Publication 510 Contents (Rev. February 2002)

Cat. No. 15014I Important Changes ................ 2 Department

of the Important Reminder ............... 2 Treasury

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

Revenue

Service Excise Taxes Not Covered .......... 2 for 2002

Registration for Certain Activities ..... 2

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

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

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

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

Communications and Air

Transportation Taxes ........... 4

Communications Tax ............ 4

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

Fuel Taxes ...................... 7

Information Returns ............. 8

Registration Requirements ......... 8

Refunds of Second Tax ........... 8

Gasoline ..................... 8

Gasohol ..................... 11

Diesel Fuel and Kerosene ......... 12

Aviation Fuel .................. 16

Special Motor Fuels ............. 17

Compressed Natural Gas ......... 18

Fuels Used on Inland Waterways .... 18

Alcohol Sold as Fuel But Not

Used as Fuel ............... 19

Manufacturers Taxes .............. 19

Taxable Event ................. 20

Exemptions ................... 20

Credits or Refunds .............. 20

Sport Fishing Equipment .......... 21

Bows ....................... 21

Arrow Components .............. 21

Coal ....................... 21

Tires ....................... 22

Gas Guzzler Tax ............... 22

Vaccines .................... 23

Retail Tax on Heavy Trucks,

Trailers, and Tractors ........... 23

Ship Passenger Tax ............... 26

Luxury Tax ..................... 26

Foreign Insurance Taxes ........... 27

Obligations Not in Registered

Form ....................... 27

Filing Form 720 .................. 27

Paying the Taxes ................. 28

Credits and Refunds ............... 29

Tax on Wagering ................. 29

Penalties and Interest .............. 31

Examination and Appeal

Procedures .................. 31

Rulings Program ................. 31
How To Get Tax Help .............. 31 ❏ 8849 Claim for Refund of Excise Taxes

Important Reminder See How To Get Tax Help near the end of Appendix A ..................... 32 this publication for information about getting

Photographs of missing children. The Inter- publications and forms. Appendix B ..................... 33 nal Revenue Service is a proud partner with the

National Center for Missing and Exploited Chil- Appendix C ..................... 38 dren. Photographs of missing children selected

Index .......................... 47 by the Center may appear in this publication on Excise Taxes

pages that would otherwise be blank. You can

help bring these children home by looking at the Not Covered

photographs and calling 1–800–THE–LOST

(1–800–843– 5678) if you recognize a child. In addition to the taxes discussed in this publica- Important Changes tion, you may have to use other forms to report

certain other excise taxes.

Air transportation taxes. For transportation These forms are as follows.

beginning in 2002, the tax on transportation of Introduction • IRS Form 2290: Heavy Highway Vehicle persons by air is increased to $3.00 for each This publication covers the excise taxes for Use Tax Return. domestic segment. The percentage tax remains which you may be liable during 2002. It covers at 7.5%. • ATF Form 5630.5: Alcohol, Tobacco. the excise taxes reported on Form 720. It also For amounts paid during 2002, the tax on the provides information on wagering activities re- • ATF Form 5630.7: Firearms. use of international air travel facilities is $13.20 ported on Forms 11–C and 730. • ATF Form 5300.26: Firearms. for flights that begin or end in the United States

or $6.60 for domestic segments that begin or Comments and suggestions. We welcome See the following discussion for information on end in Alaska or Hawaii (applies only to depar- your comments about this publication and your Form 2290. See Appendix A at the end of this tures). suggestions for future editions. publication for information on the ATF forms.

You can e-mail us while visiting our web site Luxury tax. For 2002, the luxury tax on a at www.irs.gov. passenger vehicle is reduced to 3% of the IRS Form 2290:

You can write to us at the following address: amount of the sales price that exceeds the base Highway Use Tax

amount of $40,000. The base amount is increased for electric vehicles and clean-fuel vehi- Internal Revenue Service You report the federal excise tax on the use of Technical Publications Branch certain trucks, truck tractors, and buses on pub- cles. W:CAR:MP:FP:P lic highways on Form 2290. The tax applies to

Form 720 due date. Beginning with the 4th 1111 Constitution Ave. NW highway motor vehicles with taxable gross Washington, DC 20224 quarter of 2001, you must file Form 720 by the weights of 55,000 pounds or more. Vans, pickup

last day of the month following the calendar trucks, panel trucks, and similar trucks generally

quarter for which the return is made. Form 720 We respond to many letters by telephone. are not subject to this tax.

for that 4th quarter is due January 31, 2002. The Therefore, it would be helpful if you would inrule that allowed you to file by the last day of the clude your daytime phone number, including the Note: A Spanish version of the form and its

second month following the calendar quarter for area code, in your correspondence. instructions (Form 2290SP) are now available.

certain taxes has been eliminated. See Due A public highway is any road in the United

dates States that is not a private roadway. This in- under Filing Form 720, later. Useful Items

cludes federal, state, county, and city roads. You may want to see: Deposit threshold. You do not have to de- Canadian and Mexican heavy vehicles operated

posit excise taxes for a calendar quarter if the on U.S. highways may be subject to this tax. For Publication

net tax liability for the quarter is not more than more information, get the instructions for Form

$2,500. Previously, the amount was $2,000. ❏ 378 Fuel Tax Credits and Refunds 2290.

❏ 509 Tax Calendars for 2002 Deposit due dates. One deposit rule, the reg- Registration of vehicles. Generally, you

ular method, applies for all taxes that have to be must prove that you paid your federal highway Form (and Instructions) deposited other than those deposited under the use tax when registering your taxable vehicle

alternative method. You must make deposits ❏ 11–C Occupational Tax and Registration with your state motor vehicle department or enunder the regular method by the 14th day follow- Return for Wagering tering the United States in a Canadian or Mexiing the semimonthly period. The deposit date for can registered taxable vehicle. Generally, a ❏ 637 Application for Registration (For copy of Schedule 1 of Form 2290, stamped after taxes deposited under the alternative method Certain Excise Tax Activities) was not changed. The previous deposit rules payment and returned to you by the IRS, is

❏ 720 Quarterly Federal Excise Tax acceptable proof of payment. (9-day rule, 14-day rule, and 30-day rule) have

been eliminated. See When To Make Deposits Return

under Paying the Taxes, later. ❏ 720–TO Terminal Operator Report

Amount to deposit and safe harbor rule. ❏ 720–CS Carrier Summary Report Registration for Your deposit of taxes for a semimonthly period

generally must be at least 95% of your net tax ❏ 720X Amended Quarterly Federal Excise Certain Activities Tax Return liability incurred during that period, unless the

safe harbor rule applies. Previously, your de- ❏ 730 Monthly Tax on Wagering You must register for certain excise tax activiposit had to equal the amount of your net tax ties. See the instructions for Form 637 for the list ❏ 1363 Export Exemption Certificate liability. The current liability safe harbor rule has of activities for which you must register. Each

been eliminated. However, the look-back quar- ❏ 2290 Heavy Highway Vehicle Use Tax business unit that has, or is required to have, a

Return separate employer identification number must ter safe harbor rule still applies. See Amount of

Deposits register. and Safe Harbor Rule under Paying ❏ 4136 Credit for Federal Tax Paid on

the Taxes, later. To apply for registration, complete Form 637 Fuels and provide the information requested in its inAmended Form 720. Form 720X is used to ❏ 6197 Gas Guzzler Tax structions. If your application is approved, you

make adjustments to liability reported on Forms will receive a Letter of Registration showing the ❏ 6478 Credit for Alcohol Used as Fuel 720 filed for previous quarters. Part I of Sched- activities for which you are registered, the effecule C (Form 720) has been eliminated. ❏ 6627 Environmental Taxes tive date of the registration, and your registration

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number. A copy of Form 637 is not a Letter of Metered-dose inhalers. There is no tax on credit or refund. You must also have the eviRegistration. ODCs used or sold for use as propellants in dence required by the Environmental Protection

metered-dose inhalers. For a sale to be nontax- Agency as proof that the ODCs were exported.

able, you must obtain from the purchaser an

exemption certificate that you rely on in good Imported Taxable Products Environmental Taxes faith. The certificate must be in substantially the

form set forth in section 52.4682–2(d)(5) of the An imported product containing or manufacEnvironmental taxes are imposed on the sale or regulations. Keep the certificate with your rec- tured with ODCs is subject to tax if it is entered

use of ozone-depleting chemicals (ODCs) ords. into the United States for consumption, use, or

and imported products containing or manufac- warehousing and is listed in the Imported Prod- Recycled ODCs. There is no tax on any ucts Table, discussed later. tured with these chemicals. In addition, a floor ODC diverted or recovered in the United States

stocks tax is imposed on ODCs held on January The tax is based on the weight of the ODCs as part of a recycling process (and not as part of 1 by any person (other than the manufacturer or used in the manufacture of the product. Use the the original manufacturing or production pro- following methods to figure the ODC weight. importer of the ODCs) for sale or for use in cess). There is no tax on recycled Halon-1301 or further manufacture. recycled Halon-2402 imported from a country • The actual (exact) weight of each ODC

Figure the environmental tax on Form 6627. that has signed the Montreal Protocol on Sub- used as a material in manufacturing the

Enter the tax on the appropriate lines of Form stances that Deplete the Ozone Layer (Montreal product.

720. Attach Form 6627 to Form 720 as a sup- Protocol). • If the actual weight cannot be determined, porting schedule. The Montreal Protocol is administered by the the ODC weight listed for the product in For environmental tax purposes, United United Nations (U.N.). To determine if a country the Imported Products Table, discussed States includes the 50 states, the District of has signed the Montreal Protocol, contact the later. Columbia, the Commonwealth of Puerto Rico, U.N. The Internet address is http://

any possession of the United States, the Com- untreaty.un.org/. However, if you cannot determine the actual monwealth of the Northern Mariana Islands, the Exported ODCs. Generally, there is no tax weight and the table does not list an ODC weight Trust Territory of the Pacific Islands, the conti- on ODCs sold for export if certain requirements for the product, the rate of tax is 1% of the entry nental shelf areas (applying the principles of are met. For a sale to be nontaxable, you and value of the product. section 638 of the Internal Revenue Code), and the purchaser must be registered. You must foreign trade zones. No one is exempt from the obtain from the purchaser an exemption certifi- environmental taxes, including the federal gov- Taxable Event cate that you rely on in good faith. Keep the ernment, state and local governments, Indian certificate with your records. The certificate must tribal governments, and nonprofit educational Tax is imposed on an imported taxable product be in substantially the form set forth in section organizations. when the product is first sold or used by its 52.4682–5(d)(3) of the regulations. The tax importer. The importer is liable for the tax. benefit of this exemption is limited. For more ODCs information, see section 52.4682–5 of the regu- Use of imported products. You use an im- lations. For the taxable ODCs and tax rates, see the ported product if you put it into service in a trade

Form 6627 instructions. ODCs used as feedstock. There is no tax or business or for the production of income or

on ODCs sold for use or used as a feedstock. An use it in the making of an article, including incorODC is used as a feedstock only if the ODC is poration into the article. The loss, destruction,

Taxable Event entirely consumed in the manufacture of another packaging, repackaging, warehousing, or repair

chemical. The transformation of an ODC into of an imported product is not a use of that prod- Tax is imposed on an ODC when it is first used one or more new compounds qualifies, but use uct.

or sold by its manufacturer or importer. The of an ODC in a mixture does not qualify. manufacturer or importer is liable for the tax. Entry as use. The importer may choose to For a sale to be nontaxable, you must obtain treat the entry of a product into the United States from the purchaser an exemption certificate that Use of ODCs. You use an ODC if you put it as the use of the product. Tax is imposed on the you rely on in good faith. The certificate must be into service in a trade or business or for the date of entry instead of when the product is sold in substantially the form set forth in section production of income. An ODC also is used if or used. The choice applies to all imported taxa- 52.4682–2(d)(2) of the regulations. Keep the you use it in the making of an article, including ble products that you own and have not used certificate with your records. incorporation into the article, chemical transfor- when you make the choice and all later entries. mation, or release into the air. The loss, destruc- Make the choice by checking the box in Part II of tion, packaging, repackaging, or warehousing of Credits or Refunds Form 6627. The choice is effective as of the

ODCs is not a use of the ODC. beginning of the calendar quarter to which the

The creation of a mixture containing an ODC A credit or refund (without interest) of tax paid on Form 6627 applies. You can revoke this choice

is treated as the use of that ODC. An ODC is ODCs may be claimed in the following situa- only with IRS consent.

contained in a mixture only if the chemical iden- tions.

tity of the ODC is not changed. Generally, tax is Sale of article incorporating imported prodimposed when the mixture is created and not on • If a taxed ODC is used as a propellant in a uct. The importer may treat the sale of an

its sale or use. However, you can choose to metered-dose inhaler, then the person article manufactured or assembled in the United

have the tax imposed on its sale or use by who used the ODC as a propellant may States as the first sale or use of an imported

checking the appropriate box in Part I of Form file a claim. taxable product incorporated in that article if

6627. You can revoke this choice only with IRS both the following apply. • If a taxed ODC is exported, then the man- consent. ufacturer may file a claim. • The importer has consistently treated the The creation of a mixture for export or for use sale of similar items as the first sale or use • If a taxed ODC is used as a feedstock, as a feedstock is not a taxable use of the ODCs of similar taxable imported products. then the person who used the ODC may contained in the mixture.

file a claim. • The importer has not chosen to treat entry

Exceptions. The following may be exempt into the United States as use of the prod- For general information about credits and re- uct. from the tax on ODCs. funds, see Credits and Refunds, later.

• Metered-dose inhalers. Conditions to allowance for ODCs exported. Imported Products Table • Recycled ODCs. To claim a credit or refund for ODCs that are

exported, you must have repaid or agreed to The Imported Products Table appears in Appen- • Exported ODCs. repay the tax to the exporter, or obtained the dix B at the end of this publication. The table lists

• ODCs used as feedstock. exporter’s written consent to allowance of the all the products that are subject to the tax on

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imported taxable products and specifies the the table, or change or specify the ODC weight 3) ODCs that have been reclaimed or reODC weight of each product (discussed later). of a product. cycled.

Each listing in the table identifies a product Include your name, address, taxpayer identi- 4) ODCs sold in a qualifying sale for: by name and includes only products that are fication number, and principal place of business

described by that name. Most listings identify a a) Use as a feedstock, in your request. The request must include the

product by both name and Harmonized Tariff following information for each product to be

modified. b) Export, or Schedule (HTS) heading. In those cases, a

product is included in that listing only if the prod- c) Use as a propellant in a metered-dose • The name of the product.

uct is described by that name and the rate of inhaler. • The HTS heading or subheading. duty on the product is determined by reference

to that HTS heading. A product is included in the • The type of modification requested.

listing even if it is manufactured with or contains • The ODC weight that should be specified a different ODC than the one specified in the

table. (unless the product is being removed). Communications and

Part II of the table lists electronic items that • The data supporting the request.

are not included within any other list in the table. Air Transportation

An imported product is included in this list only if Send your request to the following ad- Taxes the product meets one of the following tests. dress.

Excise taxes are imposed on amounts paid by 1) It is an electronic component whose oper- the users of certain facilities and services. If you ation involves the use of nonmechanical Internal Revenue Service receive any payment on which tax is imposed, amplification or switching devices such as P.O. Box 7604 you are required to collect the tax, file returns, tubes, transistors, and integrated circuits. Ben Franklin Station and pay the tax over to the government.

2) It contains components described in (1), Attn: CC:ITA:RU If you fail to collect and pay over the taxes,

which account for more than 15% of the (Imported Products Table) you may be liable for the trust fund recovery

cost of the product. Room 5226 penalty. See Penalties and Interest, later.

Washington, DC 20044 These components do not include passive

electrical devices, such as resistors and capaci- Communications Tax

tors. Items such as screws, nuts, bolts, plastic Floor Stocks Tax A 3% tax is imposed on amounts paid for all the parts, and similar specially fabricated parts that following communications services. may be used to construct an electronic item are Tax is imposed on any ODC held (other than by

not themselves included in the listing for elec- the manufacturer or importer of the ODC) on • Local telephone service.

January 1 for sale or use in further manufactur- tronic items. • Toll telephone service. ing. The person holding title (as determined Rules for listing products. Products are under local law) to the ODC is liable for the tax, • Teletypewriter exchange service. listed in the table according to the following whether or not delivery has been made. rules. These chemicals are taxable without regard Local telephone service. This means ac- to the type or size of storage container in which 1) A product is listed in Part I of the table if it cess to a local telephone system and the privi- the ODCs are held. The tax may apply to an is a mixture containing ODCs. lege of telephonic quality communication with ODC whether it is in a 14-ounce can or a

most people who are part of the system. Local 2) A product is listed in Part II of the table if 30-pound tank. telephone service also includes any facility or the Commissioner has determined that the You are liable for the floor stocks tax if you services provided in connection with this ser- ODCs used as materials in the manufac- hold any of the following on January 1. vice. The tax applies to lease payments for cer- ture of the product under the predominant 1) At least 400 pounds of ODCs subject to tain customer premises equipment (CPE) even method are used for purposes of refrigera- tax and not described in item (2) or (3). though the lessor does not also provide access tion or air conditioning, creating an aerosol to a local telecommunications system. or foam, or manufacturing electronic com- 2) At least 50 pounds of ODCs that are

ponents. halons subject to tax. Private communication service. Private

communication service is not local telephone 3) A product is listed in Part III of the table if 3) At least 1,000 pounds of ODCs that are service. Private communication service includes

the Commissioner has determined that the methyl chloroform subject to tax. accessory-type services provided in connection product meets both the following tests. If you are liable for the tax, prepare an inven- with a Centrex, PBX, or other similar system for

tory on January 1 of the taxable ODCs held on dual use accessory equipment. However, the a) It is not an imported taxable product. that date for sale or for use in further manufac- charge for the service must be stated separately

b) It would otherwise be included within a turing. You must pay this floor stocks tax by from the charge for the basic system, and the

list in Part II of the table. June 30 of each year. Report the tax on Form accessory must function, in whole or in part, in

6627 and Form 720 for the second calendar connection with intercommunication among the

For example, floppy disk drive units are listed quarter. subscriber’s stations.

in Part III because they are not imported taxable For the tax rates, see the Form 6627 instruc- Toll telephone service. This means a tele- products and would have been included in the tions. phonic quality communication for which a toll is Part II list for electronic items not specifically charged that varies with the distance and identified, but for their listing in Part III. ODCs not subject to floor stocks tax. The

elapsed transmission time of each communica- floor stocks tax is not imposed on any of the ODC weight. The Table ODC weight of a tion. The toll must be paid within the United following ODCs. product is the weight, determined by the Com- States. It also includes a long distance service

missioner, of the ODCs used as materials in the 1) ODCs mixed with other ingredients that that entitles the subscriber to make unlimited

manufacture of the product under the predomi- contribute to achieving the purpose for calls (sometimes limited as to the maximum

nant method of manufacturing. The ODC weight which the mixture will be used, unless the number of hours) within a certain area for a flat

is listed in Part II in pounds per single unit of mixture contains only ODCs and one or charge. Microwave relay service used for the

product unless otherwise specified. more stabilizers. transmission of television programs and not for

telephonic communication is not a toll telephone Modifying the table. A manufacturer or im- 2) ODCs contained in a manufactured article service. porter of a product may request the IRS add a in which the ODC will be used for its inproduct and its ODC weight to the table. They tended purpose without being released Teletypewriter exchange service. This

also may request the IRS remove a product from from the article. means access from a teletypewriter or other

Page 4
data station to a teletypewriter exchange system News services. The tax on toll telephone ser- International organizations and the Ameriand the privilege of intercommunication by that vice and teletypewriter exchange service does can Red Cross. The tax does not apply to

station with most persons having teletypewriter not apply to charges for the following news ser- communication services furnished to an internaor other data stations in the same exchange vices. tional organization or to the American National

system. Red Cross. • Services dealing exclusively with the colFiguring the tax. The tax is based on the sum lection or dissemination of news for or Nonprofit hospitals. The tax does not apply of all charges for local or toll telephone service through the public press or radio or televi- to telephone services furnished to income

included in the bill. However, if the bill groups sion broadcasting. tax-exempt nonprofit hospitals for their use.

individual items for billing and tax purposes, the Also, the tax does not apply to amounts paid by • Services used exclusively in the collection tax is based on the sum of the individual items these hospitals to provide local telephone ser- or dissemination of news by a news ticker within that group. The tax on the remaining items vice in the homes of its personnel who must be service furnishing a general news service not included in any group is based on the charge reached during their off-duty hours. similar to that of the public press. for each item separately. Do not include in the

tax base state or local sales or use taxes that are This exemption applies to payments received for Nonprofit educational organizations. The

separately stated on the taxpayer’s bill. messages from one member of the news media tax does not apply to payments received for

 If the tax on toll telephone service is paid by to another member (or to or from their bona fide services and facilities furnished to a nonprofit

inserting coins in coin-operated telephones, correspondents). For the exemption to apply, educational organization for its use. A nonprofit

figure the tax to the nearest multiple of 5 cents. the charge for these services must be billed in educational organization is one that satisfies all

When the tax is midway between 5-cent multi- writing to the person paying for the service and the following requirements.

ples, the next higher multiple applies. that person must certify in writing that the ser- • It normally maintains a regular faculty and vices are used for an exempt purpose. Prepaid telephone cards. A prepaid tele- curriculum.

phone card is any card or any other similar Services not exempted. The tax applies to • It normally has a regularly enrolled body of arrangement that allows its holder to get local or amounts paid by members of the news media for pupils or students in attendance at the toll telephone service and pay for those services local telephone service. Toll telephone service place where its educational activities are in advance. The tax is imposed when the card is in connection with celebrities or special guests regularly carried on. transferred by a telecommunications carrier to on talk shows is subject to the tax.

any person who is not a telecommunications • It is exempt from income tax under section

carrier. The face amount of the card is the Common carriers and communications 501(a) of the Internal Revenue Code.

amount paid for communications services. If the companies. The tax on toll telephone service This includes a school operated by an organiza- face amount is not a dollar amount, see section does not apply to WATS (wide area telephone tion exempt under section 501(c)(3) of the Inter- 49.4251–4 of the regulations. service) used by common carriers, telephone nal Revenue Code if the school meets the above and telegraph companies, or radio broadcasting qualifications. stations or networks in their business. A comExemptions mon carrier is one holding itself out to the public Federal, state, and local government. The as engaged in the business of transportation of Payments for certain services or payments from tax does not apply to communication services persons or property for compensation and offer- certain users are exempt from the communica- provided to the government of the United States, ing its services to the public generally. the government of any state or its political subdi- tions tax.

visions, the District of Columbia, or the United Military personnel serving in a combat zone. Installation charges. The tax does not apply Nations. Treat an Indian tribal government as The tax on toll telephone services does not ap- to payments received for the installation of any a state for the exemption from the communica- ply to telephone calls originating in a combat instrument, wire, pole, switchboard, apparatus, tions tax only if the services involve the exercise zone that are made by members of the U.S. or equipment. However, the tax does apply to of an essential tribal government function. Armed Forces serving there if the person receiv- payments for the repair or replacement of those ing payment for the call receives a properly items incidental to ordinary maintenance. Exemption certificate. Any form of exemp- executed exemption certificate. The signed and tion certificate will be acceptable if it includes all Answering services. The tax does not apply dated exemption certificate must contain all the the information required by the Internal Revenue to amounts paid for a private line, an answering following information. Code and Regulations. File the certificate with service, and a one-way paging or message ser- the provider of the communication services. • The name of the member of the U.S. vice if they do not provide access to a local Armed Forces performing services in the The following users that are exempt from the telephone system and the privilege of telephonic communications tax do not have to file an an- combat zone who originated the call. communication as part of the local telephone nual exemption certificate after they have filed system. • The toll charges, point of origin, and name the initial certificate to claim an exemption from of carrier. Mobile radio telephone service. The tax the communications tax.

does not apply to payments for a two-way radio • A statement that the charges are exempt • The American National Red Cross and

service that does not provide access to a local from tax under section 4253(d) of the In- other international organizations. telephone system. ternal Revenue Code. • Nonprofit hospitals. Coin-operated telephones. The tax for local • The name and address of the telephone • Nonprofit educational organizations. telephone service does not apply to payments subscriber.

made for services by inserting coins in public • State and local governments.

coin-operated telephones. The tax for toll tele- This exemption also applies to members of

phone service also does not apply if the charge the Armed Forces serving in a qualified hazard- The federal government does not have to file

is less than 25 cents. But the tax applies if the ous duty area. A qualified hazardous duty area any exemption certificate.

coin-operated telephone service is furnished for is either of the following areas. All other organizations must furnish exempa guaranteed amount. Figure the tax on the tion certificates when required. • Bosnia and Herzegovina, Croatia, or Mac- amount paid under the guarantee plus any fixed edonia, effective November 21, 1995. monthly or other periodic charge.

• Federal Republic of Yugoslavia (Serbia/ Credits or Refunds Telephone-operated security systems. The Montenegro), Albania, the Adriatic Sea, tax does not apply to amounts paid for tele- and the Ionian Sea north of the 39th paral- If tax is collected and paid over for certain ser- phones used only to originate calls to a limited lel, effective March 24, 1999. vices or users exempt from the communications number of telephone stations for security entry tax:

into a building. In addition, the tax does not apply A qualified hazardous duty area includes an

to any amounts paid for rented communication 1) The collector may claim a credit or refund area only while the special pay provision is in

equipment used in the security system. if it has: effect for that area.

Page 5
a) Repaid the tax to the person from of taxable transportation for which an amount is to the part of the trip between the point at which

whom the tax was collected, or paid. However, see Rural airports, later. A seg- the route of transportation leaves or enters the

ment is a single takeoff and a single landing. continental United States (or a port or station in b) Obtained the consent of that person to The domestic-segment tax is $3.00 per segment the 225-mile zone) and the point at which it the allowance of the credit or refund, or that begins during 2002. After 2002, the enters or leaves Hawaii or Alaska. Leaving or

domestic-segment tax will be adjusted for infla- entering occurs when the route of the transpor- 2) The person who paid the tax may claim a tion. tation passes over either the United States bor- refund. der or a point 3 nautical miles (3.45 statute

For information on forms used to claim a credit Example. In January 2002, Frank Jones miles) from low tide on the coast line, or when it

or refund, see Credits and Refunds, later. pays $264 to a commercial airline for a flight in leaves a port or station in the 225-mile zone.

January from Washington to Chicago with an Therefore, this transportation is subject to the

Air Transportation Taxes intermediate stop in Cleveland. The flight com- percentage tax on the part of the trip in U.S.

prises two segments. The price includes the airspace, the domestic-segment tax for each

Taxes are imposed on amounts paid for all the $240 fare and $24 excise tax [($240 × 7.5%) + (2 domestic segment, and the tax on the use of

following services. × $3.00)] for which Frank is liable. The airline international air travel facilities, discussed later.

collects the tax from Frank and pays it over to • Transportation of persons by air. Transportation within Alaska or Hawaii. the government. The tax on transportation of persons by air ap- • Use of international air travel facilities. Rural airports. The domestic-segment tax plies to the entire fare paid in the case of flights

• Transportation of property by air. does not apply to a segment to or from a rural between any of the Hawaiian Islands, and beairport. An airport is a rural airport for a calendar tween any ports or stations in the Aleutian Isyear if it satisfies both the following require- lands or other ports or stations elsewhere in Transportation of ments. Alaska. The tax applies even though parts of the Persons by Air flights may be over international waters or over

1) Fewer than 100,000 commercial passen- Canada, if no point on the direct line of transpor- The tax on transportation of persons by air is gers departed from the airport during the tation between the ports or stations is more than made up of the following two parts. second preceding calendar year. 225 miles from the United States (Hawaii or

• The percentage tax. Alaska). 2) Either of the following statements is true.

