phone number, including the the sales price and appears on its own line on For tax forms relating to alcohol and tobacco, area code, in your correspondence. Form 720 as IRS No. 114. See Sports Fishing visit the Alcohol and Tobacco Bureau of Trade

Equipment website at www.ttb.gov. on page 22. Useful Items

Bows. You may want to see: The tax on bows has been revised to Form 2290: include quivers, broadheads, and points. See Publication Heavy Highway Vehicle Use Bows, Quivers, Broadheads, and Points on

page 23. ❏ 378 Fuel Tax Credits and Refunds Tax Return

Arrow shafts and arrow components. Effec- ❏ 509 Tax Calendars for 2005 You report the federal excise tax on the use of

tive after March 31, 2005, there is a new tax on certain trucks, truck tractors, and buses on pubarrow shafts at $.39 per arrow shaft; and the tax Form (and Instructions) lic highways on Form 2290. The tax applies to

on arrow components is repealed. See Arrow highway motor vehicles with a taxable gross ❏ 11-C Occupational Tax and Registration Shafts on page 23. weight of 55,000 pounds or more. Vans, pickup Return for Wagering trucks, panel trucks, and similar trucks generally

Taxable tires. Highway-type tires is renamed ❏ 637 Application for Registration (For are not subject to this tax.

taxable tires and the computation of the tax has Certain Excise Tax Activities)

changed. The rate is $.0945 ($.04725 for biasply Note. A Spanish version of Form 2290 and ❏ 720 Quarterly Federal Excise Tax or super singles) for each 10 pounds of the its instructions (Form 2290-SP) are also avail- Return

maximum rated load capacity over 3,500 able. New for July 2005, a French version of

pounds. See Taxable Tires ❏ 720X Amended Quarterly Federal Excise Form 2290 and its instructions (Form 2290-FR) on page 24.

Tax Return will be available.

Vaccines. Hepatitis A and influenza have A public highway is any road in the United ❏ 730 Monthly Tax Return for Wagers been added to the list of taxable vaccines. See States that is not a private roadway. This inVaccines on page 25. ❏ 1363 Export Exemption Certificate cludes federal, state, county, and city roads.

Page 2
Canadian and Mexican heavy vehicles operated tribal governments, and nonprofit educational cise Tax Activities). Also, you must obtain from

on U.S. highways may be subject to this tax. For the purchaser an exemption certificate that you organizations.

more information, see the Instructions for rely on in good faith. Keep the certificate with

Form 2290. ODCs your records. The certificate must be in substantially the form set forth in section

Registration of vehicles. Generally, you For a list of the taxable ODCs and tax rates, see 52.4682-5(d)(3) of the regulations. The tax benmust prove that you paid your federal highway the Form 6627 instructions. efit of this exemption is limited. For more inforuse tax to register your taxable vehicle with your mation, see section 52.4682-5 of the

state motor vehicle department or to enter the regulations.

United States in a Canadian or Mexican regis- Taxable Event ODCs used as feedstock. There is no tax tered taxable vehicle. Generally, a copy of

Tax is imposed on an ODC when it is first used on ODCs sold for use or used as a feedstock. An Schedule 1 of Form 2290, stamped after pay- or sold by its manufacturer or importer. The ODC is used as a feedstock only if the ODC is ment and returned to you by the IRS, is accept- manufacturer or importer is liable for the tax. entirely consumed in the manufacture of another able proof of payment. chemical. The transformation of an ODC into

Use of ODCs. You use an ODC if you put it one or more new compounds qualifies as use as Note. If you have questions on Form 2290, into service in a trade or business or for the a feedstock, but use of an ODC in a mixture see How To Get Tax Help later, or you can call production of income. Also, an ODC is used if does not qualify. the Form 2290 call site at 1-866-699-4096 (toll you use it in the making of an article, including free) from the United States and For a sale to be nontaxable, you must obtain incorporation into the article, chemical transfor- 1-859-669-5733 (not toll free) from Canada and from the purchaser an exemption certificate that mation, or release into the air. The loss, destruc- Mexico. The hours of service are 8:00 a.m. to you rely on in good faith. The certificate must be tion, packaging, repackaging, or warehousing of 6:00 p.m., EST. in substantially the form set forth in section ODCs is not a use of the ODC. 52.4682-2(d)(2) of the regulations. Keep the cer- The creation of a mixture containing an ODC tificate with your records. is treated as the use of that ODC. An ODC is

contained in a mixture only if the chemical iden- Registration for tity of the ODC is not changed. Generally, tax is Credits or Refunds

imposed when the mixture is created and not on Certain Activities its sale or use. However, you can choose to A credit or refund (without interest) of tax paid on

have the tax imposed on its sale or use by ODCs may be claimed if a taxed ODC is : You must register for certain excise tax activi- checking the appropriate box in Part I of Form ties, such as a blending of gasoline, diesel fuel, • Used as a propellant in a metered-dose 6627. You can revoke this choice only with IRS or kerosene outside the bulk transfer/terminal inhaler, then the person who used the consent.

system. See the instructions for Form 637 for the ODC as a propellant may file a claim. The creation of a mixture for export or for use list of activities for which you must register. Also as a feedstock is not a taxable use of the ODCs • Exported, then the manufacturer may file a see Registration Requirements under Fuel contained in the mixture. claim. Taxes for information on registration for activities related to fuel. Each business unit that has, Exceptions. The following may be exempt • Used as a feedstock, then the person who

or is required to have, a separate employer from the tax on ODCs. used the ODC may file a claim.

identification number must register. • Metered-dose inhalers. For information on how to file for credits or reTo apply for registration, complete Form 637 funds, see the Instructions for Form 720 or Form • Recycled ODCs. and provide the information requested in its in- 8849.

structions. If your application is approved, you • Exported ODCs.

will receive a Letter of Registration showing the Conditions to allowance for ODCs exported. • ODCs used as feedstock. activities for which you are registered, the effec- To claim a credit or refund for ODCs that are

tive date of the registration, and your registration exported, you must have repaid or agreed to Metered-dose inhalers. There is no tax on number. A copy of Form 637 is not a Letter of repay the tax to the exporter, or obtained the ODCs used or sold for use as propellants in Registration. exporter’s written consent to allowance of the metered-dose inhalers. For a sale to be nontax- credit or refund. You must also have the evi- able, you must obtain from the purchaser an dence required by the Environmental Protection exemption certificate that you rely on in good Agency as proof that the ODCs were exported. faith. The certificate must be in substantially the Environmental Taxes form set forth in section 52.4682-2(d)(5) of the

regulations. The certificate may be included as Imported Taxable Products Environmental taxes are imposed on the sale or part of the sales documentation. Keep the certifi- use of ozone-depleting chemicals (ODCs) An imported product containing or manufac- cate with your records. and imported products containing or manufac- tured with ODCs is subject to tax if it is entered

tured with these chemicals. In addition, a floor Recycled ODCs. There is no tax on any into the United States for consumption, use, or

stocks tax is imposed on ODCs held on ODC diverted or recovered in the United States warehousing and is listed in the Imported ProdJanuary 1 by any person (other than the manu- as part of a recycling process (and not as part of ucts Table. The Imported Products Table is

the original manufacturing or production pro- facturer or importer of the ODCs) for sale or for listed in Regulations section 52.4682-3(f)(6).

use in further manufacture. cess). There is no tax on recycled Halon-1301 or The tax is based on the weight of the ODCs recycled Halon-2402 imported from a country Figure the environmental tax on Form 6627. used in the manufacture of the product. Use the that has signed the Montreal Protocol on Sub- Enter the tax on the appropriate lines of Form following methods to figure the ODC weight. stances that Deplete the Ozone Layer (Montreal 720 and attach Form 6627 to Form 720.

Protocol). • The actual (exact) weight of each ODC For environmental tax purposes, United The Montreal Protocol is administered by the used as a material in manufacturing the States includes the 50 states, the District of United Nations (U.N.). To determine if a country product. Columbia, the Commonwealth of Puerto Rico, has signed the Montreal Protocol, contact the any possession of the United States, the Com- • If the actual weight cannot be determined, U.N. The Internet address is http:// monwealth of the Northern Mariana Islands, the the ODC weight listed for the product in untreaty.un.org. Trust Territory of the Pacific Islands, the conti- the Imported Products Table.

nental shelf areas (applying the principles of Exported ODCs. Generally, there is no tax

section 638 of the Internal Revenue Code), and on ODCs sold for export if certain requirements However, if you cannot determine the actual

foreign trade zones. No one is exempt from the are met. For a sale to be nontaxable, you and weight and the table does not list an ODC weight

environmental taxes, including the federal gov- the purchaser must be registered. See Form for the product, the rate of tax is 1% of the entry

ernment, state and local governments, Indian 637, Application for Registration (for Certain Ex- value of the product.

Page 3
Taxable Event • It is an electronic component whose oper- Floor Stocks Tax

ation involves the use of nonmechanical Tax is imposed on an imported taxable product Tax is imposed on any ODC held (other than by amplification or switching devices such as when the product is first sold or used by its the manufacturer or importer of the ODC) on tubes, transistors, and integrated circuits. importer. The importer is liable for the tax. January 1 for sale or use in further manufacturUse of imported products. You use an im- • It contains components described in (1), ing. The person holding title (as determined

ported product if you put it into service in a trade which account for more than 15% of the under local law) to the ODC is liable for the tax,

or business or for the production of income or cost of the product. whether or not delivery has been made.

use it in the making of an article, including incor- These chemicals are taxable without regard

poration into the article. The loss, destruction, These components do not include passive to the type or size of storage container in which

packaging, repackaging, warehousing, or repair electrical devices, such as resistors and capaci- the ODCs are held. The tax may apply to an

of an imported product is not a use of that prod- tors. Items such as screws, nuts, bolts, plastic ODC whether it is in a 14-ounce can or a

uct. parts, and similar specially fabricated parts that 30-pound tank.

may be used to construct an electronic item are You are liable for the floor stocks tax if you Entry as use. The importer may choose to not themselves included in the listing for elec- hold any of the following on January 1. treat the entry of a product into the United States tronic items.

as the use of the product. Tax is imposed on the 1. At least 400 pounds of ODCs other than Rules for listing products. Products are date of entry instead of when the product is sold halons or methyl chloroform, listed in the table according to the following or used. The choice applies to all imported tax- 2. At least 50 pounds of halons, or rules. able products that you own and have not used

when you make the choice and all later entries. 3. At least 1,000 pounds of methyl chloro- 1. A product is listed in Part I of the table if it Make the choice by checking the box in Part II of form. is a mixture containing ODCs. Form 6627. The choice is effective as of the If you are liable for the tax, prepare an inven- beginning of the calendar quarter to which the 2. A product is listed in Part II of the table if tory on January 1 of the taxable ODCs held on Form 6627 applies. You can revoke this choice the Commissioner has determined that the that date for sale or for use in further manufac- only with IRS consent. ODCs used as materials in the manufac- turing. You must pay this floor stocks tax by ture of the product under the predominant Sale of article incorporating imported prod- June 30 of each year. Report the tax on Form method are used for purposes of refrigera- uct. The importer may treat the sale of an 6627 and Part II of Form 720 for the second tion or air conditioning, creating an aerosol article manufactured or assembled in the United calendar quarter. or foam, or manufacturing electronic com- States as the first sale or use of an imported For the tax rates, see the Form 6627 instruc- ponents. taxable product incorporated in that article if tions.

both the following apply. 3. A product is listed in Part III of the table if ODCs not subject to floor stocks tax. The the Commissioner has determined that the • The importer has consistently treated the floor stocks tax is not imposed on any of the product meets both the following tests. sale of similar items as the first sale or use following ODCs.

of similar taxable imported products. a. It is not an imported taxable product. 1. ODCs mixed with other ingredients that • The importer has not chosen to treat entry b. It would otherwise be included within a contribute to achieving the purpose for into the United States as use of the prod- list in Part II of the table. which the mixture will be used, unless the uct. mixture contains only ODCs and one or

For example, floppy disk drive units are listed more stabilizers.

in Part III because they are not imported taxable Imported Products Table 2. ODCs contained in a manufactured article products and would have been included in the in which the ODCs will be used for their The table lists all the products that are subject to Part II list for electronic items not specifically intended purpose without being released the tax on imported taxable products and speci- identified, but for their listing in Part III. from the article. fies the ODC weight (discussed later) of each ODC weight. The Table ODC weight of a product. 3. ODCs that have been reclaimed or re- product is the weight, determined by the Com- Each listing in the table identifies a product cycled. missioner, of the ODCs used as materials in the by name and includes only products that are manufacture of the product under the predomi- 4. ODCs sold in a qualifying sale for: described by that name. Most listings identify a nant method of manufacturing. The ODC weight product by both name and Harmonized Tariff a. Use as a feedstock, is listed in Part II in pounds per single unit of Schedule (HTS) heading. In those cases, a product unless otherwise specified. b. Export, or product is included in that listing only if the product is described by that name and the rate of Modifying the table. A manufacturer or im- c. Use as a propellant in a metered-dose duty on the product is determined by reference porter of a product may request the IRS add a inhaler.

to that HTS heading. A product is included in the product and its ODC weight to the table. They

listing even if it is manufactured with or contains also may request the IRS remove a product from

a different ODC than the one specified in the the table, or change or specify the ODC weight

table. of a product. To request a modification, see

Part II of the table lists electronic items that Regulations section 52.4682-3(g) for the mailing

are not included within any other list in the table. address and information that must be included

An imported product is included in this list only if in the request.

the product meets one of the following tests.

Page 4
service. Private communication service includes telephone system and the privilege of telephonic

Communications and accessory-type services provided in connection communication as part of the local telephone

with a Centrex, PBX, or other similar system for system.

Air Transportation dual use accessory equipment. However, the

charge for the service must be stated separately Mobile radio telephone service. The tax

Taxes from the charge for the basic system, and the does not apply to payments for a two-way radio

accessory must function, in whole or in part, in service that does not provide access to a local

Excise taxes are imposed on amounts paid for connection with intercommunication among the telephone system.

certain facilities and services. If you receive any subscriber’s stations.

Coin-operated telephones. The tax for local payment on which tax is imposed, you are re- Toll telephone service. This includes a tele- telephone service does not apply to payments quired to collect the tax, file returns, and pay the phonic quality communication for which a toll is made for services by inserting coins in public tax over to the government. charged that varies with the distance and coin-operated telephones. The tax for toll tele- If you fail to collect and pay over the taxes, elapsed transmission time of each communica- phone service also does not apply if the charge you may be liable for the trust fund recovery tion. The toll must be paid within the United is less than 25 cents. But the tax applies if the penalty. See Penalties and Interest, later.

States. It also includes (a) a telephonic quality coin-operated telephone service is furnished for

communication for which a toll is charged that a guaranteed amount. Figure the tax on the Uncollected Tax Report varies only with elapsed transmission time and amount paid under the guarantee plus any fixed

(b) a long distance service that entitles the sub- monthly or other periodic charge. A separate report is required to be filed by col- scriber to make unlimited calls (sometimes lim- lecting agents of communications services and ited as to the maximum number of hours) within Telephone-operated security systems. The air transportation taxes if the person from whom a certain area for a periodic charge. tax does not apply to amounts paid for tele- the facilities or services tax (the tax) is required phones used only to originate calls to a limited to be collected (the taxpayer) refuses to pay the Teletypewriter exchange service. This in- number of telephone stations for security entry tax, or it is impossible for the collecting agent to cludes access from a teletypewriter or other into a building. In addition, the tax does not apply collect the tax. The report must contain the fol- data station to a teletypewriter exchange system to any amounts paid for rented communication lowing information: the name and address of the and the privilege of intercommunication by that equipment used in the security system. taxpayer, the type of facility provided or service station with most persons having teletypewriter rendered, the amount paid for the facility or or other data stations in the same exchange News services. The tax on toll telephone service (the amount on which the tax is based), system. service and teletypewriter exchange service and the date paid. does not apply to charges for the following news

Regular method taxpayers. For regular Figuring the tax. The tax is based on the sum services.

method taxpayers, the report must be filed by of all charges for local or toll telephone service • Services dealing exclusively with the col- included in the bill. However, if the bill groups the due date of the Form 720 on which the tax lection or dissemination of news for or

would have been reported. individual items for billing and tax purposes, the through the public press or radio or televi- tax is based on the sum of the individual items

Alternative method taxpayers. For alterna- sion broadcasting. within that group. The tax on the remaining items tive method taxpayers, the report must be filed not included in any group is based on the charge • Services used exclusively in the collection by the due date of the Form 720 that includes an for each item separately. Do not include in the or dissemination of news by a news ticker adjustment to the separate account for the un- tax base state or local sales or use taxes that are service furnishing a general news service collected tax. See Alternative method on separately stated on the taxpayer’s bill. similar to that of the public press. page 30. If the tax on toll telephone service is paid by This exemption applies to payments received for Where to file. Do not file the uncollected tax inserting coins in coin-operated telephones, messages from one member of the news media figure the tax to the nearest multiple of 5 cents. report with Form 720. Instead, mail the report

When the tax is midway between 5-cent multi- to another member (or to or from their bona fide to: correspondents). For the exemption to apply, ples, the next higher multiple applies. the charge for these services must be billed in Internal Revenue Service Prepaid telephone cards. A prepaid tele- writing to the person paying for the service and Collected Excise Tax Coordinator phone card is any card or any other similar that person must certify in writing that the serv- S:C:CP:RC:Ex arrangement that allows its holder to get local or ices are used for an exempt purpose. 1111 Constitution Avenue NW, IR-2016 toll telephone service and pay for those services Washington, DC 20224 Services not exempted. The tax applies to in advance. The tax is imposed when the card is amounts paid by members of the news media for transferred by a telecommunications carrier to local telephone service. Toll telephone service any person who is not a telecommunications

Communications Tax in connection with celebrities or special guests carrier. The face amount of the card is the

on talk shows is subject to the tax. amount paid for communications services. If the

A 3% tax is imposed on amounts paid for all the face amount is not a dollar amount, see section Common carriers and communications following communications services. 49.4251-4 of the regulations. companies. The tax on toll telephone service

• Local telephone service. does not apply to WATS (wide area telephone

service) used by common carriers, telephone • Toll telephone service. Exemptions and telegraph companies, or radio broadcasting

• Teletypewriter exchange service. Payments for certain services or payments from stations or networks in their business. A common carrier is one holding itself out to the public certain users are exempt from the communica- as engaged in the business of transportation of Local telephone service. This includes ac- tions tax.

persons or property for compensation and offer- cess to a local telephone system and the privi- Installation charges. The tax does not apply ing its services to the public generally. lege of telephonic quality communication with

most people who are part of the system. Local to payments received for the installation of any Military personnel serving in a combat zone. instrument, wire, pole, switchboard, apparatus, telephone service also includes any facility or or equipment. However, the tax does apply to The tax on toll telephone services does not ap- services provided in connection with this serv- payments for the repair or replacement of those ply to telephone calls originating in a combat ice. The tax applies to lease payments for cer- zone that are made by members of the U.S. items incidental to ordinary maintenance. tain customer premises equipment (CPE) even Armed Forces serving there if the person receiv- though the lessor does not also provide access Answering services. The tax does not apply ing payment for the call receives a properly to a local telecommunications system. to amounts paid for a private line, an answering executed exemption certificate. The signed and

Private communication service. Private service, and a one-way paging or message dated exemption certificate must contain all the

communication service is not local telephone service if they do not provide access to a local following information.

Page 5
the initial certificate to claim an exemption from • The name of the member of the U.S. • Amounts paid for mileage awards that the communications tax. Armed Forces performing services in the cannot be redeemed for taxable transporcombat zone who originated the call. • The American National Red Cross and tation beginning and ending in the United

other international organizations. States are not subject to the tax. For this • The toll charges, point of origin, and name rule, mileage awards issued by a foreign of carrier. • Nonprofit hospitals. air carrier are considered to be usable • A statement that the charges are exempt • Nonprofit educational organizations. only on that foreign air carrier and thus not from tax under section 4253(d) of the In- • State and local governments. redeemable for taxable transportation be- ternal Revenue Code. ginning and ending in the United States.

• The name and address of the telephone The federal government does not have to file Therefore, amounts paid to a foreign air

subscriber. any exemption certificate. carrier for mileage awards are not subject

All other organizations must furnish exemp- to the tax. This exemption also applies to members of the tion certificates when required. Armed Forces serving in a qualified hazardous • Amounts paid by an air carrier to a domesduty area. A qualified hazardous duty area in- tic air carrier for mileage awards that can

cludes an area only while the special pay provi- be redeemed for taxable transportation Credits or Refunds sion is in effect for that area. are not subject to the tax to the extent

If tax is collected and paid over for certain serv- those miles will be awarded in connection For information about areas designated a with the purchase of taxable transporta- ices or users exempt from the communications combat zone or qualified hazardous duty area,

tax: tion. see Publication 3, Armed Forces’ Tax Guide.

• Amounts paid by an air carrier to a domes- 1. The collector may claim a credit or refund International organizations and the Ameri- tic air carrier for mileage awards that can if it has: can Red Cross. The tax does not apply to be redeemed for taxable transportation communication services furnished to an interna- a. Repaid the tax to the person from are subject to the tax to the extent those tional organization or to the American National whom the tax was collected, or miles will not be awarded in connection Red Cross. with the purchase of taxable transporta- b. Obtained the consent of that person to

Nonprofit hospitals. The tax does not apply tion. the allowance of the credit or refund, or to telephone services furnished to income

tax-exempt nonprofit hospitals for their use. 2. The person who paid the tax may claim a Domestic-segment tax. The domestic-segAlso, the tax does not apply to amounts paid by refund. ment tax is a flat dollar amount for each segment these hospitals to provide local telephone serv- of taxable transportation for which an amount is For information about credits or refunds, see ice in the homes of their personnel who must be paid. However, see Rural airports, later. A seg- the Instructions for Form 720 or Form 8849. reached during their off-duty hours. ment is a single takeoff and a single landing.

The domestic-segment tax is $3.20 per segment Nonprofit educational organizations. The Air Transportation Taxes that begins during 2005. tax does not apply to payments received for

services and facilities furnished to a nonprofit Taxes are imposed on amounts paid for all the Example. In January 2005, Frank Jones educational organization for its use. A nonprofit following services. pays $264.40 to a commercial airline for a flight educational organization is one that satisfies all • Transportation of persons by air. in January from Washington to Chicago with an the following requirements. intermediate stop in Cleveland. The flight com- • Use of international air travel facilities. • It normally maintains a regular faculty and prises two segments. The price includes the

curriculum. • Transportation of property by air. $240 fare and $24.40 excise tax [($240 × 7.5%)

+ (2 × $3.20)] for which Frank is liable. The • It normally has a regularly enrolled body of

pupils or students in attendance at the Transportation of airline collects the tax from Frank and pays it

place where its educational activities are Persons by Air over to the government.

regularly carried on. Charter flights. If an aircraft is chartered, The tax on transportation of persons by air is • the domestic-segment tax for each segment of It is exempt from income tax under section made up of the following two parts. 501(a) of the Internal Revenue Code. taxable transportation is figured by multiplying

• The percentage tax. the tax by the number of passengers trans- This includes a school operated by an organiza- ported on the aircraft. • The domestic-segment tax. tion exempt under section 501(c)(3) of the Internal Revenue Code if the school meets the above Example. In March 2005, Tim Clark pays qualifications. Percentage tax. A tax of 7.5% applies to $1,119.80 to an air charter service to carry 7

amounts paid for taxable transportation of per- employees from Washington to Detroit with an Federal, state, and local government. The sons by air. Amounts paid for transportation intermediate stop in Pittsburgh. The flight com- tax does not apply to communication services include charges for layover or waiting time and prises two segments. The price includes the provided to the government of the United States, movement of aircraft in deadhead service. $1,000 charter payment and $119.80 excise tax the government of any state or its political subdi- Mileage awards. The percentage tax may [($1,000 × 7.5%) + (2 × $3.20 × 7 passengers)] visions, the District of Columbia, or the United

apply to an amount paid (in cash or in kind) to an for which Tim is liable. The charter service col- Nations. Treat an Indian tribal government as air carrier (or any related person) for the right to lects the tax from Tim and pays it over to the a state for the exemption from the communicaprovide mileage awards for, or other reductions government. tions tax only if the services involve the exercise

of an essential tribal government function. in the cost of, any transportation of persons by Rural airports. The domestic-segment tax air. For example, this applies to mileage awards does not apply to a segment to or from a rural Exemption certificate. Any form of exemp- purchased by credit card companies, telephone airport. An airport is a rural airport for a calendar tion certificate will be acceptable if it includes all companies, restaurants, hotels, and other busi- year if it satisfies both the following require- the information required by the Internal Revenue nesses. ments. Code and Regulations. See Regulations section Generally, the percentage tax does not apply

49.4253-11. File the certificate with the provider to amounts paid for mileage awards where the 1. Fewer than 100,000 commercial passen- of the communication services. mileage awards cannot, under any circum- gers departed from the airport during the The following users that are exempt from the stances, be redeemed for air transportation that second preceding calendar year. communications tax do not have to file an an- is subject to the tax. Until regulations are issued,

nual exemption certificate after they have filed the following rules apply to mileage awards. 2. Either of the following statements is true.

Page 6
a. The airport is not located within 75 nished solely to participants in package holiday of 1970, or otherwise uses services provided

miles of another airport from which tours. The amount paid for these package tours under section 44509 or 44913(b) or subchapter I

100,000 or more commercial passen- includes a charge for air transportation even of chapter 471 of title 49, United States Code.

gers departed during the second pre- though it may be advertised as “free.” This rule For item (1), treat each flight segment as a

ceding calendar year. also applies to the tax on the use of international separate flight.

air travel facilities, discussed later. b. The airport was receiving essential air Fixed-wing air ambulance. The tax does

service subsidies as of August 5, 1997. not apply to air transportation by fixed-wing air- Liability for tax. The person paying for tax- craft if used for emergency medical services. able transportation is liable for the tax and, ordi- An updated list of rural airports can be found The aircraft must be equipped for and exclu- narily, the person receiving the payment collects on the Department of Transportation website at sively dedicated on that flight to acute care the tax, files the returns, and pays the tax over to http://ostpxweb.dot.gov/aviation/domav/ emergency medical services. the government. However, if payment is made ruralair.pdf. outside the United States for a prepaid order, Skydiving. The tax does not apply to any air

Taxable transportation. Taxable transporta- exchange order, or similar order, the person transportation exclusively for the purpose of

furnishing the initial transportation provided for skydiving. tion is transportation by air that meets either of under that order must collect the tax. the following tests. Bonus tickets. The tax does not apply to A travel agency that is an independent • It begins and ends either in the United free bonus tickets issued by an airline company broker and sells tours on aircraft that it charters

States or at any place in Canada or Mex- to its customers who have satisfied all require- must collect the transportation tax, file the re- ments to qualify for the bonus tickets. However, ico not more than 225 miles from the near- turns, and pay the tax over to the government. est point on the continental United States the tax applies to amounts paid by customers for However, a travel agency that sells tours as the boundary (this is the 225-mile zone). advance bonus tickets when customers have agent of an airline must collect the tax and remit traveled insufficient mileage to fully qualify for • It is directly or indirectly from one port or it to the airline for the filing of returns and for the the free advance bonus tickets. station in the United States to another port payment of the tax over to the government.

or station in the United States, but only if it The fact that the aircraft does not use public

is not a part of uninterrupted international or commercial airports in taking off and landing Use of International

air transportation, discussed later. has no effect on the tax. But see Certain helicop- Air Travel Facilities ter uses, later.