• The domestic-segment tax. Package tours. The air transportation taxes a) The airport is not located within 75 apply to “complimentary” air transportation fur- miles of another airport from which

Percentage tax. A tax of 7.5% applies to nished solely to participants in package holiday 100,000 or more commercial passen- tours. The amount paid for these package tours amounts paid for taxable transportation of per- gers departed during the second pre- includes a charge for air transportation even sons by air. Amounts paid for transportation ceding calendar year. though it may be advertised as “free.” This rule include charges for layover or waiting time and

movement of aircraft in deadhead service. b) The airport was receiving essential air also applies to the tax on the use of international

service subsidies as of August 5, 1997. air travel facilities, discussed later.

Mileage awards. The percentage tax may

apply to an amount paid (in cash or in kind) to an Revenue Procedure 98–18 in Cumulative Bul- Liability for tax. The person paying for taxaair carrier (or any related person) for the right to ble transportation is liable for the tax and, ordi- letin 1998–1 is the most recent list of rural

provide mileage awards for, or other reductions airports published by the IRS. An updated list narily, the person receiving the payment collects

in the cost of, any transportation of persons by can be found on the Department of Transporta- the tax, files the returns, and pays the tax over to

air. For example, this applies to mileage awards tion web site at www.bts.gov/oai/rural.html. the government. However, if payment is made

purchased by credit card companies, telephone outside the United States for a prepaid order,

companies, restaurants, hotels, and other busi- Taxable transportation. Taxable transporta- exchange order, or similar order, the person

nesses. tion is transportation by air that meets either of furnishing the initial transportation provided for

under that order must collect the tax. Generally, the percentage tax does not apply the following tests.

 A travel agency that is an independent to amounts paid for mileage awards where the • It begins and ends either in the United mileage awards cannot, under any circum- broker and sells tours on aircraft that it charters

stances, be redeemed for air transportation that States or at any place in Canada or Mex- must collect the transportation tax, file the re- ico not more than 225 miles from the near- turns, and pay the tax over to the government. is subject to the tax. Until regulations are issued,

the following rules apply to mileage awards. est point on the continental United States However, a travel agency that sells tours as the boundary (this is the 225-mile zone). agent of an airline must collect the tax and remit • Amounts paid for mileage awards that • It is directly or indirectly from one port or it to the airline for the filing of returns and for the cannot be redeemed for taxable transpor- payment of the tax over to the government. station in the United States to another port tation (for example, awards usable only on or station in the United States, but only if it The fact that the aircraft does not use public a foreign air carrier) are not subject to the is not a part of uninterrupted international or commercial airports in taking off and landing tax. air transportation, discussed later. has no effect on the tax. But see Certain helicop-

• Amounts paid by an air carrier to another ter uses, later.

air carrier, foreign or domestic, for mileage Round trip. A round trip is considered two For taxable transportation that begins and

awards that can be redeemed for taxable ends in the United States, the tax applies re- separate trips. The first trip is from the point of gardless of whether the payment is made in or transportation are not subject to the tax to departure to the destination. The second trip is outside the United States. the extent those miles will be awarded in the return trip from that destination.

connection with the purchase of air trans- If the tax is not paid when payment for the Uninterrupted international air portation subject to the percentage tax. transportation is made, the air carrier providing transportation. This means transportation the initial segment of the transportation that be- • Amounts paid by an air carrier to another entirely by air that does not begin and end in the gins or ends in the United States becomes liable air carrier, foreign or domestic, for mileage United States or in the 225-mile zone if there is for the tax.

awards that can be redeemed for taxable not more than a 12-hour scheduled interval betransportation are subject to the tax to the tween arrival and departure at any station in the Exemptions from tax. The tax on transportaextent those miles will be awarded other United States. For a special rule that applies to tion of persons by air does not apply in the

than in connection with the purchase of air military personnel, see Exemptions from tax, following situations. See also Special rules on

transportation subject to the percentage later. Transportation Taxes, later.

tax. Transportation between the continental Military personnel on international trips.

U.S. and Alaska or Hawaii. This transporta- When traveling in uniform at their own expense,

Domestic-segment tax. The domestic-seg- tion is partially exempt from the tax on transpor- United States military personnel on authorized

ment tax is a flat dollar amount for each segment tation of persons by air. The tax does not apply leave are deemed to be traveling in uninterPage 6
rupted international air transportation (defined airports in taking off and landing has no effect on Special Rules on

earlier) even if the scheduled interval between the tax. The tax applies only to amounts paid to Transportation Taxes

arrival and departure at any station in the United a person engaged in the business of transportStates is actually more than 12 hours. However, ing property by air for hire. In certain circumstances, special rules apply to

such personnel must buy their tickets within 12 the taxes on transportation of persons and prop- The tax applies only to transportation (includhours after landing at the first domestic airport erty by air. ing layover time and movement of aircraft in

and accept the first available accommodation of deadhead service) that begins and ends in the

the type called for by their tickets. The trip must United States. Thus, the tax does not apply to Aircraft used by affiliated corporations.

begin or end outside the United States and the The taxes do not apply to payments received by transportation of property by air that begins or

225-mile zone. one member of an affiliated group of corpora- ends outside the United States.

tions from another member for services fur- Certain helicopter uses. The tax does not Exemptions from tax. The tax on transporta- nished in connection with the use of an aircraft. apply to air transportation by helicopter if the tion of property by air does not apply in the However, the aircraft must be owned or leased helicopter is used for any of the following pur- by a member of the affiliated group and cannot following situations. See also Special Rules on poses. Transportation Taxes, later. be available for hire by a nonmember of the

affiliated group. Determine whether an aircraft is 1) Transporting individuals, equipment, or Cropdusting and firefighting service. The available for hire by a nonmember of an affiliated supplies in the exploration for, or the de- tax does not apply to amounts paid for cropdust- group on a flight-by-flight basis. velopment or removal of, hard minerals, ing or aerial firefighting service. An affiliated group of corporations, for this oil, or gas. Exportation. The tax does not apply to rule, is any group of corporations connected with

2) Planting, cultivating, cutting, transporting, payments for transportation of property by air in a common parent corporation through 80% or

or caring for trees (including logging oper- the course of exportation (including to United more stock ownership.

ations). States possessions) by continuous movement,

3) Providing transportation for emergency as evidenced by the execution of Form 1363, Small aircraft. The taxes do not apply to

medical services. Export Exemption Certificate. See Form 1363 transportation furnished by an aircraft having a

for more details. maximum certificated takeoff weight of 6,000 However, during a use described in items (1) pounds or less. However, the taxes do apply if Certain helicopter and fixed-wing air am- and (2), the tax applies if the helicopter takes off the aircraft is operated on an established line. bulance uses. The tax does not apply to from, or lands at, a facility eligible for assistance “Operated on an established line” means the

under the Airport and Airway Development Act amounts paid for the use of helicopters in con- aircraft operates with some degree of regularity of 1970, or otherwise uses services provided struction to set heating and air conditioning units between definite points. under section 44509 or 44913(b) or subchapter I on roofs of buildings, to dismantle tower cranes, Consider an aircraft to be operated on an of chapter 471 of title 49, United States Code. and to aid in construction of power lines and ski established line if it is operated on a charter For item (1), treat each flight segment as a lifts. basis between two cities also served by that separate flight. The tax also does not apply to air transporta- carrier on a regularly scheduled basis. tion by helicopter or fixed-wing aircraft for the Fixed-wing air ambulance. The tax does purpose of providing emergency medical trans- not apply to air transportation by fixed-wing air- Mixed load of persons and property. If a portation. The fixed-wing aircraft must be craft if used for emergency medical transporta- single amount is paid for air transportation of equipped for and exclusively dedicated on that tion. The aircraft must be equipped for and persons and property, the payment must be flight to acute care emergency medical services. exclusively dedicated on that flight to acute care allocated between the amount subject to the tax

emergency medical services. Skydiving. The tax does not apply to any air on transportation of persons and the amount

transportation exclusively for the purpose of subject to the tax on transportation of property. Skydiving. The tax does not apply to any air skydiving. The allocation must be reasonable and sup- transportation exclusively for the purpose of ported by adequate records. skydiving. Excess baggage. The tax does not apply to

excess baggage accompanying a passenger on Bonus tickets. The tax does not apply to an aircraft operated on an established line. free bonus tickets issued by an airline company Credits or Refunds

to its customers who have satisfied all require- Alaska and Hawaii. For transportation of ments to qualify for the bonus tickets. However, If tax is collected and paid over for air transporta- property to and from Alaska and Hawaii, the tax tion that is not taxable air transportation, the the tax applies to amounts paid by customers for in general does not apply to the portion of the collector may claim a credit or refund if it has advance bonus tickets when customers have transportation that is entirely outside the conti- repaid the tax to the person from whom the tax traveled insufficient mileage to fully qualify for nental United States (or the 225-mile zone if the was collected or obtained the consent of that the free advance bonus tickets. aircraft departs from or arrives at an airport in person to the allowance of the credit or refund. the 225-mile zone). But the tax applies to flights Alternatively, the person who paid the tax may between ports or stations in Alaska and the Use of International claim a refund. For information on forms used to

Aleutian Islands, as well as between ports or Air Travel Facilities claim a credit or refund, see Credits and Restations in Hawaii. The tax applies even though funds, later.

parts of the flights may be over international A $13.20 tax per person is imposed on amounts waters or over Canada, if no point on a line paid during 2002 (whether in or outside the drawn from where the route of transportation United States) for international flights that begin leaves the United States (Alaska) to where it or end in the United States. However, for a Fuel Taxes reenters the United States (Alaska) is more than domestic segment that begins or ends in Alaska 225 miles from the United States. or Hawaii, a $6.60 tax per person applies only to Excise taxes are imposed on all the following departures. This tax does not apply if all the fuels. Liability for tax. The person paying for taxa- transportation is subject to the percentage tax,

discussed earlier. ble transportation is liable for the tax and, ordi- • Gasoline.

narily, the person engaged in the business of • Gasohol. transporting property by air for hire receives the

Transportation of payment, collects the tax, files the returns, and • Diesel fuel.

pays over the tax to the government. Property by Air • Kerosene. If tax is not paid when a payment is made

A tax of 6.25% is imposed on amounts paid outside the United States, the person furnishing • Aviation fuel.

(whether in or outside the United States) for the last segment of taxable transportation col- • Special motor fuels (including LPG). transportation of property by air. The fact that lects the tax from the person to whom the propthe aircraft may not use public or commercial erty is delivered in the United States. • Compressed natural gas.

Page 7
• Fuels used in commercial transportation • A throughputter that is not a position • Removals or sales by blenders.

on inland waterways. holder. However, if the person liable for the tax expects

• An ultimate vendor. that another tax will be imposed on that fuel, that

Measurement of taxable fuel. Volumes of person should (but is not required to) file a first • An ultimate vendor (blocked pump). taxable fuel (gasoline, diesel fuel, and kerosene) taxpayer’s report.

can be measured on the basis of actual volumet- Ultimate vendors do not need to be registered to Providing information. The first taxpayer ric gallons or gallons adjusted to 60 degrees buy or sell diesel fuel or kerosene. However, must give a copy of the report to the buyer of the Fahrenheit. they must be registered for filing certain claims fuel within the bulk transfer/terminal system or to for the excise tax on these fuels. the owner of the fuel immediately before the first Information Returns tax was imposed, if the first taxpayer is not the Taxable fuel registrant. This is an enterer, an owner at that time. If an optional report is filed, a Form 720–TO, Terminal Operator Report, and industrial user, a refiner, a terminal operator, or copy should (but is not required to) be given to Form 720–CS, Carrier Summary Report, are a throughputter who received a Letter of Regis- the buyer or owner. new information returns used by terminal opera- tration under the excise tax registration provi- A person that receives a copy of the first tors and carriers to report their monthly receipts sion and whose registration has not been taxpayer’s report and later sells the fuel within and disbursements of liquid products. The re- revoked or suspended. The term taxable fuel the bulk transfer/terminal system must give the turns are due the last day of the month following means gasoline, diesel fuel, and kerosene. The copy and a “Statement of Subsequent Seller” to the month in which the transaction occurs. term registrant as used in the discussions of the buyer. If the later sale is outside the bulk These returns can be filed on paper forms or these fuels means a taxable fuel registrant. transfer/terminal system and that person ex- electronically. For information on filing electroni- Additional information. See the Form 637 pects that another tax will be imposed, that per- cally, see Publication 3536, Motor Fuel Excise instructions for the information you must submit son should (but is not required to) give the copy Tax EDI Guide. when you apply for registration. and the statement to the buyer. A model stateForm 720–TO. This information return is used ment of subsequent seller is shown in Appendix

by terminal operators to report receipts and dis- Refunds of Second Tax C as Model Certificate B. The statement must

bursements of all liquid products to and from all contain all information necessary to complete

approved terminals. Each terminal operator If the tax is paid on more than one taxable event the model.

must file a separate form for each approved for a taxable fuel (gasoline, diesel fuel, and ker- If the first taxpayer’s report relates to fuel

terminal. osene), the person paying the “second tax” may sold to more than one buyer, copies of that

claim a refund (without interest) of that tax if report must be made when the fuel is divided. Form 720–CS. This information return must certain conditions and reporting requirements Each buyer must be given a copy of the report. be filed by bulk transport carriers (barges, ves- are met. No credit against any tax is allowed for sels, and pipelines) who receive liquid product Refund claim. You must make your claim for this tax. For information about taxable events, from an approved terminal or deliver liquid prod- refund on Form 8849. Complete Schedule 5 see the discussions under Gasoline and Diesel uct to an approved terminal. (Form 8849) and attach it to your Form 8849. Fuel and Kerosene, later. You must have filed Form 720 and paid the Liquid product. A liquid product is any liquid Conditions to allowance of refund. A claim second tax before you file for a refund of that tax. transported into storage at a terminal or deliv- Do not include this claim with a claim under for refund of the tax is allowed only if all the ered out of a terminal. For a list of products, see another tax provision. You must not have in- following conditions are met. the product code table in the Instructions for cluded the second tax in the price of the fuel and Forms 720–TO and 720–CS. 1) A tax on the fuel was paid to the govern- must not have collected it from the purchaser.

ment and not credited or refunded (the You must submit the following information with Registration Requirements “first tax”). your claim.

The following discussion applies to excise tax 2) After the first tax was imposed, another tax • A copy of the first taxpayer’s report (disregistration requirements for activities relating to was imposed on the same fuel and was cussed earlier).

gasoline, diesel fuel, and kerosene. The paid to the government (the “second tax”). • A copy of the statement of subsequent terms used in this discussion are explained 3) The person that paid the second tax filed a seller if the fuel was bought from someone later. See Registration for Certain Activities, ear- timely claim for refund containing the infor- other than the first taxpayer. lier, for more information about registration. mation required (see Refund claim, later).

Persons that must register. You must be

registered if you are any of the following per- 4) The person that paid the first tax has met Gasoline

the reporting requirements, discussed sons. next. The following discussion provides definitions

• A blender. and an explanation of events relating to the

Reporting requirements. Generally, the per- excise tax on gasoline. • An enterer. son that paid the first tax must file a “First

• A pipeline operator. Taxpayer’s Report” with its Form 720 for the

quarter for which the report relates. A model first Definitions • A position holder. taxpayer’s report is shown in Appendix C as • A refiner. The following terms are used throughout the Model Certificate A. Your report must contain all discussion of gasoline. Some of these terms are information needed to complete the model. • A terminal operator. also used in the discussions of diesel fuel and By the due date for filing the Form 720, you • A vessel operator. kerosene. Other terms are defined in the discus- must send a separate copy of the report to the sion to which they pertain. following address. In addition, bus and train operators must be

registered if they use dyed diesel fuel in their Internal Revenue Service Gasoline. This means finished gasoline and

buses or trains and they incur liability for tax at Cincinnati, OH 45999–0555 gasoline blendstocks. Finished gasoline means

the bus or train rate. all products (including gasohol) that are comWrite “EXCISE – FIRST TAXPAYER’S monly or commercially known or sold as gasoPersons that may register. You may, but are REPORT” across the top of that copy. line and are suitable for use as a motor fuel. The

not required to, register if you are any of the product must have an octane rating of 75 or Optional reporting. A first taxpayer’s report following persons. more. Gasoline blendstocks are discussed later. is not required for the tax imposed on any of the

• A feedstock user. following taxable events. Approved terminal or refinery. This is a terminal operated by a registrant that is a terminal • A gasohol blender. • Removal at a terminal rack. operator or a refinery operated by a registrant

• An industrial user. • Nonbulk entries into the United States. that is a refiner.

Page 8
Aviation gasoline. This means all special Registrant. This is a taxable fuel registrant • The terminal operator has an unexpired

grades of gasoline suitable for use in aviation (see Registration Requirements, earlier). notification certificate (discussed later)

reciprocating engines and covered by ASTM from the position holder. Removal. This is any physical transfer of fuel. specification D 910 or military specification • The terminal operator has no reason to MIL-G-5572. It also means any use of fuel other than as a

material in the production of taxable or special believe any information on the certificate is

Blended taxable fuel. This means any taxa- false. fuels. However, fuel is not removed when it

ble fuel produced outside the bulk transfer/termi- evaporates or is otherwise lost or destroyed.

nal system by mixing taxable fuel on which Removal from refinery. The removal of gaso- excise tax has been imposed and any other Sale. For fuel not in a terminal, this is the line from a refinery is taxable if the removal liquid on which excise tax has not been im- transfer of title to, or substantial incidents of meets either of the following conditions. posed. This does not include a mixture removed ownership in, fuel to the buyer for money, seror sold during the calendar quarter if all such vices, or other property. For fuel in a terminal, • It is made by bulk transfer and the refiner

mixtures removed or sold by the blender contain this is the transfer of the inventory position if the or the owner of the gasoline immediately

before the removal is not a registrant. less than 400 gallons of a liquid on which the tax transferee becomes the position holder for that

has not been imposed. Blended taxable fuel fuel. • It is made at the refinery rack. does not include gasohol that receives an excise State. This includes any state, any of its politi- The refiner is liable for the tax. tax benefit.

cal subdivisions, the District of Columbia, and Exception. The tax does not apply to a re- Blender. This is the person that produces the American Red Cross. Treat an Indian tribal moval of gasoline at the refinery rack if all the blended taxable fuel. government as a state only if transactions in- following requirements are met. volve the exercise of an essential tribal govern- Bulk transfer. This is the transfer of fuel by ment function. • The gasoline is removed from an ap- pipeline or vessel. proved refinery not served by pipeline Terminal. This is a storage and distribution Bulk transfer/terminal system. This is the (other than for receiving crude oil) or ves- facility supplied by pipeline or vessel, and from sel. fuel distribution system consisting of refineries, which fuel may be removed at a rack. It does not pipelines, vessels, and terminals. Fuel in the • The gasoline is received at a facility oper- include a facility at which gasoline blendstocks supply tank of any engine, or in any tank car, ated by a registrant and located within the are used in the manufacture of products other railcar, trailer, truck, or other equipment suitable bulk transfer/terminal system. than finished gasoline if no gasoline is removed for ground transportation is not in the bulk trans- from the facility. A terminal does not include any • The removal from the refinery is by railcar. fer/terminal system. facility where finished gasoline, undyed diesel • The same person operates the refinery Enterer. This is the importer of record for the fuel, or undyed kerosene is stored if the facility is and the facility at which the gasoline is fuel. However, if the importer of record is acting operated by a registrant and all such fuel stored received. as an agent, the person for whom the agent is at the facility has been previously taxed upon

acting is the enterer. If there is no importer of removal from a refinery or terminal.

record, the owner at the time of entry into the Entry into the United States. The entry of

United States is the enterer. Terminal operator. This is any person that gasoline into the United States is taxable if the owns, operates, or otherwise controls a termi- entry meets either of the following conditions. Entry. Fuel is entered into the United States nal.

when it is brought into the United States and • It is made by bulk transfer and the enterer

applicable customs law requires that it be en- is not a registrant. Throughputter. This is any person that is a

tered for consumption, use, or warehousing. position holder or that owns fuel within the bulk • It is not made by bulk transfer. This does not apply to fuel brought into Puerto transfer/terminal system (other than in a termiRico (which is part of the U.S. customs territory), nal). The enterer is liable for the tax.

but does apply to fuel brought into the United

States from Puerto Rico. Vessel operator. This is the person that oper- Removal from a terminal by unregistered po- ates a vessel within the bulk transfer/terminal sition holder. The removal by bulk transfer of Pipeline operator. This is the person that op- system. However, vessel does not include a gasoline from a terminal is taxable if the position erates a pipeline within the bulk transfer/terminal deep draft ocean-going vessel. holder for the gasoline is not a registrant. The system. position holder is liable for the tax. The terminal

operator is jointly and severally liable for the tax Position holder. This is the person that holds Taxable Events if the position holder is a person other than the the inventory position in the fuel in the terminal, terminal operator. However, see Terminal as reflected on the records of the terminal opera- The tax on gasoline is 18.4 cents a gallon. The operator’s liability under Removal from terminal, tor. You hold the inventory position when you tax on aviation gasoline is 19.4 cents per gallon. earlier, for an exception. have a contractual agreement with the terminal Tax is imposed on the removal, entry, or sale of

operator for the use of the storage facilities and gasoline. Each of these events is discussed Bulk transfers not received at approved ter- terminaling services for the fuel. A terminal oper- later. However, see the special rules that apply minal or refinery. The removal by bulk trans- ator that owns the fuel in its terminal is a position to gasoline blendstocks, later. Also, see the dis- fer of gasoline from a terminal or refinery, or the holder. cussion under Gasohol, if applicable. entry of gasoline by bulk transfer into the United If the tax is paid on the gasoline in more than Rack. This is a mechanism capable of deliver- States, is taxable if the following conditions ap- one event, a refund may be allowed for the ply. ing fuel into a means of transport other than a “second” tax paid. See Refunds of Second Tax, pipeline or vessel. earlier. 1) No tax was previously imposed (as disRefiner. This is any person that owns, oper- cussed earlier) on any of the following Removal from terminal. All removals of gas- ates, or otherwise controls a refinery. events.

oline at a terminal rack are taxable. The position

Refinery. This is a facility used to produce fuel holder for that gasoline is liable for the tax. a) The removal from the refinery.

from crude oil, unfinished oils, natural gas li- Terminal operator’s liability. The terminal b) The entry into the United States. quids, or other hydrocarbons and from which operator is jointly and severally liable for the tax fuel may be removed by pipeline or vessel or at c) The removal from a terminal by an un- if the position holder is a person other than the a rack. However, this term does not include a registered position holder. terminal operator and is not a registrant. facility where only blended fuel or gasohol, and However, a terminal operator meeting all the no other type of fuel, is produced. For this pur- 2) Upon removal from the pipeline or vessel, following conditions at the time of the removal pose, blended fuel is any mixture that would be the gasoline is not received at an ap- will not be liable for the tax. blended taxable fuel if produced outside the bulk proved terminal or refinery (or at another

transfer/terminal system. • The terminal operator is a registrant. pipeline or vessel).

Page 9
The owner of the gasoline when it is removed suspended. The registrant must provide a new Removals and entries not connected to

from the pipeline or vessel is liable for the tax. certificate if any information on a certificate has sale. Nonbulk removals and entries are not

However, an owner meeting all the following changed. taxable if the person otherwise liable for the tax

conditions at the time of the removal will not be (position holder, refiner, or enterer) is a regisliable for the tax. Additional persons liable. When the person trant.

liable for the tax willfully fails to pay the tax, joint • The owner is a registrant. Removals and entries connected to sale. and several liability for the tax is imposed on: Nonbulk removals and entries are not taxable if • The owner has an unexpired notification • Any officer, employee, or agent of the per- the person otherwise liable for the tax (position certificate (discussed later) from the oper- son who is under a duty to ensure the holder, refiner, or enterer) is a registrant, and at ator of the terminal or refinery where the payment of the tax and who willfully fails to the time of the sale, meets the following require- gasoline is received. perform that duty, or ments. • The owner has no reason to believe any • Anyone who willfully causes the person to information on the certificate is false. • The person has an unexpired certificate fail to pay the tax. (discussed later) from the buyer. The operator of the facility where the gasoline is

received is liable for the tax if the owner meets • The person has no reason to believe any Gasoline Blendstocks information in the certificate is false. these conditions. The operator is jointly and severally liable if the owner does not meet these Gasoline includes gasoline blendstocks. The conditions. Sales after removal or entry. The sale of a previous discussions apply to these blend- gasoline blendstock that was not subject to tax stocks. However, if certain conditions are met, Sales to unregistered person. The sale of on its nonbulk removal or entry, as discussed the removal, entry, or sale of gasoline blend- gasoline located within the bulk transfer/terminal earlier, is taxable. The seller is liable for the tax. stocks is not taxable. Generally, this applies if system to a person that is not a registrant is However, the sale is not taxable if, at the time of the gasoline blendstock is not used to produce taxable if tax was not previously imposed under the sale, the seller meets the following require- finished gasoline or is received at an approved any of the events discussed earlier. ments. terminal or refinery. The seller is liable for the tax. However, a • The seller has an unexpired certificate seller meeting all the following conditions at the Blendstocks. The following are gasoline (discussed next) from the buyer. time of the sale will not be liable for the tax. blendstocks.

• The seller has no reason to believe any • The seller is a registrant. • Alkylate. information in the certificate is false. • The seller has an unexpired notification • Butane.

certificate (discussed later) from the buyer. • Butene. Certificate of buyer. The certificate from the • The seller has no reason to believe any buyer certifies the gasoline blendstocks will not • Catalytically cracked gasoline. information on the certificate is false. be used to produce finished gasoline. The certifThe buyer of the gasoline is liable for the tax if • Coker gasoline. icate may be included as part of any business

records normally used for a sale. A model certifi- the seller meets these conditions. The buyer is • Ethyl tertiary butyl ether (ETBE). jointly and severally liable if the seller does not cate is shown in Appendix C as Model Certifimeet these conditions. • Hexane. cate D. Your certificate must contain all

information necessary to complete the model. Exception. • Hydrocrackate. The tax does not apply to a sale A certificate expires on the earliest of the if all of the following apply. • Isomerate. following dates.

• The buyer’s principal place of business is • Methyl tertiary butyl ether (MTBE).

not in the United States. • The date 1 year after the effective date

• Mixed xylene (not including any separated (not earlier than the date signed) of the • The sale occurs as the fuel is delivered isomer of xylene). certificate.

into a transport vessel with a capacity of at

least 20,000 barrels of fuel. • Natural gasoline. • The date a new certificate is provided to

the seller. • Pentane. • The seller is a registrant and the exporter

of record. • The date the seller is notified the buyer’s • Pentane mixture.

right to provide a certificate has been with- • The fuel was exported. • Polymer gasoline. drawn.

• Raffinate. The buyer must provide a new certificate if any Removal or sale of blended gasoline. The • Reformate. information on a certificate has changed. removal or sale of blended gasoline by the

blender is taxable. See Blended taxable fuel • Straight-run gasoline. The IRS may withdraw the buyer’s right to

under Definitions, earlier. provide a certificate if that buyer uses the gaso- • Straight-run naphtha. The blender is liable for the tax. The tax is line blendstocks in the production of finished

figured on the number of gallons not previously gasoline or resells the blendstocks without get- • Tertiary amyl methyl ether (TAME).

subject to the tax on gasoline. ting a certificate from its buyer. • Tertiary butyl alcohol (gasoline grade)

Notification certificate. (TBA). The notification cer- Received at approved terminal or refinery.

tificate is used to notify a person of the registra- • Thermally cracked gasoline. The nonbulk removal or entry of gasoline blendtion status of the registrant. A copy of the stocks received at an approved terminal or refin- • Toluene. registrant’s letter of registration cannot be used ery is not taxable if the person otherwise liable as a notification certificate. A model notification • Transmix containing gasoline. for the tax (position holder, refiner, or enterer) certificate is shown in Appendix C as Model meets all the following requirements. Certificate C. Your notification certificate must However, gasoline blendstocks do not include

contain all information necessary to complete • The person is a registrant. any product that cannot be used without further

the model. processing in the production of finished gaso- • The person has an unexpired notification The certificate may be included as part of line. certificate (discussed earlier) from the op- any business records normally used for a sale. A erator of the terminal or refinery where the certificate expires on the earlier of the date the Not used to produce finished gasoline. gasoline blendstocks are received. registrant provides a new certificate, or the date Gasoline blendstocks not used to produce finthe recipient of the certificate is notified that the ished gasoline are not taxable if the following • The person has no reason to believe any

registrant’s registration has been revoked or conditions are met. information on the certificate is false.

Page 10
Bulk transfers to registered industrial user. If the mixture is produced within the bulk • The distributor bought the gasoline at a The removal of gasoline blendstocks from a transfer/terminal system, such as at a refinery, price that did not include the tax. pipeline or vessel is not taxable if the blend- determine whether the mixture is gasohol when

stocks are received by a registrant that is an • The sale to the user was charged on an oil the taxable removal or entry of the mixture ocindustrial user. An industrial user is any person company credit card. curs.

that receives gasoline blendstocks by bulk If the mixture is produced outside the bulk By signing the claim, the person that paid the tax transfer for its own use in the manufacture of any transfer/terminal system, determine whether the certifies that it: product other than finished gasoline. mixture is gasohol immediately after the mixture

1) Has obtained one of the three items below. is produced. If you splash blend a batch in an

empty tank, figure the volume of alcohol (without

Credits or Refunds a) Proof of exportation. adjustment for temperature) by dividing the metered gallons of alcohol by the total metered b) A certificate of ultimate purchaser. A credit or refund of the gasoline tax (without gallons of alcohol and gasoline as shown on interest) may be allowable if gasoline is, by any c) A certificate of ultimate vendor. each delivery ticket. However, if you add meperson: tered gallons of gasoline and alcohol to a tank

2) Has met any of the following conditions. already containing more than 0.5% of its capac- • Exported, ity in a liquid, include the alcohol and non-alco- a) Has neither included the tax in the price • Used in a boat engaged in commercial hol fuel contained in that liquid in figuring the of the gasoline nor collected the tax fishing, volume of alcohol in that batch. from the buyer.

• Used in military aircraft, b) Has repaid, or agreed to repay, the tax Example 1. John uses an empty 8,000 gal-

• Used in foreign trade, to the ultimate vendor of the gasoline. lon tank to blend alcohol and gasoline. His delivery tickets show that he blended Batch 1 using • Sold to a state for its exclusive use, c) Has gotten the written consent of the 7,200 metered gallons of gasoline and 800 me- ultimate vendor to the allowance of the • Sold to a nonprofit educational organiza- tered gallons of alcohol. John divides the gallons credit or refund. tion for its exclusive use, of alcohol (800) by the total gallons of alcohol

and gasoline delivered (8,000). Batch 1 qualifies • Sold to the United Nations for its exclusive as 10% gasohol. use, or Claims by the ultimate purchaser. A credit

or refund is allowable to the ultimate purchaser • Used or sold in the production of special Example 2. John blends Batch 2 in an of taxed gasoline used for a nontaxable use. motor fuels (defined later). empty tank. According to his delivery tickets, he See Publication 378 for more information about blended 7,220 gallons of gasoline and 780 gal- these claims. lons of alcohol. Batch 2 contains 9.75% alcohol Claims by wholesale distributors. A credit (780 ÷ 8,000); it qualifies as 7.7% gasohol. or refund is allowable to a gasoline wholesale Gasohol

distributor who buys gasoline at a price that Batches containing at least 9.8% alcohol.

includes the excise tax and then sells it to the Generally, the same rules that apply to the impo- If a mixture contains at least 9.8% but less than

ultimate purchaser (including an exporter) for a sition of tax on the removal and entry of gasoline 10% alcohol, part of the mixture is considered to

purpose listed in the previous list. A wholesale (discussed earlier) apply to gasohol. be 10% gasohol. To figure that part, multiply the

distributor is any person who makes retail sales However, the removal of gasohol from a re- number of gallons of alcohol in the mixture by

of gasoline at 10 or more retail motor fuel outlets finery is taxable if the removal is from an ap- 10. The other part of the mixture is excess liquid

or sells gasoline to producers, retailers, or users proved refinery by bulk transfer and the that is subject to the rules on failure to blend,

who purchase in bulk quantities and accept de- discussed later. registered refiner treats itself as not registered.

livery into bulk storage tanks. A wholesale dis- This is in addition to the taxable events dis- Batches containing at least 7.55% alcohol.

tributor is not a producer or importer. cussed earlier under Removal from If a mixture contains at least 7.55% but less than

The wholesale distributor must have sold the refinery. 7.7% alcohol, part of the mixture is considered to

gasoline at a tax-excluded price and obtained a be 7.7% gasohol. To figure that part, multiply the Gasohol. Gasohol is a mixture of gasoline and certificate of ultimate purchaser or proof of ex- number of gallons of alcohol in the mixture by alcohol that satisfies the alcohol-content re- portation. 12.987. The other part of the mixture is excess quirements immediately after the mixture is pro- The wholesale distributor must complete liquid subject to the rules on failure to blend, duced. Alcohol includes ethanol and methanol.

Schedule 4 (Form 8849) and attach it to Form discussed later. Generally, this includes ethanol used to produce 8849 to make a claim for refund for gasoline sold ethyl tertiary butyl ether (ETBE) and methanol Batches containing at least 5.59% alcohol. to an ultimate purchaser for a purpose listed produced from methane gas formed in waste If a mixture contains at least 5.59% but less than earlier. disposal sites. However, alcohol produced from 5.7% alcohol, part of the mixture is considered to

By signing the Form 8849, the gasoline petroleum, natural gas, coal (including peat), or be 5.7% gasohol. To figure that part, multiply the

wholesale distributor certifies that it: any derivative or product of these items, and number of gallons of alcohol in the mixture by

alcohol less than 190 proof do not qualify as 17.544. The other part of the mixture is excess • Bought the gasoline at a price that in- alcohol for these rules. liquid that is subject to the rules on failure to cluded the excise tax, blend, discussed later. Alcohol-content requirements. To qualify as • Qualifies as a wholesale distributor, gasohol, a mixture must contain a specific Gasohol blender. A gasohol blender is any • Sold the fuel at a tax-excluded price, and amount of alcohol by volume, without rounding. person that regularly produces gasohol outside Figure the alcohol content on a batch-by-batch • Has obtained the certificate of the ultimate of the bulk transfer/terminal system for sale or basis. There are three types of gasohol. purchaser or proof of export from its use in its trade or business. A “registered gasobuyer. • 10% gasohol. This is a mixture that con- hol blender” is a person that has been registered

by the IRS as a gasohol blender. See Registra- tains at least 9.8% alcohol.

tion Requirements, earlier. Claims by persons who paid the tax to the • 7.7% gasohol. This is a mixture that congovernment. A credit or refund is allowable to tains at least 7.55%, but less than 9.8%,

the person that paid the tax to the government if alcohol. Tax Rates

the gasoline was sold to the user (including an • 5.7% gasohol. This is a mixture that con- exporter) by either that person or by a retailer for The tax rate depends on the type of gasohol. tains at least 5.59%, but less than 7.55%, a purpose listed earlier. A credit or refund also is These rates are less than the regular tax rate for alcohol. allowable to that person if the gasoline was sold gasoline. The reduced rate also depends on

to the user by a wholesale distributor and either Any mixture that contains less than 5.59% alco- whether you are liable for the tax on the removal

of the following is true. hol is not gasohol. or entry of gasoline used to make gasohol, or on

Page 11
the removal or entry of gasohol. You may be owns the gasohol when the gasoline is sepa- c) Minimum color of +27 Saybolt.

liable for additional tax if you later separate the rated is liable for the tax.

gasoline from the gasohol or fail to blend gaso- Kerosene. This means any of the following line into gasohol. Failure to blend. Tax is imposed on the re- liquids. moval, entry, or sale of gasoline on which a

Tax on gasoline. The tax on gasoline re- reduced rate of tax was imposed if the gasoline • One of the two grades of kerosene (No.

moved or entered for the production of gasohol was not blended into gasohol, or was blended 1-K and No. 2-K) covered by ASTM specidepends on the type of gasohol that is to be into gasohol taxable at a higher rate. This tax is fication D 3699.

produced. The rates apply to the tax imposed on the difference between the tax that should have • Aviation-grade kerosene. the removal at the terminal rack or from the applied and the tax actually imposed. If the gasrefinery, or on the nonbulk entry into the United oline was not sold, the person liable for this tax is However, kerosene does not include ex- States (as discussed under Gasoline, earlier). the person that was liable for the tax on the entry cluded liquid, discussed earlier. The rates for gasoline used to produce gasohol or removal. If the gasoline was sold, the person Kerosene also includes any liquid that would containing ethanol are shown on Form 720. The that bought the gasoline in connection with the be described above but for the presence of a rates for gasoline used to produce gasohol con- taxable removal or entry is liable for this tax. dye of the type used to dye kerosene for a taining methanol are shown in the instructions nontaxable use. for Form 720. Example. John uses an empty 8,000 gallon

tank to blend gasoline and alcohol. The delivery Aviation-grade kerosene. This is Requirements. The reduced rates apply if tickets show he blended 7,205 metered gallons kerosene-type jet fuel covered by ASTM specifi- the person liable for the tax (position holder, of gasoline and 795 metered gallons of alcohol. cation D 1655 or military specification refiner, or enterer) is a registrant and: He bought the gasoline at a reduced tax rate of MIL-DTL-5624T (Grade JP-5) or MIL-DTL14.555 cents per gallon. The batch contains 83133E (Grade JP-8). 1) A registered gasohol blender that pro- 9.9375% alcohol (795 ÷ 8,000). John deter- duces gasohol with the gasoline within 24 mines that 7,950 gallons (10 Approved terminal. This is generally a facility × 795) of the mix- hours after removing or entering the gaso- approved for registration purposes for the stor- ture qualifies as 10% gasohol. See Batches line, or age of non-tax-paid diesel fuel or kerosene. containing at least 9.8% alcohol, earlier. The

2) That person, at the time that the gasoline other 50 gallons is excess liquid that he failed to Diesel-powered highway vehicle. This is

is sold in connection with the removal or blend into gasohol. He is liable for a tax of 3.845 any self-propelled vehicle designed to carry a

entry: cents per gallon (18.40 (full rate) − 14.555 (re- load over public highways (whether or not also duced rate)) on this excess liquid. designed to perform other functions) and pro- a) Has an unexpired certificate from the pelled by a diesel-powered engine. Generally, buyer, and do not consider as diesel-powered highway ve- Credits or Refunds b) Has no reason to believe any informa- hicles specially designed mobile machinery for

tion in the certificate is false. nontransportation functions and vehicles spe- A credit or refund for part of the gasoline tax may cially designed for off-highway transportation. be allowed if gasoline taxed at the full rate is For more information about these vehicles and Certificate. The certificate from the buyer used to produce gasohol for sale or use in a for information about vehicles not considered certifies that the gasoline will be used to produce person’s trade or business. By signing the claim, highway vehicles, see Publication 378. gasohol within 24 hours after purchase. The the person certifies that it has, for each batch of

certificate may be included as part of any busi- gasohol, the required information related to the Diesel-powered train. This is any diesel-powness records normally used for a sale. A copy of purchase of the gasoline. ered equipment or machinery that rides on rails.

the registrant’s letter of registration cannot be The term includes a locomotive, work train,

used as a gasohol blender’s certificate. A model Diesel Fuel and Kerosene switching engine, and track maintenance macertificate is shown in Appendix C as Model chine.

Certificate E. Your certificate must contain all Generally, diesel fuel and kerosene are taxed in

information necessary to complete the model. the same manner as gasoline (discussed earA certificate expires on the earliest of the lier). The following discussion provides informa- Taxable Events

tion about the excise tax on diesel fuel and following dates. The tax on diesel fuel and kerosene is 24.4 kerosene. • The date 1 year after the effective date cents a gallon. It is imposed on the removal,

(which may be no earlier than the date entry, or sale of diesel fuel and kerosene. Each

signed) of the certificate. Definitions of these events is discussed later. The tax does

not apply to dyed diesel fuel or dyed kerosene, • The date a new certificate is provided to The following terms are used in this discussion discussed later.

the seller. of the tax on diesel fuel and kerosene. Other If the tax is paid on the diesel fuel or ker-

• The date the seller is notified the gasohol terms used in this discussion are defined under osene in more than one event, a refund may be

blender’s registration has been revoked or Gasoline. allowed for the “second” tax paid. See Refunds

suspended. of Second Tax, earlier.

Diesel fuel. The term diesel fuel means any The buyer must provide a new certificate if any Removal from terminal. All removals of un- liquid that, without further processing or blend- information on a certificate has changed. dyed diesel fuel or undyed kerosene at a termi- ing, is suitable for use as a fuel in a diesel-pow- nal rack are taxable. The position holder for that ered highway vehicle or train. Diesel fuel does Tax on gasohol. The tax on the removal or fuel is liable for the tax. not include gasoline, kerosene, excluded liquid, entry of gasohol depends on the type of gasohol. No. 5 and No. 6 fuel oils covered by ASTM Terminal operator’s liability. The terminal The rates for gasohol containing ethanol are specification D 396, or F-76 (Fuel Naval Distil- operator is jointly and severally liable for the tax shown on Form 720. The rates for gasohol con- late) covered by military specification if the terminal operator provides any person with taining methanol are shown in the instructions MIL-F-16884. any bill of lading, shipping paper, or similar doc- for Form 720. An excluded liquid is either of the following. ument indicating that undyed diesel fuel or undyed kerosene is dyed (discussed later). Later separation. If a person separates gaso- 1) A liquid that contains less than 4% normal The terminal operator is jointly and severally line from gasohol on which a reduced tax rate paraffins. liable for the tax if the position holder is a person was imposed, that person is treated as the re- other than the terminal operator and is not a 2) A liquid with all the following properties. finer of the gasoline. Tax is imposed on the registrant. However, a terminal operator will not removal or sale of the gasoline. This tax rate is a) Distillation range of 125 degrees Fahr- be liable for the tax in this situation if, at the time the difference between the regular tax rate for enheit or less. of the removal, the following conditions are met. gasoline and the tax rate imposed on the prior

removal or entry of the gasohol. The person that b) Sulfur content of 10 ppm or less. • The terminal operator is a registrant.

Page 12
• The terminal operator has an unexpired sel fuel or blended kerosene by the blender is 1) No tax was previously imposed (as dis- notification certificate (discussed under taxable. See Blended taxable fuel in Definitions

Gasoline cussed earlier) on any of the following ) from the position holder. under Gasoline, earlier.

events. The blender is liable for the tax. The tax is • The terminal operator has no reason to figured on the number of gallons not previously believe any information on the certificate is a) The removal from the refinery. subject to the tax. false. b) The entry into the United States.

Additional persons liable. When the person c) The removal from a terminal by an un- Removal from refinery. The removal of un- liable for the tax willfully fails to pay the tax, joint registered position holder. dyed diesel fuel or undyed kerosene from a and several liability for the tax is imposed on:

refinery is taxable if the removal meets either of 2) Upon removal from the pipeline or vessel, • Any officer, employee, or agent of the per- the following conditions. the undyed diesel fuel or undyed kerosene son who is under a duty to ensure the • It is made by bulk transfer and the refiner is not received at an approved terminal or payment of the tax and who willfully fails to or owner of the fuel immediately before refinery (or at another pipeline or vessel). perform that duty, or the removal is not a registrant. The owner of the undyed diesel fuel or un- • Anyone who willfully causes the person to • It is made at the refinery rack. dyed kerosene when it is removed from the fail to pay the tax.

pipeline or vessel is liable for the tax. However, The refiner is liable for the tax.

an owner meeting all the following conditions at Exception. The tax does not apply to a re- Exemptions the time of the removal will not be liable for the

moval of undyed diesel fuel or undyed kerosene tax. The excise tax on diesel fuel or kerosene is not at the refinery rack if all the following conditions imposed if the requirements related to the fol- are met. • The owner is a registrant. lowing exemptions are met. • The owner has an unexpired notification 1) The undyed diesel fuel or undyed ker- certificate (discussed under Gasoline) • Sale or use in Alaska. osene is removed from an approved refin- from the operator of the terminal or refin- ery not served by pipeline (other than for • Aviation-grade kerosene used in an air- ery where the undyed diesel fuel or un- receiving crude oil) or vessel. craft.

dyed kerosene is received. 2) The undyed diesel fuel or undyed ker- • Kerosene used for feedstock purposes. • The owner has no reason to believe any osene is received at a facility operated by See Dyed Diesel Fuel and Dyed Kerosene, dis- information on the certificate is false. a registrant and located within the bulk cussed later, for information on the exemption transfer/terminal system. The operator of the facility where the undyed for that fuel.

diesel fuel or undyed kerosene is received is 3) The removal from the refinery is by: liable for the tax if the owner meets these condi- Sale or use in Alaska. The excise tax is not

a) Railcar and the same person operates tions. The operator is jointly and severally liable imposed on the removal, entry, or sale of diesel the refinery and the facility at which the if the owner does not meet these conditions. fuel or kerosene in Alaska for ultimate sale or

undyed diesel fuel or undyed kerosene use in an exempt area of Alaska. The removal or is received, or Sales to unregistered person. The sale of entry of any diesel fuel or kerosene is not taxa- undyed diesel fuel or undyed kerosene located b) For undyed diesel fuel only, a trailer or ble if all the following requirements are satisfied. within the bulk transfer/terminal system to a per- semi-trailer used exclusively to trans- son that is not a registrant is taxable if tax was 1) The person otherwise liable for the tax (po- port the diesel fuel from a refinery (de- not previously imposed under any of the events sition holder, refiner, or enterer): scribed in (1)) to a facility (described in discussed earlier. (2)) less than 20 miles from the refin- a) Is a registrant, The seller is liable for the tax. However, a ery. seller meeting all the following conditions at the b) Can show satisfactory evidence of the

time of the sale will not be liable for the tax. nontaxable nature of the transaction,

Entry into the United States. The entry of and • The seller is a registrant. undyed diesel fuel or undyed kerosene into the c) Has no reason to believe the evidence United States is taxable if the entry meets either • The seller has an unexpired notification is false. of the following conditions. certificate (discussed under Gasoline)

from the buyer. • It is made by bulk transfer and the enterer 2) In the case of a removal from a terminal,

is not a registrant. • The seller has no reason to believe any the terminal is an approved terminal.

information on the certificate is false. • It is not made by bulk transfer. 3) The owner of the fuel immediately after the

The buyer of the undyed diesel fuel or undyed removal or entry holds the fuel for its own The enterer is liable for the tax. kerosene is liable for the tax if the seller meets use in a nontaxable use (discussed later)

these conditions. The buyer is jointly and sever- or is a qualified dealer. Removal from a terminal by unregistered po- ally liable if the seller does not meet these condi- sition holder. The removal by bulk transfer of A qualified dealer is any person that holds a tions. undyed diesel fuel or undyed kerosene from a qualified dealer license from the state of Alaska

terminal is taxable if the position holder for that Exception. The tax does not apply to a sale or has been registered by the IRS as a qualified

fuel is not a registrant. The position holder is if all of the following apply. retailer. Satisfactory evidence may include

liable for the tax. The terminal operator is jointly copies of qualified dealer licenses or exemption

and severally liable for the tax if the position • The buyer’s principal place of business is certificates obtained for state tax purposes.

holder is a person other than the terminal opera- not in the United States.

Later sales. The excise tax applies to diesel tor. However, see Terminal operator’s liability • The sale occurs as the fuel is delivered fuel or kerosene sold by a qualified dealer after under Removal from terminal, earlier, for an into a transport vessel with a capacity of at the removal or entry. The tax is imposed at the exception. least 20,000 barrels of fuel. time of the sale and the qualified dealer is liable

Bulk transfers not received at approved ter- for the tax. However, the sale is not taxable if all • The seller is a registrant and the exporter

minal or refinery. The removal by bulk trans- the following requirements are met. of record.

fer of undyed diesel fuel or undyed kerosene • The fuel was exported. • The fuel is sold in an exempt area of from a terminal or refinery or the entry of undyed Alaska. diesel fuel or undyed kerosene by bulk transfer

into the United States is taxable if the following Removal or sale of blended diesel fuel or • The buyer buys the fuel for its own use in

conditions apply. kerosene. The removal or sale of blended die- a nontaxable use or is a qualified dealer.

Page 13
• The seller can show satisfactory evidence an aircraft or sells the kerosene without first Credits or Refunds

of the nontaxable nature of the transaction obtaining a certificate from its buyer.

and has no reason to believe the evidence A credit or refund is allowable to the ultimate

is false. purchaser or registered ultimate vendor for the Kerosene used for feedstock purposes. tax on undyed diesel fuel or undyed kerosene The excise tax on kerosene is not imposed on used for a nontaxable use. See Publication 378. Aviation-grade kerosene. The excise tax on the removal or entry of kerosene if all the followkerosene is not imposed on the removal from ing conditions are met. the terminal or refinery rack or non-bulk entry of Dyed Diesel Fuel aviation-grade kerosene if all the following con- 1) The person otherwise liable for tax (posi- and Dyed Kerosene ditions are met. tion holder, refiner, or enterer) is a regisThe excise tax is not imposed on the removal, trant.

1) The person otherwise liable for tax (posi- entry, or sale of diesel fuel or kerosene if all the 2) In the case of a removal from a terminal, tion holder, refiner, or enterer) is a regis- following tests are met. the terminal is an approved terminal. trant. • The person otherwise liable for tax (for 2) In the case of a removal from a terminal, 3) Either: example, the position holder) is a regis- the terminal is an approved terminal. trant. a) The person otherwise liable for tax

3) Either: uses the kerosene for a feedstock pur- • In the case of a removal from a terminal,

pose, or the terminal is an approved terminal. a) The person otherwise liable for tax delivers the kerosene into the fuel supply b) The kerosene is sold for use by the • The diesel fuel or kerosene satisfies the

tank of an aircraft and this delivery is buyer for a feedstock purpose and, at dyeing requirements (described next).

not in connection with a sale, or the time of the sale, the person otherwise liable for tax has an unexpired cer- b) The kerosene is sold for use as a fuel Dyeing requirements. Diesel fuel or ker- tificate (described later) from the buyer in an aircraft, and, at the time of the osene satisfies the dyeing requirements only if it and has no reason to believe any infor- sale, the person otherwise liable for tax satisfies one of the following requirements. mation on the certificate is false. has an unexpired certificate (described • It contains the dye Solvent Red 164 (and later) from the buyer and has no reason Kerosene is used for a feedstock purpose no other dye) at a concentration spectrally to believe any information on the certifi- when it is used for nonfuel purposes in the man- equivalent to at least 3.9 pounds of the cate is false.

ufacture or production of any substance other solid dye standard Solvent Red 26 per

than gasoline, diesel fuel, or special fuels. For thousand barrels of fuel.

Certain later sales. The excise tax applies example, kerosene is used for a feedstock pur- • It contains any dye of a type and in a to kerosene sold for use as a fuel in an aircraft pose when it is used as an ingredient in the concentration that has been approved by (item (3)(b)) if there is a later disqualifying sale. production of paint, but is not used for a feed- the Commissioner. The tax is imposed at the time of the first later stock purpose when it is used to power machin- disqualifying sale. The seller in that sale is liable ery at a factory where paint is produced. A for the tax. However, a later sale is not a disqual- Notice required. A legible and conspicuous feedstock user is a person that uses kerosene ifying sale if either of the following apply to that notice stating either: DYED DIESEL FUEL, for a feedstock purpose. A registered feed- sale. NONTAXABLE USE ONLY, PENALTY FOR stock user is a person that has been registered TAXABLE USE or DYED KEROSENE, • The seller has, at the time of the later sale, by the IRS as a feedstock user. See Registration NONTAXABLE USE ONLY, PENALTY FOR an unexpired certificate from the buyer Requirements, earlier. TAXABLE USE must be:

and has no reason to believe any informa- Later sales. The excise tax applies to ker- tion on the certificate is false. osene sold for use by the buyer for a feedstock 1) Provided by the terminal operator to any

• The seller delivers the kerosene into the person that receives dyed diesel fuel or purpose (item (3)(b)) if the buyer in that sale dyed kerosene at a terminal rack of that fuel supply tank of an aircraft. later sells the kerosene. The tax is imposed at operator, and the time of the later sale and that seller is liable

Certificate. The certificate from the buyer for the tax. 2) Posted by a seller on any retail pump or certifies the kerosene will be used by the buyer other delivery facility where it sells dyed Certificate. The certificate from the buyer as a fuel in an aircraft or resold for that use. The diesel fuel or dyed kerosene for use by its certifies the buyer is a registered feedstock user certificate may be included as part of any busi- buyer. and the kerosene will be used by the buyer for a ness records normally used for a sale. A model feedstock purpose. The certificate may be in- The notice under item (1) must be provided certificate is shown in Appendix C as Model

Certificate F cluded as part of any business records normally by the time of the removal and must appear on . Your certificate must contain all

used for a sale. A model certificate is shown in all shipping papers, bills of lading, and similar information necessary to complete the model.

Appendix C as Model Certificate G. Your certifi- documents accompanying the removal of the A certificate expires on the earliest of the cate must contain all information necessary to fuel. following dates. complete the model. Any seller that fails to post the required no-

• The date 1 year after the effective date tice under item (2) is presumed to know that the A certificate expires on the earliest of the fuel will be used for a taxable use (a use other (not earlier than the date signed) of the following dates. certificate. than a nontaxable use listed later). That seller is

• The date 1 year after the effective date subject to the penalty described next. • The date the seller is provided a new cer- (not earlier than the date signed) of the tificate or notice that the current certificate Penalty. A penalty is imposed on a person if certificate. is invalid. any of the following situations apply. • The date the seller is provided a new cer- • The date the seller is notified the buyer’s

right to provide a certificate has been with- tificate or notice that the current certificate 1) Any dyed fuel is sold or held for sale by

drawn. is invalid. the person for a use the person knows or

has reason to know is not a nontaxable • The date the seller is notified the buyer’s The buyer must provide a new certificate if use of the fuel. registration has been revoked or sus- any information on a certificate has changed. pended. 2) Any dyed fuel is held for use or used by

The IRS may withdraw the buyer’s right to the person for a use other than a nontaxprovide a certificate if the buyer uses the The buyer must provide a new certificate if able use and the person knew, or had reaaviation-grade kerosene other than as a fuel in son to know, that the fuel was dyed. any information on a certificate has changed.