Round trip. A round trip is considered two For taxable transportation that begins and A $14.10 tax per person is imposed on amounts

separate trips. The first trip is from the point of ends in the United States, the tax applies re- paid during 2005 (whether in or outside the

departure to the destination. The second trip is gardless of whether the payment is made in or United States) for international flights that begin outside the United States. the return trip from that destination. or end in the United States. However, for a

If the tax is not paid when payment for the Uninterrupted international air domestic segment that begins or ends in Alaska transportation is made, the air carrier providing or Hawaii, a $7.00 tax per person applies only to transportation. This means transportation the initial segment of the transportation that be- departures. This tax does not apply if all the entirely by air that does not begin and end in the gins or ends in the United States becomes liable United States or in the 225-mile zone if there is transportation is subject to the percentage tax, for the tax. discussed earlier. not more than a 12-hour scheduled interval between arrival and departure at any station in the Exemptions. The tax on transportation of per- United States. For a special rule that applies to

military personnel, see sons by air does not apply in the following situa- Transportation of Exemptions later. tions. See also Special Rules on Transportation Property by Air Transportation between the continental Taxes, later.

U.S. and Alaska or Hawaii. This transporta- Military personnel on international trips. A tax of 6.25% is imposed on amounts paid

tion is partially exempt from the tax on transpor- When traveling in uniform at their own expense, (whether in or outside the United States) for

tation of persons by air. The tax does not apply transportation of property by air. The fact that United States military personnel on authorized to the part of the trip between the point at which the aircraft may not use public or commercial leave are deemed to be traveling in uninterthe route of transportation leaves or enters the airports in taking off and landing has no effect on rupted international air transportation (de- continental United States (or a port or station in the tax. The tax applies only to amounts paid to fined earlier) even if the scheduled interval the 225-mile zone) and the point at which it a person engaged in the business of transport- between arrival and departure at any station in enters or leaves Hawaii or Alaska. Leaving or ing property by air for hire. the United States is actually more than 12 hours. entering occurs when the route of the transpor- The tax applies only to transportation (includ- However, such personnel must buy their tickets tation passes over either the United States bor- ing layover time and movement of aircraft in within 12 hours after landing at the first domestic der or a point 3 nautical miles (3.45 statute deadhead service) that begins and ends in the airport and accept the first available accommo- miles) from low tide on the coast line, or when it United States. Thus, the tax does not apply to dation of the type called for by their tickets. The leaves a port or station in the 225-mile zone. transportation of property by air that begins or trip must begin or end outside the United States Therefore, this transportation is subject to the ends outside the United States. and the 225-mile zone.

percentage tax on the part of the trip in U.S.

Certain helicopter uses. The tax does not Exemptions. The tax on transportation of airspace, the domestic-segment tax for each

apply to air transportation by helicopter if the property by air does not apply in the following domestic segment, and the tax on the use of

helicopter is used for any of the following pur- situations. See also Special Rules on Transpor- international air travel facilities, discussed later.

poses. tation Taxes, later.

Transportation within Alaska or Hawaii. Cropdusting and firefighting service. The The tax on transportation of persons by air ap- 1. Transporting individuals, equipment, or tax does not apply to amounts paid for cropdust- plies to the entire fare paid in the case of flights supplies in the exploration for, or the de- ing or aerial firefighting service. between any of the Hawaiian Islands, and be- velopment or removal of, hard minerals,

tween any ports or stations in the Aleutian Is- oil, or gas. Exportation. The tax does not apply to

lands or other ports or stations elsewhere in payments for transportation of property by air in 2. Planting, cultivating, cutting, transporting, Alaska. The tax applies even though parts of the the course of exportation (including to United or caring for trees (including logging opera- flights may be over international waters or over States possessions) by continuous movement, tions). Canada, if no point on the direct line of transpor- as evidenced by the execution of Form 1363,

tation between the ports or stations is more than 3. Providing emergency medical services. Export Exemption Certificate. See Form 1363

225 miles from the United States (Hawaii or for more details. However, during a use described in items (1) Alaska). and (2), the tax applies if the helicopter takes off Certain helicopter and fixed-wing air amPackage tours. The air transportation taxes from, or lands at, a facility eligible for assistance bulance uses. The tax does not apply to

apply to “complimentary” air transportation fur- under the Airport and Airway Development Act amounts paid for the use of helicopters in conPage 7
struction to set heating and air conditioning units narily, the person engaged in the business of maximum certificated takeoff weight of 6,000

on roofs of buildings, to dismantle tower cranes, transporting property by air for hire receives the pounds or less. However, the taxes do apply if

and to aid in construction of power lines and ski payment, collects the tax, files the returns, and the aircraft is operated on an established line.

lifts. pays the tax over to the government. “Operated on an established line” means the

The tax also does not apply to air transporta- If tax is not paid when a payment is made aircraft operates with some degree of regularity

tion by helicopter or fixed-wing aircraft for the outside the United States, the person furnishing between definite points.

purpose of providing emergency medical serv- the last segment of taxable transportation col- Consider an aircraft to be operated on an

ices. The fixed-wing aircraft must be equipped lects the tax from the person to whom the prop- established line if it is operated on a charter

for and exclusively dedicated on that flight to erty is delivered in the United States. basis between two cities also served by that

acute care emergency medical services. carrier on a regularly scheduled basis.

Skydiving. The tax does not apply to any air Mixed load of persons and property. If a Special Rules on transportation exclusively for the purpose of single amount is paid for air transportation of Transportation Taxes skydiving. persons and property, the payment must be

allocated between the amount subject to the tax Excess baggage. The tax does not apply to In certain circumstances, special rules apply to on transportation of persons and the amount excess baggage accompanying a passenger on the taxes on transportation of persons and prop- subject to the tax on transportation of property. an aircraft operated on an established line. erty by air. The allocation must be reasonable and supAlaska and Hawaii. Aircraft used by affiliated corporations. For transportation of ported by adequate records. The taxes do not apply to payments received by property to and from Alaska and Hawaii, the tax one member of an affiliated group of corpora- in general does not apply to the portion of the

transportation that is entirely outside the conti- tions from another member for services fur- Credits or Refunds

nished in connection with the use of an aircraft. nental United States (or the 225-mile zone if the However, the aircraft must be owned or leased If tax is collected and paid over for air transporta- aircraft departs from or arrives at an airport in by a member of the affiliated group and cannot tion that is not taxable air transportation, the the 225-mile zone). But the tax applies to flights be available for hire by a nonmember of the collector may claim a credit or refund if it has between ports or stations in Alaska and the affiliated group. Determine whether an aircraft is repaid the tax to the person from whom the tax Aleutian Islands, as well as between ports or available for hire by a nonmember of an affiliated was collected or obtained the consent of that stations in Hawaii. The tax applies even though group on a flight-by-flight basis. person to the allowance of the credit or refund. parts of the flights may be over international

waters or over Canada, if no point on a line For this rule, an affiliated group of corpora- Alternatively, the person who paid the tax may

tions is any group of corporations connected claim a refund. For information on how to file for drawn from where the route of transportation

leaves the United States (Alaska) to where it with a common parent corporation through 80% credits or refunds, see the Instructions for Form

or more of stock ownership. 720 or Form 8849. reenters the United States (Alaska) is more than

225 miles from the United States. Small aircraft. The taxes do not apply to

transportation furnished by an aircraft having a Liability for tax. The person paying for taxable transportation is liable for the tax and, ordiPage 8
Floor stocks, aviation-grade kerosene. See and the requirements of the American Society of

Fuel Taxes Form 720 and its instructions for information on Testing Materials D6751.

the aviation-grade kerosene floor stocks tax. Blended taxable fuel. This means any tax- Excise taxes are imposed on all the following Appendix A. All model certificates and waiv- able fuel produced outside the bulk transfer/ fuels. ers are now in Appendix A. Model certificates E, terminal system by mixing taxable fuel on which

• Gasoline, including aviation gasoline and F, H, and I have been deleted. Model certificates excise tax has been imposed and any other

gasoline blendstocks. A and B have been reversed. Model certificates liquid on which excise tax has not been imand waivers K through P have been added. posed. This does not include a mixture removed • Diesel fuel. or sold during the calendar quarter if all such

• Kerosene. Credits and refunds. The Act made many mixtures removed or sold by the blender contain

changes affecting fuel tax claims. The claims less than 400 gallons of a liquid on which the tax • Aviation-grade kerosene. are described in detail in Pub. 378, Form 8849, has not been imposed.

and Schedule C (Form 720). The certificates • Special motor fuels (including LPG). Blender. This is the person that produces and waivers necessary for many of the claims • Compressed natural gas. blended taxable fuel. However, if an untaxed are included in Appendix A in Pub. 510 and the liquid is sold as taxed taxable fuel and that Appendix in Pub. 378. The following is a brief list • Fuels used in commercial transportation untaxed liquid is used to produce blended tax- of some of the claims. on inland waterways. able fuel, the person that sold the untaxed liquid

• Biodiesel mixtures. is jointly and severally liable for the tax imposed

on the blender’s sale or removal of the blended Items To Note • Alcohol fuel mixtures. taxable fuel.

• Aviation-grade kerosene sold for use on a The American Jobs Creation Act of 2004 (the Bulk transfer. This is the transfer of taxable farm or for use by state and local govern- Act), Public Law 108-357, made changes affect- fuel by pipeline or vessel. ments; claims can only be made by the

ing fuel taxes. The following is a brief review of registered ultimate vendor. Bulk transfer/terminal system. This is the

some of these changes. taxable fuel distribution system consisting of re- • Aviation-grade kerosene sold for nontaxBiodiesel mixtures. As under previous law, fineries, pipelines, vessels, and terminals. Fuel able uses (other than use on a farm or use

persons who blend biodiesel with undyed diesel in the supply tank of any engine, or in any tank by state and local governments); claims car, railcar, trailer, truck, or other equipment fuel to produce a biodiesel mixture outside the can be made by the registered ultimate bulk transfer/terminal system must pay the die- suitable for ground transportation is not in the vendor or ultimate purchaser.

sel fuel tax on the volume of biodiesel in the bulk transfer/terminal system.

mixture. See Form 720 to report this tax. You • Gasoline and aviation gasoline sold to Enterer. This is the importer of record for the state and local governments and nonprofit also must be registered with the IRS as a taxable fuel. However, if the importer of record is educational organizations; claims can be blender. See Form 637. See Pub. 378 for infor- acting as an agent, such as a customs broker, mation on the new biodiesel mixture credit. made by the registered ultimate vendor or the person for whom the agent is acting is the ultimate purchaser.

Alcohol fuel mixtures. Persons who blend enterer. If there is no importer of record, the

alcohol with gasoline to produce an alcohol fuel • Undyed diesel fuel or undyed kerosene owner at the time of entry into the United States

sold for use in certain intercity and local mixture outside the bulk transfer/terminal sys- is the enterer.

buses; claims can be made by the regis- tem must pay the gasoline tax on the volume of Entry. Taxable fuel is entered into the United tered ultimate vendor or ultimate pur- alcohol in the mixture. See Form 720 to report States when it is brought into the United States chaser. this tax. You also must be registered with the and applicable customs law requires that it be IRS as a blender. See Form 637. See Pub. 378 entered for consumption, use, or warehousing. for information on the new alcohol fuel mixture Gasoline wholesale distributors. Refunds to This does not apply to fuel brought into Puerto credit. gasoline wholesale distributors have been elimi- Rico (which is part of the U.S. customs territory),

Aviation-grade kerosene. Aviation-grade nated for fuel sold after December 31, 2004. but does apply to fuel brought into the United

kerosene is taxed and the tax on aviation fuel Schedule 4 (Form 8849) will not be revised and States from Puerto Rico.

cannot be used for fuel sold after December 31, has been eliminated. The tax rates are the Measurement of taxable fuel. Volumes of 2004. same. taxable fuel can be measured on the basis of

Diesel fuel and kerosene, use in certain inter- actual volumetric gallons or gallons adjusted to Definitions city and local buses. The use of dyed diesel 60 degrees Fahrenheit.

fuel used in certain intercity and local buses has The following terms are used throughout the Pipeline operator. This is the person that op- been repealed; dyed diesel fuel cannot be used discussion of fuel taxes. Other terms are defined erates a pipeline within the bulk transfer/terminal in these buses. A claim can be made if diesel in the discussion of the specific fuels to which system. fuel or kerosene is used for this purpose. they pertain. Position holder. This is the person that holds Gasoline. The definition of gasoline has been Agri-biodiesel. Agri-biodiesel means bi- the inventory position in the taxable fuel in the revised. odiesel derived solely from virgin oils, including terminal, as reflected in the records of the termiTransmix. The definition of diesel fuel has esters derived from virgin vegetable oils from nal operator. You hold the inventory position

been revised to include transmix. corn, soybeans, sunflower seeds, cottonseeds, when you have a contractual agreement with the

canola, crambe, rapeseeds, safflowers, flax- terminal operator for the use of the storage facili- Two-party exchanges. In a two-party ex- seeds, rice bran, and mustard seeds, and from ties and terminaling services for the taxable fuel. change, the delivering person will not be liable animal fats. A terminal operator that owns taxable fuel in its for the tax on removal of taxable fuel from any terminal is a position holder. terminal if certain conditions are met. See Approved terminal or refinery. This is a terTwo-party exchanges later. minal operated by a registrant that is a terminal Rack. This is a mechanism capable of delivering fuel into a means of transport other than a Exemption for bulk transfers to registered operator or a refinery operated by a registrant pipeline or vessel. that is a refiner. terminals or refineries of taxable fuel. Pipeline or vessel operators must be registered for Refiner. This is any person that owns, oper- Biodiesel. Biodiesel means the monoalkyl es- the exemption from the tax on removal or entry ates, or otherwise controls a refinery. ters of long chain fatty acids derived from plant of taxable fuel by bulk transfer by pipeline or or animal matter which meet the registration Refinery. This is a facility used to produce vessel to a terminal or refinery to apply. requirements for fuels and fuel additives estab- taxable fuel and from which taxable fuel may be

Dyed fuel. The penalty for dyed fuel sold or lished by the Environmental Protection Agency removed by pipeline, by vessel, or at a rack.

used in a taxable use has been revised. (EPA) under section 211 of the Clean Air Act, However, this term does not include a facility

Page 9
where only blended fuel, and no other type of bursements of all liquid products to and from all Refunds of Second Tax

fuel, is produced. For this purpose, blended fuel approved terminals. Each terminal operator

is any mixture that would be blended taxable fuel must file a separate form for each approved If the tax is paid on more than one taxable event

if produced outside the bulk transfer/terminal terminal. for a taxable fuel under section 4081, the person

system. paying the “second tax” may claim a refund Form 720-CS. This information return must be (without interest) of that tax if certain conditions Registrant. This is a taxable fuel registrant filed by bulk transport carriers (barges, vessels, and reporting requirements are met. No credit (see Registration Requirements, later). and pipelines) who receive liquid product from against any tax is allowed for this tax. For infor- an approved terminal or deliver liquid product to Removal. This is any physical transfer of tax- mation about taxable events, see the discus- an approved terminal. able fuel. It also means any use of taxable fuel sions under Gasoline, Diesel Fuel and

other than as a material in the production of Kerosene, and Aviation-Grade Kerosene later.

taxable or special fuels. However, taxable fuel is Registration Requirements

not removed when it evaporates or is otherwise Conditions to allowance of refund. A claim

The following discussion applies to excise tax for refund of the tax is allowed only if all the lost or destroyed. registration requirements for activities relating to following conditions are met.

Sale. For taxable fuel not in a terminal, this is fuels only. See Form 637 for other persons who

the transfer of title to, or substantial incidents of must register and for more information about 1. A tax on the fuel was paid to the governownership in, taxable fuel to the buyer for registration. ment and not credited or refunded (the

money, services, or other property. For taxable “first tax”).

Persons that must register. You must be fuel in a terminal, this is the transfer of the 2. After the first tax was imposed, another tax registered if you are any of the following per- inventory position if the transferee becomes the was imposed on the same fuel and was sons. position holder for that taxable fuel. paid to the government (the “second tax”). • A blender. State. This includes any state, any of its politi- 3. The person that paid the second tax filed a cal subdivisions, the District of Columbia, and • An enterer. timely claim for refund containing the infor- the American Red Cross. An Indian tribal gov- mation required (see Refund claim, later). • A pipeline operator. ernment is treated as a state only if transactions

4. The person that paid the first tax has met involve the exercise of an essential tribal gov- • A position holder.

ernment function. the reporting requirements, discussed • A refiner. next. Taxable fuel. This means gasoline, diesel • A terminal operator. fuel, or kerosene. Reporting requirements. Generally, the per- • A vessel operator. Terminal. This is a storage and distribution son that paid the first tax must file a “First

facility supplied by pipeline or vessel, and from • Train operators who uses dyed diesel fuel Taxpayer’s Report” with its Form 720 for the

which taxable fuel may be removed at a rack. It quarter to which the report relates. A model first in their trains and they incur liability for tax

does not include a facility at which gasoline at the train rate. taxpayer’s report is shown in Appendix A as

blendstocks are used in the manufacture of Model Certificate B. The report must contain all • Full rate buyers of aviation-grade ker- products other than finished gasoline if no gaso- information needed to complete the model. osene in connection with a removal from a line is removed from the facility. A terminal does By the due date for filing the Form 720, you

not include any facility where finished gasoline, terminal (other than removal directly into must also send a separate copy of the report to the fuel tank of an aircraft). diesel fuel, or kerosene is stored if the facility is the following address.

operated by a registrant and all such taxable fuel • Producers or importers of alcohol, Internal Revenue Service Center

stored at the facility has been previously taxed biodiesel, and agri-biodiesel. Cincinnati, OH 45999-0555

upon removal from a refinery or terminal.

Write “EXCISE – FIRST TAXPAYER’S Terminal operator. This is any person that Persons that may register. You may, but are REPORT” across the top of that copy. owns, operates, or otherwise controls a termi- not required to, register if you are any of the

nal. following persons. Optional reporting. A first taxpayer’s report

is not required for the tax imposed on any of the Throughputter. This is any person that is a • A feedstock user. following taxable events. position holder or that owns taxable fuel within • An industrial user. the bulk transfer/terminal system (other than in a • Removal at a terminal rack.

terminal). • A throughputter that is not a position • Nonbulk entries into the United States. holder. Vessel operator. This is the person that oper- • Removals or sales by blenders. ates a vessel within the bulk transfer/terminal • An ultimate vendor.

system. However, vessel does not include a However, if the person liable for the tax expects Ultimate vendors do not need to be registered to deep draft ocean-going vessel. that another tax will be imposed on that fuel, that buy or sell fuel. However, they must be regis- person should (but is not required to) file a first tered to file claims for certain sales of fuel. taxpayer’s report. Information Returns

Taxable fuel registrant. This is an enterer, an Providing information. The first taxpayer Form 720-TO and Form 720-CS are information industrial user, a refiner, a terminal operator, or must give a copy of the report to the buyer of the returns used to report monthly receipts and dis- a throughputter who received a Letter of Regis- fuel within the bulk transfer/terminal system or to bursements of liquid products. A liquid product is tration under the excise tax registration provi- the owner of the fuel immediately before the first any liquid transported into storage at a terminal sions and whose registration has not been tax was imposed, if the first taxpayer is not the or delivered out of a terminal. For a list of prod- revoked or suspended. The term registrant as owner at that time. If an optional report is filed, a ucts, see the product code table in the Instruc- used in the discussions of these fuels means a copy should (but is not required to) be given to tions for Forms 720-TO and 720-CS. taxable fuel registrant. the buyer or owner. The returns are due the last day of the month A person that receives a copy of the first following the month in which the transaction Additional information. See the Form 637 taxpayer’s report and later sells the fuel within occurs. These returns can be filed on paper or instructions for the information you must submit the bulk transfer/terminal system must give the electronically. For information on filing electroni- when you apply for registration. copy and a “Statement of Subsequent Seller” to cally, see Publication 3536, Motor Fuel Excise Failure to register. The penalty for failure to the buyer. If the later sale is outside the bulk Tax EDI Guide. Pub. 3536 is only available on register if you are required to register, unless transfer/terminal system and that person ex- the IRS website. due to reasonable cause, is increased to pects that another tax will be imposed, that perForm 720-TO. This information return is used $10,000 for the initial failure, and then $1,000 son should (but is not required to) give the copy

by terminal operators to report receipts and dis- each day thereafter you fail to register. and the statement to the buyer. A model statePage 10
ment of subsequent seller is shown in Appendix Removal from terminal. All removals of gas- • The same person operates the refinery

A as Model Certificate A. The statement must oline at a terminal rack are taxable. The position and the facility at which the gasoline is

contain all information necessary to complete holder for that gasoline is liable for the tax. received.

the model. Two-party exchanges. In a two-party ex- If the first taxpayer’s report relates to fuel change, the receiving person, not the delivering Entry into the United States. The entry of sold to more than one buyer, copies of that person, is liable for the tax imposed on the gasoline into the United States is taxable if the report must be made when the fuel is divided. removal of taxable fuel from the terminal at the entry meets either of the following conditions. Each buyer must be given a copy of the report. terminal rack. A two-party exchange means a • It is made by bulk transfer and the enterer transaction (other than a sale) where the deliverRefund claim. You must have filed Form 720 or the operator of the pipeline or vessel is ing person and receiving person are both tax- and paid the second tax before you file for a not a registrant. able fuel registrants and all of the following refund of that tax. You must make your claim for apply. • It is not made by bulk transfer. refund on Form 8849. Complete Schedule 5

(Form 8849) and attach it to your Form 8849. Do • The transaction includes a transfer from The enterer is liable for the tax.

not include this claim with a claim under another the delivering person, who holds the inventory position for the taxable fuel in the Removal from a terminal by unregistered po- tax provision. You must not have included the

sition holder or unregistered pipeline or ves- second tax in the price of the fuel and must not terminal as reflected in the records of the

sel operator. The removal by bulk transfer of have collected it from the purchaser. You must terminal operator.

submit the following information with your claim. gasoline from a terminal is taxable if the position • The exchange transaction occurs before holder for the gasoline or the operator of the or at the same time as completion of re- • A copy of the first taxpayer’s report (dis- pipeline or vessel is not a registrant. The posi- moval across the rack by the receiving cussed earlier). tion holder is liable for the tax. The terminal

person. operator is jointly and severally liable for the tax • A copy of the statement of subsequent • The terminal operator in its records treats if the position holder is a person other than the seller if the fuel was bought from someone the receiving person as the person that terminal operator. However, see Terminal other than the first taxpayer. removes the product across the terminal operator’s liability under Removal from terminal,

rack for purposes of reporting the transac- earlier, for an exception.

Gasoline tion on Form 720-TO.

Bulk transfers not received at approved ter- • The transaction is subject to a written con- minal or refinery. The removal by bulk trans- The definition of gasoline has been re- tract.

fer of gasoline from a terminal or refinery, or the vised. The reduced rates of tax that

applied to gasohol and gasoline sold entry of gasoline by bulk transfer into the United Terminal operator’s liability. The terminal CAUTION

!

States, is taxable if the following conditions ap- for the production of gasohol have been re- operator is jointly and severally liable for the tax

pealed. ply. if the position holder (including the receiving

person in a two-party exchange) is a person 1. No tax was previously imposed (as dis- Gasoline. Gasoline means all products com- other than the terminal operator and is not a cussed earlier) on any of the following monly or commercially known or sold as gaso- registrant. events. line with an octane rating of 75 or more that are However, a terminal operator meeting all the

suitable for use as a motor fuel. Gasoline in- following conditions at the time of the removal a. The removal from the refinery. cludes any gasoline blend other than: will not be liable for the tax.

b. The entry into the United States.

• Qualified ethanol and methanol fuel (at • The terminal operator is a registrant. c. The removal from a terminal by an un- least 85 percent of the blend consists of • The terminal operator has an unexpired registered position holder. alcohol produced from coal, including notification certificate (discussed later) peat), from the position holder. 2. Upon removal from the pipeline or vessel,

• Partially exempt ethanol and methanol fuel the gasoline is not received at an approved • The terminal operator has no reason to (at least 85 percent of the blend consists terminal or refinery (or at another pipeline believe any information on the certificate is of alcohol produced from natural gas), or or vessel). false.

• Denatured alcohol. The owner of the gasoline when it is removed

from the pipeline or vessel is liable for the tax. Gasoline also includes gasoline blendstocks, Removal from refinery. The removal of gaso- However, an owner meeting all the following discussed in later, and any product commonly line from a refinery is taxable if the removal conditions at the time of the removal will not be used as an additive in gasoline (other than alco- meets either of the following conditions. liable for the tax. hol). • It is made by bulk transfer and the refiner, • The owner is a registrant. Aviation gasoline. This means all special the owner of the gasoline immediately

grades of gasoline suitable for use in aviation before the removal, or the operator of the • The owner has an unexpired notification

pipeline or vessel is not a registrant. certificate (discussed later) from the oper- reciprocating engines and covered by ASTM

specification D 910 or military specification ator of the terminal or refinery where the • It is made at the refinery rack. MIL-G-5572. gasoline is received.

The refiner is liable for the tax. • The owner has no reason to believe any

Exception. The tax does not apply to a re- information on the certificate is false. Taxable Events moval of gasoline at the refinery rack if all the The operator of the facility where the gasoline is following requirements are met. The tax on gasoline is $.184 per gallon. The tax received is liable for the tax if the owner meets

on aviation gasoline is $.194 per gallon. Tax is • The gasoline is removed from an ap- these conditions. The operator is jointly and sev- imposed on the removal, entry, or sale of gaso- proved refinery not served by pipeline erally liable if the owner does not meet these line. Each of these events is discussed later. (other than for receiving crude oil) or ves- conditions.

However, see the special rules that apply to sel.

gasoline blendstocks, later. Sales to unregistered person. The sale of • The gasoline is received at a facility oper- If the tax is paid on the gasoline in more than gasoline located within the bulk transfer/terminal ated by a registrant and located within the one event, a refund may be allowed for the system to a person that is not a registrant is bulk transfer/terminal system. “second” tax paid. See Refunds of Second Tax, taxable if tax was not previously imposed under

earlier. • The removal from the refinery is by railcar. any of the events discussed earlier.

Page 11
The seller is liable for the tax. However, a • Anyone who willfully causes the person to • The person has an unexpired certificate seller meeting all the following conditions at the fail to pay the tax. (discussed later) from the buyer. time of the sale will not be liable for the tax.

• The person has no reason to believe any • The seller is a registrant. Gasoline Blendstocks information in the certificate is false.

• The seller has an unexpired notification Gasoline includes gasoline blendstocks. The certificate (discussed later) from the buyer. Sales after removal or entry. The sale of a previous discussions apply to these blend- gasoline blendstock that was not subject to tax • The seller has no reason to believe any stocks. However, if certain conditions are met,

the removal, entry, or sale of gasoline blend- on its nonbulk removal or entry, as discussed information on the certificate is false.

stocks is not taxable. Generally, this applies if earlier, is taxable. The seller is liable for the tax.