Page 14
3) The person willfully alters, or attempts to ally liable for the tax if the seller knows or has farms, orchards, plantations, ranches, nuralter, the strength or composition of any reason to know that the fuel will be used for series, ranges, and feedyards for fattening catdye in dyed fuel. other than a nontaxable use. Generally, a seller tle. It also includes structures such as

of diesel fuel or kerosene is not liable for tax on greenhouses used primarily for raising agricul- The penalty is the greater of $1,000 or $10 fuel delivered into the fuel supply tank of a bus or tural or horticultural commodities. A fish farm is per gallon of the dyed diesel fuel or dyed ker- train. However, the person that delivers the fuel an area where fish are grown or raised—not osene involved. After the first violation, the into the fuel supply tank of a train, rather than the merely caught or harvested. $1,000 portion of the penalty increases depend- train operator, is liable for the tax if, at the time of ing on the number of violations. Farming purposes. Diesel fuel or kerosene delivery, the deliverer and the train operator are This penalty is in addition to any tax imposed is used on a farm for farming purposes if it is both registered by the IRS as train operators and on the fuel. bought by the owner, tenant, or operator of the a written agreement between them requires the If the penalty is imposed, each officer, em- farm and used for any of the following purposes. deliverer to pay the tax. ployee, or agent of a business entity who willfully

participated in any act giving rise to the penalty Exemptions from the back-up tax. The 1) To cultivate the soil, or to raise or harvest

is jointly and severally liable with that entity for back-up tax does not apply to a delivery of diesel any agricultural or horticultural commodity.

the penalty. fuel or kerosene for uses (1) through (8) listed 2) To raise, shear, feed, care for, train or If you are liable for the penalty, you may also under Nontaxable Uses, next. manage livestock, bees, poultry, fur-bear- be liable for the back-up tax, discussed later. In addition, since the back-up tax is imposed ing animals, or wildlife. However, the penalty applies only to dyed diesel only on the delivery into the fuel supply tank of a

3) To operate, manage, conserve, improve, fuel and dyed kerosene, while the back-up tax diesel-powered vehicle, bus, or train, the tax

may apply to other fuels. The penalty may apply does not apply to diesel fuel or kerosene used or maintain your farm and its tools and

equipment. if the fuel is held for sale or use for a taxable use as heating oil or in stationary engines.

while the back-up tax does not apply unless the 4) To handle, dry, pack, grade, or store any fuel is delivered into a fuel supply tank. raw agricultural or horticultural commodity Nontaxable Uses Exception to penalty. The penalty under (as provided below).

item (3) will not apply in any of the following The following are nontaxable uses of diesel fuel 5) To plant, cultivate, care for, or cut trees or situations. and kerosene. to prepare (other than sawing logs into

• Diesel fuel or kerosene meeting the dye- lumber, chipping, or other milling) trees for 1) Use on a farm for farming purposes (dis- ing requirements (described earlier) is market, but only if the planting, etc., is inci- cussed later). blended with any undyed liquid and the dental to your farming operations (as proresulting product meets the dyeing re- 2) Exclusive use by a state (defined earlier vided below).

quirements. under Gasoline). Diesel fuel or kerosene is treated as used on

• Diesel fuel or kerosene meeting the dye- 3) Use in a vehicle owned by an aircraft mu- a farm for farming purposes if it is bought by a

ing requirements (described earlier) is seum (as discussed later under Aviation person other than the owner, tenant, or operator

blended with any other liquid (other than Fuel). of the farm and used on the farm for any of the

diesel fuel or kerosene) that contains the purposes in item (1) or (2). 4) Use in a school bus (discussed later). type and amount of dye required to meet Item (4) applies only if more than one-half of

the dyeing requirements. 5) Use in a qualified local bus (discussed the commodity so treated during the tax year later). was produced on the farm. Commodity refers to • The alteration or attempted alteration oc- a single raw product. For example, apples would curs in an exempt area of Alaska. See 6) Use in a highway vehicle that: be one commodity and peaches another. The Sale or use in Alaska, earlier. a) Is not registered (and is not required to more-than-one-half test applies separately to • Diesel fuel or kerosene meeting the dye- be registered) for highway use under each commodity.

ing requirements (described earlier) is the laws of any state or foreign country, Item (5) applies if the operations are minor in blended with diesel fuel or kerosene not and nature when compared to the total farming oper- meeting the dyeing requirements and the ations. b) Is used in the operator’s trade or busi- blending occurs as part of a nontaxable ness or for the production of income. If undyed diesel fuel or undyed kerosene is use (other than export), discussed later. used on a farm for farming purposes, the fuel is

7) Exclusive use by a nonprofit educational not considered used for any other nontaxable

Back-Up Tax organization. use.

8) Use in a highway vehicle owned by the Not used for farming purposes. Diesel Tax is imposed on the delivery of any of the United States that is not used on a high- fuel or kerosene is not used for farming pur- following into the fuel supply tank of a

way. poses if it is used in any of the following ways. diesel-powered highway vehicle, train, or bus.

• Any dyed diesel fuel or dyed kerosene for 9) Exported. • Off the farm, such as on the highway or in

other than a nontaxable use. noncommercial aviation, even if the fuel is 10) Use other than as a fuel in a propulsion used in transporting livestock, feed, crops, engine of a diesel-powered highway vehi- • Any diesel fuel or kerosene on which a or equipment. cle (such as home heating oil). credit or refund (for fuel used for a nontaxable purpose) has been allowed. • For personal use, such as mowing the 11) Use as a fuel in a propulsion engine of a lawn. diesel-powered train (subject to back-up • Any liquid other than gasoline, diesel fuel,

or kerosene. tax, discussed earlier). • In processing, packaging, freezing, or canning operations. 12) Use in an intercity or local bus meeting Generally, this back-up tax is imposed at a certain qualifications, discussed later (sub- • In processing crude gum into gum spirits rate of 24.4 cents a gallon. However, the rate for ject to back-up tax, discussed earlier). of turpentine or gum resin or in processing fuel for a diesel-powered train is 4.4 cents a maple sap into maple syrup or maple gallon. The rate for delivery into the fuel supply Used on a farm for farming purposes. Die- sugar. tank of certain intercity or local buses is 7.4 sel fuel or kerosene is used on a farm for farming cents a gallon. purposes only if used in carrying on a trade or Buses. Diesel fuel or kerosene used in a business of farming, on a farm in the United Liability for tax. Generally, the operator of the school bus or in a qualified local bus is used for a States, and for farming purposes. vehicle, bus, or train into which the fuel is deliv- nontaxable use and is not subject to excise tax.

ered is liable for the tax. In addition, the seller of Farm. A farm includes livestock, dairy, fish, However, fuel used in an intercity or local bus is

the diesel fuel or kerosene is jointly and sever- poultry, fruit, fur-bearing animals, and truck subject to a reduced rate of tax.

Page 15
School bus. A school bus is a bus engaged Additional persons liable. When the person 4) The first producer and any person that

in the transportation of students and employees liable for the tax willfully fails to pay the tax, joint owns the fuel after its sale by the first proof schools. A school is an educational organiza- and several liability for the tax is imposed on: ducer and before its purchase by the section with a regular faculty and curriculum and a ond producer (a subsequent seller) have • Any officer, employee, or agent of the per- regularly enrolled body of students who attend met the reporting requirements, discussed son who is under a duty to ensure the next. the place where the educational activities occur. payment of the tax and who willfully fails to

Qualified local bus. A qualified local bus is perform that duty, or Reporting requirements. Generally, the first a bus meeting all the following tests. • Anyone who willfully causes the person to producer must file a report (the first producer’s fail to pay the tax. report). A model first producer’s report is shown • It is engaged in furnishing (for compensa- in Appendix C as Model Certificate H. The report tion) intracity passenger land transportaProducers. Producers include refiners, blend- must contain all information needed to complete tion available to the general public. the model. ers, and wholesale distributors of aviation fuel • It operates along scheduled, regular and dealers selling aviation fuel exclusively to Providing information. The first producer routes. producers of aviation fuel if these persons have must give a copy of the report to the person to

• been registered by the IRS. The term also in- It has a seating capacity of at least 20 whom the first producer sells the aviation fuel.

adults (excluding the driver). Each subsequent seller must give to its cludes the actual producer of aviation fuel. See

Registration for Certain Activities, earlier. buyer a statement that provides all the informa- • It is under contract with (or receiving more Any person buying aviation fuel at a reduced tion necessary to complete the “Statement of than a nominal subsidy from) any state or rate is the producer of that fuel. Subsequent Seller (Aviation Fuel)” shown in Ap- local government to furnish that transpor- Wholesale distributors. To qualify as a pendix C as Model Certificate I. The statement

tation. wholesale distributor, you must hold yourself out can be at the bottom or on the back of the copy

Intracity passenger land transportation means of the first producer’s report (or in an attached to the public as being engaged in the trade or document). land transportation of passengers between business of either of the following. If the first producer’s report relates to avia- points located within the same metropolitan 1) Selling aviation fuel to producers or retail- tion fuel divided among more than one buyer, area. It includes transportation along routes that ers or to users who purchase in bulk quan- copies of that report should be made when the cross state, city, or county boundaries if the tities (25 gallons or more) and accept fuel is divided and a copy given to each buyer. routes remain within the metropolitan area. delivery into bulk storage tanks and one of

A bus is under contract with a state or local Refund claim. You must make your claim for the following applies. refund on Form 8849. Complete Schedule 6 government only if the contract imposes a bona a) At least 30% of your sales of aviation (Form 8849) and attach it to Form 8849. Do not fide obligation on the bus operator to furnish the fuel during the preceding 12-month pe- include this claim with a claim under another tax transportation. A subsidy is more than nominal if riod are to these buyers, or provision. See the form instructions for how and it is reasonably expected to exceed an amount where to file the claim. You must attach all the equal to 3 cents multiplied by the number of b) At least 50% of the volume of aviation following information to Schedule 6. gallons of fuel used in buses on subsidized fuel is sold to these buyers and at least

routes. 500 of your sales during the preceding • Volume and type of aviation fuel.

A company that operates its buses along 12-month period are made to these • Date on which you acquired the aviation buyers, or subsidized and unsubsidized intracity routes fuel included in the claim.

may consider its buses qualified local buses 2) Selling aviation fuel for nontaxable uses • Amount of tax on the fuel the first producer only when the buses are used on the subsidized (such as use on a farm for farming pur- paid to the government and a statement intracity routes. poses) and sell at least 70% of your vol- that you have not included this tax in the

Intercity or local bus. A reduced tax of 7.4 ume of aviation fuel during the preceding sales price of the fuel and have not colcents a gallon is imposed on dyed fuel delivered 12-month period to these users. lected it from any buyer.

into the fuel supply tank of an intercity or local • A copy of the first producer’s report that bus. (See Back-Up Tax, earlier.) This is a bus Bulk storage tanks. A bulk storage tank is relates to the aviation fuel covered by the engaged in furnishing (for compensation) pas- a container that holds at least 50 gallons and is claim (discussed earlier). senger land transportation available to the gen- not the fuel supply tank of any engine mounted

eral public. The bus must be engaged in one of on, or attached to, an aircraft. • A copy of any statement of subsequent

seller that you received with respect to the the following activities. aviation fuel.

• Scheduled transportation along regular Refunds of Prior Tax

routes regardless of the size of the bus.

A registered aviation fuel producer holding avia- Aviation Fuel Exemptions • Nonscheduled transportation if the seating tion fuel on which a prior tax was paid (and not capacity of the bus is at least 20 adults Registered producers may sell aviation fuel tax credited or refunded), can get a refund (without (not including the driver). free or at a tax-reduced rate for sales to the interest) of the tax. Generally, this applies when persons or for the nontaxable uses described A bus is available to the general public if the bus a producer buys taxed fuel from a retailer. No below, but only if certain prescribed conditions credit against any tax is allowed. is available for hire to more than a limited num- are met. No seller of aviation fuel is eligible to

ber of persons, groups, or organizations. Conditions to allowance of refund. A claim claim a credit or refund for aviation fuel used by

for refund of the tax is allowed only if all the the buyer for a nontaxable use.

Aviation Fuel following conditions are met. Sales to other producers. Registered proAviation fuel is any liquid (other than gasoline or 1) A tax on the aviation fuel was paid to the ducers may sell aviation fuel tax free to other

government by an importer or producer registered producers of aviation fuel. The buyer diesel fuel) that is suitable for use as a fuel in an must give the seller a written statement contain- aircraft. (the first producer) and the tax has not

been credited or refunded. ing the buyer’s registration number.

2) After the tax was imposed, the fuel was Sales for nontaxable uses. A registered pro- Taxable Event acquired by a registered aviation fuel pro- ducer may sell aviation fuel tax free for any of

ducer (the second producer). the following uses. Tax of 21.9 cents per gallon is imposed on the

sale or use of aviation fuel by its producer or 3) The second producer has filed a timely • Use other than as a fuel in the propulsion

importer. The producer or importer is liable for claim for refund that contains the informa- engine of an aircraft (such as use as heatthe tax. tion required (see Refund claim, later). ing oil).

Page 16
• Use in military aircraft owned by the 3) Providing emergency medical transporta- gas formed in waste disposal sites. But it does

United States or a foreign country. tion. not include alcohol produced from petroleum,

natural gas, coal (including peat), or any deriva- • Use in a domestic air carrier engaged in For items (1) and (2), this applies if the helicop- tive or product of these items. foreign trade or trade between the United ter does not take off from, or land at, a facility Treat the separation of special motor fuel States and any of its possessions. eligible for assistance under the Airport and Air- from an alcohol mixture on which tax has been way Development Act of 1970, or otherwise use • Use in a foreign air carrier engaged in imposed at a rate for special motor fuels/alcohol services provided pursuant to section 44509 or foreign trade or trade between the United mixture as a sale of special motor fuel. The tax 44913(b) or subchapter I of chapter 471 of title States and any of its possessions, but only on the sale is imposed on the person who makes 49, United States Code, during such use. For if the country in which the foreign carrier is the separation. Reduce the tax on special motor item (1), each flight segment is treated as a registered allows U.S. carriers reciprocal fuel by the tax already paid on the alcohol mix- separate flight. privileges. For a list of these countries, ture.

see Revenue Ruling 74–346 in Cumula- Fixed-wing air ambulance uses. Aviation Qualified methanol and ethanol fuels. A tive Bulletin 1974–2, Revenue Ruling fuel may be sold tax free for use in a fixed-wing special rate applies to these fuels. These fuels 75–109 in Cumulative Bulletin 1975–1, aircraft providing emergency medical transpor- consist of at least 85% methanol, ethanol, or and Revenue Rulings 75–398 and tation. The exemption applies if the aircraft is other alcohol produced from a substance other 75–526 in Cumulative Bulletin 1975–2. equipped for, and exclusively dedicated on that than petroleum or natural gas. flight to, acute care emergency medical ser- • Use on a farm for farming purposes, as vices. Partially exempt methanol and ethanol fuels. discussed earlier under Diesel Fuel and A special rate applies to these fuels. These fuels Kerosene. Sales to commercial airlines. Registered consist of at least 85% methanol, ethanol, or producers may sell aviation fuel at the tax-re- • Use in an aircraft or vehicle owned by an other alcohol produced from natural gas. duced rate of 4.4 cents a gallon to a registered aircraft museum, discussed next. commercial aircraft operator for use as a fuel in Motor vehicle. For the purpose of applying • Certain helicopter and fixed-wing air am- commercial aviation (other than foreign trade). the tax on the delivery of special motor fuels, bulance uses, discussed later. See Registration for Certain Activities, earlier. motor vehicles include all types of vehicles, Commercial aviation is any use of an aircraft • Exclusive use by a state, as discussed whether or not registered (or required to be in the business of transporting persons or prop- earlier under Gasoline. registered) for highway use, that have both the erty by air for pay. However, commercial avia- following characteristics. • Exclusive use by the United Nations. tion does not include any of the following uses.

• They are propelled by a motor. • Exclusive use by a nonprofit educational • Any use of an aircraft that has a maximum

organization. certificated takeoff weight of 6,000 pounds • They are designed for carrying or towing

or less, unless the aircraft is operated on loads from one place to another, regard- • Export. an established line. For more information, less of the type of material or load carried

see Small aircraft under Special rules on or towed.

A buyer for these uses gives its supplier a Transportation Taxes, earlier. signed exemption certificate stating the Motor vehicles do not include any vehicle that

buyer • Any use exclusively for the purpose of moves exclusively on rails, or any of the follow- ’s name, address, employer identification

number, registration number (if applicable), and skydiving. ing items.

intended use. A buyer may give a separate ex- • Any use of an aircraft owned or leased by Farm tractors Trench diggers emption certificate for each purchase or may a member of an affiliated group and un- Power shovels Bulldozers give one certificate to cover all purchases from a available for hire by nonmembers. For Road graders Road rollers particular seller for up to 1 year. more information, see Aircraft used by af- Similar equipment that does

filiated corporations under Special Rules not carry or tow a load Aircraft museums. Aviation fuel may be sold on Transportation Taxes, earlier.

tax free for use in an aircraft or vehicle (such as

a ground servicing vehicle for aircraft) owned by To buy at a tax-reduced rate, the airline gives Taxable Event

the seller a signed exemption certificate stat- an aircraft museum and used exclusively for ing the buyer’s name, address, employer identi- Tax is imposed on the delivery of special motor purposes described in item (3) of the following fication number, registration number, and fuels into the fuel supply tank of the propulsion definition.

intended use of the fuel. An airline may give a engine of a motor vehicle or motorboat. How- An aircraft museum is an organization with separate exemption certificate for each ever, there is no tax on the delivery if tax was all the following characteristics. purchase or may give one certificate to cover all imposed under the bulk sales rule, discussed

purchases from a particular seller for up to 1 later, or the delivery is for a nontaxable use, 1) It is exempt from income tax as an organi- year. listed later. If the delivery is in connection with a zation described in section 501(c)(3) of the sale, the seller is liable for the tax. If it is not in Internal Revenue Code. Credits or Refunds connection with a sale, the operator of the vehi2) It is operated as a museum under a state cle or boat is liable for the tax.

(or District of Columbia) charter. A credit or refund is allowable to the ultimate Liquefied petroleum gas (LPG). Tax is im- purchaser for taxed aviation fuel used for a non- 3) It is operated exclusively for acquiring, ex- posed on the delivery of LPG into the fuel supply taxable use. See Publication 378. hibiting, and caring for aircraft of the type tank of certain intercity and local buses and

used for combat or transport in World War qualified local and school buses and must be

II. Special Motor Fuels reported on Form 720 even though a credit or

refund may be allowable for LPG used in those Special motor fuel means any liquid fuel includ- buses. Certain helicopter uses. Aviation fuel may be ing liquefied petroleum gas, liquefied natural

sold tax free for use in a helicopter used for one gas, benzol, benzene, and naptha. However, Bulk sales. Tax is imposed on the sale of

of the following purposes. gasoline, diesel fuel, kerosene, gas oil, and fuel special motor fuels that is not in connection with

oil do not qualify as special motor fuel. delivery into the fuel supply tank of the propul1) Transporting individuals, equipment, or sion engine of a motor vehicle or motorboat if the Special motor fuels/alcohol mixture. This is supplies in the exploration for, or the de- buyer furnishes a written statement to the seller a blend of alcohol with special motor fuels. The velopment or removal of, hard minerals, stating the entire quantity of the fuel covered by blend must be at least 10% alcohol that is 190 oil, or gas. the sale is for other than a nontaxable use, listed proof or more. Figure the proof of any alcohol later. The seller is liable for this tax. 2) Planting, cultivating, cutting, transporting, without regard to any added denaturants.

or caring for trees (including logging oper- The alcohol includes methanol or ethanol. Tax rate. The special motor fuels tax rate deations). This includes methanol produced from methane pends on the type of fuel involved. The tax rate

Page 17
for LPG is shown on Form 720 (IRS No. 61). The Tax rate. The rate is 48.54 cents per thousand waterways. The tax generally applies to all types

tax rates for all other special motor fuels are cubic feet (determined at standard temperature of vessels, including ships, barges, and tugshown in the Form 720 instructions for other and pressure). boats.

fuels (IRS No. 79). Motor vehicle. For this purpose, motor vehi- Inland and intracoastal waterways. Inland

and intracoastal waterways on which fuel con- cle has the same meaning as given under Spe- sumption is subject to tax are specified in sec- Nontaxable Uses cial Motor Fuels, earlier.

tion 206 of the Inland Waterways Revenue Act

The following are nontaxable uses of special of 1978, as amended. See section

motor fuels. Nontaxable Uses 48.4042–1(g) of the regulations for a list of

these waterways.

• In an off-highway business use (discussed The following are nontaxable uses of CNG. Commercial waterway transportation. later). • In an off-highway business use, as dis- Commercial waterway transportation is the use • Use in a boat engaged in commercial fish- cussed earlier under Special Motor Fuels. of a vessel on inland or intracoastal waterways

ing. for either of the following purposes. • Use in a boat engaged in commercial fish-

• Use on a farm for farming purposes, as ing. • The use is in the business of transporting

discussed earlier under Diesel Fuel and property for compensation or hire. • Use in a school bus or qualified local bus, Kerosene. as discussed earlier under Diesel Fuel and • The use is in transporting property in the

• By a state for its exclusive use, as dis- business of the owner, lessee, or operator Kerosene.

cussed earlier under Gasoline. of the vessel, whether or not a fee is • Use on a farm for farming purposes, as charged. • By nonprofit educational organizations for discussed earlier under Diesel Fuel and

Kerosene. their exclusive use, as discussed earlier The operation of all vessels meeting either of under Communications Tax. • By a state for its exclusive use, as dis- these requirements is commercial waterway

cussed earlier under Gasoline. • By the United Nations for its official use. transportation regardless of whether the vessel

is actually transporting property on a particular • By nonprofit educational organizations for • Use in a vehicle owned by an aircraft mu- voyage. (However, see Exemptions, later.) The their exclusive use, as discussed earlier seum as discussed earlier under Aviation tax is imposed on fuel consumed in vessels under Communications Tax. Fuel. while engaged in any of the following activities. • By the United Nations for its official use. • Use in any boat operated by the United • Moving without cargo. States for its exclusive use or any vessel • Use in a vehicle owned by an aircraft mu- • Awaiting passage through locks. of war of any foreign nation. seum, as discussed earlier under Aviation

Fuel. • Moving to or from a repair facility.

Off-highway business use. This is use in a • Use in any boat operated by the United • Dislodging vessels grounded on a sand

highway vehicle that is not registered (or re- States for its exclusive use or any vessel bar.

quired to be registered) for highway use under of war of any foreign nation. • Fleeting barges into a single tow. the laws of any state or foreign country and is

used in the operator’s trade or business or for There is no tax on a delivery in connection • Maneuvering around loading and unloadthe production of income. It also includes use in with a sale of CNG only if, by the time of sale, the ing docks.

seller meets both the following conditions. a vehicle owned by the United States that is not

used on a highway. • Has an unexpired certificate from the Liquid fuel. Liquid fuel includes diesel fuel,

buyer. Bunker C residual fuel oil, special motor fuel,

and gasoline. The tax is imposed on liquid fuel • Has no reason to believe any information actually consumed by a vessel’s propulsion en- Compressed Natural Gas in the certificate is false. gine and not on the unconsumed fuel in a

vessel’s tank. Tax applies to compressed natural gas (CNG) Certificate. The certificate from the buyer cer- under the circumstances described next. Dual use of liquid fuels. The tax applies to all tifies the CNG will be used in a nontaxable use

taxable liquid used as a fuel in the propulsion of (listed earlier). The certificate may be included

as part of any business records normally used the vessel, regardless of whether the engine (or

Taxable Event other propulsion system) is used for another for a sale. A model certificate is shown in Appendix C purpose. The tax applies to all liquid fuel con- as Model Certificate J. Your certificate Tax is imposed on the delivery of CNG into the must contain all information necessary to com- sumed by the propulsion engine even if it oper- fuel supply tank of the propulsion engine of a plete the model. ates special equipment by means of a power motor vehicle or motorboat. However, there is A certificate expires on the earliest of the take-off or power transfer. For example, the fuel

no tax on the delivery if tax was imposed under used in the engine both to operate an alternator, following dates. the bulk sales rule discussed next, or the deliv- generator, or pumps and to propel the vessel is

ery is for a nontaxable use, listed later. If the • The date 1 year after the effective date taxable.

delivery is in connection with a sale, the seller is (which may be no earlier than the date The tax does not apply to fuel consumed in

signed) of the certificate. liable for the tax. If it is not in connection with a engines not used to propel the vessel.

sale, the operator of the boat or vehicle is liable If you draw liquid fuel from the same tank to • The date a new certificate is provided to for the tax. operate both a propulsion engine and a non- the seller.

propulsion engine, determine the fuel used in

Bulk sales. Tax is imposed on the sale of • The date the seller is notified the buyer’s the nonpropulsion engine and exclude that fuel right to provide a certificate has been with- CNG that is not in connection with delivery into from the tax. IRS will accept a reasonable estidrawn. mate of the fuel based on your operating experi- the fuel supply tank of the propulsion engine of a

motor vehicle or motorboat if the buyer furnishes ence, but you must keep records to support your

allocation. a written statement to the seller that the entire Fuels Used on Inland

quantity of the CNG covered by the sale is for Waterways Voyages crossing boundaries of the speciuse as a fuel in a motor vehicle or motorboat and fied waterways. The tax applies to fuel conthe seller has given the buyer a written acknowl- Tax applies to liquid fuel used in the propulsion sumed by a vessel crossing the boundaries of

edgement of receipt of the statement. The seller system of commercial transportation vessels the specified waterways only to the extent of fuel

of the CNG is liable for the tax. while traveling on certain inland and intracoastal consumed for propulsion while on those waterPage 18
ways. Generally, the operator may figure the used in the exercise of an essential tribal gov- Manufacturer. The term “manufacturer” infuel so used during a particular voyage by multi- ernment function. cludes a producer or importer. A manufacturer is

plying total fuel consumed in the propulsion en- any person who produces a taxable article from All operators of vessels used in com- gine by a fraction. The numerator of the fraction new or raw material, or from scrap, salvage, or mercial waterway transportation who is the time spent operating on the specified wa- junk material, by processing or changing the RECORDS acquire liquid fuel must keep adequate terways and the denominator is the total time form of an article or by combining or assembling records of all fuel used for taxable purposes. spent on the voyage. This calculation cannot be two or more articles. If you furnish the materials Operators who are seeking an exclusion from used where it is found to be unreasonable. and keep title to those materials and to the the tax must keep records that will support any finished article, you are considered the manu- exclusion claimed. Taxable event. Tax of 24.4 cents a gallon is facturer even though another person actually

imposed on liquid fuel used in the propulsion Your records should include all of the follow- manufactures the taxable article.

system of a vessel. ing information. A manufacturer who sells a taxable article in

The person who operates (or whose employ- knockdown condition is liable for the tax. The

ees operate) the vessel in which the fuel is person who buys these component parts and

consumed is liable for the tax. The tax is paid assembles a taxable article may also be liable

with Form 720. No tax deposits are required. • The acquisition date and quantity of fuel for tax as a further manufacturer depending on

delivered into storage tanks or the tanks the labor, material, and overhead required to

Exemptions. Certain types of commercial wa- on your vessel. assemble the completed article if the article is

terway transportation are excluded from the tax. assembled for business use. • The identification number or name of each

Fishing vessels. Fuel is not taxable when vessel using the fuel. Importer. An importer is a person who

used by a fishing vessel while traveling to a brings a taxable article into the United States, or • The departure time, departure point, route fishing site, while engaged in fishing, or while withdraws a taxable article from a customs traveled, destination, and arrival time for returning from the fishing site with its catch. A bonded warehouse for sale or use in the United each vessel. vessel is not transporting property in the busi- States.

ness of the owner, lessee, or operator by merely If you claim an exemption from the tax, include transporting fish or other aquatic animal life Sale. A sale is the transfer of the title to, or the in your records the following additional informa- caught on the voyage. substantial incidents of ownership in, an article tion as it pertains to you. However, the tax does apply to fuel used by to a buyer for consideration which may consist of

a commercial vessel along the specified water- • The draft of the vessel on each voyage. money, services, or other things.

ways while traveling to pick up aquatic animal • The type of vessel in which you used the Use considered sale. A manufacturer who life caught by another vessel and while trans- fuel. uses a taxable article is liable for the tax in the porting the catch of that other vessel. same manner as if it were sold. • The ultimate use of the cargo (for vessels Deep-draft ocean-going vessels. Fuel is

operated by state or local governments). Lease considered sale. The lease of an not taxable when used by a vessel designed article (including any renewal or extension of the primarily for use on the high seas if it has a draft lease) by the manufacturer is generally consid- of more than 12 feet on the voyage. For each Alcohol Sold as Fuel ered a taxable sale. However, for the gas guz- voyage, figure the draft when the vessel has its But Not Used as Fuel zler tax, only the first lease (excluding any greatest load of cargo and fuel. A voyage is a renewal or extension) of the automobile by the round trip. If a vessel has a draft of more than 12 If you sell or use alcohol (either mixed or manufacturer is considered a sale. feet on at least one way of the voyage, the straight) as a fuel, you may be eligible for an vessel satisfies the 12-foot draft requirement for Manufacturers taxes based on sales price. income tax credit. Use Form 6478, Credit for the entire voyage. Alcohol Used as Fuel, The manufacturers taxes imposed on the sale of to figure the credit. For

Passenger vessels. Fuel is not taxable more information about this credit, see Alcohol sport fishing equipment, electric outboard moFuel Credit tors, sonar devices, bows, and arrow compo- when used by vessels primarily for the transpor- in Publication 378.

nents are based on the sale price of the article. tation of persons. The tax does not apply to fuel If the credit was claimed, you are liable for an used in commercial passenger vessels while The taxes imposed on coal are based either on excise tax if you did any of the following. the sale price or the weight. transporting property in addition to transporting

passengers. Nor does it apply to ferryboats car- • Used the mixture or straight alcohol other The price for which an article is sold includes

rying passengers and their cars. the total consideration paid for the article, than as a fuel.

whether that consideration is in the form of Ocean-going barges. Fuel is not taxable • Separated the alcohol from a mixture. money, services, or other things. However, you when used in tugs to move LASH and SEABEE • Mixed the straight alcohol. include certain charges made when a taxable ocean-going barges released by their ocean-go- article is sold and you exclude others. To figure ing carriers solely to pick up or deliver interna- Report the tax on Form 720. The rate of tax the price on which you base the tax, use the tional cargoes. depends on the applicable rate used to figure following rules. However, it is taxable when any of the follow- the credit. No tax deposits are required. ing conditions apply. 1) Include both the following charges in the

price. • One or more of the barges in the tow is

not a LASH barge, SEABEE barge, or a) Any charge for coverings or containers other ocean-going barge carried aboard Manufacturers Taxes (regardless of their nature). an ocean-going vessel. b) Any charge incident to placing the arti- The following discussion of manufacturers taxes • One or more of the barges is not on an cle in a condition packed ready for ship- applies to the tax on the following items. international voyage. ment.