The buyer of the gasoline is liable for the tax if However, the sale is not taxable if, at the time of the gasoline blendstock is not used to produce the seller meets these conditions. The buyer is finished gasoline or is received at an approved the sale, the seller meets the following require- jointly and severally liable if the seller does not terminal or refinery. ments.

meet these conditions.

• The seller has an unexpired certificate Exception. The tax does not apply to a sale Blendstocks. The following are gasoline (discussed next) from the buyer. if all of the following apply. blendstocks.

• The seller has no reason to believe any • The buyer’s principal place of business is • Alkylate. information in the certificate is false. not in the United States. • Butane. • The sale occurs as the fuel is delivered • Butene. Certificate of buyer. The certificate from the into a transport vessel with a capacity of at buyer certifies the gasoline blendstocks will not least 20,000 barrels of fuel. • Catalytically cracked gasoline. be used to produce finished gasoline. The certif- • The seller is a registrant and the exporter • Coker gasoline. icate may be included as part of any business of record. records normally used for a sale. A model certifi- • Ethyl tertiary butyl ether (ETBE). • The fuel was exported. cate is shown in Appendix A as Model Certificate • Hexane. D. Your certificate must contain all information

necessary to complete the model. Removal or sale of blended gasoline. • Hydrocrackate. The

removal or sale of blended gasoline by the A certificate expires on the earliest of the • Isomerate.

blender is taxable. See Blended taxable fuel following dates.

• Methyl tertiary butyl ether (MTBE). under Definitions, earlier. • The date 1 year after the effective date The blender is liable for the tax. The tax is • Mixed xylene (not including any separated (not earlier than the date signed) of the figured on the number of gallons not previously isomer of xylene). certificate. subject to the tax on gasoline. • Natural gasoline. Persons who blend alcohol with gasoline to • The date a new certificate is provided to produce an alcohol fuel mixture outside the bulk • Pentane. the seller.

transfer/terminal system must pay must pay the • Pentane mixture. • The date the seller is notified the buyer’s gasoline tax on the volume of alcohol in the

mixture. See Form 720 to report this tax. You right to provide a certificate has been with- • Polymer gasoline. also must be registered with the IRS as a drawn.

• Raffinate. blender. See Form 637. The buyer must provide a new certificate if any However, if an untaxed liquid is sold as taxed • Reformate. information on a certificate has changed. taxable fuel and that untaxed liquid is used to

produce blended taxable fuel, the person that • Straight-run gasoline. The IRS may withdraw the buyer’s right to

sold the untaxed liquid is jointly and severally provide a certificate if that buyer uses the gaso- • Straight-run naphtha.

liable for the tax imposed on the blender’s sale line blendstocks in the production of finished • Tertiary amyl methyl ether (TAME). or removal of the blended taxable fuel. gasoline or resells the blendstocks without get-

• Tertiary butyl alcohol (gasoline grade) ting a certificate from its buyer.

Notification certificate. The notification cer- (TBA). tificate is used to notify a person of the registra- Received at approved terminal or refinery. • Thermally cracked gasoline. tion status of the registrant. A copy of the The nonbulk removal or entry of gasoline blend- registrant’s letter of registration cannot be used • Toluene. stocks received at an approved terminal or refin- as a notification certificate. A model notification

ery is not taxable if the person otherwise liable certificate is shown in Appendix A as Model However, gasoline blendstocks do not include Certificate C for the tax (position holder, refiner, or enterer) . A notification certificate must con- any product that cannot be used without further meets all the following requirements. tain all information necessary to complete the processing in the production of finished gaso- model. line. • The person is a registrant. The certificate may be included as part of

any business records normally used for a sale. A • The person has an unexpired notification Not used to produce finished gasoline. certificate expires on the earlier of the date the Gasoline blendstocks not used to produce fin- certificate (discussed earlier) from the opregistrant provides a new certificate, or the date erator of the terminal or refinery where the ished gasoline are not taxable if the following the recipient of the certificate is notified that the gasoline blendstocks are received. conditions are met. registrant’s registration has been revoked or

Removals and entries not connected to • The person has no reason to believe any suspended. The registrant must provide a new

sale. Nonbulk removals and entries are not information on the certificate is false. certificate if any information on a certificate has

changed. taxable if the person otherwise liable for the tax

(position holder, refiner, or enterer) is a regis- Bulk transfers to registered industrial user. Additional persons liable. When the person trant. The removal of gasoline blendstocks from a liable for the tax willfully fails to pay the tax, joint Removals and entries connected to sale. pipeline or vessel is not taxable if the blend- and several liability for the tax is imposed on: Nonbulk removals and entries are not taxable if stocks are received by a registrant that is an

• Any officer, employee, or agent of the per- the person otherwise liable for the tax (position industrial user. An industrial user is any person

son who is under a duty to ensure the holder, refiner, or enterer) is a registrant, and at that receives gasoline blendstocks by bulk

payment of the tax and who willfully fails to the time of the sale, meets the following require- transfer for its own use in the manufacture of any

perform that duty, or ments. product other than finished gasoline.

Page 12
Credits or Refunds Diesel Fuel and Kerosene pelled by a diesel-powered engine. Generally,

do not consider as diesel-powered highway ve- A credit or refund of the gasoline tax (without Generally, diesel fuel and kerosene are taxed in hicles specially designed mobile machinery for

interest) may be allowable if gasoline is, by any the same manner as gasoline (discussed ear- nontransportation functions and vehicles speperson: lier). cially designed for off-highway transportation.

For more information about these vehicles and • Exported, Dyed diesel fuel and dyed kerosene for information about vehicles not considered cannot be used in certain intercity and • Used in a boat engaged in commercial highway vehicles, see Publication 378. local buses. All removals of diesel fuel CAUTION

!

fishing, or kerosene at a terminal rack are taxable at Diesel-powered train. This is any diesel-pow- $.244 per gallon. • Used in military aircraft, ered equipment or machinery that rides on rails.

Diesel fuel means: The term includes a locomotive, work train, • Used in foreign trade, switching engine, and track maintenance ma- • Any liquid that without further processing • Sold to a state, political subdivision of a chine. or blending, is suitable for use as a fuel in state, or the District of Columbia for its a diesel-powered highway vehicle or train, exclusive use (see Claims by registered

ultimate vendors), • Transmix, and Taxable Events

• Sold to a nonprofit educational organiza- • Diesel fuel blendstocks (when identified by The tax on diesel fuel and kerosene is $.244 per the IRS). tion for its exclusive use, as discussed gallon. It is imposed on the removal, entry, or

earlier under Communications Tax, (see A liquid is suitable for this use if the liquid has sale of diesel fuel and kerosene. Each of these

Claims by registered ultimate vendors), practical and commercial fitness for use in the events is discussed later. The tax does not apply

propulsion engine of a diesel-powered highway to dyed diesel fuel or dyed kerosene, discussed • Sold to the United Nations for its official vehicle or diesel-powered train. A liquid may later.

use, or possess this practical and commercial fitness If the tax is paid on the diesel fuel or ker-

• Used or sold in the production of special even though the specified use is not the predom- osene in more than one event, a refund may be

motor fuels (defined later). allowed for the “second” tax paid. See inant use of the liquid. However, a liquid does Refunds

not possess this practical and commercial fit- of Second Tax, earlier.

Refunds to gasoline wholesale distribu- ness solely by reason of its possible or rare use

as a fuel in the propulsion engine of a Use in certain intercity and local buses. tors have been eliminated for fuel sold after

December 31, 2004. diesel-powered highway vehicle or diesel-pow- Dyed diesel fuel and dyed kerosene cannot be Schedule 4 (Form 8849)

will not be revised and cannot be used for fuel ered train. Diesel fuel does not include gasoline, used in certain intercity and local buses. A claim

kerosene, excluded liquid, No. 5 and No. 6 fuel for $.17 per gallon may be made by the ultimate sold after December 31, 2004. oils covered by ASTM specification D 396, or vendor (under certain conditions) or the ultimate

F-76 (Fuel Naval Distillate) covered by military purchaser for undyed diesel fuel or undyed kerClaims by persons who paid the tax to the specification MIL-F-16884. osene sold for use in certain intercity or local

government. A credit or refund is allowable to buses. An intercity or local bus is a bus engaged An excluded liquid is either of the following. the person that paid the tax to the government if in furnishing (for compensation) passenger land

the gasoline was sold to the ultimate purchaser 1. A liquid that contains less than 4% normal transportation available to the general public.

(including an exporter) by either that person or paraffins. The bus must be engaged in one of the following

by a retailer for a purpose listed earlier. By activities.

2. A liquid with all the following properties. signing the claim, the person that paid the tax • Scheduled transportation along regular certifies that it: a. Distillation range of 125 degrees Fahr- routes regardless of the size of the bus.

enheit or less. • Nonscheduled transportation if the seating 1. Has obtained one of the three items below. b. Sulfur content of 10 ppm or less. capacity of the bus is at least 20 adults

a. Proof of exportation. (not including the driver). c. Minimum color of +27 Saybolt.

b. A certificate of ultimate purchaser. A bus is available to the general public if the bus Transmix means a by-product of refined is available for hire to more than a limited num- c. A certificate of ultimate vendor. products created by the mixing of different spec- ber of persons, groups, or organizations. ification products during pipeline transportation. 2. Has met any of the following conditions. Removal from terminal. All removals of dieKerosene. This means any of the following sel fuel or kerosene at a terminal rack are tax- a. Has neither included the tax in the price liquids. able. The position holder for that fuel is liable for of the gasoline nor collected the tax the tax. • One of the two grades of kerosene (No. from the buyer.

1-K and No. 2-K) covered by ASTM speci- Two-party exchanges. In a two-party ex- b. Has repaid, or agreed to repay, the tax fication D 3699. change, the receiving person, not the delivering to the ultimate vendor of the gasoline. person, is liable for the tax imposed on the • Kerosene-type jet fuel covered by ASTM c. Has gotten the written consent of the removal of taxable fuel from the terminal at the specification D 1655 or military specifica- ultimate vendor to the allowance of the terminal rack. A two-party exchange means a tion MIL-DTL-5624T (Grade JP-5) or

credit or refund. MIL-DTL-83133E (Grade JP-8). See transaction (other than a sale) where the deliverAviation-Grade Kerosene ing person and receiving person are both tax- later.

able fuel registrants and all of the following

However, kerosene does not include ex- apply. Claims by ultimate purchasers and regis- cluded liquid, discussed earlier. tered ultimate vendors. A claim may be • The transaction includes a transfer from

Kerosene also includes any liquid that would made by an ultimate purchaser of taxed gaso- the delivering person, who holds the in- be described above but for the presence of a line used for a nontaxable use. A claim may be ventory position for the taxable fuel in the dye of the type used to dye kerosene for a made by a registered ultimate vendor for sales terminal as reflected in the records of the

nontaxable use. terminal operator. to a state or local government for its exclusive

use or to a nonprofit educational organization for Diesel-powered highway vehicle. This is • The exchange transaction occurs before

its exclusive use if the ultimate purchaser any self-propelled vehicle designed to carry a or at the same time as completion of rewaives its right to the claim. For more informa- load over public highways (whether or not also moval across the rack by the receiving

tion, see Publication 378. designed to perform other functions) and pro- person.

Page 13
• The terminal operator in its records treats • The seller has an unexpired notification • It is made by bulk transfer and the enterer the receiving person as the person that certificate (discussed under Gasoline) or the operator of the pipeline or vessel is removes the product across the terminal from the buyer. not a registrant. rack for purposes of reporting the transac- • The seller has no reason to believe any • It is not made by bulk transfer. tion on Form 720-TO. information on the certificate is false.

• The transaction is subject to a written con- The enterer is liable for the tax. The buyer of the diesel fuel or kerosene is liable

tract. for the tax if the seller meets these conditions. Removal from a terminal by unregistered po- The buyer is jointly and severally liable if the sition holder or unregistered pipeline or ves- Terminal operator’s liability. The terminal seller does not meet these conditions. sel operator. The removal by bulk transfer of operator is jointly and severally liable for the tax diesel fuel or kerosene from a terminal is taxable Exception. The tax does not apply to a sale if the terminal operator provides any person with if the position holder for that fuel or the operator if all of the following apply. any bill of lading, shipping paper, or similar doc- of the pipeline or vessel is not a registrant. The ument indicating that diesel fuel or kerosene is • The buyer’s principal place of business is position holder is liable for the tax. The terminal dyed (discussed later). not in the United States.

operator is jointly and severally liable for the tax The terminal operator is jointly and severally • The sale occurs as the fuel is delivered if the position holder is a person other than the liable for the tax if the position holder (including into a transport vessel with a capacity of at terminal operator. However, see Terminal the receiving person in a two-party exchange) is least 20,000 barrels of fuel. operator’s liability under Removal from terminal, a person other than the terminal operator and is earlier, for an exception. • The seller is a registrant and the exporter not a registrant. However, a terminal operator of record. will not be liable for the tax in this situation if, at Bulk transfers not received at approved ter- the time of the removal, the following conditions • The fuel was exported. minal or refinery. The removal by bulk trans- are met. fer of diesel fuel or kerosene from a terminal or

Removal or sale of blended diesel fuel or • The terminal operator is a registrant. refinery or the entry of diesel fuel or kerosene by

kerosene. The removal or sale of blended die- bulk transfer into the United States is taxable if • The terminal operator has an unexpired sel fuel or blended kerosene by the blender is the following conditions apply. notification certificate (discussed under taxable. Blended taxable fuel produced using

Gasoline) from the position holder. 1. No tax was previously imposed (as dis- biodiesel is subject to the tax. See Blended

taxable fuel under Definitions, earlier. • The terminal operator has no reason to cussed earlier) on any of the following The blender is liable for the tax. The tax is believe any information on the certificate is events.

figured on the number of gallons not previously false. a. The removal from the refinery. subject to the tax.

Persons who blend biodiesel with undyed b. The entry into the United States. Removal from refinery. The removal of die- diesel fuel to produce a biodiesel mixture

sel fuel or kerosene from a refinery is taxable if c. The removal from a terminal by an un- outside the bulk transfer terminal system must

the removal meets either of the following condi- registered position holder. pay must pay the diesel fuel tax on the volume of

tions. biodiesel in the mixture. Generally, the biodiesel

2. Upon removal from the pipeline or vessel, mixture must be diesel fuel (defined earlier). See • It is made by bulk transfer and the refiner, the diesel fuel or kerosene is not received Form 720 to report this tax. You also must be the owner of the fuel immediately before at an approved terminal or refinery (or at registered with the IRS as a blender. See Form the removal, or the operator of the pipeline another pipeline or vessel). 637.

or vessel is not a registrant. However, if an untaxed liquid is sold as taxed The owner of the diesel fuel or kerosene taxable fuel and that untaxed liquid is used to • It is made at the refinery rack. when it is removed from the pipeline or vessel is produce blended taxable fuel, the person that

The refiner is liable for the tax. liable for the tax. However, an owner meeting all sold the untaxed liquid is jointly and severally the following conditions at the time of the re- liable for the tax imposed on the blender’s sale Exception. The tax does not apply to a re- moval will not be liable for the tax. moval of diesel fuel or kerosene at the refinery or removal of the blended taxable fuel.

rack if all the following conditions are met. • The owner is a registrant. Additional persons liable. When the person

liable for the tax willfully fails to pay the tax, joint • The owner has an unexpired notification 1. The diesel fuel or kerosene is removed and several liability for the tax is imposed on: certificate (discussed under Gasoline) from an approved refinery not served by from the operator of the terminal or refin- • Any officer, employee, or agent of the per- pipeline (other than for receiving crude oil) ery where the diesel fuel or kerosene is son who is under a duty to ensure the or vessel.

received. payment of the tax and who willfully fails to

2. The diesel fuel or kerosene is received at a perform that duty, or • The owner has no reason to believe any facility operated by a registrant and located information on the certificate is false. • Anyone who willfully causes the person to within the bulk transfer/terminal system. fail to pay the tax. The operator of the facility where the diesel fuel 3. The removal from the refinery is by: or kerosene is received is liable for the tax if the

a. Railcar and the same person operates owner meets these conditions. The operator is Exemptions

the refinery and the facility at which the jointly and severally liable if the owner does not The excise tax on diesel fuel or kerosene is not diesel fuel or kerosene is received, or meet these conditions. imposed and the dyeing requirements do not

b. For diesel fuel only, a trailer or have to be met if the rules related to the follow- Sales to unregistered person. The sale of

semi-trailer used exclusively to trans- ing exemptions are met. diesel fuel or kerosene located within the bulk

port the diesel fuel from a refinery (de- transfer/terminal system to a person that is not a • Sale or use in certain areas of Alaska.

scribed in (1)) to a facility (described in registrant is taxable if tax was not previously • Kerosene used for feedstock purposes. (2)) less than 20 miles from the refinery. imposed under any of the events discussed earlier.

The seller is liable for the tax. However, a Sale or use in certain areas of Alaska. The

Entry into the United States. The entry of excise tax is not imposed on the removal, entry, seller meeting all the following conditions at the diesel fuel or kerosene into the United States is or sale of diesel fuel or kerosene in Alaska for time of the sale will not be liable for the tax. taxable if the entry meets either of the following ultimate sale or use in an exempt area of Alaska.

conditions. • The seller is a registrant. The removal or entry of any diesel fuel or kerPage 14
osene is not taxable if all the following require- stock purpose when it is used to power machin- • It contains any dye of a type and in a

ments are satisfied. ery at a factory where paint is produced. A concentration that has been approved by

feedstock user is a person that uses kerosene the Commissioner.

1. The person otherwise liable for the tax (po- for a feedstock purpose. A registered feed- sition holder, refiner, or enterer): stock user is a person that has been registered Notice required. A legible and conspicuous

a. Is a registrant, by the IRS as a feedstock user. See Registration notice stating either: DYED DIESEL FUEL,

Requirements, earlier. NONTAXABLE USE ONLY, PENALTY FOR b. Can show satisfactory evidence of the TAXABLE USE or DYED KEROSENE, Later sales. The excise tax applies to ker- nontaxable nature of the transaction, NONTAXABLE USE ONLY, PENALTY FOR and osene sold for use by the buyer for a feedstock TAXABLE USE must be: purpose (item (3)(b)) if the buyer in that sale c. Has no reason to believe the evidence later sells the kerosene. The tax is imposed at 1. Provided by the terminal operator to any is false. the time of the later sale and that seller is liable person that receives dyed diesel fuel or

for the tax. dyed kerosene at a terminal rack of that 2. In the case of a removal from a terminal, operator, and the terminal is an approved terminal. Certificate. The certificate from the buyer

certifies the buyer is a registered feedstock user 2. Posted by a seller on any retail pump or 3. The owner of the fuel immediately after the and the kerosene will be used by the buyer for a other delivery facility where it sells dyed removal or entry holds the fuel for its own feedstock purpose. The certificate may be in- diesel fuel or dyed kerosene for use by its use in a nontaxable use (discussed later) cluded as part of any business records normally buyer. or is a qualified dealer. used for a sale. A model certificate is shown in The notice under item (1) must be provided A qualified dealer is any person that holds a Appendix A as Model Certificate G. Your certifi- by the time of the removal and must appear on qualified dealer license from the state of Alaska cate must contain all information necessary to all shipping papers, bills of lading, and similar or has been registered by the IRS as a qualified complete the model. documents accompanying the removal of the retailer. Satisfactory evidence may include A certificate expires on the earliest of the fuel. copies of qualified dealer licenses or exemption following dates. Any seller that fails to post the required no- certificates obtained for state tax purposes. tice under item (2) is presumed to know that the

Later sales. The excise tax applies to diesel • The date 1 year after the effective date fuel will be used for a taxable use (a use other

fuel or kerosene sold by a qualified dealer after (not earlier than the date signed) of the than a nontaxable use listed later). That seller is

the removal or entry. The tax is imposed at the certificate. subject to the penalty described next. time of the sale and the qualified dealer is liable • The date the seller is provided a new cer- for the tax. However, the sale is not taxable if all Penalty. A penalty is imposed on a person if tificate or notice that the current certificate the following requirements are met. any of the following situations apply. is invalid.

• The fuel is sold in an exempt area of • The date the seller is notified the buyer’s 1. Any dyed fuel is sold or held for sale by the Alaska. registration has been revoked or sus- person for a use the person knows or has

• The buyer buys the fuel for its own use in pended. reason to know is not a nontaxable use of

a nontaxable use or is a qualified dealer. the fuel.

The buyer must provide a new certificate if • The seller can show satisfactory evidence 2. Any dyed fuel is held for use or used by any information on a certificate has changed. of the nontaxable nature of the transaction the person for a use other than a nontaxand has no reason to believe the evidence able use and the person knew, or had reason to know, that the fuel was dyed. is false. Credits or Refunds

3. The person willfully alters, chemically or

Kerosene used for feedstock purposes. A credit or refund is allowable to the ultimate otherwise, or attempts to so alter, the

The excise tax on kerosene is not imposed on purchaser or registered ultimate vendor for the strength or composition of any dye in dyed

the removal or entry of kerosene if all the follow- tax on undyed diesel fuel or undyed kerosene fuel.

ing conditions are met. used for a nontaxable use. See Publication 378. 4. The person has knowledge that a dyed

fuel which has been altered, as described 1. The person otherwise liable for tax (posi- in (3) above, sells or holds for sale such tion holder, refiner, or enterer) is a regis- Dyed Diesel Fuel fuel for any use for which the person trant. and Dyed Kerosene knows or has reason to know is not a non2. In the case of a removal from a terminal, taxable use of the fuel. The excise tax is not imposed on the removal, the terminal is an approved terminal. entry, or sale of diesel fuel or kerosene if all the The penalty is the greater of $1,000 or $10

3. Either: following tests are met. per gallon of the dyed diesel fuel or dyed kerosene involved. After the first violation, the a. The person otherwise liable for tax uses • The person otherwise liable for tax (for $1,000 portion of the penalty increases depend- the kerosene for a feedstock purpose, example, the position holder) is a regis- ing on the number of violations. or trant. This penalty is in addition to any tax imposed

b. The kerosene is sold for use by the • on the fuel. In the case of a removal from a terminal,

buyer for a feedstock purpose and, at If the penalty is imposed, each officer, em- the terminal is an approved terminal.

the time of the sale, the person other- ployee, or agent of a business entity who willfully • The diesel fuel or kerosene satisfies the wise liable for tax has an unexpired cer- participated in any act giving rise to the penalty dyeing requirements (described next). tificate (described later) from the buyer is jointly and severally liable with that entity for

and has no reason to believe any infor- the penalty.

mation on the certificate is false. Dyeing requirements. Diesel fuel or ker- There is no administrative appeal or review

osene satisfies the dyeing requirements only if it allowed for the third and subsequent penalty

Kerosene is used for a feedstock purpose satisfies one of the following requirements. imposed by section 6715 on any person for

when it is used for nonfuel purposes in the man- penalties imposed after October 22, 2004, exufacture or production of any substance other • It contains the dye Solvent Red 164 (and cept for:

than gasoline, diesel fuel, or special fuels. For no other dye) at a concentration spectrally • Fraud or a mistake in the chemical analy- example, kerosene is used for a feedstock pur- equivalent to at least 3.9 pounds of the sis or pose when it is used as an ingredient in the solid dye standard Solvent Red 26 per

production of paint, but is not used for a feed- thousand barrels of fuel. • Mathematical calculation of the penalty.

Page 15
If you are liable for the penalty, you may also In addition, since the back-up tax is imposed 3. To operate, manage, conserve, improve,

be liable for the back-up tax, discussed later. or maintain your farm and its tools and only on the delivery into the fuel supply tank of a

However, the penalty applies only to dyed diesel equipment. diesel-powered vehicle or train, the tax does not

fuel and dyed kerosene, while the back-up tax apply to diesel fuel or kerosene used as heating 4. To handle, dry, pack, grade, or store any may apply to other fuels. The penalty may apply oil or in stationary engines. raw agricultural or horticultural commodity if the fuel is held for sale or use for a taxable use (as provided below). while the back-up tax does not apply unless the

fuel is delivered into a fuel supply tank. Nontaxable Uses 5. To plant, cultivate, care for, or cut trees or

to prepare (other than sawing logs into Exception to penalty. The penalty under The following are nontaxable uses of diesel fuel lumber, chipping, or other milling) trees for item (3) will not apply in any of the following and kerosene. market, but only if the planting, etc., is inci- situations. dental to your farming operations (as pro- 1. Use on a farm for farming purposes (dis- • Diesel fuel or kerosene meeting the dye- vided below). cussed later). ing requirements (described earlier) is Diesel fuel or kerosene is treated as used on blended with any undyed liquid and the 2. Exclusive use by a state (defined earlier a farm for farming purposes if it is bought by a resulting product meets the dyeing re- under Definitions). person other than the owner, tenant, or operator quirements. of the farm and used on the farm for any of the 3. Use in a vehicle owned by an aircraft mu- • Diesel fuel or kerosene meeting the dye- purposes in item (1) or (2). seum. ing requirements (described earlier) is Item (4) applies only if more than one-half of

blended with any other liquid (other than 4. Use in a school bus (discussed later). the commodity so treated during the tax year

diesel fuel or kerosene) that contains the 5. Use in a qualified local bus (discussed was produced on the farm. Commodity refers to

type and amount of dye required to meet later). a single raw product. For example, apples would

the dyeing requirements. be one commodity and peaches another. The 6. Use in a highway vehicle that: more-than-one-half test applies separately to • The alteration or attempted alteration oc- each commodity. curs in an exempt area of Alaska. See a. Is not registered (and is not required to Item (5) applies if the operations are minor in Sale or use in Alaska, earlier. be registered) for highway use under nature when compared to the total farming oper- the laws of any state or foreign country, • Diesel fuel or kerosene meeting the dye- ations. and ing requirements (described earlier) is Not used for farming purposes. Diesel blended with diesel fuel or kerosene not b. Is used in the operator’s trade or busi- fuel or kerosene is not used for farming pur- meeting the dyeing requirements and the ness or for the production of income. poses if it is used in any of the following ways. blending occurs as part of a nontaxable

use (other than export), discussed later. 7. Exclusive use by a nonprofit educational • Off the farm, such as on the highway or in

organization, as discussed earlier under noncommercial aviation, even if the fuel is

Communications Tax. used in transporting livestock, feed, crops, Back-Up Tax or equipment. 8. Use in a highway vehicle owned by the Tax is imposed on the delivery of any of the United States that is not used on a high- • For personal use, such as mowing the following into the fuel supply tank of a way. lawn.

diesel-powered highway vehicle or train.

9. Exported. • In processing, packaging, freezing, or can- • Any dyed diesel fuel or dyed kerosene for ning operations. other than a nontaxable use. 10. Use other than as a fuel in a propulsion

engine of a diesel-powered highway vehi- • In processing crude gum into gum spirits • Any undyed diesel fuel or undyed ker- cle (such as home heating oil). of turpentine or gum resin or in processing osene on which a credit or refund (for fuel maple sap into maple syrup or maple used for a nontaxable purpose) has been 11. Use as a fuel in a propulsion engine of a sugar. allowed. diesel-powered train (subject to back-up

tax, discussed earlier). • Any liquid other than gasoline, diesel fuel, Buses. Diesel fuel or kerosene used in a

or kerosene. school bus or in a qualified local bus is used for a Used on a farm for farming purposes. Die- nontaxable use and is not subject to excise tax. Generally, this back-up tax is imposed at a sel fuel or kerosene is used on a farm for farming

rate of $.244 per gallon. However, see School bus. A school bus is a bus engaged purposes only if used in carrying on a trade or

Form 720 for the diesel-powered train rate. in the transportation of students and employees business of farming, on a farm in the United of schools. A school is an educational organiza- States, and for farming purposes. Liability for tax. Generally, the operator of the tion with a regular faculty and curriculum and a

Farm. A farm includes livestock, dairy, fish, vehicle or train into which the fuel is delivered is regularly enrolled body of students who attend

liable for the tax. In addition, the seller of the poultry, fruit, fur-bearing animals, and truck the place where the educational activities occur.

diesel fuel or kerosene is jointly and severally farms, orchards, plantations, ranches, nur- Qualified local bus. A qualified local bus is series, ranges, and feedyards for fattening cat- liable for the tax if the seller knows or has reason a bus meeting all the following tests. to know that the fuel will be used for other than a tle. It also includes structures such as

nontaxable use. Generally, a seller of diesel fuel greenhouses used primarily for raising agricul- • It is engaged in furnishing (for compensaor kerosene is not liable for tax on fuel delivered tural or horticultural commodities. A fish farm is tion) intracity passenger land transportainto the fuel supply tank of a train. However, the an area where fish are grown or raised—not tion available to the general public.

person that delivers the fuel into the fuel supply merely caught or harvested. • It operates along scheduled, regular tank of a train, rather than the train operator, is Farming purposes. Diesel fuel or kerosene routes. liable for the tax if, at the time of delivery, the is used on a farm for farming purposes if it is deliverer and the train operator are both regis- • It has a seating capacity of at least 20 bought by the owner, tenant, or operator of the tered by the IRS as train operators and a written adults (excluding the driver). farm and used for any of the following purposes. agreement between them requires the deliverer • It is under contract with (or receiving more to pay the tax. 1. To cultivate the soil, or to raise or harvest than a nominal subsidy from) any state or

any agricultural or horticultural commodity. local government to furnish that transpor- Exemptions from the back-up tax. The tation. back-up tax does not apply to a delivery of diesel 2. To raise, shear, feed, care for, train or

fuel or kerosene for uses (1) through (8) listed Intracity passenger land transportation means manage livestock, bees, poultry, fur-bearunder Nontaxable Uses, next. ing animals, or wildlife. land transportation of passengers between

Page 16
points located within the same metropolitan rack for purposes of reporting the transac- tor. However, see Terminal operator’s liability

area. It includes transportation along routes that tion on Form 720-TO. under Removal from terminal, earlier, for an

cross state, city, or county boundaries if the exception. • The transaction is subject to a written con- routes remain within the metropolitan area. tract. Bulk transfers not received at approved terA bus is under contract with a state or local minal or refinery. The removal by bulk transgovernment only if the contract imposes a bona Terminal operator’s liability. The terminal fer of aviation-grade kerosene from a terminal or

fide obligation on the bus operator to furnish the operator is jointly and severally liable for the tax refinery or the entry of aviation-grade kerosene

transportation. A subsidy is more than nominal if if the position holder (including the receiving by bulk transfer into the United States is taxable

it is reasonably expected to exceed an amount person in a two-party exchange) is a person if the following conditions apply.

equal to 3 cents multiplied by the number of other than the terminal operator and is not a

gallons of fuel used in buses on subsidized registrant. However, a terminal operator will not 1. No tax was previously imposed (as disroutes. be liable for the tax in this situation if, at the time cussed earlier) on any of the following

A company that operates its buses along of the removal, the following conditions are met. events.

subsidized and unsubsidized intracity routes • The terminal operator is a registrant. a. The removal from the refinery. may consider its buses qualified local buses

only when the buses are used on the subsidized • The terminal operator has an unexpired b. The entry into the United States.

notification certificate (discussed under intracity routes. c. The removal from a terminal by an un- Gasoline) from the position holder. registered position holder. Aviation-Grade Kerosene • The terminal operator has no reason to

believe any information on the certificate is 2. Upon removal from the pipeline or vessel,

false. Effective January 1, 2005, the tax on the aviation-grade kerosene is not rethe sale of aviation fuel by the producer ceived at an approved terminal or refinery

(or at another pipeline or vessel). is repealed. Removal from refinery. The removal of CAUTION

!

Tax-free removals of undyed aviation-grade aviation-grade kerosene from a refinery is tax- The owner of the aviation-grade kerosene kerosene, if the Secretary determined that such able if the removal meets either of the following when it is removed from the pipeline or vessel is kerosene was destined for use as a fuel in an conditions. liable for the tax. However, an owner meeting all aircraft, are repealed effective January 1, 2005. the following conditions at the time of the re- • It is made by bulk transfer and the refiner, moval will not be liable for the tax. the owner of the fuel immediately before

the removal, or the operator of the pipeline • The owner is a registrant. Aviation-Grade Kerosene or vessel is not a registrant. • The owner has an unexpired notification This is kerosene-type jet fuel covered by ASTM • It is made at the refinery rack. certificate (discussed under Gasoline) specification D 1655 or military specification from the operator of the terminal or refin- MIL-DTL-5624T (Grade JP-5) or The refiner is liable for the tax.

ery where the aviation-grade kerosene is MIL-DTL-83133E (Grade JP-8). Exception. The tax does not apply to a re- received.

moval of aviation-grade kerosene at the refinery • The owner has no reason to believe any rack if all the following conditions are met. Taxable Events information on the certificate is false.

1. The aviation-grade kerosene is removed The operator of the facility where the Aviation-grade kerosene is taxed as a taxable from an approved refinery not served by aviation-grade kerosene is received is liable for fuel. The rate of tax on removal, entry, or sale of pipeline (other than for receiving crude oil) the tax if the owner meets these conditions. The aviation-grade kerosene at the terminal rack is or vessel. operator is jointly and severally liable if the $.219 per gallon unless a reduced rate applies. 2. The aviation-grade kerosene is received at owner does not meet these conditions. See Commercial Aviation; Liability of Commer- a facility operated by a registrant and lo- cial Aircraft Operators for Tax below. The posi- cated within the bulk transfer/terminal sys- Sales to unregistered person. The sale of tion holder is liable for the tax.

tem. aviation-grade kerosene located within the bulk

transfer/terminal system to a person that is not a Removal from terminal. All removals of 3. The removal from the refinery is by railcar registrant is taxable if tax was not previously aviation-grade kerosene at a terminal rack are and the same person operates the refinery imposed under any of the events discussed ear- taxable. The position holder for that fuel is liable and the facility at which the aviation-grade lier. for the tax. kerosene is received. The seller is liable for the tax. However, a

Two-party exchanges. In a two-party ex- seller meeting all the following conditions at the

change, the receiving person, not the delivering Entry into the United States. The entry of time of the sale will not be liable for the tax.

person, is liable for the tax imposed on the aviation-grade kerosene into the United States • The seller is a registrant. removal of taxable fuel from the terminal at the is taxable if the entry meets either of the follow- terminal rack. A two-party exchange means a ing conditions. • The seller has an unexpired notification

transaction (other than a sale) where the deliver- certificate (discussed under Gasoline) • It is made by bulk transfer and the enterer ing person and receiving person are both tax- from the buyer.

able fuel registrants and all of the following or the operator of the pipeline or vessel is

not a registrant. • The seller has no reason to believe any apply. information on the certificate is false. • It is not made by bulk transfer. • The transaction includes a transfer from The buyer of the aviation-grade kerosene is lia- the delivering person, who holds the in- The enterer is liable for the tax. ble for the tax if the seller meets these condi- ventory position for the taxable fuel in the tions. The buyer is jointly and severally liable if terminal as reflected in the records of the Removal from a terminal by unregistered po- the seller does not meet these conditions. terminal operator. sition holder or unregistered pipeline or vessel operator. The removal by bulk transfer of Exception. The tax does not apply to a sale • The exchange transaction occurs before aviation-grade kerosene from a terminal is tax- if all of the following apply. or at the same time as completion of re- able if the position holder for the aviation-grade moval across the rack by the receiving • The buyer’s principal place of business is kerosene or the operator of the pipeline or ves- person. not in the United States. sel is not a registrant. The position holder is

• The terminal operator in its records treats liable for the tax. The terminal operator is jointly • The sale occurs as the fuel is delivered

the receiving person as the person that and severally liable for the tax if the position into a transport vessel with a capacity of at

removes the product across the terminal holder is a person other than the terminal opera- least 20,000 barrels of fuel.

Page 17
• The seller is a registrant and the exporter • Except in special cases identified by the rectly into the fuel tank of an aircraft in

of record. Secretary in regulations, no vehicle regis- commercial aviation or

tered for highway use is loaded with • The fuel was exported. • For nontaxable uses (listed below). aviation-grade kerosene at such terminal.

• The refueler truck, tanker, or tank wagon Commercial Aviation; Liability of Certificate. The certificate may be included meets the following requirements: Commercial Aircraft Operators for as part of any business records normally used

Tax for a sale. See Model Certificate K. 1. Has storage tanks, hose, and coupling A certificate expires on the earliest of the

The position holder is liable for tax with respect equipment designed and used for fueling following dates. aircraft, to removals of taxable fuel from a terminal at the • The date one year after the effective date rack. However, the position holder is not liable 2. Is not registered for highway use, and (not earlier than the date signed) of the for tax on the removal of aviation-grade ker- certificate. osene from a terminal at the terminal rack if the 3. Is operated by the terminal operator or a

kerosene is removed directly into the fuel tank of person that makes a daily accounting to • The date the buyer provides the seller a

an aircraft for use in commercial aviation. In this the terminal operator of each delivery of new certificate or notice that the current

case, the operator of the aircraft in commercial fuel from the refueler truck, tanker, or tank certificate is invalid.

aviation is liable for the tax on the removal of wagon. Information reporting will be re- • The date the IRS or the buyer notifies the aviation-grade kerosene at the rate of $.044 per quired by terminal operators regarding this seller that the buyer’s right to provide a gallon if position holder: provision. Until the format of this informa- certificate has been withdrawn. tion reporting is issued, taxpayers are re- • Is a taxable fuel registrant, quired to retain records regarding the daily The buyer must provide a new certificate if accounting, but are not required to report • Has an unexpired certificate (a model cer- any information on a certificate has changed. such information. tificate is shown in Appendix A as Model The IRS may withdraw the buyer’s right to Certificate K) from the operator of the air- provide a certificate if the buyer uses the craft, and Terminal located within a secured area of an aviation-grade kerosene to which a certificate airport. The conference report to the Act pro- • Has no reason to believe any of the infor- relates other than as stated in the certificate

vides an initial list of qualifying terminals and the mation in the certificate is false. airports at which they are located. The confer- Nontaxable uses of aviation-grade kerosene. ence report also provides that this list is subject Beginning July 1, 2005, each commercial air- to the Secretary’s verification. This notice • Use on a farm for farming purposes, as craft operator (other than one engaged exclu- adopts the list in the conference report except discussed earlier under Diesel Fuel and sively in foreign trade) must be registered by the Kerosene. for the following airport terminals, which the IRS as a condition of providing the certificate Commissioner has determined are not located that the aviation-grade kerosene will be used in • Use in foreign trade (reciprocal benefits within a secure area of the airport they serve: commercial aviation. required for foreign airlines).

• San Jose Municipal Airport, • Use in certain helicopter and fixed-wing air

Commercial aviation. Commercial aviation is T-77-CA-4650, ambulance uses.

any use of an aircraft in the business of trans- • John Wayne Airport/Orange County, • Exclusive use by a state, as defined ear- porting persons or property by air for pay. How- T-33-CA-4772, and lier under Definitions. ever, commercial aviation does not include any

of the following uses. • Eppley Airfield, T-47-NE-3608 • Exclusive use by a nonprofit educational

organization, as discussed earlier under • Any use of an aircraft that has a maximum This list refers to fueling operations regarding Communications Tax.

certificated takeoff weight of 6,000 pounds the federal excise tax on aviation-grade keror less, unless the aircraft is operated on osene, and has nothing to do with the general • Use in an aircraft or vehicle owned by an

an established line. For more information, security of airports either included or not in- aircraft museum.

see Small aircraft under Special Rules on cluded on the list. • Use in military aircraft. Transportation Taxes, earlier.

Exceptions • Any use exclusively for the purpose of Back-up Tax skydiving. The rate on aviation-grade kerosene is zero if it

Tax is imposed on aviation-grade kerosene: • Any use of an aircraft owned or leased by is removed from any refinery or terminal directly

a member of an affiliated group and un- into the fuel tank of an aircraft for a nontaxable 1. Sold by any person to an owner, lessee, or available for hire by nonmembers. For use and the position holder: operator of an aircraft for use in such air- more information, see Aircraft used by af- craft or • Is a taxable fuel registrant, filiated corporations under Special Rules

on Transportation Taxes, earlier. 2. Used by any in an aircraft unless there • Has an unexpired certificate (see Model

was a taxable sale of the aviation-grade Certificate K) from the operator of the air- kerosene under (1) above. Certain refueler trucks, tankers, and tank craft, and

wagons treated as terminals. For purposes Generally, this back-up tax is imposed at a • Has no reason to believe any of the infor- of the tax imposed on aviation-grade kerosene rate of $.219 per gallon. The back-up tax does mation in the certificate is false.

removed directly into the fuel tank of an aircraft not apply if the aviation-grade kerosene was

for use in commercial aviation, certain refueler taxed under section 4081 and that tax was not The exemptions are listed under Nontaxable

trucks, tankers, and tank wagons are treated as credited or refunded. uses of aviation-grade kerosene below.

part of a terminal if the following conditions are

met. Aviation-grade kerosene used in a

Certificate, Commercial Aviation diesel-powered highway vehicle. Tax is im- • Such terminal is located within a secured and Nontaxable Uses posed on the delivery of aviation-grade ker- area of an airport (defined below). osene into the fuel supply tank of a

• Any aviation-grade kerosene which is diesel-powered highway vehicle on which a A certificate is required from the buyer of

loaded in a refueler truck, tanker, or tank credit or refund (for aviation-grade kerosene aviation-grade:

wagon at a terminal is for delivery into used for a nontaxable purpose) has been alaircraft at the airport in which the terminal • To support aircraft operator liability for tax lowed. This back-up tax is imposed at a rate of

is located. on removal of aviation-grade kerosene di- $.244 per gallon.

Page 18
Credits or Refunds Tax rate. The special motor fuels tax rate de- Motor vehicle. For this purpose, motor vehipends on the type of fuel involved. The tax rate cle has the same meaning as given under SpeA claim may be made by the ultimate purchaser for LPG is shown on Form 720 (IRS No. 61). The cial Motor Fuels, earlier.

for taxed aviation-grade kerosene used for a tax rates for all other special motor fuels are nontaxable use or for use in a commercial avia- shown in the Form 720 instructions for other tion. A claim may be made by a registered ulti- Nontaxable Uses fuels (IRS No. 79). mate vendor for certain sales. For more

information, see Publication 378. The following are nontaxable uses of CNG.

Nontaxable Uses • In an off-highway business use, as dis- Special Motor Fuels cussed earlier under Special Motor Fuels. The following are nontaxable uses of special

Special motor fuel means any liquid fuel includ- motor fuels. • Use in a boat engaged in commercial fishing liquefied petroleum gas, liquefied natural ing.

gas, benzol, benzene, and naptha. However, • In an off-highway business use (discussed • Use in a school bus or qualified local bus, gasoline, diesel fuel, kerosene, gas oil, and fuel later). as discussed earlier under Diesel Fuel and oil do not qualify as special motor fuel. • Use in a boat engaged in commercial fish- Kerosene.

Qualified methanol and ethanol fuels. A ing. • Use on a farm for farming purposes, as special rate applies to these fuels. Qualified eth- • Use on a farm for farming purposes, as discussed earlier under Diesel Fuel and

anol and methanol means any liquid at least 85 discussed earlier under Diesel Fuel and Kerosene.

percent of which consists of alcohol produced Kerosene. • Exclusive use by a state, as defined ear- from coal, including peat.

• Exclusive use by a state, as defined ear- lier under Definitions.

Partially exempt methanol and ethanol fuels. lier under Definitions. • By nonprofit educational organizations for A special rate applies to these fuels. Partially • By nonprofit educational organizations for their exclusive use, as discussed earlier exempt ethanol and methanol means any liquid under Communications Tax. their exclusive use, as discussed earlier at least 85 percent of which consists of alcohol under Communications Tax. produced from natural gas. • Official use by the United Nations.

• Official use by the United Nations. Motor vehicle. For the purpose of applying • Use in a vehicle owned by an aircraft mu-

• Use in a vehicle owned by an aircraft mu- seum. the tax on the delivery of special motor fuels,

motor vehicles include all types of vehicles, seum. • Use in any boat operated by the United whether or not registered (or required to be • Use in any boat operated by the United States for its exclusive use or any vessel registered) for highway use, that have both the States for its exclusive use or any vessel of war of any foreign nation. following characteristics. of war of any foreign nation. There is no tax on a delivery in connection • They are propelled by a motor. with a sale of CNG only if, by the time of sale, the • They are designed for carrying or towing Off-highway business use. This is use in a seller meets both the following conditions. loads from one place to another, regard- highway vehicle that is not registered (or reless of the type of material or load carried quired to be registered) for highway use under • The seller has an unexpired certificate

or towed. the laws of any state or foreign country and is from the buyer.

Motor vehicles do used in the operator’s trade or business or for not include any vehicle that • The seller has no reason to believe any

moves exclusively on rails, or any of the follow- the production of income. It also includes use in information in the certificate is false.

a vehicle owned by the United States that is not ing items: farm tractors, trench diggers, power

shovels, bulldozers, road graders, road rollers, used on a highway. Certificate. The certificate from the buyer cer- and similar equipment that does not carry or tow tifies the CNG will be used in a nontaxable use a load. (listed earlier). The certificate may be included

Compressed Natural Gas as part of any business records normally used Taxable Event for a sale. A model certificate is shown in Appendix A as Model Certificate J. Your certificate Tax is imposed on the delivery of special motor Taxable Event must contain all information necessary to com- fuels into the fuel supply tank of the propulsion plete the model. engine of a motor vehicle or motorboat. How- Tax is imposed on the delivery of compressed ever, there is no tax on the delivery if tax was A certificate expires on the earliest of the natural gas (CNG) into the fuel supply tank of the imposed under the bulk sales rule, discussed following dates. propulsion engine of a motor vehicle or motor- later, or the delivery is for a nontaxable use, boat. See Form 720 for the tax rate. However, • The date 1 year after the effective date listed later. If the delivery is in connection with a there is no tax on the delivery if tax was imposed (which may be no earlier than the date sale, the seller is liable for the tax. If it is not in under the bulk sales rule discussed next, or the signed) of the certificate. connection with a sale, the operator of the vehi- delivery is for a nontaxable use, listed later. If the cle or boat is liable for the tax. • The date a new certificate is provided to delivery is in connection with a sale, the seller is the seller. Liquefied petroleum gas (LPG). Tax is im- liable for the tax. If it is not in connection with a

posed on the delivery of LPG into the fuel supply sale, the operator of the boat or vehicle is liable • The date the seller is notified the buyer’s

tank of certain vehicles and must be reported on for the tax. right to provide a certificate has been withForm 720. A credit or refund may be allowable drawn.

for taxed LPG used for certain nontaxable uses. Bulk sales. Tax is imposed on the sale of See Pub. 378. CNG that is not in connection with delivery into Fuels Used on Inland

the fuel supply tank of the propulsion engine of a Bulk sales. Tax is imposed on the sale of Waterways motor vehicle or motorboat if the buyer furnishes special motor fuels that is not in connection with

delivery into the fuel supply tank of the propul- Tax applies to liquid fuel used in the propulsion a written statement to the seller that the entire

sion engine of a motor vehicle or motorboat if the system of commercial transportation vessels quantity of the CNG covered by the sale is for

buyer furnishes a written statement to the seller while traveling on certain inland and intracoastal use as a fuel in a motor vehicle or motorboat and

stating the entire quantity of the fuel covered by waterways. The tax generally applies to all types the seller has given the buyer a written acknowlthe sale is for other than a nontaxable use, listed of vessels, including ships, barges, and tug- edgement of receipt of the statement. The seller

later. The seller is liable for this tax. boats. of the CNG is liable for the tax.

Page 19
Inland and intracoastal waterways. Inland is the time spent operating on the specified wa- ernment is treated as a state only if the fuel is

and intracoastal waterways on which fuel con- terways and the denominator is the total time used in the exercise of an essential tribal govsumption is subject to tax are specified in sec- spent on the voyage. This calculation cannot be ernment function.

tion 206 of the Inland Waterways Revenue Act used where it is found to be unreasonable. All operators of vessels used in com- of 1978, as amended. See section 48.4042-1(g) Taxable event. Tax is imposed on liquid fuel mercial waterway transportation who of the regulations for a list of these waterways. used in the propulsion system of a vessel. See RECORDS acquire liquid fuel must keep adequate

Commercial waterway transportation. Form 720 for the tax rate. records of all fuel used for taxable purposes.

Commercial waterway transportation is the use The person who operates (or whose employ- Operators who are seeking an exclusion from

of a vessel on inland or intracoastal waterways ees operate) the vessel in which the fuel is the tax must keep records that will support any

for either of the following purposes. consumed is liable for the tax. If a vessel owner exclusion claimed.

• The use is in the business of transporting (or lessee) contracts with an independent con- Your records should include all of the followtractor to operate the vessel, the independent property for compensation or hire. ing information. contractor is the person liable for tax, regardless

• The use is in transporting property in the • The acquisition date and quantity of fuel of who purchases the fuel. The tax is paid with

business of the owner, lessee, or operator Form 720. No tax deposits are required. delivered into storage tanks or the tanks

of the vessel, whether or not a fee is on your vessel. Exemptions. Certain types of commercial wa- charged. terway transportation are excluded from the tax. • The identification number or name of each

vessel using the fuel. The operation of all vessels meeting either of Fishing vessels. Fuel is not taxable when

these requirements is commercial waterway used by a fishing vessel while traveling to a • The departure time, departure point, route

traveled, destination, and arrival time for transportation regardless of whether the vessel fishing site, while engaged in fishing, or while each vessel. is actually transporting property on a particular returning from the fishing site with its catch. A

voyage. (However, see Exemptions, later.) The vessel is not transporting property in the busitax is imposed on fuel consumed in vessels ness of the owner, lessee, or operator by merely If you claim an exemption from the tax, include

while engaged in any of the following activities. in your records the following additional informa- transporting fish or other aquatic animal life tion as it pertains to you. caught on the voyage. • Moving without cargo. However, the tax does apply to fuel used by • The draft of the vessel on each voyage. • Awaiting passage through locks. a commercial vessel along the specified waterways while traveling to pick up aquatic animal • The type of vessel in which you used the • Moving to or from a repair facility. fuel. life caught by another vessel and while trans-

• Dislodging vessels grounded on a sand porting the catch of that other vessel. • The ultimate use of the cargo (for vessels bar. Deep-draft ocean-going vessels. Fuel is operated by state or local governments).

• Fleeting barges into a single tow. not taxable when used by a vessel designed

primarily for use on the high seas if it has a draft • Maneuvering around loading and unload- Alcohol Sold as Fuel of more than 12 feet on the voyage. For each ing docks. But Not Used as Fuel voyage, figure the draft when the vessel has its

greatest load of cargo and fuel. A voyage is a If you sell or use alcohol (either mixed or Liquid fuel. Liquid fuel includes diesel fuel, round trip. If a vessel has a draft of more than 12 straight) as a fuel, you may be eligible for an Bunker C residual fuel oil, special motor fuel, feet on at least one way of the voyage, the income tax credit. Use Form 6478 to figure the and gasoline. The tax is imposed on liquid fuel vessel satisfies the 12-foot draft requirement for credit. For more information about this credit, actually consumed by a vessel’s propulsion en- the entire voyage. see Pub. 378. gine and not on the unconsumed fuel in a Passenger vessels. Fuel is not taxable If the credit was claimed (either as an excise vessel’s tank. when used by vessels primarily for the transpor- tax credit or income tax credit) or a refund was Dual use of liquid fuels. The tax applies to all tation of persons. The tax does not apply to fuel claimed, you are liable for an excise tax if you taxable liquid used as a fuel in the propulsion of used in commercial passenger vessels while did any of the following: used the mixture or the vessel, regardless of whether the engine (or being operated as passenger vessels, even if straight alcohol other than as a fuel, separated other propulsion system) is used for another such vessels also transport property. Nor does it the alcohol from a mixture, or mixed the straight purpose. The tax applies to all liquid fuel con- apply to ferryboats carrying passengers and alcohol.

sumed by the propulsion engine even if it oper- their cars. Report the tax on Form 720. The rate of tax ates special equipment by means of a power depends on the applicable rate used to figure Ocean-going barges. Fuel is not taxable take-off or power transfer. For example, the fuel the credit. No deposits are required. when used in tugs to move LASH and SEABEE used in the engine both to operate an alternator, ocean-going barges released by their ocean-go- generator, or pumps and to propel the vessel is ing carriers solely to pick up or deliver interna- Biodiesel Sold as Fuel taxable.

The tax does not apply to fuel consumed in tional cargoes. But Not Used as Fuel

However, it is taxable when any of the follow- engines not used to propel the vessel. ing conditions apply. If you sell or use biodiesel (either mixed or If you draw liquid fuel from the same tank to straight) as a fuel, you may be eligible for an operate both a propulsion engine and a non- • One or more of the barges in the tow is income tax credit. Use Form 8864 to figure the propulsion engine, determine the fuel used in not a LASH barge, SEABEE barge, or credit. For more information about this credit, the nonpropulsion engine and exclude that fuel other ocean-going barge carried aboard see Pub. 378. from the tax. IRS will accept a reasonable esti- an ocean-going vessel. If the credit was claimed (either as an excise mate of the fuel based on your operating experi- • One or more of the barges is not on an tax credit or income tax credit) or a refund was ence, but you must keep records to support your international voyage. claimed, you are liable for an excise tax if you allocation. did any of the following: used the mixture or • Part of the cargo carried is not being Voyages crossing boundaries of the speci- straight biodiesel other than as a fuel, separated transported internationally. fied waterways. The tax applies to fuel con- the biodiesel from a mixture, or mixed the

sumed by a vessel crossing the boundaries of straight biodiesel. State or local governments. No tax is im- the specified waterways only to the extent of fuel Report the tax on Form 720. The rate of tax posed on the fuel used in a vessel operated by a consumed for propulsion while on those water- depends on the applicable rate used to figure state or local government in transporting prop- ways. Generally, the operator may figure the the credit. No deposits are required. erty on official business. The ultimate use of the fuel so used during a particular voyage by multi- cargo must be for a function ordinarily carried plying total fuel consumed in the propulsion en- out by governmental units. An Indian tribal gov- gine by a fraction. The numerator of the fraction

Page 20
• Leased, Manufacturers Taxes 1. Include both the following charges in the

price. • Sold conditionally,

The following discussion of manufacturers taxes a. Any charge for coverings or containers • Sold on installment with chattel mortgage, applies to the tax on the following items. (regardless of their nature). or

• Sport fishing equipment. b. Any charge incident to placing the arti- • Sold on installment with title to pass in the

cle in a condition packed ready for ship- • Bows, quivers, broadheads, and points. future.

ment. • Arrow components, effective before April To figure the tax, multiply the partial payment by

1, 2005. the tax rate in effect at the time of the payment. 2. Exclude all the following amounts from the

• Arrow shafts, effective after March 31, price.