• Part of the cargo carried is not being • Sport fishing equipment.

transported internationally. 2) Exclude all the following amounts from the • Bows. price.

State or local governments. No tax is im- • Arrow components. a) The manufacturers excise tax, whether posed on the fuel used in a vessel operated by a • Coal. or not it is stated as a separate charge. state or local government in transporting property on official business. The ultimate use of the b) The transportation costs pursuant to • Tires.

cargo must be for a function ordinarily carried the sale. (The cost of transportation of • Gas guzzler automobiles. out by governmental units. An Indian tribal gov- goods to a warehouse before their

ernment is treated as a state only if the fuel is • Vaccines. bona fide sale is not excludable.)

Page 19
c) Delivery, insurance, installation, retail zlers, and vaccines.) State is defined and certify the exempt purpose for which the

dealer preparation costs, and other article will be used. The information must be in under Gasoline.

charges you incur in placing the article writing and may be noted on the purchase order • Sale of an article to a nonprofit educa- in the hands of the purchaser under a or other document furnished by the purchaser to tional organization for its exclusive use. bona fide sale. the seller in connection with the sale. (This exemption does not apply to the For a sale to a state or local government, an d) Discounts, rebates, and similar al- taxes on coal, gas guzzlers, and vac- exemption certificate must be signed by an of- lowances actually granted to the pur- cines.) Nonprofit educational organization ficer or employee authorized by the state or local chaser. is defined under Communications Tax. government. See section 48.4221–5(c) of the

e) Local advertising charges. A charge • Sale of an article for use by the purchaser regulations for the certificate requirements.

made separately when the article is as supplies for vessels. (This exemption For sales for use as supplies for vessels, if

sold and that qualifies as a charge for does not apply to the taxes on coal and the manufacturer and purchaser are not regis-

“local advertising” may, within certain vaccines.) Supplies for vessels means tered, the owner or agent of the vessel must

limits, be excluded from the sale price. ships’ stores, sea stores, or legitimate provide an exemption certificate to the manufacequipment on vessels of war of the United turer before or at the time of sale. See section f) Charges for warranty paid at the States or any foreign nation, vessels em- 48.4221–4(d) of the regulations for the certifi- purchaser’s option. However, a charge ployed in the fisheries or whaling busi- cate requirements. for a warranty of an article that the

manufacturer requires the purchaser to ness, or vessels actually engaged in Proof of export requirement. Within 6

foreign trade. pay to obtain the article is included in months of the date of sale or shipment by the

the sale price on which the tax is fig- • Sale of an article for use by the purchaser manufacturer, whichever is earlier, the manuured. for further manufacture, or for resale by facturer must receive proof of exportation. See

section 48.4221–3(d) of the regulations for evi- the purchaser to a second purchaser for

use by the second purchaser for further dence that qualifies as proof of exportation. Bonus goods. Allocate the sale price if you

give free nontaxable goods with the purchase of manufacture. (This exemption does not Proof of resale for further manufacture retaxable merchandise. Figure the tax only on the apply to the tax on coal.) Use for further quirement. Within 6 months of the date of sale

sale price attributable to the taxable articles. manufacture means use in the manufac- or shipment by the manufacturer, whichever is ture or production of an article subject to earlier, the manufacturer must receive proof that

Example. A manufacturer sells a quantity of the manufacturers excise taxes. If you buy the article has been resold for use in further

taxable articles and gives the purchaser certain articles tax free and resell or use them manufacture. See section 48.4221–2(c) of the

nontaxable articles as a bonus. The sale price of other than in the manufacture of another regulations for evidence that qualifies as proof of article, you are liable for the tax on their the shipment is $1,500. The normal sale price is resale.

$2,000: $1,500 for the taxable articles and $500 resale or use just as if you had manufac- Information to be furnished to purchaser. tured and sold them. for the nontaxable articles. Since the taxable The manufacturer must indicate to the pur- items represent 75% of the normal sale price, • Sale of an article for export or for resale by chaser that the articles normally would be sub- the tax is based on 75% of the actual sale price, the purchaser to a second purchaser for ject to tax and are being sold tax free for an or $1,125 (75% of $1,500). The remaining $375 export. The article may be exported to a exempt purpose because the purchaser has is allocated to the nontaxable articles. foreign country or to a possession of the provided the required certificate.

United States. (A vaccine shipped to a

Taxable Event possession of the United States is not Credits or Refunds considered to be exported.) If an article is Tax attaches when the title to the article sold sold tax free for export and the manufac- The manufacturer may be eligible to obtain a passes from the manufacturer to the buyer. turer does not receive proof of export, de- credit or refund of the manufacturers tax. If a When the title passes depends on the intention scribed later, the manufacturer is liable for tax-paid article is exported, the exporter or ship- of the parties as gathered from the contract of the tax. per may claim a credit or refund if the manufac- sale. In the absence of expressed intention, the turer waives its right to claim the credit or refund. • Sales of articles of native Indian handi- legal rules of presumption followed in the juris- In the case of a tax-paid article used to make craft, such as bows and arrow compo- diction where the sale occurs determine when another taxable article, the subsequent manu- nents, manufactured by Indians on title passes. facturer may claim the credit or refund. reservations, in Indian schools, or under If the taxable article is used by the manufac- U.S. jurisdiction in Alaska. A credit or refund (without interest) of the turer, the tax attaches at the time use begins. manufacturers taxes may be allowable if a The manufacturer is liable for the tax. tax-paid article is, by any person: Requirements for Exempt Sales Partial payments. The tax applies to each • Exported,

partial payment received when taxable articles The following requirements must be met for a • Used or sold for use as supplies for ves- are: sale to be exempt from the manufacturers tax. sels (except for coal and vaccines),

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

• Sold conditionally, turer, first purchaser, and second purchaser in exclusive use (except for coal, gas guzthe case of resales must be registered. See the zlers, and vaccines), • Sold on installment with chattel mortgage, Form 637 instructions for more information. or • Sold to a nonprofit educational organizaExceptions to registration requirements. tion for its exclusive use (except for coal, • Sold on installment with title to pass in the Registration is not required for any of the follow- gas guzzlers, and vaccines), or future. ing. • Used for further manufacture of another To figure the tax, multiply the partial payment by • State or local governments. article subject to the manufacturers taxes the tax rate in effect at the time of the payment. (except for coal). • Foreign purchasers of articles sold or reExemptions sold for export. In addition, a credit or refund (without interest)

• The United States. may be allowable for a tax-paid article for which The following sales are exempt from the manu- the price is readjusted by reason of return or facturers tax. • Parties to a sale of supplies for vessels. repossession of the article or a bona fide dis-

• Sale of an article to a state or local gov- count, rebate, or allowance for taxes based on

ernment for the exclusive use of the state price. Certification requirement. If the purchaser is

or local government. (This exemption does The claim must set forth in detail the facts required to be registered, the purchaser must

not apply to the taxes on coal, gas guz- upon which the claim is based. give the manufacturer its registration number

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Conditions to allowance. To claim a credit or 5) Fishing rod belts, fishing rodholders, fish- Pay this tax with your return. No tax deposit is

refund in the case of an export, supplies for ing harnesses, fish fighting chairs, fishing required.

vessels, or sales to a state or local government outriggers, and fishing downriggers.

or nonprofit educational organization, the per- See Revenue Ruling 88 Coal –52 in Cumulative Bulson who paid the tax must submit, with the letin 1988–1 for a more complete description of claim, a statement asserting any of the follow- A tax is imposed on the first sale of coal mined in the items of taxable equipment. the United States. The producer of the coal is ing. liable for the tax. The producer is the person Electric outboard boat motors and sonar • That the tax was neither included in the who has vested ownership of the coal under devices. A tax of 3% of the sale price is im- price of the article nor collected from a state law immediately after the coal is severed posed on the sale by the manufacturer of electric vendee. The statement must also identify from the ground. Determine vested ownership outboard motors and sonar devices suitable for the nature of the evidence available to es- without regard to any contractual arrangement finding fish. This includes any parts or accesso- tablish these facts. for the sale or other disposition of the coal or the ries sold on or in connection with the sale of payment of any royalties between the producer • That the person has repaid, or agreed to those articles. The tax on any sonar device, and third parties. A producer includes any per- repay, the tax to the ultimate vendor of the however, cannot exceed $30. A sonar device son who extracts coal from coal waste refuse

article. suitable for finding fish does not include any piles (or from the silt waste product that results device that is a graph recorder, a digital type, a • That the person has secured, and will sub- from the wet washing of coal).

mit upon the request of the IRS, the writ- meter readout, a combination graph recorder, or The tax is not imposed on coal extracted

a combination meter readout. from a riverbed by dredging if it can be shown ten consent of the ultimate vendor to

that the coal has been taxed previously. allowance of the credit or refund. Certain equipment resale. The tax on the

The ultimate vendor is the seller making the sale Tax rates. The tax on underground-mined sale of sport fishing equipment is imposed a coal is the lower of: that gives rise to the overpayment of tax or that second time under the following circumstances.

immediately precedes the exportation or use If the manufacturer sells a taxable article to any • $1.10 a ton, or

that gives rise to the overpayment. person, the manufacturer is liable for the tax. If • 4.4% of the sale price. the purchaser or any other person then sells it to To claim a credit or refund for a price readjust- a person who is related (discussed next) to the ment, the claim must contain the name and The tax on surface-mined coal is the lower of: manufacturer, that related person is liable for a address of the purchaser. To claim a credit or second tax on any subsequent sale of the arti- • 55 cents a ton, or refund for further manufacture, the claim must cle. The second tax, however, is not imposed if contain the name of the manufacturer and the • 4.4% of the sale price. the constructive sale price rules under section date of payment. 4216(b) of the Internal Revenue Code apply to For claims by the exporter or shipper, the Coal will be taxed at the 4.4% rate if the selling the sale by the manufacturer. price is less than $25 a ton for claim must contain the proof of export and a If the second tax is imposed, a credit for tax underground-mined coal and less than $12.50 a statement signed by the person that paid the tax previously paid by the manufacturer is available ton for surface-mined coal. Apply the tax propor- waiving the right to claim a credit or refund. The provided the related person can document the tionately if a sale or use includes a portion of a statement must include the amount of tax paid, tax paid. The documentation requirement is ton. the date of payment, and the office to which it generally satisfied only through submission of was paid. copies of actual records of the person that previ- Example. If you sell 21,000 pounds (10.5

ously paid the tax. tons) of coal from an underground mine for Sport Fishing Equipment $525, the price per ton is $50. The tax is $1.10 × Related person. For the tax on sport fishing 10.5 tons ($11.55). A tax of 10% of the sale price is imposed on equipment, a person is a related person of the

many articles of sport fishing equipment sold by manufacturer if that person and the manufac- Coal production. Coal is produced from surthe manufacturer. This includes any parts or turer have a relationship described in section face mines if all geological matter (trees, earth,

accessories sold on or in connection with the 465(b)(3)(C) of the Internal Revenue Code. rock) above the coal is removed before the coal

sale of those articles. is mined. Treat coal removed by auger and coal

Bows reclaimed from coal waste refuse piles as pro- Pay this tax with your return. No tax deposits duced from a surface mine. are required. A tax of 11% of the sale price is imposed on the Treat coal as produced from an underground Sport fishing equipment includes all the fol- sale by the manufacturer of any bow having a mine when the coal is not produced from a lowing items. draw weight of 10 pounds or more. The tax also surface mine. In some cases, a single mine may

is imposed on the sale of any part or accessory yield coal from both surface mining and under- 1) Fishing rods and poles (and component suitable for inclusion in or attachment to a taxa- ground mining. Determine if the coal is from a parts), fishing reels, fly fishing lines, and ble bow and any quiver suitable for use with surface mine or an underground mine for each other fishing lines not over 130 pounds arrows, described next. For a list of taxable and ton of coal produced and not on a mine-by-mine test, fishing spears, spear guns, and spear nontaxable articles, see Revenue Ruling 98–5 basis.

tips. in Cumulative Bulletin 1998–1. Determining tonnage or selling price. The 2) Items of terminal tackle, including leaders, Pay this tax with your return. No tax deposit producer pays the tax on coal at the time of sale artificial lures, artificial baits, artificial flies, is required. or use. In figuring the selling price for applying fishing hooks, bobbers, sinkers, snaps, the tax, the point of sale is f.o.b. (free on board) drayles, and swivels (but not including nat- Arrow Components mine or f.o.b. cleaning plant if you clean the coal ural bait or any item of terminal tackle de- before selling it. This applies even if you sell the signed for use and ordinarily used on A tax of 12.4% of the sale price is imposed on coal for a delivered price. The f.o.b. mine or fishing lines not described in (1)). the sale by the manufacturer of any shaft, point, f.o.b. cleaning plant is the point at which you nock, or vane of a type used in the manufacture figure the number of tons sold for applying the 3) The following items of fishing supplies and of any arrow that after its assembly meets either applicable tonnage rate, and the point at which accessories: fish stringers, creels, tackle

boxes, bags, baskets, and other contain- of the following conditions. you figure the sale price for applying the 4.4%

rate. ers designed to hold fish, portable bait • It measures 18 inches or more in overall The tax applies to the full amount of coal containers, fishing vests, landing nets, gaff length. sold. However, the IRS allows a calculated re- hooks, fishing hook disgorgers, and dress- • It measures less than 18 inches in overall duction of the taxable weight of the coal for the ing for fishing lines and artificial flies. length but is suitable for use with a taxable weight of the moisture in excess of the coal’s

4) Fishing tip-ups and tilts. bow, discussed earlier. inherent moisture content. Include in the sale

Page 21
price any additional charge for a freeze-condi- • If the foreign country does not have a cus- operates on a schedule along regular routes or

tioning additive in figuring the tax. toms administrator, a statement of the for- seats at least 20 adults (excluding the driver).

Do not include in the sales price the excise eign consignee showing receipt of the Qualifying school bus. This is any bus tax imposed on coal. coal. substantially all the use (85% or more) of which

Coal used by the producer. The tax on coal is to transport students and employees of

schools. applies if the coal is used by the producer in Tires

other than a mining process. A mining process Credit or refund. A credit or refund (without means the same for this purpose as for percent- Tax is imposed on the sale by the manufacturer interest) is allowable if the tax on a tire has been age depletion. For example, the tax does not of tires of the type used on highway vehicles and

made all or in part of rubber. paid on its sale by the manufacturer and the tire apply if, before selling the coal, you break it, is sold by any person on, or in connection with, clean it, size it, or apply any other process con- The tax is based on the weight of each tire. any other article that is: sidered mining under the rules for depletion. In The tax does not apply to tires that weigh 40

this case, the tax applies only when you sell the pounds or less. The tax rate is shown in the • An automobile bus chassis or body,

coal. The tax does not apply to coal used as fuel Form 720 instructions. • Exported, in the coal drying process since it is considered Determination of weight. Do not include

to be used in a mining process. However, the tax metal rims or rim bases in figuring the total • Sold to a state or local government for its

does apply when you use the coal as fuel or as exclusive use, weight of a tire. But include in the total weight, an ingredient in making coke since the coal is the wire, staples, darts, clips, and other material • Sold to a nonprofit educational organiza- not used in a mining process. or fastening devices that form a part of the tire or tion for its exclusive use, or You must use a constructive sale price to are required for its use. figure the tax under the 4.4% rate if you use the • Used or sold for use as supplies for ves- Consider studs as part of a tire, and include coal in other than a mining process. Base your sels. them in the total weight. The total weight of a constructive sale price on sales of a like kind and tubeless tire or inner tube includes the weight The person who sold the article is eligible to grade of coal by you or other producers made of the air valve and stem or any other mecha- make the claim. f.o.b. mine or cleaning plant. Normally, you use nism that functions as a part of the tire or at- the same constructive price used to figure your

percentage depletion deduction.

taches to the inner tube and is used in Gas Guzzler Tax connection with inflating the tire or tube or mainBlending. taining its air pressure. Tax is imposed on the sale by the manufacturer If you blend surface-mined coal

with underground-mined coal during the clean- When you sell tires with metal rims or rim of automobiles of a model type that has a fuel

bases attached, you must keep records estab- economy standard as measured by the Environ- ing process, you must figure the excise tax on

the sale of the blended, cleaned coal. Figure the lishing what portion of the total weight of the mental Protection Agency (EPA) of less than finished product represents the tire without the 22.5 miles per gallon. If you import an automo- tax separately for each type of coal in the blend.

Base the tax on the amount of each type in the metal rim or rim base. bile for personal use, you may be liable for this

blend if you can determine the proportion of Alternative method of determining weight. tax. Figure the tax on Form 6197, Gas Guzzler

each type of coal contained in the final blend. If you have received permission from the IRS, Tax, as discussed later. The tax rate is based on

Base the tax on the ratio of each type originally fuel economy rating. The tax rates for the gas you may determine total weight of tires that you

put into the cleaning process if you cannot deter- manufactured and sold using the average guzzler tax are shown on Form 6197.

mine the proportion of each type of coal in the weight for each type, size, grade, and classifica- A person that lengthens an existing automoblend. However, the tax is limited to 4.4% of the bile (for example, to make a stretch limousine) is tion.

the manufacturer of an automobile. sale price per ton of the blended coal. See Revenue Procedure 92–82 in Cumulative Bulletin 1992–2 for several alternative

Exemption from tax. The tax does not apply Automobiles. An automobile is any methods you can use to determine tire weight. four-wheeled vehicle that is: to sales of lignite and imported coal. The only

other exemption from the tax on the sale of coal Manufacturer’s retail stores. The excise tax • Rated at an unloaded gross vehicle weight is for coal exported as discussed next. on tires is imposed at the time the tires are of 6,000 pounds or less, delivered to the manufacturer-owned retail

Exported. The tax does not apply to the stores, not at the time of sale. • Propelled by an engine powered by gaso- sale of coal if the coal is in the stream of export line or diesel fuel, and when sold by the producer and the coal is actu- Tires on imported articles. The importer of

ally exported. an article equipped with taxable tires is treated • Intended for use mainly on public streets,

Coal is in the stream of export when sold by as the manufacturer of the tires and is liable for roads, and highways.

the tire excise tax when the article is sold (ex- the producer if the sale is a step in the exportation of the coal to its ultimate destination in a cept in the case of an automobile bus chassis or Limousines. The tax generally applies to

body with tires). limousines (including stretch limousines) re- foreign country. For example, coal is in the gardless of their weight. stream of export when: Tires exempt from tax. The tax does not apply to the following items. Vehicles not subject to tax. For the gas 1) The coal is loaded on an export vessel and guzzler tax, the following vehicles are not con- title is transferred from the producer to a • Tires of extruded tiring with an internal sidered automobiles. foreign purchaser, or wire fastening agent.

2) The producer sells the coal to an export • Recapped or retreaded tires if the tires 1) Vehicles operated exclusively on a rail or

broker in the United States under terms of have been sold previously in the United rails.

a contract showing that the coal is to be States and were taxable tires at the time 2) Vehicles sold for use and used primarily: shipped to a foreign country. of sale.

a) As ambulances or combination Proof of export includes any of the following • Tire carcasses not suitable for commercial ambulance-hearses, items. use.

b) For police or other law enforcement • A copy of the export bill of lading issued • Tires for use on qualifying intercity, local, purposes by federal, state, or local gov- by the delivering carrier. and school buses. For tax-free treatment, ernments, or the registration requirements discussed • A certificate signed by the export carrier’s earlier under Requirements for Exempt c) For firefighting purposes. agent or representative showing actual ex- Sales apply. portation of the coal. 3) Vehicles treated under 49 USC 32901

• A certificate of landing signed by a cus- Qualifying intercity or local bus. This is (1978) as non-passenger automobiles.

toms officer of the foreign country to which any bus used mainly (more than 50%) to trans- This includes limousines manufactured prithe coal is exported. port the general public for a fee and that either marily to transport more than 10 persons.

Page 22
The manufacturer can sell a vehicle de- Highway vehicle. A highway vehicle is any • Any vaccine containing diphtheria toxoid. scribed in item (2) tax free only when the sale is self-propelled vehicle designed to carry a load

made directly to a purchaser for the described • Any vaccine containing tetanus toxoid. over public highways, whether or not it is also

emergency use and the manufacturer and pur- designed to perform other functions. • Any vaccine containing pertussis bacteria, chaser (other than a state or local government) extracted or partial cell bacteria, or spe- Vehicles not considered highway vehicles. are registered. cific pertussis antigens. The following vehicles are not highway vehicles Treat an Indian tribal government as a state for purposes of the retail tax. only if the police or other law enforcement pur- • Any vaccine containing polio virus.

poses are an essential tribal government func- • Any vaccine against measles. 1) Certain specially-designed mobile machin- tion. ery for nontransportation functions. • Any vaccine against mumps. Model type. Model type is a particular class of 2) Certain trailers and semitrailers specially • Any vaccine against rubella. automobile as determined by EPA regulations. designed to perform nontransportation

• Any vaccine against hepatitis B. functions off the highway. Fuel economy. Fuel economy is the average

number of miles an automobile travels on a 3) Certain specially-designed vehicles for the • Any vaccine against chicken pox.

gallon of gasoline (or diesel fuel) rounded to the primary function of transporting a specific • Any vaccine against rotavirus gastroenter- nearest 0.1 mile as figured by the EPA. type of load other than over the public itis. highway for certain operations (construc- Imported automobiles. The tax applies to • Any conjugate vaccine against streptococ- tion, manufacturing, mining, processing, automobiles that do not have a prototype-based cus pneumoniae. farming, drilling, timbering, or similar oper- fuel economy rating assigned by the EPA. An ations). Their use in carrying this load over automobile imported into the United States with- • Any HIB vaccine. public highways is substantially limited or out a certificate of conformity to United States impaired because of their design. emission standards and which has no assigned The tax is 75 cents per dose of each taxable

fuel economy rating must be either: vaccine. The tax per dose on a vaccine that

contains more than one taxable vaccine is 75 Gross vehicle weight. The tax does not apply • Converted by installation of emission con- cents times the number of taxable vaccines. to truck chassis and bodies suitable for use with trols to conform in all material respects to a vehicle that has a gross vehicle weight of an automobile already certified for sale in Credit or refund. A credit or refund (without 33,000 pounds or less. It also does not apply to the United States, or interest) is available if the vaccine is: truck trailer and semitrailer chassis and bodies

• Modified by installation of emission control suitable for use with a trailer or semitrailer that

components and individually tested to • Returned to the person who paid the tax has a gross vehicle weight of 26,000 pounds or

demonstrate emission compliance. (other than for resale), or less. Tractors (and truck chassis completed as

• Destroyed. tractors) are subject to tax without regard to

An imported automobile that has been con- gross vehicle weight.

verted to conform to an automobile already certi- The claim for a credit or refund must be filed The gross vehicle weight means the maxi- within 6 months after the vaccine is returned or fied for sale in the United States may use the mum total weight of a loaded vehicle. Generally, destroyed. fuel economy rating assigned to the conformed this maximum total weight is the gross vehicle automobile. Conditions to allowance. To claim a credit weight rating provided by the manufacturer or A fuel economy rating is not generally avail- or refund, the person who paid the tax must determined by the seller of the completed arti- able for modified imported automobiles because have repaid or agreed to repay the tax to the cle. The seller’s gross vehicle weight rating must the EPA does not require a highway fuel econ- ultimate purchaser of the vaccine or obtained take into account the strength of the chassis omy test on them. A separate highway fuel the consent of such purchaser to allowance of frame and the axle capacity and placement. See economy test would be required to devise a fuel the credit or refund. section 145.4051–1(e)(3) of the regulations for economy rating (otherwise the automobile is more information.

presumed to fall within the lowest fuel economy

rating). Parts or accessories. The tax applies to parts For more information about fuel economy Retail Tax on or accessories sold on or in connection with, or

ratings for imported automobiles, see Revenue with the sale of, a taxable article. For example, if Ruling 86–20 and Revenue Procedure 86–9 in Heavy Trucks, at the time of the sale by the retailer, the part or Cumulative Bulletin 1986–1, and Revenue Pro- accessory has been ordered from the retailer, cedure 87–10 in Cumulative Bulletin 1987–1. Trailers, and Tractors the part or accessory will be considered as sold

in connection with the sale of the vehicle. The Exemptions. No one is exempt from the gas A tax of 12% of the sales price is imposed on the tax applies in this case whether or not the re- guzzler tax, including the federal government, first retail sale of the following articles, including tailer bills the parts or accessories separately. state and local governments, and nonprofit edu- related parts and accessories sold on or in con- If the retailer sells a taxable chassis, body, or cational organizations. However, see Vehicles

nection with, or with the sale of, the articles. tractor without parts or accessories considered not subject to tax, earlier.

essential for the operation or appearance of the • Truck chassis and bodies. Form 6197. Use Form 6197 to figure your tax taxable article, the sale of the parts or accessoliability for each quarter. Attach Form 6197 to • Truck trailer and semitrailer chassis and ries by the retailer to the purchaser is considered

your Form 720 for the quarter. See the instruc- bodies. made in connection with the sale of the taxable

tions for Form 6197 for more information about article even though they are shipped separately, • Tractors of the kind chiefly used for high- filing and the special rules for filing if you import at the same time, or on a different date. The tax way transportation in combination with a an automobile for personal use. applies unless there is evidence to the contrary. trailer or semitrailer. For example, if a retailer sells to any person a Credit or refund. If the manufacturer paid the A sale of a truck, truck trailer, or semitrailer is chassis and the bumpers for the chassis, or sells tax on a vehicle that is used or resold for an considered a sale of a chassis and a body. a taxable tractor and the fifth wheel and attach- emergency use (see item (2) under Vehicles not ments, the tax applies to the parts or accesso- subject to tax), the manufacturer can claim a The seller is liable for the tax. ries regardless of the method of billing or the credit or refund. See Credits and Refunds, later. time at which the shipments were made. The tax Chassis or body. A chassis or body is taxable does not apply to parts and accessories that are Vaccines only if you sell it for use as a component part of a spares or replacements. highway vehicle that is a truck, truck trailer or

Tax is imposed on certain vaccines sold by the semitrailer, or a tractor of the kind chiefly used Separate purchase. The tax generally apmanufacturer in the United States. A taxable for highway transportation in combination with a plies to the price of a part or accessory and its

vaccine means any of the following vaccines. trailer or semitrailer. installation if the following conditions are met.