2005. Exemptions a. The manufacturers excise tax, whether

• Coal. or not it is stated as a separate charge. The following sales by the manufacturer are

exempt from the manufacturers tax. • Taxable tires. b. The transportation charges pursuant to

the sale. (The cost of transportation of • Gas guzzler automobiles. • Sale of an article to a state or local gov- goods to a warehouse before their bona ernment for the exclusive use of the state • Vaccines. fide sale is not excludable.) or local government. (This exemption does

c. Delivery, insurance, installation, retail not apply to the taxes on coal, gas guz- Manufacturer. The term “manufacturer” in- dealer preparation charges, and other zlers, and vaccines.) State is defined in cludes a producer or importer. A manufacturer is charges you incur in placing the article Definitions under Fuel Taxes, earlier. any person who produces a taxable article from in the hands of the purchaser under a

new or raw material, or from scrap, salvage, or bona fide sale. • Sale of an article to a nonprofit educajunk material, by processing or changing the tional organization for its exclusive use. d. Discounts, rebates, and similar al- form of an article or by combining or assembling (This exemption does not apply to the lowances actually granted to the pur- two or more articles. If you furnish the materials taxes on coal, gas guzzlers, and vac- chaser. and keep title to those materials and to the cines.) Nonprofit educational organization finished article, you are considered the manu- e. Local advertising charges. A charge is defined under Communications Tax. facturer even though another person actually made separately when the article is manufactures the taxable article. • Sale of an article for use by the purchaser sold and that qualifies as a charge for A manufacturer who sells a taxable article in as supplies for vessels. (This exemption “local advertising” may, within certain knockdown (unassembled) condition is liable for limits, be excluded from the sale price. does not apply to the taxes on coal and

the tax. The person who buys these component vaccines.) Supplies for vessels means f. Charges for warranty paid at the parts and assembles a taxable article may also ships’ stores, sea stores, or legitimate purchaser’s option. However, a charge be liable for tax as a further manufacturer de- equipment on vessels of war of the United for a warranty of an article that the man- pending on the labor, material, and overhead States or any foreign nation, vessels em- ufacturer requires the purchaser to pay required to assemble the completed article if the ployed in the fisheries or whaling busi- article is assembled for business use. to obtain the article is included in the

sale price on which the tax is figured. ness, or vessels actually engaged in

Importer. An importer is a person who foreign trade.

brings a taxable article into the United States, or Bonus goods. Allocate the sale price if you • Sale of an article for use by the purchaser withdraws a taxable article from a customs

give free nontaxable goods with the purchase of for further manufacture, or for resale by bonded warehouse for sale or use in the United

States. taxable merchandise. Figure the tax only on the the purchaser to a second purchaser for

sale price attributable to the taxable articles. use by the second purchaser for further Sale. A sale is the transfer of the title to, or the manufacture. (This exemption does not substantial incidents of ownership in, an article Example. A manufacturer sells a quantity of apply to the tax on coal.) Use for further to a buyer for consideration which may consist of taxable articles and gives the purchaser certain money, services, or other things. manufacture means use in the manufac- nontaxable articles as a bonus. The sale price of ture or production of an article subject to Use considered sale. A manufacturer who the shipment is $1,500. The normal sale price is the manufacturers excise taxes. If you buy $2,000: $1,500 for the taxable articles and $500 uses a taxable article is liable for the tax in the

for the nontaxable articles. Since the taxable articles tax free and resell or use them same manner as if it were sold. other than in the manufacture of another items represent 75% of the normal sale price, Lease considered sale. The lease of an the tax is based on 75% of the actual sale price, article, you are liable for the tax on their

article (including any renewal or extension of the or $1,125 (75% of $1,500). The remaining $375 resale or use just as if you had manufaclease) by the manufacturer is generally consid- is allocated to the nontaxable articles. tured and sold them.

ered a taxable sale. However, for the gas guz- • Sale of an article for export or for resale by zler tax, only the first lease (excluding any Taxable Event the purchaser to a second purchaser for renewal or extension) of the automobile by the

manufacturer is considered a sale. export. The article may be exported to a Tax attaches when the title to the article sold

foreign country or to a possession of the Manufacturers taxes based on sales price. passes from the manufacturer to the buyer.

When the title passes depends on the intention United States. (A vaccine shipped to a The manufacturers taxes imposed on the sale of

of the parties as gathered from the contract of possession of the United States is not sport fishing equipment, electric outboard motors, and bows are based on the sale price of the sale. In the absence of expressed intention, the considered to be exported.) If an article is

article. The taxes imposed on coal are based legal rules of presumption followed in the juris- sold tax free for export and the manufaceither on the sale price or the weight. turer does not receive proof of export, de- diction where the sale occurs determine when

The price for which an article is sold includes title passes. scribed later, the manufacturer is liable for

the total consideration paid for the article, If the taxable article is used by the manufac- the tax.

whether that consideration is in the form of turer, the tax attaches at the time use begins.

money, services, or other things. However, you • Sales of articles of native Indian handi- The manufacturer is liable for the tax.

craft, such as bows and arrow shafts, include certain charges made when a taxable

article is sold and you exclude others. To figure Partial payments. The tax applies to each manufactured by Indians on reservations,

the price on which you base the tax, use the partial payment received when taxable articles in Indian schools, or under U.S. jurisdicfollowing rules. are: tion in Alaska.

Page 21
Requirements for Exempt Sales statement signed by the person that paid the tax • Exported, waiving the right to claim a credit or refund. The

The following requirements must be met for a • Used or sold for use as supplies for ves- statement must include the amount of tax paid,

sale to be exempt from the manufacturers tax. sels (except for coal and vaccines), the date of payment, and the office to which it

Registration requirements. The manufac- was paid. • Sold to a state or local government for its

turer, first purchaser, and second purchaser in exclusive use (except for coal, gas guz- Claim for price readjustment. To claim a

the case of resales must be registered. See the zlers, and vaccines), credit or refund for a price readjustment, the Form 637 instructions for more information. person who paid the tax must include with the • Sold to a nonprofit educational organiza- Exceptions to registration requirements. claim, a statement that contains the following. tion for its exclusive use (except for coal, Registration is not required for any of the follow- gas guzzlers, and vaccines), or • A description of the circumstances that ing. gave rise to the price readjustment. • Used for further manufacture of another • State or local governments. article subject to the manufacturers taxes • An identification of the article whose price (except for coal). • Foreign purchasers of articles sold or re- was readjusted.

sold for export. • The price at which the article was sold. Export. If a tax-paid article is exported, the • The United States.

exporter or shipper may claim a credit or refund • The amount of tax paid on the article and

• Parties to a sale of supplies for vessels the date on which it was paid. if the manufacturer waives its right to claim the

and aircraft. credit or refund. In the case of a tax-paid article • The name and address of the purchaser. used to make another taxable article, the subsequent manufacturer may claim the credit or re- • The amount repaid to the purchaser or Certification requirement. If the purchaser is credited to the purchaser’s account. fund. required to be registered, the purchaser must

give the manufacturer its registration number Price readjustments. In addition, a credit or and certify the exempt purpose for which the refund (without interest) may be allowable for a Sport Fishing Equipment article will be used. The information must be in tax-paid article for which the price is readjusted writing and may be noted on the purchase order by reason of return or repossession of the article The tax on sonar devices suitable for or other document furnished by the purchaser to or a bona fide discount, rebate, or allowance for finding fish has been repealed, effec- the seller in connection with the sale. taxes based on price. tive after December 31, 2004. The tax CAUTION

!

For a sale to a state or local government, an on fishing tackle boxes is now 3%, effective exemption certificate must be signed by an of- Conditions to allowance. To claim a credit or

beginning January 1, 2005. ficer or employee authorized by the state or local refund in the case of export, supplies for vesgovernment. See section 48.4221-5(c) of the sels, or sales to a state or local government or A tax of 10% of the sale price is imposed on

regulations for the certificate requirements. nonprofit educational organization, the person many articles of sport fishing equipment sold by

For sales for use as supplies for vessels and who paid the tax must certify on the claim that the manufacturer. This includes any parts or

aircraft, if the manufacturer and purchaser are one of the following applies and that the claimant accessories sold on or in connection with the

not registered, the owner or agent of the vessel has the required supporting information. sale of those articles.

must provide an exemption certificate to the Pay this tax with Form 720. No tax deposits • The claimant sold the article at a tax-ex- manufacturer before or at the time of sale. See are required. cluded price. section 48.4221-4(d) of the regulations for the Sport fishing equipment includes all the fol- certificate requirements. • The person has repaid, or agreed to re- lowing items. pay, the tax to the ultimate vendor of the Proof of export requirement. Within 6

months of the date of sale or shipment by the article. 1. Fishing rods and poles (and component

parts), fishing reels, fly fishing lines, and manufacturer, whichever is earlier, the manu- • The person has obtained the written con- other fishing lines not over 130 pounds facturer must receive proof of exportation. See sent of the ultimate vendor to make the

test, fishing spears, spear guns, and spear section 48.4221-3(d) of the regulations for evi- claim.

tips. dence that qualifies as proof of exportation. The ultimate vendor generally is the seller makProof of resale for further manufacture re- 2. Items of terminal tackle, including leaders, ing the sale that gives rise to the overpayment of

quirement. Within 6 months of the date of sale artificial lures, artificial baits, artificial flies, tax.

or shipment by the manufacturer, whichever is fishing hooks, bobbers, sinkers, snaps, Claim for further manufacture. To claim a earlier, the manufacturer must receive proof that drayles, and swivels (but not including nat- credit or refund for further manufacture, the ural bait or any item of terminal tackle de- the article has been resold for use in further claimant must include a statement that contains manufacture. See section 48.4221-2(c) of the signed for use and ordinarily used on the following. fishing lines not described in (1)). regulations for evidence that qualifies as proof of

resale. • The name and address of the manufac- 3. The following items of fishing supplies and turer and the date of payment. Information to be furnished to purchaser. accessories: fish stringers, creels, bags,

The manufacturer must indicate to the pur- • An identification of the article for which the baskets, and other containers designed to

chaser that the articles normally would be sub- credit or refund is claimed. hold fish, portable bait containers, fishing

ject to tax and are being sold tax free for an vests, landing nets, gaff hooks, fishing • The amount of tax paid on the article and exempt purpose because the purchaser has hook disgorgers, and dressing for fishing the date on which it was paid. provided the required certificate. lines and artificial flies.

• Information indicating that the article was 4. Fishing tip-ups and tilts. Credits or Refunds used as material in the manufacture or

production of, or as a component part of, a 5. Fishing rod belts, fishing rodholders, fishThe manufacturer may be eligible to obtain a second article manufactured or produced ing harnesses, fish fighting chairs, fishing

credit or refund of the manufacturers tax for by the manufacturer, or was sold on or in outriggers, and fishing downriggers.

certain uses, sales, exports, and price readjust- connection with, or with the sale of a sec- See Revenue Ruling 88-52 in Cumulative Bulle- ments. The claim must set forth in detail the ond article manufactured or produced by tin 1988-1 for a more complete description of the facts upon which the claim is based. the manufacturer. items of taxable equipment.

Uses, sales, and exports. A credit or refund • An identification of the second article.

(without interest) of the manufacturers taxes Fishing tackle boxes. The tax on fishing

may be allowable if a tax-paid article is, by any For claims by the exporter or shipper, the tackle boxes is 3% of the sales price. The tax is

person: claim must contain the proof of export and a paid by the manufacturer, producer, or importer.

Page 22
Electric outboard boat motors. A tax of 3% was in effect prior to April 1, 2005. Pay this tax The tax applies to the full amount of coal

of the sale price is imposed on the sale by the with Form 720. No tax deposit is required. sold. However, the IRS allows a calculated remanufacturer of electric outboard motors. This duction of the taxable weight of the coal for the The tax on arrow shafts is subject to an includes any parts or accessories sold on or in weight of the moisture in excess of the coal’s annual inflation adjustment for any cal- connection with the sale of those articles. inherent moisture content. Include in the sale endar year beginning after 2005. CAUTION

!

price any additional charge for a freeze-condi- Certain equipment resale. The tax on the tioning additive in figuring the tax. sale of sport fishing equipment is imposed a Coal Do not include in the sales price the excise second time under the following circumstances. tax imposed on coal. If the manufacturer sells a taxable article to any A tax is imposed on the first sale of coal mined in person, the manufacturer is liable for the tax. If the United States. The producer of the coal is Coal used by the producer. The tax on coal

the purchaser or any other person then sells it to liable for the tax. The producer is the person applies if the coal is used by the producer in a person who is related (discussed next) to the who has vested ownership of the coal under other than a mining process. A mining process manufacturer, that related person is liable for a state law immediately after the coal is severed means the same for this purpose as for percent- second tax on any subsequent sale of the arti- from the ground. Determine vested ownership age depletion. For example, the tax does not cle. The second tax, however, is not imposed if without regard to any contractual arrangement apply if, before selling the coal, you break it, the constructive sale price rules under section for the sale or other disposition of the coal or the clean it, size it, or apply any other process con- 4216(b) of the Internal Revenue Code apply to payment of any royalties between the producer sidered mining under the rules for depletion. In the sale by the manufacturer. and third parties. A producer includes any per- this case, the tax applies only when you sell the If the second tax is imposed, a credit for tax son who extracts coal from coal waste refuse coal. The tax does not apply to coal used as fuel previously paid by the manufacturer is available piles (or from the silt waste product that results in the coal drying process since it is considered provided the related person can document the from the wet washing of coal). to be used in a mining process. However, the tax tax paid. The documentation requirement is The tax is not imposed on coal extracted does apply when you use the coal as fuel or as generally satisfied only through submission of from a riverbed by dredging if it can be shown an ingredient in making coke since the coal is copies of actual records of the person that previ- that the coal has been taxed previously. not used in a mining process. ously paid the tax. You must use a constructive sale price to Tax rates. The tax on underground-mined Related person. For the tax on sport fishing figure the tax under the 4.4% rate if you use the coal is the lower of: equipment, a person is a related person of the coal in other than a mining process. Base your

manufacturer if that person and the manufac- • $1.10 a ton, or constructive sale price on sales of a like kind and

turer have a relationship described in section grade of coal by you or other producers made • 4.4% of the sale price. 465(b)(3)(C) of the Internal Revenue Code. f.o.b. mine or cleaning plant. Normally, you use

the same constructive price used to figure your The tax on surface-mined coal is the lower of: Bows, Quivers, Broadheads, percentage depletion deduction.

• 55 cents a ton, or and Points Blending. If you blend surface-mined coal • 4.4% of the sale price. with underground-mined coal during the cleanThe tax on bows has been revised to ing process, you must figure the excise tax on Coal will be taxed at the 4.4% rate if the selling include quivers, broadheads, and the sale of the blended, cleaned coal. Figure the price is less than $25 a ton for points. Points are included with the tax tax separately for each type of coal in the blend. CAUTION

!

underground-mined coal and less than $12.50 a on bows effective after March 31, 2005. Base the tax on the amount of each type in the ton for surface-mined coal. Apply the tax propor- The tax on bows is 11% (.11) of the sales blend if you can determine the proportion of tionately if a sale or use includes a portion of a price. The tax is paid by the manufacturer, pro- each type of coal contained in the final blend. ton. ducer, or importer. It applies to bows having a Base the tax on the ratio of each type originally

peak draw weight of 30 pounds or more. The tax put into the cleaning process if you cannot deter- Example. If you sell 21,000 pounds (10.5 is also imposed on the sale of any part or acces- mine the proportion of each type of coal in the tons) of coal from an underground mine for sory suitable for inclusion in or attachment to a blend. However, the tax is limited to 4.4% of the $525, the price per ton is $50. The tax is $1.10 × sale price per ton of the blended coal. taxable bow and any quiver, broadhead, or point 10.5 tons ($11.55). suitable for use with arrows described below.

Exemption from tax. The tax does not apply Pay this tax with Form 720. No tax deposit is Coal production. Coal is produced from sur- to sales of lignite and imported coal. The only required. face mines if all geological matter (trees, earth, other exemption from the tax on the sale of coal rock) above the coal is removed before the coal is for coal exported as discussed next. Arrow Shafts is mined. Treat coal removed by auger and coal

reclaimed from coal waste refuse piles as pro- Exported. The tax does not apply to the

duced from a surface mine. sale of coal if the coal is in the stream of export The tax on arrow components has Treat coal as produced from an underground when sold by the producer and the coal is actu- been repealed, replaced by a tax on mine when the coal is not produced from a ally exported. arrow shafts, effective after March 31, CAUTION

!

surface mine. In some cases, a single mine may Coal is in the stream of export when sold by 2005. yield coal from both surface mining and under- the producer if the sale is a step in the exporta- The tax on arrow shafts is $.39 per arrow ground mining. Determine if the coal is from a tion of the coal to its ultimate destination in a shaft. The tax is paid by the manufacturer, pro- surface mine or an underground mine for each foreign country. For example, coal is in the ducer, or importer of any arrow shaft (whether ton of coal produced and not on a mine-by-mine stream of export when: sold separately or incorporated as part of a fin- basis.

ished or unfinished product) of a type used in the 1. The coal is loaded on an export vessel and manufacture of any arrow which after its assem- Determining tonnage or selling price. The title is transferred from the producer to a bly meets either of the following conditions. producer pays the tax on coal at the time of sale foreign purchaser, or or use. In figuring the selling price for applying • It measures 18 inches or more in overall the tax, the point of sale is f.o.b. (free on board) 2. The producer sells the coal to an export length. mine or f.o.b. cleaning plant if you clean the coal broker in the United States under terms of

• It measures less than 18 inches in overall before selling it. This applies even if you sell the a contract showing that the coal is to be

coal for a delivered price. The f.o.b. mine or shipped to a foreign country. length but is suitable for use with a taxable

bow, described earlier. f.o.b. cleaning plant is the point at which you Proof of export includes any of the following figure the number of tons sold for applying the items. The arrow shaft tax is effective for sales after applicable tonnage rate, and the point at which

March 31, 2005. See the January 2005 revision you figure the sale price for applying the 4.4% • A copy of the export bill of lading issued

of Form 720 for the arrow component tax that rate. by the delivering carrier.

Page 23
• A certificate signed by the export carrier’s operates on a schedule along regular routes or c. For firefighting purposes.

agent or representative showing actual ex- seats at least 20 adults (excluding the driver).

portation of the coal. 3. Vehicles treated under 49 USC 32901 Qualifying school bus. This is any bus (1978) as non-passenger automobiles. • A certificate of landing signed by a cus- substantially all the use (85% or more) of which This includes limousines manufactured pri- toms officer of the foreign country to which is to transport students and employees of marily to transport more than 10 persons. the coal is exported. schools.

The manufacturer can sell a vehicle de- • If the foreign country does not have a cus- Credit or refund. A credit or refund (without scribed in item (2) tax free only when the sale is toms administrator, a statement of the for- interest) is allowable on tax-paid tires if the tires made directly to a purchaser for the described eign consignee showing receipt of the have been: emergency use and the manufacturer and pur- coal. chaser (other than a state or local government) • Exported, are registered.

Taxable Tires • Sold to a state or local government for its Treat an Indian tribal government as a state

exclusive use, only if the police or other law enforcement purposes are an essential tribal government func- Highway-type tires is renamed taxable • Sold to a nonprofit educational organiza- tion. tion for its exclusive use, as discussed tires and the computation of the tax has earlier under Communications Tax, changed. Model type. Model type is a particular class of CAUTION

!

• Used or sold for use as supplies for ves- automobile as determined by EPA regulations. A tax is imposed on taxable tires sold by the

manufacturer, producer, or importer at the rate sels, or Fuel economy. Fuel economy is the average of $.0945 ($.04725 in the case of a biasply tire or • Sold in connection with certain intercity, number of miles an automobile travels on a

super single tire) for each 10 pounds of the local, or school buses. gallon of gasoline (or diesel fuel) rounded to the

maximum rated load capacity over 3,500 nearest 0.1 mile as figured by the EPA.

pounds. Also, a credit or refund (without interest) is Imported automobiles. The tax also ap- A taxable tire is any tire of the type used on allowable on tax-paid tires sold by any person plies to automobiles that do not have a highway vehicles if wholly or partially made of on, or in connection with, any other article that is prototype-based fuel economy rating assigned rubber and if marked according to federal regu- sold or used in an activity listed above or with a by the EPA. An automobile imported into the lations for highway use. A biasply tire is a pneu- bus chassis or body. United States without a certificate of conformity matic tire on which the ply cords that extend to The person who paid the tax is eligible to to United States emission standards and which the beads are laid at alternate angles substan- make the claim. has no assigned fuel economy rating must be tially less than 90 degrees to the centerline of either: the tread. A super single tire is a tire greater than Gas Guzzler Tax

13 inches in cross section width designed to • Converted by installation of emission conreplace 2 tires in a dual fitment. Tax is imposed on the sale by the manufacturer trols to conform in all material respects to

of automobiles of a model type that has a fuel an automobile already certified for sale in

Special rule, manufacturer’s retail stores. economy standard as measured by the Environ- the United States, or

The excise tax on taxable tires is imposed at the mental Protection Agency (EPA) of less than • Modified by installation of emission control time the taxable tires are delivered to the 22.5 miles per gallon. If you import an automo- components and individually tested to manufacturer-owned retail stores, not at the bile for personal use, you may be liable for this demonstrate emission compliance. time of sale. tax. Figure the tax on Form 6197, as discussed

later. The tax rate is based on fuel economy An imported automobile that has been con- Tires on imported articles. The importer of rating. The tax rates for the gas guzzler tax are verted to conform to an automobile already certi- an article equipped with taxable tires is treated shown on Form 6197. fied for sale in the United States may use the as the manufacturer of the tires and is liable for A person that lengthens an existing automo- fuel economy rating assigned to that certified the taxable tire excise tax when the article is sold bile (for example, to make a stretch limousine) is automobile. (except in the case of an automobile bus chassis the manufacturer of an automobile. A fuel economy rating is not generally avail- or body with tires). able for modified imported automobiles because Automobiles. An automobile is any Tires exempt from tax. The tax on taxable the EPA does not require a highway fuel econ- four-wheeled vehicle that is: omy test on them. A separate highway fuel tires does not apply to the following items. • Rated at an unloaded gross vehicle weight economy test would be required to devise a fuel

• Recapped or retreaded tires if the tires of 6,000 pounds or less, economy rating (otherwise the automobile is

have been sold previously in the United presumed to fall within the lowest fuel economy • Propelled by an engine powered by gaso- States and were taxable tires at the time rating category). line or diesel fuel, and of sale. For more information about fuel economy

• Intended for use mainly on public streets, ratings for imported automobiles, see Revenue • Tire carcasses not suitable for commercial roads, and highways. Ruling 86-20 and Revenue Procedure 86-9 in use. Cumulative Bulletin 1986-1, and Revenue Pro-

• Tires for use on qualifying intercity, local, Limousines. The tax generally applies to cedure 87-10 in Cumulative Bulletin 1987-1.

and school buses. For tax-free treatment, limousines (including stretch limousines) re- Exemptions. No one is exempt from the gas the registration requirements discussed gardless of their weight. guzzler tax, including the federal government, earlier under Requirements for Exempt Vehicles not subject to tax. For the gas Sales state and local governments, and nonprofit edu- apply. guzzler tax, the following vehicles are not con- cational organizations. However, see Vehicles • Tires sold for the exclusive use of the De- sidered automobiles. not subject to tax, earlier.

partment of Defense or the Coast Guard. 1. Vehicles operated exclusively on a rail or Form 6197. Use Form 6197 to figure your tax • Tires of a type used exclusively on mobile rails. liability for each quarter. Attach Form 6197 to machinery. The effective date is for tires your Form 720 for the quarter. See the instruc- 2. Vehicles sold for use and used primarily: sold after October 22, 2004. See Vehicles tions for Form 6197 for more information and the

not considered highway vehicles on page a. As ambulances or combination one-time filing rules. 25 for the definition of mobile machinery. ambulance-hearses, Credit or refund. If the manufacturer paid the

Qualifying intercity or local bus. This is b. For police or other law enforcement tax on a vehicle that is used or resold for an

any bus used mainly (more than 50%) to trans- purposes by federal, state, or local gov- emergency use (see item (2) under Vehicles not

port the general public for a fee and that either ernments, or subject to tax), the manufacturer can claim a

Page 24
credit or refund. For information about how to file ultimate purchaser of the vaccine or obtained considered highway vehicles for purposes of the

for credits or refunds, see the Instructions for the consent of such purchaser to allowance of retail tax.

Form 720 or Form 8849. the credit or refund.

1. Specially designed mobile machinery

for nontransportation functions. A Vaccines self-propelled vehicle is not a highway veRetail Tax on hicle if all the following apply.

Influenza has been added to the list of

taxable vaccines. The effective date is a. The chassis has permanently mounted Heavy Trucks, CAUTION for sales or uses after June 30, 2005. to it machinery or equipment used to

!

For sales made on or before July 1, 2005, and Trailers, and Tractors perform certain operations (construcdelivered after July 1, 2005, the delivery date is tion, manufacturing, drilling, mining, timconsidered the sale date. bering, processing, farming, or similar

Hepatitis A has been added to the list of Four classifications of truck body types operations) if the operation of the mataxable vaccines. The effective date is for sales have been designated as meeting the chinery or equipment is unrelated to

or uses after November 30, 2004. For sales suitable for use standard and will be transportation on or off the public high- CAUTION

!

made on or before December 1, 2004, and deliv- excluded from the retail tax. See Gross vehicle ways.

ered after December 1, 2004, the delivery date weight below. b. The chassis has been specially de- is considered the sale date. A tax of 12% of the sales price is imposed on signed to serve only as a mobile carTax is imposed on certain vaccines sold by the first retail sale of the following articles, in- riage and mount for the machinery or cluding related parts and accessories sold on or the manufacturer in the United States. A taxable equipment, whether or not the machinvaccine means any of the following vaccines. in connection with, or with the sale of, the arti- ery or equipment is in operation. cles. • Any vaccine containing diphtheria toxoid. c. The chassis could not, because of its • Truck chassis and bodies. special design and without substantial • Any vaccine containing tetanus toxoid.

• Truck trailer and semitrailer chassis and structural modification, be used as part

• Any vaccine containing pertussis bacteria, bodies. of a vehicle designed to carry any other

extracted or partial cell bacteria, or spe- load.

cific pertussis antigens. • Tractors of the kind chiefly used for highway transportation in combination with a 2. Vehicles specially designed for off-high- • Any vaccine containing polio virus. trailer or semitrailer. way transportation. A vehicle is not • Any vaccine against measles. treated as a highway vehicle if the vehicle is A truck is a highway vehicle primarily de- specially designed for the primary function • Any vaccine against mumps. signed to transport its load on the same chassis of transporting a particular type of load other • Any vaccine against rubella. as the engine, even if it is equipped to tow a than over the public highway and because vehicle, such as a trailer or semitrailer. of this special design, the vehicles’s capa- • Any vaccine against hepatitis A (effective A tractor is a highway vehicle primarily de- bility to transport a load over a public high- after November 30, 2004). signed to tow a vehicle, such as a trailer or way is substantially limited or impaired. • Any vaccine against hepatitis B. semitrailer, but does not carry cargo on the To make this determination, you can take same chassis as the engine. into account the vehicle’s size, whether the • Any vaccine against chicken pox. A sale of a truck, truck trailer, or semitrailer is vehicle is subject to licensing, safety, or • Any vaccine against rotavirus gastroenter- considered a sale of a chassis and a body. other requirements, and whether the vehi- The seller is liable for the tax. itis. cle can transport a load at a sustained

Chassis or body. A chassis or body is taxable speed of at least 25 miles per hour. It does • Any conjugate vaccine against streptococonly if you sell it for use as a component part of a not matter that the vehicle can carry heavier cus pneumoniae.

highway vehicle that is a truck, truck trailer or loads off highway than it is allowed to carry • Any HIB vaccine. semitrailer, or a tractor of the kind chiefly used over the highway.