Page 23
Table 1. Tax Base an actual or presumed markup percentage. If

the person liable for tax is the vehicle’s manufacTransaction Figuring the Base turer, producer, or importer, the following discussions show how you figure the presumptive Sale by the manufacturer, producer, Sales price plus (presumed markup retail sales price depending on the type of trans- importer, or related person percentage × sales price) action and the persons involved in the transacSale by the dealer Total consideration paid for the item including tion. Table 1 outlines the appropriate tax base

any charges incident to placing it in a calculation for various transactions.

condition ready for use The presumed markup percentage to be

used for trucks and truck-tractors is 4%. But for Long-term lease by the manufacturer, Constructive sales price plus (presumed truck trailers and semitrailers and remanufac- producer, importer, or related person markup percentage × constructive sales price) tured trucks and tractors, the presumed markup

Short-term lease by the manufacturer, Constructive sales price at which such or percentage is zero.

producer, importer, or related person similar articles are sold Sale. For a taxable sale by a manufacturer,

Short-term lease by a lessor other than the Price for which the article was sold to the producer, importer, or related person, you genmanufacturer, producer, importer, or related lessor plus the cost of parts and accessories erally figure the tax on a tax base of the sales

person installed by the lessor plus a presumed price plus an amount equal to the presumed

markup percentage markup percentage times that sales price.

Short-term lease where the articles are Lowest established retail price in effect at the Long-term lease. In the case of a long-term

regularly sold at arm’s length time of the taxable use lease by a manufacturer, producer, importer, or

related person, figure the tax on a tax base of

the constructive sales price plus an amount

Leases. A long-term lease (a lease with a equal to the presumed markup percentage • The owner, lessee, or operator of any ve- times the constructive sales price. term of 1 year or more, taking into account hicle that contains a taxable article installs

any part or accessory on the vehicle. options to renew) before a first retail sale is Short-term lease. When a manufacturer, treated as a taxable sale. The tax is imposed on producer, importer, or related person leases an • The installation occurs within 6 months af- the lessor at the time of the lease. article in a short-term lease considered a taxater the vehicle is first placed in service. A short-term lease (a lease with a term of ble use, figure the tax on a constructive sales less than 1 year, taking into account options to price at which those or similar articles generally The owners of the trade or business installing renew) before a first retail sale is treated as a are sold in the ordinary course of trade by retail- the parts or accessories are secondarily liable taxable use. The tax is imposed on the lessor at ers. for the tax. the time of the lease. But if the lessor in this situation regularly A vehicle is placed in service on the date the Exported vehicle. A vehicle exported sells articles at retail in arm’s-length transac- owner takes actual possession of the vehicle. before its first retail sale, used in a foreign coun- tions, figure the tax on the lowest established This date is established by a signed delivery try, and then returned to the U.S., is subject to retail price in effect at the time of the taxable ticket or other comparable document indicating use. the retail tax on its first retail sale after importa- delivery to and acceptance by the owner. tion. If a person other than the manufacturer, pro- The tax does not apply if the installed part or ducer, importer, or related person leases an accessory is a replacement part or accessory. Tax on resale of tax-paid trailers and article in a short-term lease considered a taxa- The tax also does not apply if the total price of semitrailers. The tax applies to a trailer or ble use, figure the tax on a tax base of the price the parts and accessories, including installation semitrailer resold within 6 months after having for which the article was sold to the lessor plus charges, during the 6-month period is $1,000 or been sold in a taxable sale. The seller liable for the cost of parts and accessories installed by the less. However, if the total price is more than the tax on the resale can claim a credit equal to lessor and a presumed markup percentage. $1,000, the tax paid on the prior taxable sale. The credit the tax applies to the cost of all parts

and accessories (and installation charges) dur- cannot exceed the tax on the resale. See section Related person. A related person is any

ing that period. 145.4052–1(a)(4) of the regulations for informa- member of the same controlled group as the

tion on the conditions to allowance for the credit. manufacturer, producer, or importer. Do not

Example. You bought a taxable vehicle and treat as a related person a person that sells the Use treated as sale. If any person uses a placed it in service on April 8. On May 3, you articles through a permanent retail establish- taxable article before the first retail sale of the bought and installed parts and accessories at a ment in the normal course of being a retailer if article, that person is liable for the tax as if the cost of $850. On July 15, you bought and in- that person has records to prove the article was article had been sold at retail by that person. stalled parts and accessories for $300. Tax of sold for a price that included a markup equal to Figure the tax on the price at which similar arti- $138 (12% of $1,150) applies on July 15. Also, or greater than the presumed markup percent- cles are sold in the ordinary course of trade by tax will apply to any costs of additional parts and age. retailers. The tax attaches when the use begins. accessories installed on the vehicle before Oc- If the seller of an article regularly sells the General rule for sales by dealers to the con- tober 8. articles at retail in arm’s-length transactions, fig- sumer. For a taxable sale, other than a ure the tax on its use on the lowest established First retail sale defined. The sale of an article long-term lease, by a person other than a manu- retail price for the articles in effect at the time of facturer, producer, importer, or related person, is treated as the first retail sale, and the seller the taxable use. will be liable for the tax imposed on the sale your tax base is the retail sales price as dis- If the seller of an article does not regularly unless one of the following exceptions applies. cussed next under Determination of tax base.

sell the articles at retail in arm’s-length transac- When you sell an article to the consumer, • There has been a prior taxable sale, tions, a constructive price on which the tax is generally you do not add a presumed markup to lease, or use of the article (however, see figured will be determined by the IRS after con- the tax base. However, you do add a markup if Tax on resale of tax-paid trailers and sidering the selling practices and price struc- all the following apply. semitrailers, next). tures of sellers of similar articles.

If a seller of an article incurs liability for tax on • You do not perform any significant activi- • The sale qualifies as a tax-free sale under the use of the article and later sells or leases the ties relating to the processing of the sale section 4221 of the Internal Revenue article in a transaction that otherwise would be of a taxable article. Code (see Sales exempt from tax, later). taxable, liability for tax is not incurred on the later • The main reason for processing the sale • The seller in good faith accepts from the sale or lease. through you is to avoid or evade the pre- purchaser a statement signed under pen- sumed markup. alties of perjury and executed in good faith Presumptive retail sales price. There are

that the purchaser intends to resell the ar- rules to ensure the tax base of transactions • You do not have records proving that the

ticle or lease it on a long-term basis. considered to be taxable sales includes either article was sold for a price that included a

Page 24
markup equal to or greater than the pre- cost of a comparable new vehicle. If the restora- • It is not designed to be permanently

sumed markup percentage. tion includes the use of a glider kit, the tax does mounted on or affixed to a truck chassis or

not apply to the sale or use of the restored body. In these situations, your tax base is the sales vehicle as long as the total cost of the repair is price plus an amount equal to the presumed House trailers. This is any house trailer (re- markup percentage times that selling price. not more than the 75% limit.

gardless of size) suitable for use in connection Repairs and modifications. The tax does with either passenger automobiles or trucks. Determination of tax base. These rules ap- not apply to the sale or use of an article that has ply to both normal retail sales price and pre- Camper coaches or bodies for self-pro- been repaired or modified unless the cost of the sumptive retail sales price computations. To pelled mobile homes. This is any article de- repairs and modifications is more than 75% of arrive at the tax base, the price is the total signed to be mounted or placed on trucks, truck the retail price of a comparable new article. This consideration paid (including trade-in allow- chassis, or automobile chassis and to be used includes modifications that change the transpor- ance) for the item and includes any charge inci- primarily as living quarters or camping accomdent to placing the article in a condition ready for tation function of an article or restore a wrecked modations on and off the trucks. Further, the tax

use. However, see Presumptive retail sales article to a functional condition. However, this does not apply to chassis specifically designed

price, earlier. exception generally does not apply to an article and constructed to accommodate and transport

that was not subject to the tax when it was new. self-propelled mobile home bodies. Exclusions from tax base. Exclude from

Further manufacture. The tax does not ap- Farm feed, seed, and fertilizer equipment. the tax base the retail excise tax imposed on the

sale. Exclude any state or local retail sales tax if ply to the use by a person of a taxable article as This is any body primarily designed to process

stated as a separate charge from the price material in the manufacture or production of, or or prepare, haul, spread, load, or unload feed,

whether the sales tax is imposed on the seller or as a component part of, another article to be seed, or fertilizer to or on farms. This exemption

purchaser. Also exclude the value of any used manufactured or produced by that person. Do applies only to the farm equipment body (and

not treat a person as engaged in the manufac- parts and accessories) and not to the chassis component of the article furnished by the first upon which the farm equipment is mounted. user of the article. ture of any article merely because that person

Exclude charges for transportation, delivery, combines the article with any of the following Ambulances and hearses. This is any aminsurance, and installation (other than installa- items. bulance, hearse, or combination

tion charges for parts and accessories, dis- ambulance-hearse.

cussed earlier) and other expenses incurred in • Coupling device (including any fifth

wheel). Truck-tractors. This is any truck-tractor connection with the delivery of an article to a specifically designed for use in shifting semitrail- purchaser. These expenses are those incurred • Wrecker crane. ers in and around freight yards and freight termi- in delivery from the retail dealer to the customer. nals. • Loading and unloading equipment (includ- In the case of delivery directly from the manufacing any crane, hoist, winch, or power lift- turer to the dealer’s customer, include the trans- Concrete mixers. This is any article deportation and delivery charges to the extent the gate). signed to be placed or mounted on a truck, truck

charges do not exceed what it would have cost trailer, or semitrailer chassis to be used to pro- • Aerial ladder or tower.

to ship the article to the dealer. cess or prepare concrete.

Exclude amounts charged for machinery or • Ice and snow control equipment. Sales exempt from tax. The following sales equipment that does not contribute to the high- • Earth moving, excavation, and construc- are ordinarily exempt from tax. way transportation function of the vehicle, pro- tion equipment. vided those charges are supported by adequate • Sales to a state or local government for its

records. For example, for an industrial vacuum • Spreader. exclusive use.

loader vehicle, exclude amounts charged for the • Sleeper cab. • Sales to Indian tribal governments, but vacuum pump and hose, filter system, material only if the transaction involves the exer- • Cab shield. separator, silencer or muffler, control cabinet, cise of an essential tribal government and ladder. Similarly, for a sewer cleaning vehi- • Wood or metal floor. function.

cle, exclude amounts charged for the high pressure water pump, hose components, and the Combining an article with an item in this list does • Sales to a nonprofit educational organizavacuum pipe. not give rise to taxability. However, see Parts or tion for its exclusive use.

accessories, discussed earlier.

Sales not at arm • Sales for use by the purchaser for further ’s length. For any taxable

article sold (not at arm’s length) at less than the manufacture of other taxable articles (see Articles exempt from tax. The tax on heavy below). fair market price, figure the excise tax on the trucks, trailers, and tractors does not apply to

price for which similar articles are sold at retail in sales of the articles described in the following • Sales for export or for resale by the pur- the ordinary course of trade. discussions. chaser to a second purchaser for export.

A sale is not at arm’s length if either of the Rail trailers and rail vans. This is any • Sales to the United Nations for official use. following apply. chassis or body of a trailer or semitrailer de-

• One of the parties is controlled (in law or signed for use both as a highway vehicle and a Registration requirement. In general the

in fact) by the other or there is common railroad car (including any parts and accessories seller and buyer must be registered for a sale to

control, whether or not the control is actu- be tax free. See the Form 637 instructions for designed primarily for use on and in connection ally exercised to influence the sales price. more information. Certain registration excep- with it). Do not treat a piggyback trailer or semi- tions apply in the case of sales to state and local • The sale is made under special arrange- trailer as designed for use as a railroad car. governments and to foreign purchasers for ex- ments between a seller and a purchaser. Parts and accessories. This is any part or port.

accessory sold separately from the truck or Installment sales. If the first retail sale is an Further manufacture. If you buy articles trailer, except as described earlier under Parts installment sale, or other form of sale in which tax free and resell or use them other than in the or accessories and Separate purchase. the sales price is paid in installments, the tax manufacture of another article, you are liable for

arises at the time of the sale. The tax is figured Trash containers. This is any box, the tax on their resale or use just as if you had

on the entire sales price. No part of the tax is container, receptacle, bin or similar article that manufactured and sold them.

deferred because the sales price is paid in in- meets all the following conditions. Credits and refunds. A credit or refund (with- stallments. out interest) of the tax on heavy vehicles may be • It is designed to be used as a trash Restoration of worn vehicles. The tax allowable if the tax has been paid with respect to container. does not apply to the sale or use of a worn an article and, before any other use, such article

vehicle restored to a usable condition if the cost • It is not designed to carry freight other is used by any person as a component part of

of the restoration is not more than 75% of the than trash. another taxable article manufactured or proPage 25
duced. The person using the article as a compo- The second situation involves voyages on a • Use of the vehicle as material in the man- nent part is eligible for the credit or refund. commercial vessel transporting passengers en- ufacture or production of, or as a compo- A credit or refund is allowable if, before any gaged in gambling on the vessel beyond the nent part of, another taxable vehicle other use, an article is, by any person: territorial waters of the United States. Territorial manufactured or produced by the user. waters of the United States are those waters • Exported, within the international boundary line between • Use of the vehicle as a demonstrator.

• Used or sold for use as supplies for ves- the United States and any contiguous foreign • Use of a vehicle after importation if the sels, country or within 3 nautical miles (3.45 statute user or importer establishes that the first miles) from low tide on the coastline. If passen- • Sold to a state or local government for its use of the vehicle occurred before January gers participate as players in any policy game or exclusive use, or 1, 1991. other lottery, or any other game of chance for

• Sold to a nonprofit educational organiza- money or other thing of value that the owner or

tion for its exclusive use. operator of the vessel (or their employee, agent, Parts and accessories. Certain parts or acA credit or refund is also allowable if there is a or franchisee) conducts, sponsors, or operates, cessories installed within six months of the

the voyage is subject to the ship passenger tax. price readjustment by reason of the return or date on which a passenger vehicle is placed in The tax applies regardless of the duration of the repossession of an article or by reason of a bona service may be subject to the tax. The same rate voyage. A casual, friendly game of chance with fide discount, rebate, or allowance. of tax applies to parts and accessories that ap- other passengers that is not conducted, spon- plies to vehicles. See also Conditions to allowance under Man- sored, or operated by the owner or operator is The owner, lessee, or operator of the vehicle ufacturers Taxes, earlier. not gambling for determining if the voyage is is liable for the tax. If the part is installed by subject to the ship passenger tax. Tire credit. A credit is allowed against the tax someone else, the installer is secondarily liable on heavy vehicles if tires are sold on or in con- Exemptions. The tax does not apply when a for the tax.

nection with the sale of the article. The credit is vessel is on a voyage of less than 12 hours The tax does not apply to any of the following equal to the manufacturers excise tax imposed between 2 points in the United States or if a items. on the tires (discussed earlier). This is the sec- vessel is owned or operated by a state or local

tion 4051(d) tire credit and is claimed on line 11a government. • Replacement parts or accessories.

of Schedule C (Form 720) for the same quarter • Parts or accessories installed to help a for which the tax on the heavy vehicle is re- person with a disability operate, enter, or ported. exit the vehicle. Luxury Tax • Parts or accessories that permit the vehiThe luxury tax is imposed on the first retail sale cle to be propelled with a clean-burning Ship Passenger Tax of a passenger vehicle with a price exceeding fuel.

the base amount. The seller of the vehicle is • Parts and accessories if the total cost (in- A tax of $3 per passenger is imposed on certain liable for the luxury tax. cluding installation) of all parts and acces- ship voyages, as explained later under Taxable For 2002, the tax is 3% of the amount the sories does not exceed $1,000. situations. The tax is imposed only once for each sales price exceeds the base amount of

passenger, either at the time of first embarkation $40,000. However, the base amount is inor disembarkation in the United States. creased for the following vehicles. Exemptions. The luxury tax does not apply to

The person providing the voyage (the opera- the sale of a passenger vehicle for the following • For an electric vehicle, the base amount is tor of the vessel) is liable for the tax. purposes. increased by 50%.

Voyage. A voyage is the vessel’s journey that • For a clean-fuel vehicle, the base amount • For use exclusively in public safety, law includes the outward and homeward trips or is increased by the amount the price of the enforcement, or public works activities by passages. The voyage starts when the vessel vehicle increases due to the installation of the federal, state, or local government. begins to load passengers and continues until retrofit parts and components that permit Treat an Indian tribal government as a the vessel has completed at least one outward the vehicle to be propelled by a state only if the use is an essential tribal and one homeward passage. The tax may be clean-burning fuel. government function. imposed even if a passenger does not make

both an outward and a homeward passage as • For use exclusively in providing emerlong as the voyage begins or ends in the United The luxury tax is scheduled to expire gency medical services by any person.

States. after 2002. • For use by the purchaser exclusively in TIP

Passenger. A passenger is an individual car- the business of transporting persons or

ried on the vessel other than the Master or a property for hire or compensation. crew member or other individual engaged in the

Passenger vehicles. Generally, the tax ap- • For export. The requirements for making a business of the vessel or its owners.

plies if the passenger vehicle has an unloaded sale of an article for export exempt from

Example 1. John Smith works as a guest weight of 6,000 pounds or less. However, the tax the manufacturers tax also applies to

lecturer. The cruise line hired him for the benefit applies to a truck or van only if it has a maxi- these sales.

of the passengers. Therefore, he is engaged in mum loaded weight of 6,000 pounds or less.

The tax applies to limousines regardless of their Resale or substantial non-exempt use. the business of the vessel and is not a passenger. weight. The tax applies to vehicles that were originally

exempt from the luxury tax if the purchaser re- Leases. Generally, a lease is considered a Example 2. Marian Green is a travel agent. sells the vehicle or makes a substantial non-ex- sale of the vehicle. The sales price is the lowest She is taking the cruise as a promotional trip to empt use of the vehicle within 2 years after the price for which the vehicle is sold by retailers in determine if she wants to offer it to her clients. date of purchase. the ordinary course of business. For rules on She is a passenger. paying the tax on a lease, see section Credit or refund. A credit or refund (without Taxable situations. There are two taxable sit- 4217(e)(2) of the Internal Revenue Code. interest) may be allowable if the price of the uations. The first situation involves voyages on Use treated as sale. If any person uses a commercial passenger vessels extending over vehicle is readjusted by reason of return or re- passenger vehicle before its first retail sale, the one or more nights. A voyage extends over one possession of the vehicle or a bona fide dis- person is taxed on such use as if that person or more nights if it extends for more than 24 count, rebate, or allowance applied against the sold the vehicle at retail. hours. A passenger vessel is any vessel with price of the vehicle. For information on condistateroom or berth accommodations for more Exceptions. The luxury tax does not apply tions to allowance that apply to credits and rethan 16 passengers. to the following uses of a vehicle. funds, see Manufacturers Taxes, earlier.

Page 26
Luxury Tax Computation each dollar (or fraction thereof) of the premium Attach any disclosure statement to the first

paid. quarter Form 720. You may be able to use Form

8833, Treaty-Based Return Position Disclosure

1) Casualty insurance and indemnity, fidelity, Under Section 6114 or 7701(b), as a disclosure 1.Enter the retail price of the vehicle and surety bonds: 4 cents (for example, on statement. See the Form 720 instructions for

a premium payment of $10.10, the tax is how and where to file. 2.Enter additions to the retail price . . 44 cents) See Revenue Procedure 92–14 in Cumula3.Add lines 1 and 2 ............ tive Bulletin 1992–1 for procedures you can use 2) Life, sickness, and accident insurance, to claim a refund of this tax under certain U.S. and annuity contracts: 1 cent (for example, 4.Enter subtractions from the retail treaties. on a premium payment of $10.10, the tax price ..................... is 11 cents).

5.Adjusted sales price. Subtract line 4 3) Reinsurance policies covering any of the

from line 3 ................. taxable contracts described in items (1) Obligations Not and (2): 1 cent.

6.Base amount for 2002 ......... $40,000* However, the tax does not apply to casualty in Registered Form

7. Taxable adjusted sales price. insurance premiums paid to foreign insurers for Tax is imposed on any person who issues a Subtract line 6 from line 5. If line 6 coverage of export goods in transit to foreign registration-required obligation not in registered destinations. is greater than line 5, stop here— form. The tax is: the luxury tax does not apply to the

vehicle ................... Premium. Premium means the agreed price • 1% of the principal of the obligation, multior consideration for assuming and carrying the plied by

8. Tax rate for 2002 ............ .03(3%) risk or obligation. It includes any additional • The number of calendar years (or portions charge or assessment payable under the con9. Luxury tax. of calendar years) during the period start- Multiply line 7 by the tract, whether in one sum or installments. If

tax rate on line 8 ............. ing on the date the obligation was issued premiums are refunded, claim the tax paid on and ending on the date it matures. those premiums as an overpayment against tax Line 1. The retail price is the total due on other premiums paid or file a claim for consideration paid in cash, cash equivalents, A registration-required obligation is any refund.

goods, services, and the wholesale fair market obligation other than one that meets any of the

value of any trade-in minus any payoff made When liability attaches. The liability for this following conditions.

by the seller and any cash given back to the tax attaches when the premium payment is customer. For leases, enter the lowest price for 1) It is issued by a natural person. transferred to the foreign insurer or reinsurer which the vehicle is sold by retailers in the (including transfers to any bank, trust fund, or 2) It is not of a type offered to the public. ordinary course of business. similar recipient designated by the foreign in- Line 2. Additions include the following items if 3) It has a maturity (at issue) of not more surer or reinsurer) or to any nonresident agent, stated separately on the invoice and not than one year. solicitor, or broker. A person can pay the tax included in the retail price. before the liability attaches if the person keeps 4) It can only be issued to a foreign person. • Preparation charges. records consistent with that practice. • Delivery charges. For item (4), if the obligation is not in regisPerson liable for the tax. The person who tered form, the interest on the obligation must be • Packaging. makes the payment of the premium to the for- payable only outside the United States and its • Parts or accessories sold on or in eign insurer or to any nonresident agent, solici- possessions. Also, the obligation must state on connection with the vehicle. tor, or broker is liable for the tax. This is the its face that any U.S. person who holds it shall • Taxes (except the luxury tax and state resident person who actually transfers the be subject to limits under the U.S. income tax sales tax). money or its equivalent to the insurer or agent. laws. • Commissions.

The person liable for this tax must keep • Mandatory warranties. accurate records that identify each pol- • Any other charges not listed above. RECORDS icy or instrument subject to tax. These Line 4. Subtractions include the following if records must clearly establish the type of policy Filing Form 720 they are separately stated on the invoice and or instrument, the gross premium paid, the iden- are included in line 3. Use Form 720 to report and pay the excise taxes tity of the insured and insurer, and the total • State and local sales taxes. discussed earlier. File Form 720 for each calen- premium charged. If the premium is to be paid in • Title and registration charges. dar quarter until you file a final Form 720. If you installments, the records must also establish the are not reporting a tax that you normally report, • Optional warranty charges. amount and anniversary date of each install- enter zero on the line for that tax. • Rebates and price adjustments paid. ment. Be sure to sign the return. An unsigned re- • The value of used components supplied The records must be kept at the place of turn is not considered filed.

by the purchaser. business or other convenient location for at least You may be required to file your returns on a * The base amount for an electric vehicle is 3 years after the later of the date any part of the monthly or semimonthly basis instead of quar- $60,000. The base amount for a clean-fuel tax became due, or the date any part of the tax terly if you do not make deposits as required vehicle is $40,000 plus the amount the price was paid. During this period, the records must (see Deposit Requirements, later) or are liable of the vehicle increases due to the be readily accessible to the IRS. for the excise tax on gasoline, diesel fuel, or installation of retrofit parts and components kerosene and meet certain conditions. that permit the vehicle to be propelled by a

clean-burning fuel. The person having control or possession of a Form 720. The form has various sections.

policy or instrument subject to this tax must keep

the policy for at least 3 years after the date any • Part I consists of excise taxes generally

part of the tax on it was paid. required to be deposited (See Deposit Requirements, later). Foreign Insurance Treaty-based positions under IRC 6114. • Part II consists of excise taxes that are You may have to file an annual report disclosing Taxes not required to be deposited. the amount of premiums exempt from United

States excise tax as a result of the application of • Part III consists of the lines for your total Tax is imposed on insurance policies issued by a treaty with the United States that overrides (or tax, showing any claims and overpay- foreign insurers. The following tax rates apply to otherwise modifies) any provision of the Internal ments from previous quarters, indicating

Revenue Code. the amount of your deposits, and deterPage 27
mining the balance due or any overpay- son. This allows the IRS to call the designee to Federal tax deposit coupons. If you do not

ment. answer any questions that arise during the make your deposits electronically (discussed

processing of your return. It also allows your next), they must be accompanied by a Form • Schedule A, Excise Tax Liability, is used designee to perform certain actions. See the 8109, Federal Tax Deposit Coupon. If you do not to record your net tax liability for each form instructions for more information. have a coupon book, contact your local IRS semimonthly period in a quarter. Complete office or call 1–800–829–1040. it if you have an entry in Part I. One-time filing. If you import a vehicle, you

• Schedule C, Claims, is used to make may be eligible to make a one-time filing of Form Electronic deposit requirement. You must

claims only if you are reporting a liability in 720 for the gas guzzler tax or the luxury tax if you use the Electronic Federal Tax Payment System

Part I or Part II. meet the following three conditions. (EFTPS) to make electronic deposits of all depository tax liabilities (including employment • You do not use the vehicle in the course of Attachments to Form 720. You may have taxes, corporate income tax, and excise taxes) your trade or business. to attach the following forms. you incur after 2001, if you meet either of the

• You do not import gas guzzling cars or following conditions. • Form 6197 for the gas guzzler tax. luxury vehicles in the course of your trade • You had to make electronic deposits in • Form 6627 for environmental taxes. or business. 2001.