• Any trivalent vaccine against influenza (ef- for highway transportation in combination with a 3. Nontransportation trailers and semi- trailer or semitrailer. fective after June 30, 2005). trailers. A trailer or semi-trailer is not

Highway vehicle. A highway vehicle is any treated as a highway vehicle if it is spe- The tax is 75 cents per dose of each taxable self-propelled vehicle designed to carry a load cially designed to function only as an envaccine. The tax per dose on a vaccine that over public highways, whether or not it is also closed stationary shelter for carrying on a

contains more than one taxable vaccine is 75 designed to perform other functions. Examples nontransportation function at an off-high- cents times the number of taxable vaccines. of vehicles designed to carry a load over public way site. For example, a trailer that is cahighways are passenger automobiles, pable only of functioning as an office for an Taxable use. Any manufacturer (including a

motorcycles, buses, and highway-type trucks off-highway construction operation is not a governmental entity) that uses a taxable vaccine

and truck tractors. A vehicle is a highway vehicle highway vehicle. before it is sold will be liable for the tax in the

same manner as if the vaccine was sold by the even though the vehicle’s design allows it to

manufacturer. perform a highway transportation function for Gross vehicle weight. The tax does not apply

only one of the following. to truck chassis and bodies suitable for use with

Credit or refund. A credit or refund (without a vehicle that has a gross vehicle weight of interest) is available if the vaccine is: • A particular type of load, such as passen- 33,000 pounds or less. It also does not apply to gers, furnishings, and personal effects (as truck trailer and semitrailer chassis and bodies • Returned to the person who paid the tax in a house, office, or utility trailer). suitable for use with a trailer or semitrailer that (other than for resale), or

• A special kind of cargo, goods, supplies, has a gross vehicle weight of 26,000 pounds or • Destroyed. or materials. less. Tractors (and truck chassis completed as

The claim for a credit or refund must be filed tractors) are subject to tax without regard to • Some off-highway task unrelated to high- within 6 months after the vaccine is returned or gross vehicle weight. way transportation, except as discussed destroyed. next.

Conditions to allowance. To claim a credit

or refund, the person who paid the tax must Vehicles not considered highway vehicles.

have repaid or agreed to repay the tax to the Generally, the following kinds of vehicles are not

Page 25
The following four classifications of truck chassis and the bumpers for the chassis, or sells Tax on resale of tax-paid trailers and

body types meet the suitable for use standard a taxable tractor and the fifth wheel and attach- semitrailers, later).

and will be excluded from the retail excise tax. ments, the tax applies to the parts or accesso- • The sale qualifies as a tax-free sale under ries regardless of the method of billing or the • Platform truck bodies 21 feet or less in section 4221 of the Internal Revenue time at which the shipments were made. The tax length. Code (see Sales exempt from tax, later). does not apply to parts and accessories that are

• Dry freight and refrigerated truck van bod- spares or replacements. • The seller in good faith accepts from the

ies 24 feet or less in length. purchaser a statement signed under pen- Separate purchase. The tax generally ap- alties of perjury and executed in good faith • Dump truck bodies with load capacities of plies to the price of a part or accessory and its that the purchaser intends to resell the ar- eight cubic yards or less. installation if the following conditions are met. ticle or lease it on a long-term basis. There

• Refuse packer truck bodies with load ca- • The owner, lessee, or operator of any ve- is no registration requirement.

pacities of 20 cubic yards or less. hicle that contains a taxable article installs

any part or accessory on the vehicle. Leases. A long-term lease (a lease with a These four classifications are effective for sales term of 1 year or more, taking into account on or after April 4, 2005. For more information, • The installation occurs within 6 months af- options to renew) before a first retail sale is see Rev. Proc. 2005-19, which is on page 832 of ter the vehicle is first placed in service. treated as a taxable sale. The tax is imposed on Internal Revenue Bulletin 2005-14 at the lessor at the time of the lease. www.irs.gov/pub/irs-irbs/irb05-14.pdf. The owners of the trade or business installing A short-term lease (a lease with a term of the parts or accessories are secondarily liable The gross vehicle weight means the maxi- less than 1 year, taking into account options to for the tax. mum total weight of a loaded vehicle. Generally, renew) before a first retail sale is treated as a A vehicle is placed in service on the date the this maximum total weight is the gross vehicle taxable use. The tax is imposed on the lessor at owner takes actual possession of the vehicle. weight rating provided by the manufacturer or the time of the lease. This date is established by a signed delivery determined by the seller of the completed arti- ticket or other comparable document indicating Exported vehicle. A vehicle exported cle. The seller’s gross vehicle weight rating is delivery to and acceptance by the owner. before its first retail sale, used in a foreign coun- determined solely on the basis of the strength of The tax does not apply if the installed part or try, and then returned to the United States, is the chassis frame and the axle capacity and accessory is a replacement part or accessory. subject to the retail tax on its first retail sale after placement. The seller may not take into account The tax also does not apply if the total price of importation. any readily attachable components (such as the parts and accessories, including installation tires or rim assemblies) in determining the gross Tax on resale of tax-paid trailers and charges, during the 6-month period is $1,000 or vehicle weight. See Regulations section semitrailers. The tax applies to a trailer or less. However, if the total price is more than 145.4051-1(e)(3) for more information. semitrailer resold within 6 months after having $1,000, the tax applies to the cost of all parts been sold in a taxable sale. The seller liable for

and accessories (and installation charges) dur- Parts or accessories. The tax applies to parts the tax on the resale can claim a credit equal to ing that period. or accessories sold on or in connection with, or the tax paid on the prior taxable sale. The credit

with the sale of, a taxable article. For example, if cannot exceed the tax on the resale. See section

Example. You bought a taxable vehicle and at the time of the sale by the retailer, the part or 145.4052-1(a)(4) of the regulations for informa- placed it in service on April 8. On May 3, you accessory has been ordered from the retailer, tion on the conditions to allowance for the credit.

bought and installed parts and accessories at a the part or accessory will be considered as sold cost of $850. On July 15, you bought and in- Use treated as sale. If any person uses a in connection with the sale of the vehicle. The stalled parts and accessories for $300. Tax of taxable article before the first retail sale of the tax applies in this case whether or not the re- $138 (12% of $1,150) applies on July 15. Also, article, that person is liable for the tax as if the tailer bills the parts or accessories separately. article had been sold at retail by that person. tax will apply to any costs of additional parts and If the retailer sells a taxable chassis, body, or accessories installed on the vehicle before Oc- Figure the tax on the price at which similar arti- tractor without parts or accessories considered tober 8. cles are sold in the ordinary course of trade by essential for the operation or appearance of the retailers. The tax attaches when the use begins. taxable article, the sale of the parts or accesso- First retail sale defined. The sale of an article If the seller of an article regularly sells the ries by the retailer to the purchaser is considered is treated as the first retail sale, and the seller articles at retail in arm’s-length transactions, fig- made in connection with the sale of the taxable will be liable for the tax imposed on the sale ure the tax on its use on the lowest established article even though they are shipped separately, unless one of the following exceptions applies. retail price for the articles in effect at the time of at the same time, or on a different date. The tax the taxable use. applies unless there is evidence to the contrary. • There has been a prior taxable sale, If the seller of an article does not regularly For example, if a retailer sells to any person a lease, or use of the article (however, see sell the articles at retail in arm’s-length transactions, a constructive price on which the tax is Table 1. Tax Base figured will be determined by the IRS after considering the selling practices and price struc- IF the transaction is a... THEN figuring the base by using the... tures of sellers of similar articles.

Sale by the manufacturer, producer, Sales price plus (presumed markup If a seller of an article incurs liability for tax on

importer, or related person percentage × sales price) the use of the article and later sells or leases the

article in a transaction that otherwise would be

Sale by the dealer Total consideration paid for the item including taxable, liability for tax is not incurred on the later any charges incident to placing it in a sale or lease. condition ready for use

Presumptive retail sales price. There are Long-term lease by the manufacturer, Constructive sales price plus (presumed rules to ensure that the tax base of transactions producer, importer, or related person markup percentage × constructive sales price) considered to be taxable sales includes either

Short-term lease by the manufacturer, Constructive sales price at which such or an actual or presumed markup percentage. If

producer, importer, or related person similar articles are sold the person liable for tax is the vehicle’s manufacturer, producer, or importer, the following dis- Short-term lease by a lessor other than the Price for which the article was sold to the cussions show how you figure the presumptive manufacturer, producer, importer, or related lessor plus the cost of parts and accessories retail sales price depending on the type of trans- person installed by the lessor plus a presumed action and the persons involved in the transac- markup percentage tion. Table 1 outlines the appropriate tax base

Short-term lease where the articles are Lowest established retail price in effect at the calculation for various transactions.

regularly sold at arm’s length time of the taxable use The presumed markup percentage to be

used for trucks and truck-tractors is 4%. But for

Page 26
truck trailers and semitrailers and remanufac- arrive at the tax base, the price is the total as a component part of, another article to be

tured trucks and tractors, the presumed markup consideration paid (including trade-in allow- manufactured or produced by that person. Do

percentage is zero. ance) for the item and includes any charge inci- not treat a person as engaged in the manufacdent to placing the article in a condition ready for ture of any article merely because that person Sale. For a taxable sale by a manufacturer, use. However, see Presumptive retail sales combines the article with any of the following producer, importer, or related person, you gen- price, earlier. items. erally figure the tax on a tax base of the sales

price plus an amount equal to the presumed Exclusions from tax base. Exclude from • Coupling device (including any fifth markup percentage times that sales price. the tax base the retail excise tax imposed on the wheel). sale. Exclude any state or local retail sales tax if Long-term lease. In the case of a long-term stated as a separate charge from the price • Wrecker crane.

lease by a manufacturer, producer, importer, or whether the sales tax is imposed on the seller or • Loading and unloading equipment (includ- related person, figure the tax on a tax base of purchaser. Also exclude the value of any used ing any crane, hoist, winch, or power lift- the constructive sales price plus an amount component of the article furnished by the first equal to the presumed markup percentage gate). user of the article. times the constructive sales price. Exclude charges for transportation, delivery, • Aerial ladder or tower.

Short-term lease. When a manufacturer, insurance, and installation (other than installa- • Ice and snow control equipment. producer, importer, or related person leases an tion charges for parts and accessories, disarticle in a short-term lease considered a tax- cussed earlier) and other expenses incurred in • Earth moving, excavation, and construcable use, figure the tax on a constructive sales connection with the delivery of an article to a tion equipment.

price at which those or similar articles generally purchaser. These expenses are those incurred • Spreader. are sold in the ordinary course of trade by retail- in delivery from the retail dealer to the customer.

ers. • Sleeper cab. In the case of delivery directly from the manufacBut if the lessor in this situation regularly turer to the dealer’s customer, include the trans- • Cab shield.

sells articles at retail in arm’s-length transac- portation and delivery charges to the extent the

charges do not exceed what it would have cost • Wood or metal floor. tions, figure the tax on the lowest established

retail price in effect at the time of the taxable to ship the article to the dealer. Combining an article with an item in this list does use. Exclude amounts charged for machinery or not give rise to taxability. However, see Parts or

If a person other than the manufacturer, pro- equipment that does not contribute to the high- accessories, discussed earlier.

ducer, importer, or related person leases an way transportation function of the vehicle, proarticle in a short-term lease considered a tax- vided those charges are supported by adequate Articles exempt from tax. The tax on heavy

able use, figure the tax on a tax base of the price records. For example, for an industrial vacuum trucks, trailers, and tractors does not apply to for which the article was sold to the lessor plus loader vehicle, exclude amounts charged for the sales of the articles described in the following the cost of parts and accessories installed by the vacuum pump and hose, filter system, material discussions.

lessor and a presumed markup percentage. separator, silencer or muffler, control cabinet,

and ladder. Similarly, for a sewer cleaning vehi- Rail trailers and rail vans. This is any Related person. A related person is any cle, exclude amounts charged for the high pres- chassis or body of a trailer or semitrailer de- member of the same controlled group as the sure water pump, hose components, and the signed for use both as a highway vehicle and a manufacturer, producer, or importer. Do not vacuum pipe. railroad car (including any parts and accessories treat as a related person a person that sells the designed primarily for use on and in connection articles through a permanent retail establish- Sales not at arm’s length. For any taxable with it). Do not treat a piggyback trailer or semi- ment in the normal course of being a retailer if article sold (not at arm’s length) at less than the trailer as designed for use as a railroad car. that person has records to prove the article was fair market price, figure the excise tax on the

sold for a price that included a markup equal to price for which similar articles are sold at retail in Parts and accessories. This is any part or

or greater than the presumed markup percent- the ordinary course of trade. accessory sold separately from the truck or

age. A sale is not at arm’s length if either of the trailer, except as described earlier under Parts

following apply. or accessories and Separate purchase.

General rule for sales by dealers to the con- • One of the parties is controlled (in law or Trash containers. This is any box, sumer. For a taxable sale, other than a in fact) by the other or there is common container, receptacle, bin, or similar article that long-term lease, by a person other than a manu- control, whether or not the control is actu- meets all the following conditions. facturer, producer, importer, or related person, ally exercised to influence the sales price. your tax base is the retail sales price as dis- • It is designed to be used as a trash cussed next under Determination of tax base. • The sale is made under special arrange- container.

When you sell an article to the consumer, ments between a seller and a purchaser. • It is not designed to carry freight other generally you do not add a presumed markup to than trash. the tax base. However, you do add a markup if Installment sales. If the first retail sale is an

all the following apply. installment sale, or other form of sale in which • It is not designed to be permanently the sales price is paid in installments, tax liability mounted on or affixed to a truck chassis or • You do not perform any significant activi- arises at the time of the sale. The tax is figured body. ties relating to the processing of the sale on the entire sales price. No part of the tax is of a taxable article. deferred because the sales price is paid in in- House trailers. This is any house trailer (re- • The main reason for processing the sale stallments. gardless of size) suitable for use in connection through you is to avoid or evade the pre- Repairs and modifications. The tax does with either passenger automobiles or trucks. sumed markup. not apply to the sale or use of an article that has Camper coaches or bodies for self-pro- • You do not have records proving that the been repaired or modified unless the cost of the pelled mobile homes. This is any article de- article was sold for a price that included a repairs and modifications is more than 75% of signed to be mounted or placed on trucks, truck markup equal to or greater than the pre- the retail price of a comparable new article. This chassis, or automobile chassis and to be used sumed markup percentage. includes modifications that change the transpor- primarily as living quarters or camping accom- tation function of an article or restore a wrecked In these situations, your tax base is the sales modations. Further, the tax does not apply to article to a functional condition. However, this price plus an amount equal to the presumed chassis specifically designed and constructed to exception generally does not apply to an article markup percentage times that selling price. accommodate and transport self-propelled mo- that was not subject to the tax when it was new. bile home bodies. If a chassis is not specifically

Determination of tax base. These rules ap- Further manufacture. The tax does not ap- designed and constructed to accommodate and

ply to both normal retail sales price and pre- ply to the use by a person of a taxable article as transport self-propelled mobile home bodies,

sumptive retail sales price computations. To material in the manufacture or production of, or the chassis is subject to tax unless the chassis is

Page 27
suitable for use with a vehicle that has a gross • Sold to a nonprofit educational organiza- other lottery, or any other game of chance for

vehicle weight of 33,000 pounds or less. tion for its exclusive use. money or other thing of value that the owner or

operator of the vessel (or their employee, agent, Farm feed, seed, and fertilizer equipment. A credit or refund is also allowable if there is a or franchisee) conducts, sponsors, or operates, This is any body primarily designed to process price readjustment by reason of the return or the voyage is subject to the ship passenger tax. or prepare, haul, spread, load, or unload feed, repossession of an article or by reason of a bona The tax applies regardless of the duration of the seed, or fertilizer to or on farms. This exemption fide discount, rebate, or allowance. voyage. A casual, friendly game of chance with applies only to the farm equipment body (and See also Conditions to allowance under Man- other passengers that is not conducted, spon- parts and accessories) and not to the chassis ufacturers Taxes, earlier. sored, or operated by the owner or operator is upon which the farm equipment is mounted. not gambling for determining if the voyage is Tire credit. A credit is allowed against the tax Ambulances and hearses. This is any am- subject to the ship passenger tax. on heavy vehicles if taxable tires are sold on or bulance, hearse, or combination in connection with the sale of the article. The ambulance-hearse. Exemptions. The tax does not apply when a credit is equal to the manufacturers excise tax vessel is on a voyage of less than 12 hours Truck-tractors. This is any truck-tractor imposed on the taxable tires (discussed earlier). between 2 points in the United States or if a specifically designed for use in shifting semitrail- This is the section 4051(d) taxable tire credit and vessel is owned or operated by a state or local ers in and around freight yards and freight termi- is claimed on line 15a of Schedule C (Form 720) government. nals. for the same quarter for which the tax on the

heavy vehicle is reported. Concrete mixers. This is any article designed to be placed or mounted on a truck, truck

trailer, or semitrailer chassis to be used to pro- Foreign Insurance cess or prepare concrete. This exemption does

not apply to the chassis on which the article is Ship Passenger Tax Taxes

mounted.

A tax of $3 per passenger is imposed on certain Tax is imposed on insurance policies issued by Sales exempt from tax. The following sales ship voyages, as explained later under Taxable foreign insurers. Any person who makes, signs, are ordinarily exempt from tax. situations. The tax is imposed only once for each issues, or sells any of the documents and instru- passenger, either at the time of first embarkation ments subject to the tax, or for whose use or • Sales to a state or local government for its or disembarkation in the United States. benefit they are made, signed, issued, or sold, is exclusive use. The person providing the voyage (the opera- liable for the tax. tor of the vessel) is liable for the tax. • Sales to Indian tribal governments, but The following tax rates apply to each dollar only if the transaction involves the exer- Voyage. A voyage is the vessel’s journey that (or fraction thereof) of the premium paid. cise of an essential tribal government includes the outward and homeward trips or

function. passages. The voyage starts when the vessel 1. Casualty insurance and indemnity, fidelity,

• Sales to a nonprofit educational organiza- begins to load passengers and continues until and surety bonds: 4 cents (for example, on

tion for its exclusive use. the vessel has completed at least one outward a premium payment of $10.10, the tax is

and one homeward passage. The tax may be 44 cents). • Sales for use by the purchaser for further imposed even if a passenger does not make manufacture of other taxable articles (see 2. Life, sickness, and accident insurance, and both an outward and a homeward passage as below). annuity contracts: 1 cent (for example, on long as the voyage begins or ends in the United a premium payment of $10.10, the tax is States. • Sales for export or for resale by the pur- 11 cents). chaser to a second purchaser for export. Passenger. A passenger is an individual car- 3. Reinsurance policies covering any of the ried on the vessel other than the Master or a • Sales to the United Nations for official use. taxable contracts described in items (1) crew member or other individual engaged in the and (2): 1 cent. Registration requirement. business of the vessel or its owners. In general, the

seller and buyer must be registered for a sale to However, the tax does not apply to casualty

Example 1. John Smith works as a guest be tax free. See the Form 637 instructions for insurance premiums paid to foreign insurers for

more information. Certain registration excep- lecturer. The cruise line hired him for the benefit coverage of export goods in transit to foreign

of the passengers. Therefore, he is engaged in destinations. tions apply in the case of sales to state and local the business of the vessel and is not a passen- governments and to foreign purchasers for ex- Premium. Premium means the agreed ger. port. price or consideration for assuming and carrying

Further manufacture. the risk or obligation. It includes any additional If you buy articles Example 2. Marian Green is a travel agent. charge or assessment payable under the con- tax free and resell or use them other than in the She is taking the cruise as a promotional trip to

manufacture of another article, you are liable for tract, whether in one sum or installments. If determine if she wants to offer it to her clients.

the tax on their resale or use just as if you had premiums are refunded, claim the tax paid on She is a passenger.

manufactured and sold them. those premiums as an overpayment against tax Taxable situations. There are two taxable sit- due on other premiums paid or file a claim for

Credits and refunds. A credit or refund (with- uations. The first situation involves voyages on refund.

commercial passenger vessels extending over out interest) of the tax on heavy vehicles may be

allowable if the tax has been paid with respect to one or more nights. A voyage extends over one When liability attaches. The liability for this

an article and, before any other use, such article or more nights if it extends for more than 24 tax attaches when the premium payment is

hours. A passenger vessel is any vessel with transferred to the foreign insurer or reinsurer is used by any person as a component part of

another taxable article manufactured or pro- stateroom or berth accommodations for more (including transfers to any bank, trust fund, or

duced. The person using the article as a compo- than 16 passengers. similar recipient designated by the foreign innent part is eligible for the credit or refund. The second situation involves voyages on a surer or reinsurer) or to any nonresident agent,

commercial vessel transporting passengers en- solicitor, or broker. A person can pay the tax A credit or refund is allowable if, before any gaged in gambling on the vessel beyond the before the liability attaches if the person keeps other use, an article is, by any person: territorial waters of the United States. Territorial records consistent with that practice.

• Exported, waters of the United States are those waters

within the international boundary line between Who must file. The person who pays the pre- • Used or sold for use as supplies for ves- the United States and any contiguous foreign mium to the foreign insurer (or to any nonresi- sels, country or within 3 nautical miles (3.45 statute dent person such as a foreign broker) must pay

• Sold to a state or local government for its miles) from low tide on the coastline. If passen- the tax and file the return. Otherwise, any person

exclusive use, or gers participate as players in any policy game or who issued or sold the policy, or who is insured

Page 28
under the policy, is required to pay the tax and be subject to limits under the U.S. income tax However, the conditions listed under (2) do not

file the return. laws. apply to environmental taxes, the ship passenger tax, obligations not in registered form, for- The person liable for this tax must keep eign insurance taxes, fuels used on inland accurate records that identify each pol- waterways, alcohol sold as fuel but not used as RECORDS icy or instrument subject to tax. These Filing Form 720 fuel, biodiesel sold as fuel but not used as fuel, records must clearly establish the type of policy and certain fuel taxes if the tax was based on or instrument, the gross premium paid, the iden- use (for example, dyed diesel fuel used in tity of the insured and insurer, and the total Use Form 720 to report and pay the excise taxes trains, LPG, and CNG). premium charged. If the premium is to be paid in previously discussed in this publication. File

installments, the records must also establish the Form 720 for each calendar quarter until you file Employer identification number. If you file amount and anniversary date of each install- a final Form 720.

Form 720, you need an employer identification ment. You may be required to file your returns on a number (EIN), unless you are a one-time filer The records must be kept at the place of monthly or semimonthly basis instead of quar- (discussed later). If you do not have an EIN, you business or other convenient location for at least terly if you do not make deposits as required may apply for one online. Go to the IRS website 3 years after the later of the date any part of the (see Payment of Taxes, later) or are liable for at www.irs.gov/businesses/small and click on tax became due, or the date any part of the tax the excise tax on taxable fuels and meet certain the “Employer ID Numbers (EINs)” link. You was paid. During this period, the records must conditions. may also apply for an EIN by telephone by be readily accessible to the IRS. Form 720 has 3 parts. calling 1-800-829-4933, or you can fax or mail The person having control or possession of a Form SS-4, Application for Employer Identifica- policy or instrument subject to this tax must keep • Part I consists of excise taxes generally tion Number, to the IRS. required to be deposited (see Payment of the policy for at least 3 years after the date any

part of the tax on it was paid. Taxes, later). Final return. File a final return if either of the

• Part II consists of excise taxes that are following apply to you. Treaty-based positions under IRC 6114. not required to be deposited. You may have to file an annual report disclosing • You go out of business. • Part III is used to figure your tax liability for the amount of premiums exempt from United • You will not owe excise taxes that are re- States excise tax as a result of the application of the quarter and the amount of any balance portable on Form 720 in future quarters. a treaty with the United States that overrides (or due or overpayment.

otherwise modifies) any provision of the Internal • Schedule A, Excise Tax Liability, is used Revenue Code. Due dates. Form 720 must be filed by the to record your net tax liability for each Attach any disclosure statement to the first following due dates. semimonthly period in a quarter. Complete quarter Form 720. You may be able to use Form it if you have an entry in Part I. 8833, Treaty-Based Return Position Disclosure Quarter Covered Due Dates

Under Section 6114 or 7701(b), as a disclosure • Schedule C, Claims, is used to make January, February, March ..... April 30 statement. See the Form 720 instructions for claims. However, Schedule C can only be April, May, June ............ July 31

how and where to file. used if you are reporting a liability in Part I July, August, September ...... October 31

See Revenue Procedure 92-14 in Cumula- or Part II. October, November, December January 31

tive Bulletin 1992-1 for procedures you can use Attachments to Form 720. You may have If any due date falls on a Saturday, Sunday, to claim a refund of this tax under certain U.S.

to attach the following forms. or legal holiday, you can file the return on the treaties.

next business day. • Form 6197 for the gas guzzler tax.

• Form 6627 for environmental taxes. One-time filing. See the Instructions for Form

Obligations Not 720 for information on eligibility to make a

one-time filing of Form 720 for the gas guzzler Form 720X. This form is used to make adjust- tax. in Registered Form ments to liability reported on Forms 720 filed in

prior quarters. You can file Form 720X by itself Tax is imposed on any person who issues a Payment voucher. Form 720-V, Payment or, if it shows a decrease in tax, you can attach it Voucher, must be included with Form 720 and registration-required obligation not in registered to Form 720. See the form and its instructions for your payment if you have a balance due on form. The tax is: more information. line 10 of Form 720.

• 1% of the principal of the obligation, multi- Conditions to allowance. For tax deplied by creases, the claimant must check the appropri-

• The number of calendar years (or portions ate box on Form 720X stating that:

of calendar years) during the period start- Payment of Taxes 1. For adjustments of communications or air ing on the date the obligation was issued

and ending on the date it matures. transportation taxes, the claimant has: Generally, semimonthly deposits of excise taxes

are required. A semimonthly period is the first a. Repaid the tax to the person from A registration-required obligation is any 15 days of a month (the first semimonthly pe- whom it was collected, or obligation other than one that meets any of the riod) or the 16th through the last day of a month

following conditions. b. Obtained the consent of that person to (the second semimonthly period).

the allowance of the adjustment. However, no deposit is required for the situa- 1. It is issued by a natural person. tions listed below; the taxes are payable with

2. It is not of a type offered to the public. 2. For other adjustments, the claimant has: Form 720.

3. It has a maturity (at issue) of not more than a. Not included the tax in the price of the • The net liability for taxes listed in Part I

one year. article and not collected the tax from the (Form 720) does not exceed $2,500 for

purchaser, the quarter. 4. It can only be issued to a foreign person.

b. Repaid the tax to the ultimate pur- • The gas guzzler tax is being paid on a For item (4), if the obligation is not in regis- chaser, or one-time filing. tered form, the interest on the obligation must be

payable only outside the United States and its c. Attached the written consent of the ulti- • The liability is for taxes listed in Part II

possessions. Also, the obligation must state on mate purchaser to the allowance of the (Form 720), except for the floor stocks tax,

its face that any U.S. person who holds it shall adjustment. that generally requires a single deposit.

Page 29
How To Make Deposits Amount of Deposits transportation taxes may be based on taxes

included in amounts billed or tickets sold during

To avoid a penalty, make your deposits timely Deposits for a semimonthly period generally a semimonthly period instead of on taxes actuand do not mail your deposits directly to the IRS. ally collected during the period. Under the alter- must be at least 95 percent of the net tax liability

Records of your deposits will be sent to the IRS native method, the tax included in amounts for that period unless the safe harbor rule (disfor crediting to your accounts. billed or tickets sold during a semimonthly pe- cussed later) applies. Generally, you do not riod is considered collected during the first 7 have to make a deposit for a period in which you Electronic deposit requirement. You must days of the second following semimonthly pe- make electronic deposits of all depository taxes incurred no tax liability. riod. The deposit of tax is due by the 3rd banking (such as deposits for employment tax, excise day after the 7th day of that period. Net tax liability. Your net tax liability is your tax, and corporate income tax) using the Electronic Federal Tax Payment System (EFTPS) in Example. The tax included in amounts tax liability for the period minus any claims on

2005 if: billed or tickets sold for the period June 16-30, Schedule C (Form 720) for the period. You may

2005, is considered collected from July 16-22, figure your net tax liability for a semimonthly • The total deposits of such taxes in 2003 2005, and must be deposited by July 27, 2005. period by dividing your net liability incurred dur- exceeded $200,000 or To use the alternative method, you must ing the calendar month by two. If you use this

• You were required to use EFTPS in 2004. keep a separate account of the tax included in method, you must use it for all semimonthly

amounts billed or tickets sold during the month periods in the calendar quarter.

If you are required to use EFTPS and use and report on Form 720 the tax included in Do not reduce your liability by any Form 8109, Federal Tax Deposit Coupon, in- amounts billed or tickets sold and not the

amounts from Form 720X. stead, you may be subject to a 10% penalty. If amount of tax that is actually collected. For ex- CAUTION

!

you are not required to use EFTPS, you may ample, amounts billed in December, January,

participate voluntarily. To get more information and February are considered collected during

or to enroll in EFTPS, visit the EFTPS website at January, February, and March and are reported

www.eftps.gov, or call 1-800-555-4477. Also on Form 720 as the tax for the 1st quarter of the

see Publication 966, Electronic Choices for Pay- calendar year. Safe Harbor Rule

ing ALL Your Federal Taxes. The separate account for any month cannot

Depositing on time. For EFTPS deposits to The safe harbor rule applies separately to de- include an adjustment resulting from a refusal to

be on time, you must initiate the transaction at posits under the regular method and the alterna- pay or inability to collect unless the refusal has

least one business day before the date the de- been reported to the IRS. See Uncollected Tax tive method. Persons who filed Form 720 for the

posit is due. Report on page 5. look-back quarter (the 2nd calendar quarter pre-

 The net amount of tax that is considered ceding the current quarter) are considered to Federal Tax Deposit Coupons. If you are not collected during the semimonthly period must be meet the semimonthly deposit requirement if the making deposits by EFTPS, use Form 8109 to either: deposit for each semimonthly period in the cur- make the deposits at an authorized financial rent quarter is at least 1

/6 (16.67%) of the net tax institution. See the instructions in the coupon • The net amount of tax reflected in the sep- liability reported for the look-back quarter. book for additional information. If you do not arate account for the corresponding semi- have a coupon book, call 1-800-829-4933. For the semimonthly period for which the monthly period of the preceding month or additional deposit is required, the additional de- You will automatically be enrolled in • One-half of the net amount of tax reflected posit must be at least 11/90 (12.23%), 10/90 EFTPS when you apply for an EIN. in the separate account for the preceding (11.12%) for non-EFTPS, of the net tax liability You will receive a separate mailing

TIP

month. reported for the look-back quarter. Also, the total containing instructions for activating your deposit for that semimonthly period must be at EFTPS enrollment after you receive your EIN. least 1 Special rule for deposits of taxes in Septem- /6 (16.67%) of the net tax liability reported You will still have the option to use FTD coupons, but see Electronic deposit requirement ber 2005. If you are required to make depos- for the look-back quarter.

earlier. its, see the chart below. The special rule does Exceptions. The safe harbor rule does not not apply to taxes not required to be deposited apply to: (see Payment of Taxes earlier). See Regula- When To Make Deposits tions section 40.6302(c)-2 for rules to figure the • The 1st and 2nd quarters beginning on or

net tax liability for the deposits due in Septem- after the effective date of an increase in There are two methods for determining depos- ber. the rate of tax unless the deposit of taxes its: the regular method and the alternative

method. for each semimonthly period in the calen- Additional deposit of taxes in September dar quarter is at least 1 The regular method applies to all taxes in /6 (16.67%) of the 2005

Part I of Form 720 except for communications tax liability you would have had for the

and air transportation taxes if deposits are For the Period look-back quarter if the increased rate of

based on amounts billed or tickets sold, rather Beginning Ending Due tax had been in effect for that look-back

than on amounts actually collected. See Alterna- Type of Tax on on Date quarter,

tive method below.

Regular method • Any quarter if liability includes any tax not If you are depositing more than one tax taxes in effect throughout the look-back quarter, under a method, combine all the taxes under the EFTPS or method and make one deposit for the semi- 1 Sept. 16 Sept. Sept.

monthly period. 26 29 • For deposits under the alternative method, Non-EFTPS Sept. 16 Sept. Sept. any quarter if liability includes any tax not Regular method. The deposit of tax for a 25 28 in effect throughout the look-back quarter semimonthly period is due by the 14th day fol- Alternative method and the month preceding the look-back lowing that period. Generally, this is the 29th day taxes (IRS Nos. 22, quarter. of a month for the first semimonthly period and 26, 27, and 28) the 14th day of the following month for the sec- (based on amounts ond semimonthly period. If the 14th or the 29th Requirements to be met. For the safe harbor billed) day falls on a Saturday, Sunday, or legal holi- EFTPS1 Sept. 1 Sept. Sept. rule to apply, you must: day, you must make the deposit by the immedi- 11 29 ately preceding day that is not a Saturday, • Make each deposit timely at an authorized Non-EFTPS Sept. 1 Sept. Sept. Sunday, or legal holiday. financial institution and 10 28

Alternative method (IRS Nos. 22, 26, 27, and • Pay any underpayment for the current 1See Electronic deposit requirement earlier.

28). Deposits of communications and air quarter by the due date of the return.

Page 30
The IRS may withdraw the right to Cards Checkers Cricket that you accept wagers. You may also be remake deposits of tax using the safe Croquet Dog racing Football quired to file a first return for a new entity created

harbor rule from any person not com- Golf Gymnastics Hockey when certain changes in ownership or control CAUTION

!

plying with these rules. Horse racing Lacrosse Rugby occur. In addition, you are required to file a Soccer Squash Tennis supplemental registration when certain events Tax rate increases. You must modify the safe Track Tug of war Wrestling occur. See the Form 11-C instructions.

harbor rule if there has been an increase in the

rate of tax. You must figure your tax liability in Contest. A contest is any competition involv- Information required. Follow the instructions

the look-back quarter as if the increased rate ing speed, skill, endurance, popularity, politics, on the back of the form. All filers must have an

had been in effect. To qualify for the safe harbor strength, or appearance, such as the following. employer identification number (EIN). You canrule, your deposits cannot be less than 1/6 of the not use your social security number. If you do • Elections. refigured tax liability. not have an EIN, you may apply for one online.

• The outcome of nominating conventions. Go to the IRS website at www.irs.gov/businesses/small and click on the “Employer ID • Dance marathons. Numbers (EINs)” link. You may also apply for an Tax on Wagering • Log-rolling contests. EIN by telephone by calling 1-800-829-4933, or

you can fax or mail Form SS-4, Application for • Wood-chopping contests. The following two taxes are imposed on wager- Employer Identification Number, to the IRS.

ing activities. • Weightlifting contests. If you are a principal, you must show the

number of agents that accept wagers for you • Occupational tax. You must pay the occu- • Beauty contests. and their names, addresses, and EINs. If you pational tax if you accept taxable wagers • Spelling bees. engage a new agent after filing Form 11-C, you for yourself or another person. See Form must file a supplemental registration showing 11-C, later, for more information. this information within 10 days after you engage Wagering pool. A wagering pool conducted • Wagering tax. You must pay the tax on the agent. for profit includes any method or scheme for wagering if you are in the business of ac- Agents must show the name, address, and giving prizes to one or more winning bettors cepting taxable wagers or running a wa- EIN of each of their principals. If you are en- based on the outcome of a sports event, a con- gering pool or lottery. You must also pay gaged by a new principal after having filed a test, or a combination or series of these events the tax on wagering if you have not prop- Form 11-C, you must file a supplemental regis- or contests if the wagering pool is managed and erly registered the name and address of tration within 10 days after being engaged by the conducted for the purpose of making a profit. A your principal on Form 11-C. See Form new principal. If you do not provide the required wagering pool or lottery may be conducted for 730, later, for more information. information about the principal, you will be liable profit even if a direct profit does not occur. If you for the excise tax on wagers you accept as if you operate the wagering pool or lottery with the were the principal. Exempt organizations. Organizations ex- expectation of a profit in the form of increased

empt from income tax under section 501 or 521 sales, attendance, or other indirect benefits, you Example. Ken operates a numbers game of the Internal Revenue Code are not exempt conduct it for profit. and engages 10 people to receive wagers from from the tax on wagering or the occupational tax. Lottery. This includes the numbers game, pol- the public on his behalf. Ken also employs a However, see Lottery, later, for an exception. secretary and a bookkeeper. Ken and each of icy, punch boards, and similar types of wagerConfidentiality. No Treasury Department em- the 10 agents are liable for the tax. They must ing. In general, a lottery conducted for profit

ployee may disclose any information that you includes any method or scheme for the distribu- each file Form 11-C. The secretary and the

supply in relation to the wagering taxes, unless tion of prizes among persons who have paid or bookkeeper are not liable for the tax unless they

necessary to administer or enforce the Internal promised to pay for a chance to win the prizes. also accept wagers for Ken.

Revenue laws. The winning prizes are usually determined by On Ken’s Form 11-C, he lists all required

the drawing of numbers, symbols, or tickets from information (name, address, and EIN) for each

Definitions a wheel or other container or by the outcome of of his ten agents as well as himself. He does not

a given event. list his secretary or bookkeeper.

The following definitions apply to Form 11-C and Each of the 10 agents file Form 11-C show- It does not include either of the following

Form 730. kinds of events. ing his or her name, address, and EIN, as well

as Ken’s. Principal. A principal is a person who is in the 1. Games of a type in which usually the wa- business of accepting wagers for his or her own gers are placed, winners are determined, Figuring the tax. The following tax must be account. This is the person who makes a profit and the prizes are distributed in the pres- paid annually for every year in which taxable or risks loss depending on the outcome of the ence of everyone who placed a wager. wagers are accepted. event or contest for which the wager is ac2. Drawings conducted by a tax-exempt or- • $50 if all wagers accepted are authorized cepted.

ganization, if the net proceeds of the draw- under the laws of the state in which acAgent. This is the agent of the principal who cepted. ing do not benefit a private shareholder or accepts wagers for the principal. individual. • $500 for all other wagers. Wagers. Wagers include any wager: Card games, roulette games, dice games, The tax year begins on July 1. If you start ac- • Made on a sports event or a contest with a bingo, keno, and gambling wheels usually fall cepting wagers after July 31, the tax is prorated person in the business of accepting wa- within exception (1) above. for the first year. The prorated amounts are

gers, shown in the table in the Form 11-C instructions.

• Placed in a wagering pool on a sports Form 11-C

Refund. A refund for an overpayment of the event or contest, if the pool is conducted You use Form 11-C to register with the IRS occupational tax may be claimed on Form 8849 for profit, or certain information on wagering activity and to using Schedule 6. See the Form 8849 instruc- • Placed in a lottery conducted for profit. pay the occupational tax on wagering. Your can- tions for details.

celed check is proof of registration and payment.

Sports event. A sports event includes every Who must file. You must file Form 11-C if you Form 730

type of amateur, scholastic, or professional are a principal or an agent, defined earlier. sports competition, such as: Form 730 is used for figuring the tax on wagers.

When to file. You must file your first Form The wagering tax applies to the wagers (as

Auto racing Baseball Basketball 11-C before you begin accepting wagers. After defined earlier), regardless of the outcome of

Billiards Bowling Boxing that, file a renewal return by July 1 for each year the individual wagers.

Page 31
The tax applies only to a wager that meets • The tax has been repaid to that person. the trust fund recovery penalty may apply. Willeither of the following conditions. fully means voluntarily, consciously, and inten- • The written consent of that person to tionally. The trust fund recovery penalty equals • It is accepted in the United States. make the claim has been obtained. 100% of the taxes not collected or not paid over

• It is placed by a person who is in the to the U.S. Government. If the claim is for a laid-off wager accepted by United States with a U.S. citizen or resi- The trust fund recovery penalty may be im- the claimant, the statement must be attached for dent, or in a wagering pool or lottery con- posed on any person responsible for collecting, both the person who placed the laid-off wager ducted by a U.S. citizen or resident. accounting for, and paying over these taxes. If and the person who placed the original wager. this person knows that these required actions

Wagers made within the United States are Each person liable for the wagering tax are not taking place for whatever reason, the

taxable regardless of the citizenship or place of must keep records to reflect each day’s person is acting willfully. Paying other expenses

residence of the parties to the wager. operations. Your records should in- of the business instead of paying the taxes is RECORDS

clude the following information. willful behavior. Laid-off wagers. Persons accepting more A responsible person can be an officer or wagers than they are willing to carry may lay off • The gross amount of all wagers accepted. employee of a corporation, a partner or em- a portion of the wagers with another person to • The gross amount of each class or type of ployee of a partnership, or any other person who avoid the risk of loss. If you accept a wager wager accepted on each event, contest, or had responsibility for certain aspects of the busi- taken initially by someone else (other than an other wagering medium. ness and financial affairs of the employer (or agent acting for you) include the wager in your business). This may include accountants, trust- gross receipts. If you accept a wager and lay off • The gross amount of any wagers laid off ees in bankruptcy, members of a board, banks, all or part of it with a person who is liable for the with other persons and the name, ad- insurance companies, or sureties. The responsi- tax, you may be entitled to a credit or refund, dress, and registration number of each ble person could even be another corporation— discussed later. person with whom you placed the laid-off in other words, anyone who has the duty and the wagers. Excluded wagers. Tax is not imposed on any ability to direct, account for, or pay over the

of the following. For more information on records, see sections money. Having signature power on the business

44.4403-1 and 44.6001-1 of the regulations. checking account could be a significant factor in • Parimutuel wagering, including horse rac- determining responsibility. ing, dog racing, and jai alai when licensed

under state law.

• Coin-operated devices such as pinball machines. Penalties Examination and • Sweepstakes, wagering pools, or lotteries

that are conducted by an agency of a state and Interest Appeal Procedures

if the wager is placed with the state

Penalties and interest may result from any of the If your excise tax return is examined and you agency or its authorized agents or employ- disagree with the findings, you can get informa- ees. following acts.

tion about audit and appeal procedures from • Failing to collect and pay over tax as the Publication 556, Examination of Returns, ApFiguring the tax. The amount of the wager is collecting agent (see Trust fund recovery peal Rights, and Claims for Refund. An penalty, next). the amount risked by the bettor, including any unagreed case involving an excise tax covered

fee or charge incident to placing the wager. It is • Failing to keep adequate records. in this publication differs from other tax cases in

not the amount that the bettor stands to win. that you can only contest it in court after payThe tax is 2% of the wager if it is not author- • Failing to file returns. ment of the tax by filing suit for a refund in the

ized under the laws of the state in which ac- • Failing to pay taxes. United States District Court or the United States

cepted. If the wager is authorized, the rate is Court of Federal Claims.

0.25% of the wager. • Filing returns late.

When to file. Once you have filed Form 730 • Filing false or fraudulent returns.

reporting tax, file a return for each subsequent

month whether or not you have taxable wagers • Paying taxes late. Rulings Program • Failing to make deposits. to report. File Form 730 for each month by the

last day of the following month. If you have none The IRS has a program for assisting taxpayers • Depositing taxes late. to report, write “0” in the last box of the dollar who have technical problems with tax laws and

amount column. If you stop accepting wagers • Making false statements relating to tax. regulations. The IRS will answer inquiries from

permanently, check the final return box on the individuals and organizations about the tax ef- • Failing to register. fect of their acts or transactions. The National form. • Misrepresenting that tax is excluded from Office of the IRS issues rulings on those mat- Credit or refund. A credit or refund may be the price of an article. ters.

claimed for an overpayment of the wagering tax A ruling is a written statement to a taxpayer or for the amount of tax imposed on a wager that that interprets and applies tax laws to the is laid off with another person who is liable for Failure to register. The penalty for failure to taxpayer’s specific set of facts. There are also the tax on the amount laid off. Claim a credit on register if you are required to register, unless determination letters issued by IRS directors line 5 of Form 730 or file a claim for refund on due to reasonable cause, is increased to and information letters issued by IRS directors Form 8849 using Schedule 6. No credit or refund $10,000 for the initial failure, and then $1,000 or the National Office.

will be allowed unless the timely filed claim has each day thereafter you fail to register. There is a fee for most types of determination the required statements, certificates, and con- Trust fund recovery penalty. If you provide letters and rulings. For complete details of the sents attached. For more information, see the taxable communications or air transportation rulings program, see Rev. Proc. 2005-1. You instructions for Form 730 and Form 8849. services, you have to collect excise taxes (as can find Rev. Proc. 2005-1 on page 1 of Internal

Conditions to allowance. One of the fol- discussed earlier) from those persons who pay Revenue Bulletin 2005-01 at www.irs.gov/pub/

you for those services. You must pay over these irs-irbs/irb05-01.pdf. lowing statements must be attached to the claim taxes to the U.S. Government. for credit or refund.

If you willfully fail to collect or pay over these • The tax has not been collected from the taxes, or if you evade or defeat them in any way, person who placed the wager.

Page 32
Follow the directions from the prompts. When • Services. You can walk in to your local

How To Get Tax Help you order forms, enter the catalog number for Taxpayer Assistance Center every busithe form you need. The items you request will be ness day to ask tax questions or get help

You can get help with unresolved tax issues, faxed to you. For help with transmission with a tax problem. An employee can exorder free publications and forms, ask tax ques- problems, call 703-487-4608. Long-distance plain IRS letters, request adjustments to

charges may apply. your account, or help you set up a pay- tions, and get more information from the IRS in ment plan. You can set up an appointment several ways. By selecting the method that is Phone. Many services are available by best for you, you will have quick and easy ac- by calling your local Center and, at the phone. cess to tax help. prompt, leaving a message requesting

Everyday Tax Solutions help. A represen- Contacting your Taxpayer Advocate. If you • Ordering forms, instructions, and publica- tative will call you back within 2 business have attempted to deal with an IRS problem days to schedule an in-person appoint- tions. Call 1-800-829-3676 to order unsuccessfully, you should contact your Tax- current-year forms, instructions, and publi- ment at your convenience. To find the payer Advocate. cations and prior-year forms and instruc- number, go to www.irs.gov or look in the The Taxpayer Advocate independently rep- phone book under “United States Govern- tions. You should receive your order within resents your interests and concerns within the 10 days. ment, Internal Revenue Service.” IRS by protecting your rights and resolving

problems that have not been fixed through nor- • Asking tax questions. Call the IRS with Mail. You can send your order for mal channels. While Taxpayer Advocates can- your tax questions at 1-800-829-4933. For forms, instructions, and publications to not change the tax law or make a technical tax questions on Form 2290, call the Form the National Distribution Center and re- decision, they can clear up problems that re- 2290 call site at 1-866-699-4096 (toll free) ceive a response within 10 workdays after your sulted from previous contacts and ensure that from the United States and request is received. Use the address below. your case is given a complete and impartial 1-859-669-5733 (not toll free) from Canreview. ada and Mexico. The hours of service are National Distribution Center To contact your Taxpayer Advocate: 8:00 a.m. to 6:00 p.m., EST. P.O. Box 8903

• Call the Taxpayer Advocate toll free at • Solving problems. You can get Bloomington, IL 61702-8903

1-877-777-4778. face-to-face help solving tax problems CD-ROM for tax products. You can every business day in IRS Taxpayer As- • Call, write, or fax the Taxpayer Advocate order IRS Publication 1796, Federal sistance Centers. An employee can ex- office in your area. Tax Products on CD-ROM, and obtain: plain IRS letters, request adjustments to

• Call 1-800-829-4059 if you are a your account, or help you set up a pay- • Current-year forms, instructions, and pub- TTY/TDD user. ment plan. Call your local Taxpayer Assis- lications.

tance Center for an appointment. To find • Visit the website at www.irs.gov/advocate. • Prior-year forms and instructions. the number, go to www.irs.gov or look in

the phone book under “United States Gov- For more information, see Publication 1546, • Frequently requested tax forms that may ernment, Internal Revenue Service.” The Taxpayer Advocate Service of the IRS. be filled in electronically, printed out for

submission, and saved for recordkeeping. • TTY/TDD equipment. If you have access Free tax services. To find out what services to TTY/TDD equipment, call are available, get Publication 910, Guide to Free • Internal Revenue Bulletins.

1-800-829-4059 to ask tax or account Tax Services. It contains a list of free tax publications and an index of tax topics. It also de- questions or to order forms and publica- Buy the CD-ROM from National Technical In- tions. scribes other free tax information services, formation Service (NTIS) on the Internet at

www.irs.gov/cdorders for $22 (no handling fee) including tax education and assistance programs and a list of TeleTax topics. Evaluating the quality of our telephone serv- or call 1-877-233-6767 toll free to buy the

CD-ROM for $22 (plus a $5 handling fee). The ices. To ensure that IRS representatives give Internet. You can access the IRS web- first release is available in early January and the accurate, courteous, and professional answers, site 24 hours a day, 7 days a week at we use several methods to evaluate the quality final release is available in late February. www.irs.gov to: of our telephone services. One method is for a CD-ROM for small businesses. IRS • Download forms, instructions, and publica- second IRS representative to sometimes listen Publication 3207, Small Business Re- tions. in on or record telephone calls. Another is to ask source Guide, is a must for every small some callers to complete a short survey at the • Order IRS products online. business owner or any taxpayer about to start a end of the call. business. This handy, interactive CD contains • See answers to frequently asked tax ques- all the business tax forms, instructions, and pub- tions. Walk-in. Many products and services lications needed to successfully manage a busi-

• Search publications online by topic or are available on a walk-in basis. ness. In addition, the CD provides an

keyword. abundance of other helpful information, such as

how to prepare a business plan, finding financ- • Send us comments or request help by • Products. You can walk in to many post ing for your business, and much more. The de- email. offices, libraries, and IRS offices to pick up sign of the CD makes finding information easy certain forms, instructions, and publica- • Sign up to receive local and national tax and quick and incorporates file formats and tions. Some IRS offices, libraries, grocery news by email. browsers that can be run on virtually any stores, copy centers, city and county gov- desktop or laptop computer. • Get information on starting and operating ernment offices, credit unions, and office

 It is available in early April. You can get a a small business. supply stores have a collection of products free copy by calling 1-800-829-3676 or by visit- available to print from a CD-ROM or pho- ing the website at www.irs.gov/smallbiz. tocopy from reproducible proofs. Also,

some IRS offices and libraries have the Fax. You can get over 100 of the most Internal Revenue Code, regulations, Inter- requested forms and instructions 24 nal Revenue Bulletins, and Cumulative hours a day, 7 days a week, by fax. Bulletins available for research purposes. Just call 703-368-9694 from your fax machine.

Page 33
Appendix A

This appendix contains models of the certificates, reports, and statements discussed earlier under Fuel Taxes

Model Certificate A

STATEMENT OF SUBSEQUENT SELLER

1.

Name, address, and employer identification number of seller in subsequent sale

2.

Name, address, and employer identification number of the buyer in subsequent sale

3.

Date and location of subsequent sale

4.

Volume and type of taxable fuel sold

The undersigned seller (“Seller”) has received the copy of the first taxpayer’s report provided with this statement in

connection with Seller’s purchase of the taxable fuel described in this statement.

Under penalties of perjury, Seller declares that Seller has examined this statement, including any accompanying

schedules and statements, and, to the best of Seller’s knowledge and belief, they are true, correct and complete.

Signature and date signed

Printed or typed name of person signing this report

Title

Page 34
Model Certificate B

FIRST TAXPAYER’S REPORT

1.

First Taxpayer’s name, address and employer identification number

2.

Name, address, and employer identification number of the buyer of the taxable fuel subject to tax

3.

Date and location of removal, entry, or sale

4.

Volume and type of taxable fuel removed, entered or sold

5. Check type of taxable event:

Removal from refinery

Entry into United States

Bulk transfer from terminal by unregistered position holder

Bulk transfer not received at an approved terminal

Sale within the bulk transfer/terminal system

Removal at the terminal rack

Removal or sale by the blender

6.

Amount of federal excise tax paid on account of the removal, entry, or sale

The undersigned taxpayer (“Taxpayer”) has not received, and will not claim, a credit with respect to, or a refund of, the tax

on the taxable fuel to which this form relates.

Under penalties of perjury, Taxpayer declares that Taxpayer has examined this statement, including any accompanying

schedules and statements, and to the best of Taxpayer’s knowledge and belief, they are true, correct and complete.

Signature and date signed

Printed or typed name of person signing this report

Title

Page 35
Model Certificate C

NOTIFICATION CERTIFICATE OF TAXABLE FUEL REGISTRANT

Name, address, and employer identification number of person receiving certificate

The undersigned taxable registrant (“Registrant”) hereby certifies under penalties of perjury that Registrant is registered

by the Internal Revenue Service with registration number and that Registrant’s registration has not

been revoked or suspended by the Internal Revenue Service.

Registrant understands that the fraudulent use of this certificate may subject Registrant and all parties making such

fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Signature and date signed

Printed or typed name of person signing

Title of person signing

Name of Registrant

Employer identification number

Address of Registrant

Page 36
Model Certificate D

CERTIFICATE OF PERSON BUYING GASOLINE BLENDSTOCKS FOR USE OTHER THAN IN THE PRODUCTION OF

FINISHED GASOLINE

(To support tax-free sales under section 4081 of the Internal Revenue Code.)

Name, address, and employer identification number of seller

The undersigned buyer (“Buyer”) hereby certifies the following under penalties of perjury:

The gasoline blendstocks to which this certificate relates will not be used to produce finished gasoline.

This certificate applies to the following (complete as applicable):

If this is a single purchase certificate, check here and enter:

1. Invoice or delivery ticket number

2. (number of gallons) of (type of gasoline blendstocks)

If this is a certificate covering all purchases under a specified account or order number, check here and enter:

1. Effective date

2. Expiration date

(period not to exceed 1 year after the effective date)

3. Type (or types) of gasoline blendstocks

4. Buyer account or order number 

Buyer will not claim a credit or refund under section 6427(h) of the Internal Revenue Code for any gasoline blendstocks

covered by this certificate.