• You are not required to file Form 720 to • You deposited more than $200,000 in fed- Form 720X. This new form is used to make report any other excise taxes. eral depository taxes in 2000. adjustments to liability reported on Forms 720

filed in previous quarters. Previously these ad- File Form 720 for the quarter in which you If you do not meet these conditions, electronic

justments were made in Part I of Schedule C incur the tax liability. Attach Form 6197 if you deposits are voluntary.

(Form 720). report the gas guzzler tax. Pay the full tax with For information about EFTPS, access it on the You can file Form 720X by itself or, if it shows the return. No deposits are required. Check the Internet at www.eftps.gov, or see Publication a decrease in tax, you can attach it to Form 720. one-time filing box on page 1, Form 720. 966, Now a Full Range of Electronic Choices to See the form and its instructions for more infor- Pay ALL Your Federal Taxes. mation. Final return. File a final return if either of the You can enroll in EFTPS on-line or you can following apply to you. Conditions to allowance. For tax de- call:

creases, the claimant must check the appropri- • You go out of business. • 1–800–945–8400, or ate box on Form 720X stating that: • You will not owe excise taxes that are re- • 1–800–555–4477.

1) For adjustments of communications or air portable on Form 720 in future quarters.

transportation taxes, the claimant has:

When To Make Deposits Due dates. Form 720 must be filed by the a) Repaid the tax to the person from following due dates. whom it was collected, or These rules apply to taxes reported on Form 720

for which deposits are required. b) Obtained the consent of that person to Quarter Covered Due Dates Generally, you make deposits for a semi- allowance of the adjustment. January, February, March ..... April 30 monthly period. A semimonthly period is the first

April, May, June ............ July 31 15 days of a month or the 16th day through the 2) For other adjustments, the claimant has: July, August, September ...... October 31 end of a month.

October, November, December January 31 a) Not included the tax in the price of the All taxes are deposited under the rules for

article and not collected the tax from regular method taxes. However, communica- If any due date falls on a Saturday, Sunday, tion and air transportation taxes can be depos- the purchaser, or legal holiday, you can file the return on the

next business day. ited under the rules for alternative method

b) Repaid the tax to the ultimate pur- taxes. You must report the floor stocks tax imposed chaser, or All excise taxes that must be deposited are on ODCs held on January 1, as discussed earc) Attached the written consent of the ulti- subject to the special September rules. Under lier, on the return due by July 31 of the year that

mate purchaser to the allowance of the these rules, an additional deposit is required in the tax is imposed.

adjustment. September and different dates may apply if you

are required to make electronic deposits (see

However, the conditions listed under (2) do not Electronic deposit requirement, earlier). The

apply to environmental taxes, the ship passen- Paying the Taxes taxes for that part of the period not covered by

ger tax, obligations not in registered form, for- the special rules should be deposited by the

eign insurance taxes, fuels used on inland normal due date. Excise taxes are due and payable without as- waterways, alcohol sold as fuel but not used as See Publication 509 for an Excise Tax Cal- sessment or notice. If you need to make a pay- fuel, and taxes based on the use of certain endar that shows the due dates for the current ment when you file your quarterly return, make fuels (dyed diesel fuel in trains or buses and year. your payment by check or money order payable LPG, CNG, and other special motor fuels). to the United States Treasury. Write on your Regular method taxes. Deposits of taxes check or money order your employer identifica- Employer identification number. If you file (other than alternative method taxes) for a semi- tion number, Form 720, and the period covered Form 720, you need an employer identification monthly period are due by the 14th day following by the payment. number (EIN), unless you are a one-time filer the semimonthly period. Therefore, the deposit

(discussed next). If you do not have an EIN, you for the first semimonthly period is due by the Floor stocks tax on ODCs. You must deposit need to file Form SS–4, Application for Em- 29th of that month. The deposit for the second the floor stocks tax imposed on ODCs held on ployer Identification Number. You can get a semimonthly period is due by the 14th of the January 1, as discussed earlier, by June 30 of Form SS–4 from the IRS or from the Social following month. the year that the tax is imposed. Security Administration. If you do not receive an If the 14th day is a Saturday, Sunday, or

EIN by the time a return is due, file your return legal holiday in the District of Columbia, you

anyway and write “Applied for” and the date you Deposit Requirements must make the deposit by the immediately preapplied in the space for the EIN. See the Form ceding day that is not a Saturday, Sunday, or If you have to file a quarterly excise tax return on SS–4 instructions for how to file. legal holiday. Form 720, you may have to make deposits of

Third party designee. You can check the your excise taxes before the return is due. If you September rule. For 2002, deposit by Sep-

“Yes” box in the third party designee area to are not required to make deposits, you pay the tember 27 the taxes for the period beginning

authorize the IRS to discuss your Form 720 with tax when you file Form 720. See Exceptions, September 16 and ending September 25. If

an employee of your business or another per- later. making electronic deposits, deposit by SeptemPage 28
ber 30 the taxes for the period beginning Sep- September rule. To figure your net tax lia- 2) The taxes are reportable on a one-time

tember 16 and ending September 26. bility under the September rule, see sections filing. (See the earlier discussion,

40.6302(c)–2 and, for alternative method taxes, One-time filing, under Filing Form 720.) Make the deposit for the remaining 40.6302(c)–3 of the regulations. days of the second semimonthly period 3) The net liability for taxes listed in Part I of CAUTION in September by the regular due date. Form 720 does not exceed $2,500 for the

!

quarter. Safe Harbor Rule

4) The tax liability is for the removal of a

You can use the safe harbor rule to figure if you batch of gasohol from an approved refin- Alternative method taxes. You can deposit have deposited a sufficient amount of tax. The ery by bulk transfer, if the refiner elects to communications and air transportation taxes rules apply separately to regular method taxes treat itself for that removal as not regis- based on amounts considered as collected (the and alternative method taxes. tered. alternative method) rather than on amounts ac- The safe harbor rule applies to persons who tually collected. filed a Form 720 for the second calendar quarter If you use the alternative method, the tax (the look-back quarter) preceding the current included in amounts billed or tickets sold during quarter. If you filed for the look-back quarter, you a semimonthly period is considered as collected Credits and Refunds will meet the semimonthly deposit requirement during the first 7 days of the second following for the current quarter if all the following condi- semimonthly period. You must deposit these A credit may be claimed on Schedule C of Form tions are met. taxes by the third banking day after that seventh 720 or a refund may be claimed on Form 8849

day. for the credits and refunds described previously. • The deposit of that tax for each semi- To use the alternative method, you must monthly period in the current quarter is not To file a claim for a credit on Schedule C, you

keep a separate account of the tax included in must have a tax liability to report on Form 720 for less than 1/6 (16.67%) of the net tax liabil- the amounts billed or tickets sold during the the quarter. If you have no tax liability for the ity reported for that tax for the look-back month. Report on Form 720 the tax included in quarter, you must use Form 8849 to file a claim quarter. amounts billed or tickets sold and not the for a refund.

amount of tax that is actually collected. • Each deposit is timely made. Generally, claims must be filed within 3 years

of the filing of the return reporting the tax to • Any underpayment for the current quarter Example. Under the alternative method, the which the claim relates, or 2 years from when is paid by the due date of the return. tax included in amounts billed or tickets sold the tax reported on the return was paid, whichbetween March 1 and March 15, 2002, is consid- • For regular method taxes, liability does not ever is later. A return filed before the due date is

ered collected during the first 7 days of April include any tax that was not imposed, or a considered to have been filed on the due date.

2002. The deposit of these taxes is due by April tax on a chemical not subject to tax, at all See Publication 378 for claims by ultimate 10, 2002, 3 banking days after April 7. These times during the look-back quarter. purchasers of fuels and registered ultimate venamounts are reported on the Form 720 for the dors, including information on when to file. • For alternative method taxes, liability does second quarter of 2002. not include any tax that was not imposed For specific information on claiming a credit

September rule. For 2002, deposit by Sep- or refund for a particular excise tax, see the at all times during the look-back quarter discussion about that tax. tember 27 the communications and air transpor- and the month preceding the look-back

tation taxes included in the amounts billed or quarter.

tickets sold during the period beginning Septem- • For the semimonthly period for which the ber 1 and ending September 10. If making electronic deposits, deposit by September 30 the air additional deposit is required (September Tax on Wagering rule), the additional deposit must be at transportation and communications taxes included in the amounts billed or tickets sold dur- least 11/90 (12.23%), 10/90 (11.12%) for The following two taxes are imposed on wagering the period beginning September 1 and non-EFTPS, of the net tax liability reported ing activities.

for the look-back quarter. ending September 11. • Occupational tax. You must pay the occuReport alternative method taxes de- pational tax if you accept taxable wagers Tax rate increases. You must modify the safe posited under the September rule on for yourself or another person. See Form

harbor rule if there has been an increase in the Form 720 for the 4th quarter. 11–C, later, for more information.

TIP

rate of tax. You must figure your tax liability in • Wagering tax. You must pay the tax on the look-back quarter as if the increased rate wagering if you are in the business of ac- had been in effect. To qualify for the safe harbor Make the deposit for the remaining cepting wagers or running a wagering pool rule, your deposits cannot be less than 1/6 of the days of the first semimonthly period in or lottery. You must also pay the tax on CAUTION September by the regular due date. refigured tax liability. !

wagering if you have not properly registered the name and address of your principal on Form 11–C. See Form 730, later, Exceptions for more information.

Amount of Deposits You do not have to make deposits of taxes in the

following situations. You pay these taxes when Exempt organizations. Organizations ex- Deposits for a semimonthly period generally you file your Form 720 for the quarter. empt from income tax under section 501 or 521 must be at least 95 percent of the net tax liability of the Internal Revenue Code are not exempt for that period unless the safe harbor rule (dis- 1) The liability is for taxes on the following from the tax on wagering or the occupational tax. cussed later) applies. Generally, you do not items. However, see Lottery, later, for an exception. have to make a deposit for a period in which you a) Sport fishing equipment. incurred no tax liability. Confidentiality. No Treasury Department emb) Electric outboard motors and sonar de- ployee may disclose any information that you

Net tax liability. Your net tax liability is your vices. supply in relation to the wagering taxes, unless

tax liability for the period minus any claims on necessary to administer or enforce the Internal c) Bows. Schedule C (Form 720) for the period. You may Revenue laws.

figure your net tax liability for a semimonthly d) Arrow components.

period by dividing your net liability incurred dur- e) Fuels used on inland waterways. Definitions

ing the calendar month by two. If you use this

method, you must use it for all semimonthly f) Alcohol sold as fuel but not used as The following definitions apply to Form 11–C

periods in the calendar quarter. fuel. and Form 730.

Page 29
Principal. A principal is a person who is in the Each of the 10 agents file Form 11–C show1) Games of a type in which usually the wa- business of accepting wagers for his or her own ing his or her name, address, and EIN, as well gers are placed, winners are determined, account. This is the person who makes profit or as Ken’s. and the prizes are distributed in the pres- risks loss depending on the outcome of the

event or contest for which the wager is ac- ence of everyone who placed a wager. Figuring the tax. The following tax must be

cepted. paid annually for every year in which taxable 2) Drawings conducted by a tax-exempt or- wagers are accepted. ganization, if the net proceeds of the draw- Agent. This is the agent of the principal who ing do not benefit a private shareholder or • $50 if all wagers accepted are authorized accepts wagers for the principal. individual. under the laws of the state in which accepted. Wagers. Wagers include any wager: Card games, roulette games, dice games,

bingo, keno, and gambling wheels usually fall • $500 for all other wagers. • Made on sports events or contests with a within exception (1) above. person in the business of accepting wa- The tax year begins on July 1. If you start acgers, cepting wagers after July 31, the tax is prorated Form 11–C for the first year. The prorated amounts are • Placed in a wagering pool on a sports shown in the table in the Form 11–C instruc- event or contest, if the pool is conducted You use Form 11–C to register with the IRS tions. for profit, or certain information on wagering activity and to

pay the occupational tax on wagering. Your can- • Placed in a lottery conducted for profit. Refund. A refund for an overpayment of the celed check is proof of registration and payment. occupational tax may be claimed on Form 8849

using Schedule 6. See the Form 8849 instruc- Sports event. A sports event includes every Who must file. You must file Form 11–C if tions for details. type of amateur, scholastic, or professional you are a principal or an agent, defined earlier. sports competition, such as: Form 730 When to file. You must file your first Form Auto racing Baseball Basketball

Billiards Bowling Boxing 11–C before you begin accepting wagers. After Form 730 is used for figuring the tax on wagers.

Cards Checkers Cricket that, file a renewal return by July 1 for each year The wagering tax applies to the wagers (as

Croquet Dog racing Football that you accept wagers. You may also be re- defined earlier), regardless of the outcome of

Golf Gymnastics Hockey quired to file a first return for a new entity created the individual wagers.

Horse racing Lacrosse Rugby when certain changes in ownership or control The tax applies only to a wager that meets

Soccer Squash Tennis occur. In addition, you are required to file a either of the following conditions.

Track Tug of war Wrestling supplemental registration when certain events • It is accepted in the United States. occur. See the Form 11–C instructions.

• It is placed by a person who is in the Contest. A contest is any competition involv- Information required. Follow the instructions United States with a U.S. citizen or resi- ing speed, skill, endurance, popularity, politics, on the back of the form. All filers must have an dent, or in a wagering pool or lottery con- strength, or appearance, such as the following. employer identification number (EIN). You can- ducted by a U.S. citizen or resident. • Elections. not use your social security number. If you do

not have an EIN, you need to file Form SS–4, Wagers made within the United States are • The outcome of nominating conventions. Application for Employer Identification Number. taxable regardless of the citizenship or place of • Dance marathons. You can get a Form SS–4 from the IRS or from residence of the parties to the wager.

• Log-rolling contests. the Social Security Administration. If you do not Laid-off wagers. Persons accepting more receive an EIN by the time a return is due, file • Wood-chopping contests. wagers than they are willing to carry may lay off your return anyway and write “Applied for” and

a portion of the wagers with another person to • Weightlifting contests. the date you applied in the space for the EIN.

See the Form SS avoid the risk of loss. If you accept a wager –4 instructions for how to file. • Beauty contests. taken initially by someone else (other than an If you are a principal, you must show the agent acting for you) include the wager in your • Spelling bees. number of agents that accept wagers for you gross receipts. If you accept a wager and lay off and their names, addresses, and EINs. If you all or part of it with a person who is liable for the engage a new agent after filing Form 11–C, you Wagering pool. A wagering pool conducted tax, you may be entitled to a credit or refund, must file a supplemental registration showing for profit includes any method or scheme for discussed later. this information within 10 days after you engage giving prizes to one or more winning bettors the agent. based on the outcome of a sports event, a con- Excluded wagers. Tax is not imposed on any Agents must show the name, address, and test, or a combination or series of these events of the following. EIN of each of their principals. If you are en- or contests if the wagering pool is managed and • Parimutuel wagering, including horse rac- gaged by a new principal after having filed a conducted for the purpose of making a profit. A ing, dog racing, and jai alai when licensed wagering pool or lottery may be conducted for Form 11–C, you must file a supplemental regis- under state law. tration within 10 days after being engaged by the profit even if a direct profit does not occur. If you

operate the wagering pool or lottery with the new principal. If you do not provide the required • Coin-operated devices such as pinball maexpectation of a profit in the form of increased information about the principal, you will be liable chines.

for the excise tax on wagers you accept as if you sales, attendance, or other indirect benefits, you were the principal. • Sweepstakes, wagering pools, or lotteries conduct it for profit. that are conducted by an agency of a state

Example. Ken operates a numbers game if the wager is placed with the state Lottery. This includes the numbers game, pol- and engages 10 people to receive wagers from agency or its authorized agents or employ- icy, punch boards, and similar types of wager- ees. ing. In general, a lottery conducted for profit the public on his behalf. Ken also employs a

secretary and a bookkeeper. Ken and each of includes any method or scheme for the distribu- the 10 agents are liable for the tax. They must tion of prizes among persons who have paid or Figuring the tax. The amount of the wager is

promised to pay for a chance to win the prizes. the amount risked by the bettor, including any each file Form 11–C. The secretary and the

The winning prizes are usually determined by fee or charge incident to placing the wager. It is bookkeeper are not liable for the tax unless they

also accept wagers for Ken. the drawing of numbers, symbols, or tickets from not the amount that the bettor stands to win.

a wheel or other container or by the outcome of The tax is 2% of the wager if it is not author- On Ken’s Form 11–C, he lists all required

a given event. information (name, address, and EIN) for each ized under the laws of the state in which acIt does not include either of the following cepted. If the wager is authorized, the rate is of his ten agents as well as himself. He does not

kinds of events. list his secretary or bookkeeper. 0.25% of the wager.

Page 30
When to file. File Form 730 for each month by • Making false statements relating to tax. determination letters issued by IRS directors

the last day of the following month. File a return and information letters issued by IRS directors • Failing to register. whether or not you have taxable wagers to re- or the National Office.

port. If you have none to report, write “0” in the • Misrepresenting that tax is excluded from There is a fee for most types of determination

last box of the dollar amount column. If you stop the price of an article. letters and rulings. For complete details of the

accepting wagers permanently, check the final rulings program, see Publication 1375, Procereturn box on the form. dures for Issuing Rulings, Determination Let- Trust fund recovery penalty. If you provide ters, and Information Letters, etc. Credit or refund. A credit or refund may be taxable communications or air transportation

claimed for an overpayment of the wagering tax services, you have to collect excise taxes (as

or for the amount of tax imposed on a wager that discussed earlier) from those persons who pay

is laid off with another person who is liable for you for those services. You must pay over these

the tax on the amount laid off. Claim a credit on taxes to the U.S. Government. How To Get Tax Help

line 5 of Form 730 or file a claim for refund on If you willfully fail to collect or pay over these

Form 8849 using Schedule 6. No credit or refund You can get help with unresolved tax issues, taxes, or if you evade or defeat them in any way,

will be allowed unless the timely filed claim has order free publications and forms, ask tax ques- the trust fund recovery penalty may apply. Willthe required statements, certificates, and con- tions, and get more information from the IRS in fully means voluntarily, consciously, and inten- several ways. By selecting the method that is sents attached. For more information, see the tionally. The trust fund recovery penalty equals best for you, you will have quick and easy ac- instructions for Form 730 and Form 8849. 100% of the taxes not collected or not paid over cess to tax help. to the U.S. Government. Conditions to allowance. One of the folThe trust fund recovery penalty may be im- lowing statements must be attached to the claim Contacting your Taxpayer Advocate. If you posed on any person responsible for collecting, for credit or refund. have attempted to deal with an IRS problem accounting for, and paying over these taxes. If unsuccessfully, you should contact your Tax- • The tax has not been collected from the this person knows that these required actions payer Advocate. person who placed the wager. are not taking place for whatever reason, the The Taxpayer Advocate represents your in- • The tax has been repaid to that person. person is acting willfully. Paying other expenses terests and concerns within the IRS by protect- of the business instead of paying the taxes is • The written consent of that person to ing your rights and resolving problems that have willful behavior. make the claim has been obtained. not been fixed through normal channels. While A responsible person can be an officer or Taxpayer Advocates cannot change the tax law employee of a corporation, a partner or em- or make a technical tax decision, they can clear If the claim is for a laid-off wager accepted by ployee of a partnership, or any other person who up problems that resulted from previous con- the claimant, the statement must be attached for had responsibility for certain aspects of the busi- both the person who placed the laid-off wager tacts and ensure that your case is given a comand the person who placed the original wager. ness and financial affairs of the employer (or plete and impartial review. business). This may include accountants, trust- To contact your Taxpayer Advocate: Each person liable for the wagering tax ees in bankruptcy, members of a board, banks,

must keep records to reflect each day’s insurance companies, or sureties. The responsi- • Call the Taxpayer Advocate at

operations. Your records should in- ble person could even be another corporation— 1–877–777–4778. RECORDS

clude the following information. in other words, anyone who has the duty and the • Call the IRS at 1–800–829–1040.

ability to direct, account for, or pay over the • The gross amount of all wagers accepted. money. Having signature power on the business • Call, write, or fax the Taxpayer Advocate

• The gross amount of each class or type of checking account could be a significant factor in office in your area.

wager accepted on each event, contest, or determining responsibility. • Call 1–800–829–4059 if you are a other wagering medium. TTY/TDD user.

• The gross amount of any wagers laid off

with other persons and the name, ad- For more information, see Publication 1546,

dress, and registration number of each Examination and The Taxpayer Advocate Service of the IRS.

person with whom you placed the laid-off

wagers. Appeal Procedures Free tax services. To find out what services

are available, get Publication 910, Guide to Free For more information on records, see sections If your excise tax return is examined and you Tax Services. It contains a list of free tax publi- 44.4403–1 and 44.6001–1 of the regulations. disagree with the findings, you can get informa- cations and an index of tax topics. It also detion about audit and appeal procedures from scribes other free tax information services,

Publication 556, Examination of Returns, Ap- including tax education and assistance propeal Rights, and Claims for Refund. An grams and a list of TeleTax topics.

Penalties unagreed case involving an excise tax covered Personal computer. With your per- in this publication differs from other tax cases in sonal computer and modem, you can and Interest that you can only contest it in court after pay- access the IRS on the Internet at ment of the tax by filing suit for a refund in the www.irs.gov. While visiting our web site, you Penalties and interest may result from any of the United States District Court or the United States can: following acts. Court of Federal Claims.

• Find answers to questions you may have. • Failing to collect and pay over tax as the

collecting agent (see Trust fund recovery • Download forms and publications or

penalty, next). search for forms and publications by topic Rulings Program or keyword. • Failing to keep adequate records.

• View forms that may be filled in electroni- The IRS has a program for assisting taxpayers • Failing to file returns. who have technical problems with tax laws and cally, print the completed form, and then

• Failing to pay taxes. save the form for recordkeeping. regulations. The IRS will answer inquiries from

• Filing returns late. individuals and organizations about the tax ef- • View Internal Revenue Bulletins published fect of their acts or transactions. The National in the last few years. • Filing false or fraudulent returns. Office of the IRS issues rulings on those mat- • Search regulations and the Internal Reve- • Paying taxes late. ters.

nue Code. A ruling is a written statement to a taxpayer • Failing to make deposits. that interprets and applies tax laws to the • Receive our electronic newsletters on hot

• Depositing taxes late. taxpayer’s specific set of facts. There are also tax issues and news.

Page 31
• Get information on starting and operating reproducible proofs. Also, some IRS offices and

a small business. libraries have the Internal Revenue Code, regu- National Revenue Center

lations, Internal Revenue Bulletins, and Cumu- Special Occupational Tax

You can also reach us with your computer lative Bulletins available for research purposes. 550 Main Street

using File Transfer Protocol at ftp.irs.gov. Cincinnati, OH 45202

(513) 684–2979 or 1–800–937–8864

TaxFax Service. Using the phone at- Mail. You can send your order for

tached to your fax machine, you can forms, instructions, and publications to National Revenue Center

receive forms and instructions by call- the Distribution Center nearest to you Excise Tax

ing 703–368–9694. Follow the directions from and receive a response within 10 workdays after 550 Main Street

the prompts. When you order forms, enter the your request is received. Find the address that Cincinnati, OH 45250–3263

catalog number for the form you need. The items applies to your part of the country. (513) 684–3334 or 1–800–398–2282

you request will be faxed to you. • Western part of U.S.: For help with transmission problems, call the

FedWorld Help Desk at 703–487–4608. Western Area Distribution Center ATF Form 5630.5:

Rancho Cordova, CA 95743–0001 Alcohol, Tobacco; • Central part of U.S.: ATF Form 5630.7: Firearms

Phone. Many services are available by Central Area Distribution Center

phone. P.O. Box 8903 A number of excise taxes apply to alcoholic

Bloomington, IL 61702–8903 beverages, tobacco products, and firearms. If

you produce, sell, or import guns, tobacco, or • Eastern part of U.S. and foreign alcoholic products, or if you manufacture equip- • Ordering forms, instructions, and publica- addresses: ment for their production, you may be liable for tions. Call 1–800–829–3676 to order cur- Eastern Area Distribution Center one or more excise taxes. Use Form 5630.5 rent and prior year forms, instructions, and P.O. Box 85074 (Alcohol, Tobacco) or Form 5630.7 (Firearms), publications. Richmond, VA 23261–5074 Special Tax Registration and Return, to register

• Asking tax questions. Call the IRS with your place of business and pay an annual tax.

your tax questions at 1–800–829–1040. CD-ROM. You can order IRS Publica- The businesses covered by Form 5630.5 intion 1796, Federal Tax Products on clude the following. • TTY/TDD equipment. If you have access CD-ROM, and obtain: to TTY/TDD equipment, call 1–800–829– • Brewers and dealers of liquor, wine, or

4059 to ask tax questions or to order beer.

forms and publications. • Current tax forms, instructions, and publi- • Distillers, importers, wholesale and retail cations. • TeleTax topics. Call 1–800–829–4477 to dealers of distilled spirits.

listen to pre-recorded messages covering • Prior-year tax forms and instructions. • Manufacturers who use alcohol to produce various tax topics. • Popular tax forms that may be filled in nonbeverage products.

electronically, printed out for submission, • Importers and wholesalers of imported Evaluating the quality of our telephone ser- and saved for recordkeeping. perfumes. vices. To ensure that IRS representatives give • Internal Revenue Bulletins. accurate, courteous, and professional answers, The businesses covered by Form 5630.7 in- we evaluate the quality of our telephone ser- The CD-ROM can be purchased from Na- clude manufacturers, importers, and dealers in vices in several ways. tional Technical Information Service (NTIS) by firearms (National Firearms Act).

• A second IRS representative sometimes calling 1–877–233–6767 or on the Internet at

monitors live telephone calls. That person www.irs.gov. The first release is available in ATF Form 5300.26: Firearms only evaluates the IRS assistor and does mid-December and the final release is available

not keep a record of any taxpayer’s name in late January. Use ATF Form 5300.26, Federal Firearms and

or tax identification number. IRS Publication 3207, Small Business Re- Ammunition Excise Tax Return, to determine

source Guide, is an interactive CD-ROM that your firearms excise tax liability. Mail all domes- • We sometimes record telephone calls to contains information important to small busi- tic firearms excise tax returns to the special evaluate IRS assistors objectively. We nesses. It is available in mid-February. You can purpose post office box (lockbox) as indicated hold these recordings no longer than one get one free copy by calling 1–800–829–3676 on the return form. File returns for Puerto Rico week and use them only to measure the or visiting the IRS web site at www.irs.gov. and Virgin Islands with the Chief, Puerto Rico quality of assistance. Operations, Alcohol, Tobacco, and Firearms. • We value our customers’ opinions.