Buyer will provide a new certificate to the seller if any information in this certificate changes.

If Buyer resells the gasoline blendstocks to which this certificate relates, Buyer will be liable for tax unless Buyer obtains a

certificate from the purchaser stating that the gasoline blendstocks will not be used to produce finished gasoline and otherwise

complies with the conditions of §48.4081-4(b)(3) of the Manufacturers and Retailers Excise Tax Regulations.

Buyer understands that if Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer’s

right to provide a certificate.

Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn.

In addition, the Internal Revenue Service has not notified Buyer that the right to provide a certificate has been withdrawn from

a purchaser to which Buyer sells gasoline blendstocks tax free.

Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such fraudulent use

of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Signature and date signed

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Page 37
Model Certificate G

CERTIFICATE OF REGISTERED FEEDSTOCK USER

(To support tax-free removals and entries of kerosene under section 4082 of the Internal Revenue Code.)

(Buyer) certifies the following under penalties of perjury:

Name of buyer

Buyer is a registered feedstock user with registration number . Buyer’s registration has not been revoked

or suspended.

The kerosene to which this certificate applies will be used by Buyer for a feedstock purpose.

This certificate applies to percent of Buyer’s purchases from (name, address, and employer

identification number of seller) as follows (complete as applicable):

1. A single purchase on invoice or delivery ticket number .

2. All purchases between (effective date) and (expiration date) (period not to exceed

one year after the effective date) under account or order number(s) . If this certificate applies only to Buyer’s

purchases for certain locations, check here and list the locations.

If Buyer sells the kerosene to which this certificate relates, Buyer will be liable for tax on that sale.

Buyer will provide a new certificate to the seller if any information in this certificate changes.

If Buyer violates the terms of this certificate, the Internal Revenue Service may revoke the Buyer’s registration.

Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of

this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Employer identification number

Address of Buyer

Signature and date signed

Page 38
Model Certificate J

CERTIFICATE OF PERSON BUYING COMPRESSED NATURAL GAS (CNG) FOR A NONTAXABLE USE

(To support tax-free sales of CNG under section 4041 of the Internal Revenue Code.)

Name, address, and employer identification number of seller

(“Buyer”) certifies the following under penalties of perjury:

(Name of buyer)

The CNG to which this certificate relates will be used in a nontaxable use.

This certificate applies to the following (complete as applicable):

The kerosene to which this certificate applies will be used by Buyer for a feedstock purpose.

If this is a single purchase certificate, check here and enter:

1. Invoice or delivery ticket number 

2. (number of MCFs)

If this is a certificate covering all purchases under a specified account or order number, check here and enter:

1. Effective date 

2. Expiration date 

 (period not to exceed 1 year after the effective date)

3. Buyer account or order number 

Buyer will not claim a credit or refund under section 6427 of the Internal Revenue Code for any CNG to which this certificate

relates.

Buyer will provide a new certificate to the seller if any information in this certificate changes.

Buyer understands that if Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer’s

right to provide a certificate.

Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn.

In addition, the Internal Revenue Service has not notified Buyer that the right to provide a certificate has been withdrawn

from a purchaser to which Buyer sells CNG tax free.

Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use

of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Employer identification number

Address of Buyer

Signature and date signed

Page 39
Model Certificate K

CERTIFICATE OF PERSON BUYING AVIATION-GRADE KEROSENE FOR

COMMERCIAL AVIATION OR NONTAXABLE USE

(To support operator liability for tax on removals of aviation-grade kerosene directly into the fuel tank of an aircraft in

commercial aviation pursuant to § 4081 of the Internal Revenue Code or to support a tax rate of zero pursuant to §§

4041 and 4082.)

Name, address, and employer identification number of position holder

The undersigned aircraft operator (“Buyer”) hereby certifies the following under the penalties of perjury:

The aviation-grade kerosene to which this certificate relates is purchased (check one): for

use on a farm for farming purposes; for use in foreign trade (reciprocal benefits required for foreign registered airlines);

 for use in certain helicopter and fixed-wing air ambulance uses; for use other than as a fuel in the propulsion

engine of an aircraft; for the exclusive use of a nonprofit educational organization; for the exclusive use of a

state; for use in an aircraft owned by an aircraft museum; for use in military aircraft; or for use in

commercial aviation (other than foreign trade).

With respect to aviation-grade kerosene purchased after June 30, 2005, for use in commercial aviation

(other than foreign trade), Buyer’s registration number is . Buyer’s registration has not been suspended or revoked by

the Internal Revenue Service.

This certificate applies to the following (complete as applicable):

This is a single purchase certificate:

1. Invoice or delivery ticket number

2. Number of gallons

 This is a certificate covering all purchases under a specified account or order number:

1. Effective date 

2. Expiration date (period not to exceed 1 year after the effective date)

3. Buyer account number 

Buyer agrees to provide the person liable for tax with a new certificate if any information in this certificate changes.

If the aviation-grade kerosene to which this certificate relates is being bought for use in commercial aviation

(other than foreign trade), Buyer is liable for tax on its use of the fuel and will pay that tax to the government.

If Buyer sells or uses the aviation-grade kerosene to which this certificate relates for a use other than the use

 stated above, Buyer will be liable for tax.

Buyer understands that it must be prepared to establish by satisfactory evidence the purpose for which the

 fuel purchased under this certificate was used.

Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn.

If Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer’s right to provide a certificate.

The fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of this certificate

 to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

Page 40
 Model Waiver L

WAIVER FOR USE BY ULTIMATE PURCHASERS OF

AVIATION-GRADE KEROSENE USED IN NONTAXABLE USES

To support vendor’s claim for a credit or payment under § 6427 of the Internal Revenue Code.

Name, address, and employer identification number of ultimate vendor

The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under the penalties of perjury:

The aviation-grade kerosene to which this waiver relates is purchased (check one):

for export;

for use in foreign trade (reciprocal benefits required for foreign registered airlines);

for use in certain helicopter and fixed-wing air ambulance uses;

for use other than as a fuel in the propulsion engine of an aircraft;

for the exclusive use of a nonprofit educational organization;

for use in an aircraft owned by an aircraft museum;

for use in military aircraft;

other nontaxable use (describe); or

for use in commercial aviation (other than foreign trade).

This waiver applies to the following (complete as applicable):

This is a single purchase waiver:

1. Invoice or delivery ticket number

2. Number of gallons

This is a waiver covering all purchases under a specified account or order number:

1. Effective date 

2. Expiration date (period not to exceed 1 year after the effective date)

3. Buyer account number 

Buyer will provide a new waiver to the vendor if any information in this waiver changes.

If Buyer uses the aviation-grade kerosene to which this waiver relates for a use other than the use stated

above, Buyer will be liable for tax.

Buyer understands that by signing this waiver, Buyer gives up its right to claim any credit or payment for the

aviation-grade kerosene used in a nontaxable use.

Buyer acknowledges that it has not and will not claim any credit or payment for the aviation-grade kerosene

to which this waiver relates.

Buyer understands that the fraudulent use of this waiver may subject Buyer and all parties making such

fraudulent use of this waiver to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

Page 41
 Model Certificate M

CERTIFICATE FOR STATE USE OR NONPROFIT EDUCATIONAL

ORGANIZATION USE

To support vendor’s claim for a credit or payment under § 6416(a)(4) of the Internal Revenue Code.

Name, address, and employer identification number of ultimate vendor

The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under the penalties of perjury:

Buyer will use the gasoline or aviation gasoline to which this certificate relates (check one):

For the exclusive use of a state; or

For the exclusive use of a nonprofit educational organization.

This certificate applies to the following (complete as applicable):

This is a single purchase certificate:

1. Invoice or delivery ticket number

2. Number of gallons

This is a certificate covering all purchases under a specified account or order number:

1. Effective date 

2. Expiration date (period not to exceed 1 year after the effective date)

3. Buyer account number

Buyer will provide a new certificate to the vendor if any information in this certificate changes.

Buyer understands that by signing this certificate, Buyer gives up its right to claim any credit or payment for

the gasoline or aviation gasoline to which this certificate relates.

Buyer acknowledges that it has not and will not claim any credit or payment for the gasoline or aviation

gasoline to which this certificate relates.

Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such

fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

Page 42
 Model Waiver N

WAIVER FOR USE BY ULTIMATE PURCHASERS OF DIESEL FUEL OR

KEROSENE USED IN INTERCITY BUS TRANSPORTATION

To support vendor’s claim for a credit or payment under § 6427 of the Internal Revenue Code.

Name, address, and employer identification number of ultimate vendor

The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under the penalties of perjury:

The diesel fuel or kerosene to which this waiver relates is purchased for use in intercity bus transportation.

This waiver applies to the following (complete as applicable):

This is a single purchase waiver:

1. Invoice or delivery ticket number

2. Number of gallons

This is a waiver covering all purchases under a specified account or order number:

1. Effective date 

2. Expiration date (period not to exceed 1 year after the effective date)

3. Buyer account number 

Buyer will provide a new waiver to the vendor if any information in this waiver changes.

If Buyer uses the diesel fuel or kerosene to which this waiver relates for a use other than in intercity bus

transportation, Buyer will be liable for tax.

Buyer understands that by signing this waiver, Buyer gives up its right to claim any credit or payment for the

diesel fuel or kerosene used in intercity bus transportation.

Buyer acknowledges that it has not and will not claim any credit or payment for the diesel fuel or kerosene to

which this waiver relates.

Buyer understands that the fraudulent use of this waiver may subject Buyer and all parties making such

fraudulent use of this waiver to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

Page 43
Model Certificate O

CERTIFICATE FOR BIODIESEL

(To support a claim under §§ 6426(c), 6427(e), and 40A of the Internal Revenue Code)

Name, address, and employer identification number of claimant.

The undersigned biodiesel producer (“Producer”) hereby certifies the following under penalties of perjury:

Producer certifies that the biodiesel to which this certificate relates is monoalkyl esters of long chain fatty

acids derived from plant or animal matter that meets the requirements of the American Society of Testing and Materials

D6751 and the registration requirements for fuels and fuel additives established by EPA under § 211 of the

Clean Air Act (42 U.S.C § 7545)

Producer certifies that the biodiesel to which this certificate relates is:

% Agri-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, and mustard seeds and

from animal fats).

% Biodiesel (other than agri-biodiesel)

This certificate applies to the following:

1. Invoice or delivery ticket number

2. Number of gallons

Producer understands that fraudulent use of this certificate may subject producer, claimant, and parties making such

fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Producer

Employer identification number

Address of Producer

Signature and date signed

Page 44
 Model Certificate P

CERTIFICATE OF FARMING USE OR STATE USE

To support vendor’s claim for credit or payment under section 6427 of the Internal Revenue Code

Name, Address, and Employer Identification Number of Vendor

The undersigned buyer (“Buyer”) hereby certifies the following under penalties of perjury:

A. Buyer will use the diesel fuel or kerosene to which this certificate relates — (check one):

1.  On a farm for farming purposes (as defined in §48.6420-4 of the Manufacturers and Retailers Excise Tax

Regulations) and Buyer is the owner, tenant, or operator of the farm on which the fuel will be used;

2.  On a farm (as defined in §48.6420-4(c)) for any of the purposes described in paragraph (d) of that section

(relating to cultivating, raising, or harvesting) and Buyer is not the owner, tenant, or operator of the farm on

which the fuel will be used; or

3.  For the exclusive use of a State or local government, or the District of Columbia.

B. This certificate applies to the following (complete as applicable):

1. If this is a single purchase certificate, check here  and enter:

a. Invoice or delivery ticket number 

b. Number of gallons 

2. If this is a certificate covering all purchases under a specified account or order number, check here 

and enter:

a. Effective date 

b. Expiration date 

(period not to exceed 1 year after effective date)

c. Buyer account or order number 

■ Buyer will provide a new certificate to the vendor if any information in this certificate changes.

■ If Buyer uses the diesel fuel or kerosene to which this certificate relates for a purpose other than stated in the

certificate, Buyer will be liable for any tax.

■ Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such

fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

Signature and date signed

Page 45
To help us develop a more useful index, please let us know if you have ideas for index entries. Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

A C Exempt communication Free tax services . . . . . . . . . . . . 33

Affiliated corporations ....... 8 Chemicals, services: Fuels:

Agri-biodiesel, defined ....... 9 ozone-depleting: ........... 3 American Red Cross ........ 6 Aviation . . . . . . . . . . . . . . . . . . . . 17

Air transportation taxes: Coal: Answering service ........... 5 Compressed natural gas . . . . 19

Blending . . . . . . . . . . . . . . . . . . . 23 Coin-operated telephones . . . 5 Diesel . . . . . . . . . . . . . . . . . . . . . 13 225-mile-zone rule .......... 7

Exemptions . . . . . . . . . . . . . . . . 23 Common carriers ............ 5 Gasoline . . . . . . . . . . . . . . . . . . . 11 Alaska . . . . . . . . . . . . . . . . . . . . 7, 8 Producer. . . . . . . . . . . . . . . . . . . 23 Installation charges .......... 5 Kerosene . . . . . . . . . . . . . . . . . . 13

Baggage .................... 8 Production . . . . . . . . . . . . . . . . . 23 International Special motor fuel . . . . . . . . . . 19

Bonus tickets ............... 7 Selling price . . . . . . . . . . . . . . . . 23 organizations ............. 6 Used on inland

Credits or refunds ........... 8 Tax rates . . . . . . . . . . . . . . . . . . 23 Military personnel ........... 5 waterways . . . . . . . . . . . . . . . 19

Exemptions ................. 7 Coin-operated telephones .... 5 Mobile radio telephone

Export ...................... 7 service ................... 5 Comments ................... 2 G Fixed-wing ambulance ....... 7 News services .............. 5 Commercial waterway Gambling . . . . . . . . . . . . . . . . . . . 28 Hawaii Nonprofit educational . . . . . . . . . . . . . . . . . . . . 7, 8 transportation . . . . . . . . . . . . . 20 Gas guzzler tax: Helicopters organizations ............. 6 ................. 7 Communications taxes: Automobiles . . . . . . . . . . . . . . . 24 Nonprofit hospitals .......... 6 International air travel Coin-operated telephones . . . 5 Credit or refund . . . . . . . . . . . . 24 Private communication facilities .................. 7 Credits or refunds ........... 6 Limousines . . . . . . . . . . . . . . . . 24 service ................... 5 Military personnel ........... 7 Exemptions ................. 5 Vehicles not subject to Radio broadcasts ........... 5 Package tours .............. 7 Figuring the tax ............. 5 tax . . . . . . . . . . . . . . . . . . . . . . 24 Security systems ............ 5 Persons by air .............. 6 Local telephone service ...... 5 Gasoline blendstocks . . . . . . . 12 Exempt sales, heavy Prepaid telephone cards ..... 5 Persons liable . . . . . . . . . . . . . 7, 8 Gasoline, defined . . . . . . . . . . . 11 trucks . . . . . . . . . . . . . . . . . . . . . 28 Private communication Property by air .............. 7 service Exemptions: ................... 5 Tax rates ................... 6 Teletypewriter exchange Air transportation taxes ...... 7 H

Taxable transportation ....... 7 service ................... 5 Bonus tickets ............... 7 Hawaii, air transportation Travel agency ............... 7 Toll telephone service ....... 5 Coal . . . . . . . . . . . . . . . . . . . . . . . 23 taxes ....................... 7

Uninterrupted WATS service ............... 5 Communications taxes ...... 5 Heavy trucks: international .............. 7 Compressed natural gas . . . . 19 Federal government ......... 6 First retail sale, defined . . . . . 26

Aircraft: Credit or refund: Fixed-wing air ambulance .... 7 Further manufacture . . . . . . . . 27

Affiliated corporations ........ 8 Gas guzzler tax For export . . . . . . . . . . . . . . . . . 21 . . . . . . . . . . . . 24 Installment sales . . . . . . . . . . . 27

Fixed-wing air ambulance .... 7 Gasoline tax . . . . . . . . . . . . . . . 13 Further manufacturing . . . . . . 21 Parts or accessories . . . . . . . . 26

Helicopters ................. 7 Manufacturers taxes . . . . . . . . 22 Helicopters ................. 7 Presumptive retail sales

Small planes ................ 8 Resale of tax-paid price Indian handicrafts . . . . . . . . . . 21 . . . . . . . . . . . . . . . . . . . . 26

Alaska: semitrailers . . . . . . . . . . . . . . 26 Indian tribal governments .... 6 Related persons . . . . . . . . . . . . 27

Retail tax . . . . . . . . . . . . . . . . . . 28 Military personnel ........... 7 Separate purchases . . . . . . . . 26 Air transportation taxes ...... 7

Tire tax Nonprofit educational . . . . . . . . . . . . . . . . . . . . 24 Tax base . . . . . . . . . . . . . . . . . . 27 Tax on diesel fuel or Vaccines . . . . . . . . . . . . . . . . . . . 25 organizations . . . . . . . . . . 6, 21 Tax rate . . . . . . . . . . . . . . . . . . . 25 kerosene . . . . . . . . . . . . . . . . 14 Wagering taxes State and local . . . . . . . . . . . . 32 Helicopters ................... 7 American Red Cross ......... 6 governments . . . . . . . . . . . 6, 21 Help (See Tax help) Answering service ........... 5 Taxable tires . . . . . . . . . . . . . . . 24 D Highway use tax .............. 2 Appeal procedures . . . . . . . . . . 32 Vessel supplies . . . . . . . . . . . . 21

Deposits: Highway vehicle Approved refinery,

Net tax liability (Diesel-powered) . . . . . . . . . . 13 defined ..................... 9 . . . . . . . . . . . . . 30

Approved terminal, Deposits, How to make . . . . . . 30 F

defined ..................... 9 Diesel fuel: Farming . . . . . . . . . . . . . . . . . . . . . 16 I

Arrow shafts . . . . . . . . . . . . . . . . 23 Buses . . . . . . . . . . . . . . . . . . . . . 16 Federal government .......... 6 Imported taxable products

Assistance (See Tax help) Definitions . . . . . . . . . . . . . . . . . 13 Fishing tackle boxes . . . . . . . . 22 (ODCs) ..................... 3

Exemption . . . . . . . . . . . . . . . . . 14 Aviation gasoline, Floor stocks tax: Information returns, liquid

defined . . . . . . . . . . . . . . . . . . . . 11 Farm . . . . . . . . . . . . . . . . . . . . . . 16 Ozone-depleting products . . . . . . . . . . . . . . . . . . 10

Aviation-grade kerosene . . . . 17 Dyed diesel fuel . . . . . . . . . . . . . 15 chemicals ................. 4 Interest and penalties . . . . . . . 32

Dyed kerosene . . . . . . . . . . . . . . 15 Form 720: International air travel

Attachments . . . . . . . . . . . . . . . 29 facilities .................... 7

B Due dates . . . . . . . . . . . . . . . . . 29 E

Back-up tax . . . . . . . . . . . . . . . . . 16 Final return . . . . . . . . . . . . . . . . 29 Electric outboard motors . . . . 23 Schedule A . . . . . . . . . . . . . . . . 29 K Biodiesel, defined ............ 9 Employer identification Schedule C Kerosene: Blended taxable fuel, . . . . . . . . . . . . . . . . 29 number . . . . . . . . . . . . . . . . . . . 29 Buses . . . . . . . . . . . . . . . . . . . . . 16 defined Form: ..................... 9 Enterer, defined .............. 9 Definitions . . . . . . . . . . . . . . . . . 13 Blender, defined 11-C . . . . . . . . . . . . . . . . . . . . . . . 31 .............. 9 Entry, defined ................ 9 Exemption . . . . . . . . . . . . . . . . . 14 1363 ....................... 7 Bonus tickets ................ 7 Environmental taxes: Farming . . . . . . . . . . . . . . . . . . . 16 2290 ....................... 2 Bows, Quivers, Broadheads, Credit or refund ............. 3 6197 .................. 24, 29 and Points . . . . . . . . . . . . . . . . 23 Exceptions .................. 3 637 . . . . . . . . . . . . . . . . . . . . . . . . . 3 L Bulk transfer, defined ........ 9 Ozone-depleting 6478 . . . . . . . . . . . . . . . . . . . . . . 20 Liquid products, information Bulk transfer/terminal system, chemicals ................. 3 6627 . . . . . . . . . . . . . . . . . . . . 3, 29 returns . . . . . . . . . . . . . . . . . . . . 10 defined ..................... 9 United States (defined) ...... 3 720 . . . . . . . . . . . . . . . . . . . . 24, 29 Local telephone service ...... 5 Buses: Examination procedures . . . . 32 720X . . . . . . . . . . . . . . . . . . . . . . 29

Diesel fuel . . . . . . . . . . . . . . . . . 16 Excluded liquid . . . . . . . . . . . . . 13 730 . . . . . . . . . . . . . . . . . . . . . . . . 31

Kerosene . . . . . . . . . . . . . . . . . . 16 Exempt articles, retail 8864 . . . . . . . . . . . . . . . . . . . . . . 20 M

Tire tax . . . . . . . . . . . . . . . . . . . . 24 tax . . . . . . . . . . . . . . . . . . . . . . . . 27 SS-4 . . . . . . . . . . . . . . . . . . . . . . 29 Manufacturer, defined . . . . . . . 21

Page 46
Manufacturers taxes: Prepaid telephone cards ..... 5 Security systems ............. 5 Terminal operator,

Arrow shafts . . . . . . . . . . . . . . . 23 Publications (See Tax help) Ship passenger tax . . . . . . . . . . 28 defined . . . . . . . . . . . . . . . . . . . . 10

Bows, Quivers, Broadheads, Special motor fuels . . . . . . . . . . 19 Terminal, defined . . . . . . . . . . . . 10

and Points . . . . . . . . . . . . . . . 23 R Special September rule, When Throughputter, defined . . . . . . 10

Coal . . . . . . . . . . . . . . . . . . . . . . . 23 to deposit . . . . . . . . . . . . . . . . . 30 Tires: Rack, defined ................ 9 Credits or refunds . . . . . . . . . . 22 Sport fishing equipment: Credit against heavy truck Exemptions . . . . . . . . . . . . . . . . 21 Radio broadcasts ............ 5

List of equipment . . . . . . . . . . . 22 tax . . . . . . . . . . . . . . . . . . . . . . 28

Gas guzzler tax . . . . . . . . . . . . 24 Refiner, defined .............. 9 Resales . . . . . . . . . . . . . . . . . . . 23 Credit or refund of tax . . . . . . 24

Lease . . . . . . . . . . . . . . . . . . . . . 21 Refinery, defined ............. 9 State and local Toll telephone services ....... 5 Lease payments . . . . . . . . . . . 21 Refund of second tax . . . . . . . . 10 governments ............... 6 Train (Diesel-powered) . . . . . . 13 Partial payments . . . . . . . . . . . 21 Registrant . . . . . . . . . . . . . . . . . . . 10 State, defined . . . . . . . . . . . . . . . 10 Transmix . . . . . . . . . . . . . . . . . . . . 13 Registration . . . . . . . . . . . . . . . . 22 Registrant, defined . . . . . . . . . . 10

Related person Suggestions ................. 2 Travel agency ................ 7 . . . . . . . . . . . . . 23 Registration . . . . . . . . . . . . . . . . . 10 Requirements for exempt TTY/TDD information . . . . . . . . 33 Form 637 ................... 3 sales . . . . . . . . . . . . . . . . . . . . 22 T Two-party exchanges . . . . 9, 11, Registration-required Sale . . . . . . . . . . . . . . . . . . . . . . . 21 13, 17 obligations . . . . . . . . . . . . . . . . 29 Tax help . . . . . . . . . . . . . . . . . . . . . 33

Sport fishing equipment . . . . . 22

Related persons: Tax rate: Taxable Tires . . . . . . . . . . . . . . 24

Heavy trucks . . . . . . . . . . . . . . . 27 Air transportation of U Vaccines . . . . . . . . . . . . . . . . . . . 25 Sport fishing equipment . . . . . 23 persons .................. 6 Uninterrupted international air Mobile radio telephone Removal, defined . . . . . . . . . . . . 10 Air transportation of transportation .............. 7 service ..................... 5 property .................. 7 Retail tax: More information (See Tax help) Arrow shafts . . . . . . . . . . . . . . . 23 Credits and refunds . . . . . . . . 28 V Bows, Quivers, Broadheads, Heavy trucks . . . . . . . . . . . . . . . 25 Vaccines: N and Points . . . . . . . . . . . . . . . 23 Rulings Program . . . . . . . . . . . . 32 Credit or refund . . . . . . . . . . . . 25 Coal . . . . . . . . . . . . . . . . . . . . . . . 23 News services ................ 5 Rural airports ................ 6 Manufacturers tax . . . . . . . . . . 25 Communications tax ......... 5 Nonprofit educational Electric outboard motor Vehicles: . . . . . 23 organizations .............. 6 S International air travel Gas guzzler . . . . . . . . . . . . . . . . 24

facilities .................. 7 Imported . . . . . . . . . . . . . . . . . . . 24 Sale, defined . . . . . . . . . . . . . . . . 10 O Obligations not in registered Law enforcement . . . . . . . . . . . 24 Sales price: Obligations not in registered form . . . . . . . . . . . . . . . . . . . . . 29 Vessel operator, defined . . . . 10 Bonus goods . . . . . . . . . . . . . . . 21

form . . . . . . . . . . . . . . . . . . . . . . 29 Cost of transportation Policies issued by foreign . . . . . . . 21

Ozone-depleting chemicals: Delivery costs persons . . . . . . . . . . . . . . . . . 28 . . . . . . . . . . . . . . 21 W

Floor stocks tax ............. 4 Discounts Ship passenger tax . . . . . . . . . 28 . . . . . . . . . . . . . . . . . . 21 Wagering taxes: Imported taxable Sport fishing equipment . . . . . 22 Installation costs . . . . . . . . . . . 21 Credit or refund . . . . . . . . . . . . 32

products .................. 3 Trucks . . . . . . . . . . . . . . . . . . . . . 25 Insurance costs . . . . . . . . . . . . 21 Definitions . . . . . . . . . . . . . . . . . 31

Local advertising Taxable fuel registrant . . . . . . 10 Waterways . . . . . . . . . . . . . . . . . . 19

charges . . . . . . . . . . . . . . . . . 21 Taxable tires: P WATS service ................ 5

Manufacturers excise Exemptions . . . . . . . . . . . . . . . . 24 Payment of taxes . . . . . . . . . . . . 29 When to deposit . . . . . . . . . . . . . 30 tax . . . . . . . . . . . . . . . . . . . . . . 21 Manufacturers taxes . . . . . . . . 24 Penalties: Rebates . . . . . . . . . . . . . . . . . . . 21 Taxes, Payment of . . . . . . . . . . 29 ■ Dyed diesel fuel . . . . . . . . . . . . 15 Retail dealer preparation Taxpayer Advocate . . . . . . . . . . 33 Dyed kerosene . . . . . . . . . . . . . 15 costs . . . . . . . . . . . . . . . . . . . . 21 Teletypewriter exchange Pipeline operator, defined .... 9 Warranty charges . . . . . . . . . . 21 service ..................... 5 Position holder, defined ...... 9

Page 47