Throughout this year, we will be surveying

our customers for their opinions on our

service. Appendix A

This appendix provides information about ATF Walk-in. You can walk in to many post forms you may have to use to report certain offices, libraries, and IRS offices to pick excise taxes not covered in this publication. up certain forms, instructions, and publications. Some IRS offices, libraries, grocery Bureau of Alcohol, Tobacco, and

stores, copy centers, city and county govern- Firearms (ATF). If you need forms or

ments, credit unions, and office supply stores more information about the ATF forms,

have an extensive collection of products avail- write to or call:

able to print from a CD-ROM or photocopy from

Page 32
Part I. Products that are mixtures containing ODCs

Imported Products Table

Mixtures containing ODCs, including but not limited to:

—anti-static sprays

—automotive products such as “carburetor cleaner,” “stop

leak,” “oil charge”

—cleaning solvents

—contact cleaners

—degreasers

—dusting sprays

—electronic circuit board coolants

—electronic solvents

—Ethylene oxide/CFC-12

—fire extinguisher preparations and charges

—flux removers for electronics

—insect and wasp sprays

—mixtures of ODCs

—propellants

—refrigerants

Part II. Products in which ODCs are used for purposes of refrigeration or air conditioning, creating an

aerosol or foam, or manufacturing electronic components

Product Name

Harmonized Tariff

Schedule Heading ODC ODC Weight

Rigid foam insulation defined in §52.4682-1(d)(3)

Foams made with ODCs, other than foams

defined in §52.4682-1(d)(3)

Scrap flexible foam made with ODCs

Medical products containing ODCs—

—surgical staplers

—cryogenic medical instruments

—drug delivery systems

—inhalants

Dehumidifiers, household

Chillers:

charged with CFC-12

charged with CFC-114

charged with R-500

Refrigerator-freezers, household:

not > 184 liters

> 184 liters but not > 269 liters

> 269 liters but not > 382 liters

> 382 liters

Refrigerators, household

not > 184 liters

> 184 liters but not > 269 liters

> 269 liters but not > 382 liters

> 382 liters

Freezers, household

Freezers, household

Refrigerating display counters not

> 227 kg

8415.82.00.50

8415.82.00.65

8418.10.00.10

8418.10.00.20

8418.10.00.30

8418.10.00.40

8418.21.00.10

8418.21.00.20

8418.21.00.30

8418.21.00.90

8418.30

8418.40

8418.50

CFC-12

CFC-12

CFC-114

CFC-12

CFC-11

0.344

1600.

1250.

1920.

1.081

0.13

1.321

0.26

1.541

0.35

1.871

0.35

1.081

1.321

0.261

1.541

0.35

1.871

0.35

2.01

0.4

2.01

0.4

50.01

CFC-12 260.0

CFC-11

CFC-12

CFC-11

CFC-12

CFC-11

CFC-12

CFC-11

CFC-12

CFC-11

CFC-12

CFC-11

0.13

CFC-12

CFC-11

CFC-12

CFC-11

CFC-12

CFC-11

CFC-12

CFC-11

CFC-12

Appendix B

This appendix provides the Imported Products Table. This is a listing of imported products containing or manufactured with ozone-depleting

chemicals (ODCs). See Imported Taxable Products for more information on these tables.

Page 33
Part II. (continued)

Product Name

Harmonized Tariff

Schedule Heading ODC ODC Weight

CFC-12

Icemaking machines:

charged with CFC-12

charged with R-502

Drinking water coolers:

charged with CFC-12

charged with R-500

Centrifugal chillers, hermetic:

charged with CFC-12

charged with CFC-114

charged with R-500

Reciprocating chillers:

charged with CFC-12

Mobile refrigeration systems:

containers

trucks

trailers

Refrigeration condensing units:

not > 746W

> 746W but not > 2.2KW

> 2.2 KW but not > 7.5KW

> 7.5KW but not > 22.3 KW

>22.3KW

Fire extinguishers, charged w/ODCs

Electronic typewriters and word processors

Electronic calculators

Electronic calculators w/printing device

Electronic calculators

Account machines

Cash registers

Digital automatic data processing machines

w/cathode ray tube, not included in

subheading 8471.20.00.90

Laptops, notebooks, and pocket computers

Digital processing unit w/entry value

not > $100K

> $100K

Combined input/output units (terminal)

Keyboards

Display units

Printer units

Input or output units

Hard magnetic disk drive units not included in

subheading 8471.93.10 for a disk of a

diameter:

not > 9 cm (31⁄2 inches)

> 9 cm (31⁄2 inches) but not > 21 cm

(81⁄4 inches)

Nonmagnetic storage unit w/entry value > $1,000

Magnet disk drive unit for a disk of a diameter

over 21 cm (81⁄4 inches)

Power supplies

8418.69

8418.69

8418.69

8418.69

8418.99

8418.99.00.05

8418.99.00.10

8418.99.00.15

8418.99.00.20

8418.99.00.25

8424

8469

8470.10

8470.21

8470.29

8470.40

8470.50

8471.20

8471.20.00.90

8471.91

8471.91

8471.92

8471.92

8471.92

8471.92

8471.92

8471.93

8471.93

8471.93

8471.93.10

8471.99.30

CFC-12

CFC-12

CFC-12

CFC-12

CFC-12

CFC-12

CFC-12

CFC-12

CFC-12

CFC-12

CFC-12

CFC-12

CFC-12

CFC-115

CFC-114

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

1.4

3.39

0.21

0.22

1600.

1250.

1920.

200.

15.

11.

20.

0.3

1.0

3.0

8.5

17.0

0.2049

0.0035

0.0057

0.0035

0.1913

0.1913

0.3663

0.03567

0.4980

27.6667

0.3600

0.0742

0.0386

0.1558

0.1370

0.2829

1.1671

2.7758

4.0067

0.0655

Page 34
Part II. (continued)

Product Name

Harmonized Tariff

Schedule Heading ODC ODC Weight

CFC-12

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

Electronic office machines

Populated cards for digital processing unit in

subheading 8471.91 with value:

not > $100K

> $100 K

Automatic goods—vending machines with

refrigerating device

Microwave ovens with electronic controls, with

capacity of:

0.99 cu. ft. or less

1.0 through 1.3 cu. ft.

1.31 cu. ft. or greater

Microwave oven combination with electronic

controls

Telephone sets w/entry value:

not > $11.00

> $11.00

Teleprinters & teletypewriters

Switching equipment not included in subheading

8517.30.20

Private branch exchange switching equipment

Modems

Intercoms

Facsimile machines

Loudspeakers, microphones, headphones, &

electric sound amplifier sets, not included in

subheading 8518.30.10

Telephone handsets

Turntables, record players, cassette players, and

other sound reproducing apparatus

Magnetic tape recorders & other sound recording

apparatus, not included in subheading

8520.20

Telephone answering machines

Color video recording/reproducing apparatus

Videodisc players

Cordless handset telephones

Cellular communication equipment

TV cameras

Camcorders

Radio combinations

Radios

Motor vehicle radios with or w/o tape player

Radio combinations

Radios

Tuners w/o speaker

Television receivers

VCRs

Home satellite earth stations

Electronic assemblies for HTS headings 8525,

8527, & 8528

8472

8473.30

8473.30

8476.11

8476.50

8516.50.40.60

8517.10

8517.10

8517.20

8517.30

8517.30.20

8517.40

8517.81

8517.82

8518

8518.30.10

8519

8520

8520.20

8521.10.00.20

8521.90

8525.20.50

8525.20.60

8525.30

8525.30

8527.11

8527.19

8527.21

8527.31

8527.32

8527.39.00.20

8528

8528.10.40

8528.10.80.55

8529.90

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

0.001

0.1408

4.82

0.45

0.0300

0.0441

0.0485

0.0595

0.0225

0.1

0.1

0.1267

0.0753

0.0225

0.0225

0.0225

0.0022

0.042

0.0022

0.0022

0.1

0.0586

0.0106

0.1

0.4446

1.423

0.0586

0.0022

0.0014

0.0021

0.0022

0.0014

0.0022

0.0386

0.0586

0.0106

0.0816

Page 35
Part II. (continued)

Product Name

Harmonized Tariff

Schedule Heading ODC ODC Weight

CFC-12

CFC-113

CFC-113

CFC-113

Indicator panels incorporating liquid crystal

devices or light emitting diodes

Printed circuits

Computerized numerical controls

Diodes, crystals, transistors and other similar

discrete semiconductor devices

Electronic integrated circuits and

microassemblies

Signal generators

Avionics

Signal generators subassemblies

Insulated or refrigerated railway freight cars

Passenger automobiles:

foams (interior)

foams (exterior)

with charged a/c

without charged a/c

electronics

Light trucks:

foams (interior)

foams (exterior)

with charged a/c

without charged a/c

electronics

Heavy trucks and tractors, with GVW 33,001 lbs

or more:

foams (interior)

foams (exterior)

with charged a/c

without charged a/c

electronics

Motorcycles with seat foamed with ODCs

Bicycles with seat foamed with ODCs

Seats foamed with ODCs

Aircraft

Optical fibers

Electronic cameras

Photocopiers

Avionics

Electronic drafting machines

Complete patient monitoring systems

Complete patient monitoring systems;

subassemblies thereof

Physical or chemical analysis instruments

Oscilloscopes

Foam chairs

Foam sofas

Foam mattresses

8531.20

8534

8537.10.00.30

8541

8542

8543.20

8543.90.40

8543.90.80

8606

8703

8704

8704

8711

8712

8714.95

8802

9001

9006

9009

9014.20

9017

9018.19.80

9018.19.80.60

9027

9030

9401

9401

9404.21

CFC-113

CFC-113

CFC-113

CFC-113

CFC-113

CFC-11

CFC-11

CFC-11

CFC-12

CFC-113

CFC-12

CFC-11

CFC-11

CFC-12

CFC-113

CFC-12

CFC-11

CFC-11

CFC-12

CFC-113

CFC-11

CFC-11

CFC-11

CFC-12

CFC-113

CFC-12

CFC-113

CFC-113

CFC-113

CFC-113

CFC-12

CFC-113

CFC-113

CFC-12

CFC-113

CFC-11

CFC-12

CFC-113

CFC-11

CFC-11

CFC-11

0.0146

0.001

0.1306

0.0001

0.0002

0.6518

0.915

0.1265

100.1

0.8

0.7

2.0

0.2

0.5

0.6

0.1

2.0

0.2

0.4

0.6

0.1

3.0

2.0

0.4

0.04

0.04

0.04

0.25 lb./1000 lbs

Operating Empty

Weight (OEW)

30.0 lbs./1000 lbs. OEW

0.005 lb./ thousand feet

0.01

0.0426

0.915

0.12

0.94

3.4163

1.9320

0.0003

0.0271

0.49

0.5943

0.2613

0.30

0.75

1.60

Page 36
Part II. (continued)

Product Name

Harmonized Tariff

Schedule Heading ODC ODC Weight

CFC-113

CFC-113

CFC-113

Electronic games and electronic components

thereof

Electronic items not otherwise listed in

the Table

not included in HTS

chapters 84, 85, 90

9504

0.0004 pound/$1.00 of

entry value

included in HTS

chapters 84, 85, 90

0.0004 pound/$1.00 of

entry value

Part III.

Product Name

Harmonized Tariff

Schedule Heading

Products that are not imported taxable products

Room air conditioners

Dishwashers

Clothes washers

Clothes dryers

Floppy disk drive units

Transformers and inductors

Toasters

Unrecorded media

Recorded media

Capacitors

Resistors

Switching apparatus

Cathode tubes

8415.10.00.60

8422.11

8450.11

8451.21

8471.93

8504

8516.72

8523

8524

8532

8533

8536

8540

1 Denotes an ODC used in the manufacture of rigid foam insulation.

Page 37
Model Certificate A

FIRST TAXPAYER’S REPORT

1.

2.

3.

4.

5.

6.

First Taxpayer’s name, address, and employer identification number

Name, address, and employer identification number of the buyer of the taxable fuel subject to tax

Date and location of removal, entry, or sale

Volume and type of taxable fuel removed, entered, or sold

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

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

Appendix C

This appendix contains models of the certificates, reports, and statements discussed earlier under Fuel Taxes.

Page 38
Model Certificate B

STATEMENT OF SUBSEQUENT SELLER

1.

2.

3.

4.

Name, address, and employer identification number of seller in subsequent sale

Name, address, and employer identification number of the buyer in subsequent sale

Date and location of subsequent sale

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 39
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 40
Model Certificate D

CERTIFICATE OF PERSON BUYING GASOLINE BLENDSTOCKS FOR USE OTHER THAN IN THE PRODUCTION OF

FINISHED GASOLINE

Name, address, and employer identification number of seller

Signature and date signed

Printed or typed name of person signing

Title of person signing

Name of Buyer

Employer identification number

Address of Buyer

(To support tax-free sales under section 4081 of the Internal Revenue Code.)

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.

Page 41
Model Certificate E

CERTIFICATE OF REGISTERED GASOHOL BLENDER

Name, address, and employer identification number of seller

(To support sales of gasoline at the gasohol production tax rate under section 4081(c) of the Internal Revenue Code)

Name of buyer (“Buyer”) certifies the following under penalties of perjury:

Buyer is registered as a gasohol blender with registration number . Buyer’s registration has not been suspended or

revoked by the Internal Revenue Service.

The gasoline bought under this certificate will be used by Buyer to produce gasohol (as defined in §48.4081-(6)(b) of the Manufacturers

and Retailers Excise Tax Regulations) within 24 hours after buying the gasoline.

Type of gasohol Buyer will produce (check one only):

10% gasohol

7.7% gasohol

5.7% gasohol

If the gasohol the Buyer will produce will contain ethanol, check here:

This certificate applies to the following (complete as applicable):

If this is a single purchase certificate, check here and enter:

1. Account number

2. Number of gallons

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(f) of the Internal Revenue Code for any gasoline covered by this certificate.

Buyer agrees to provide seller with a new certificate if any information in this certificate changes.

Buyer understands that Buyer’s registration may be revoked if the gasoline covered by this certificate is resold or is used other than in

Buyer’s production of the type of gasohol identified above.

Buyer will reduce any alcohol mixture credit under section 40(b) by an amount equal to the benefit of the gasohol production tax rate

under section 4081(c) for the gasohol to which this certificate relates.

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 42
Model Certificate F

CERTIFICATE OF PERSON BUYING AVIATION-GRADE KEROSENE FOR USE AS A FUEL IN AN AIRCRAFT

(To support tax-free removals and entries of aviation-grade kerosene under section 4082 of the Internal Revenue Code.)

Printed or typed name of person signing

Title of person signing

Employer identification number

Address of Buyer

Signature and date signed

Name of buyer

(Buyer) certifies the following under penalties of perjury:

The aviation-grade kerosene to which this certificate applies will be used by Buyer as a fuel in an aircraft or resold by Buyer for that

use.

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.

1. A single purchase on invoice or delivery ticket number .

This certificate applies to percent of Buyer’s purchases from (name, address, and employer

identification number of seller) as follows (complete as applicable):

Buyer is buying the kerosene for (check either or both as applicable):

Buyer’s use as a fuel in an aircraft.

Resale for use as a fuel in an aircraft.

Buyer will provide a new certificate to the seller if any information in this certificate changes.

If Buyer sells the aviation-grade kerosene to which this certificate relates and does not deliver it into the fuel supply tank of an aircraft,

Buyer will be liable for tax unless Buyer obtains a certificate from its buyer stating that the aviation-grade kerosene will be used as a fuel in

an aircraft.

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.

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.

Page 43
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.)

Printed or typed name of person signing

Title of person signing

Employer identification number

Address of Buyer

Signature and date signed

Name of buyer

(Buyer) certifies the following under penalties of perjury:

Buyer is a registered feedstock user with registration number . Buyer’s registration has not been revoked or

suspended.

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.

1. A single purchase on invoice or delivery ticket number .

This certificate applies to percent of Buyer’s purchases from (name, address, and employer

identification number of seller) as follows (complete as applicable):

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.

The kerosene to which this certificate applies will be used by Buyer for a feedstock purpose.

Page 44
Model Certificate H

FIRST PRODUCER’S REPORT

First Producer’s name, address, and employer identification number

Printed or typed name of person signing

Title of person signing

Signature and date signed

Under penalties of perjury, First Producer declares that First Producer has examined this statement, including any accompanying

schedules and statements, and, to the best of First Producer’s knowledge and belief, it is true, correct and complete.

Buyer’s name, address, and employer identification number

Date and location of taxable sale

Volume and type of aviation fuel sold

Amount of federal excise tax paid on account of the sale

Model Certificate I

STATEMENT OF SUBSEQUENT SELLER (AVIATION FUEL)

Name, address, and employer identification number of seller in subsequent sale

Printed or typed name of person signing

Title of person signing

Signature and date signed

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, it is true, correct and complete.

Name, address, and employer identification number of buyer in subsequent sale

Date and location of subsequent sale

Volume and type of aviation fuel sold

The undersigned seller (Seller) has received the copy of the first producer’s report provided with this statement in connection with

Seller’s purchase of the aviation fuel described in this statement.

Page 45
Model Certificate J

CERTIFICATE OF PERSON BUYING COMPRESSED NATURAL GAS (CNG) FOR A NONTAXABLE USE

Name, address, and employer identification number of seller

(To support tax-free sales of CNG under section 4041 of the Internal Revenue Code.)

Printed or typed name of person signing

Title of person signing

Employer identification number

Address of Buyer

Signature and date signed

(Name of buyer)

(“Buyer”) certifies the following under penalties of perjury:

The CNG to which this certificate relates will be used in a nontaxable use.

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 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.

Page 46
Index

A Selling price . . . . . . . . . . . 21 Excluded liquid . . . . . . . . . . 12 6478 . . . . . . . . . . . . . . . 19

Affiliated corporations ....... 7 Tax rates . . . . . . . . . . . . 21 Exempt articles, retail tax . . . 25 6627 . . . . . . . . . . . . . . 3, 28

Air transportation taxes: Coin-operated telephones .... 5 Exempt communication services: 720 . . . . . . . . . . . . . . 23, 27

Comments .............. 2 American Red Cross ...... 5 720X . . . . . . . . . . . . . . . 28 225-mile-zone rule ....... 6

Alaska Answering service ....... 5 730 . . . . . . . . . . . . . . . . 30 . . . . . . . . . . . . . . 6-7 Commercial waterway

Baggage 8109 . . . . . . . . . . . . . . . 28 .............. 7 transportation . . . . . . . . . . 18 Coin-operated telephones . . 5

Bonus tickets SS-4 . . . . . . . . . . . . . . . 28 ........... 7 Communications taxes: Common carriers ........ 5

Credits or refunds ........ 7 Installation charges ....... 5 Free tax services . . . . . . . . . 31 Coin-operated telephones . . 5

Exemptions ............ 6 Fuels: Credits or refunds ........ 5 International organizations . . 5

Export ............... 7 Deposits . . . . . . . . . . . . . 29 Military personnel ........ 5 Aviation . . . . . . . . . . . . . 16

Fixed-wing ambulance ..... 7 Exemptions Mobile radio telephone Compressed natural gas . . 18 ............ 5

Hawaii . . . . . . . . . . . . . . 6-7 Figuring the tax service ............. 5 Diesel . . . . . . . . . . . . . . . 12 ......... 5

Helicopters ............ 7 News services .......... 5 Gasohol . . . . . . . . . . . . . 11 Local telephone service .... 4

International air travel Prepaid telephone cards . . . 5 Nonprofit educational Gasoline .............. 8

facilities ............. 7 organizations ......... 5 Kerosene . . . . . . . . . . . . 12 Private communication

Military personnel ........ 6 Nonprofit hospitals ....... 5 Special motor fuel . . . . . . . 17 service ............. 4

Package tours .......... 6 Private communication Used on inland waterways . . . Teletypewriter exchange Persons by air .......... 6 . . . . . . . . . . . . . . . . . 18 service ............. 4 service ............. 4

Persons liable . . . . . . . . . 6-7 Toll telephone service ..... 4 Radio broadcasts ........ 5

Property by air .......... 7 WATS service .......... 5 Security systems ........ 5

Tax rates ............. 6 G

Compressed natural gas . . . . 18 Exempt sales, heavy trucks . . 25 Taxable transportation ..... 6 Gambling . . . . . . . . . . . . . . 26

Credit or refund: Exemptions: Travel agency Gas guzzler tax: .......... 6 Gas guzzler tax . . . . . . . . 23 Air transportation taxes .... 6 Uninterrupted international . . 6 Automobiles . . . . . . . . . . 22 Gasoline tax . . . . . . . . . . 11 Bonus tickets ........... 7

Aircraft: Credit or refund . . . . . . . . 23 General rules . . . . . . . . . . 29 Coal . . . . . . . . . . . . . . . . 22 Affiliated corporations ..... 7 Limousines . . . . . . . . . . . 22

Luxury tax . . . . . . . . . . . . 26 Communications taxes .... 5 Fixed-wing air ambulance . . 7 Vehicles not subject to Manufacturers taxes . . . . . 20 Federal government . . . . 5, 26 Helicopters ............ 7 tax . . . . . . . . . . . . . . . 22

Resale of tax-paid Fixed-wing air ambulance . . 7 Museums . . . . . . . . . . . . 17 Gasohol . . . . . . . . . . . . . . . 11 semitrailers . . . . . . . . . . 24 For export . . . . . . . . . . . . 20 Small planes ........... 7 Gasoline blendstocks . . . . . . 10 Retail tax . . . . . . . . . . . . 25 Further manufacturing . . . . 20

Alaska: Gasoline, defined ......... 8 Tire tax . . . . . . . . . . . . . . 22 Helicopters ............ 7

Air transportation taxes .... 6 Vaccines . . . . . . . . . . . . . 23 Indian handicrafts . . . . . . . 20

Tax on diesel fuel or

kerosene . . . . . . . . . . . 13 Wagering taxes . . . . . . . . 31 Indian tribal governments . . . 5 H

Luxury tax . . . . . . . . . . . . 26 Hawaii, air transportation Alternative method deposits . . 29 Military personnel ........ 6 taxes ................ 6 American Red Cross ....... 5 D Nonprofit educational Heavy trucks: Answering service ......... 5 Deposits: organizations . . . . . . . 5, 20 First retail sale, defined . . . 24 Appeal procedures . . . . . . . . 31 Alternative method . . . . . . 29 State and local Further manufacture . . . . . 25 Approved refinery, defined . . . 8 Electronic . . . . . . . . . . . . 28 governments . . . . . . . 5, 20 Glider kits . . . . . . . . . . . . 25

Approved terminal, defined . . . 8 Exceptions . . . . . . . . . . . 29 Tires . . . . . . . . . . . . . . . 22 Installment sales . . . . . . . 25

Arrow components . . . . . . . . 21 Federal tax deposit Vessel supplies . . . . . . . . 20 Parts or accessories . . . . . 23 coupons . . . . . . . . . . . . 28 Assistance (See Tax help) Presumptive retail sales Net tax liability . . . . . . . . . 29 Aviation fuel . . . . . . . . . . . . 16 price . . . . . . . . . . . . . . 24 Regular method . . . . . . . . 28 F

Aviation gasoline, defined .... 9 Related persons . . . . . . . . 24 Requirements . . . . . . . . . 28 Farming . . . . . . . . . . . . . . . 15 Separate purchases . . . . . 23 Safe harbor rule . . . . . . . . 29 Federal government ........ 5 Tax base . . . . . . . . . . . . . 25 B When to make . . . . . . . . . 28 Federal tax deposit coupons . . . Tax rate . . . . . . . . . . . . . 23

Back-up tax . . . . . . . . . . . . 15 Diesel fuel: . . . . . . . . . . . . . . . . . . . 28 Helicopters . . . . . . . . . . . . 7, 17

Blended taxable fuel, defined . . 9 Buses . . . . . . . . . . . . . . . 15 Firearms . . . . . . . . . . . . . . 32 Help (See Tax help) Definitions . . . . . . . . . . . . 12 Blender, defined .......... 9 Fixed-wing air ambulance . . . 17 Highway use tax .......... 2 Exemption . . . . . . . . . . . . 13 Bonus tickets ............ 7 Floor stocks tax:

Farm . . . . . . . . . . . . . . . 15 Highway vehicle Bows Ozone-depleting chemicals . . . . . . . . . . . . . . . . . . . 21 (Diesel-powered) . . . . . . . 12 Dyed diesel fuel . . . . . . . . . . 14 Bulk transfer, defined .................. 4 ....... 9 Dyed kerosene . . . . . . . . . . 14 Bulk transfer/terminal system, Form 720:

defined Attachments . . . . . . . . . . 28 I ............... 9

Bureau of Alcohol, Tobacco, Due dates . . . . . . . . . . . . 28 Imported taxable products E

and Firearms . . . . . . . . . . 32 Final return . . . . . . . . . . . 28 (ODCs) ............... 3 EFTPS . . . . . . . . . . . . . . . 28

Buses: Paying the tax . . . . . . . . . 28 Information returns, liquid Electric outboard motors . . . . 21

Diesel fuel . . . . . . . . . . . . 15 Schedule A . . . . . . . . . . . 28 products .............. 8 Employer identification Schedule C . . . . . . . . . . . 28 Kerosene . . . . . . . . . . . . 15 Interest and penalties . . . . . . 31 number . . . . . . . . . . . . . . 28 Special one-time filing . . . . 28 Tire tax . . . . . . . . . . . . . . 22 International air travel Enterer, defined ........... 9 Form: facilities .............. 7

Entry, defined ............ 9 11–C . . . . . . . . . . . . . . . 30

C Environmental taxes: 1363 ................ 7

Chemicals, ozone-depleting: Credit or refund ......... 3 2290 ................ 2 K

Coal: Exceptions ............ 3 5300.26 . . . . . . . . . . . . . 32 Kerosene:

Blending . . . . . . . . . . . . . 22 Ozone-depleting chemicals . . 5630.5 . . . . . . . . . . . . . . 32 Buses . . . . . . . . . . . . . . . 15

Exemptions . . . . . . . . . . . 22 .................. 3 5630.7 . . . . . . . . . . . . . . 32 Definitions . . . . . . . . . . . . 12

Producer . . . . . . . . . . . . . 21 United States (defined) .... 3 6197 ............. 23, 28 Exemption . . . . . . . . . . . . 13

Production . . . . . . . . . . . . 21 637 . . . . . . . . . . . . . . . . . 2 Examination procedures . . . . 31 Farming . . . . . . . . . . . . . 15

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L Ozone-depleting chemicals: Cost of transportation . . . . 19 Taxable fuel registrant ...... 8

Liquid products, information Floor stocks tax ......... 4 Delivery costs . . . . . . . . . 20 Taxpayer Advocate . . . . . . . 31

returns ............... 8 Imported taxable products . . 3 Discounts . . . . . . . . . . . . 20 Teletypewriter exchange

Local telephone service ..... 4 Installation costs . . . . . . . . 20 service ............... 4

Insurance costs . . . . . . . . 20 Luxury tax: P Terminal operator, defined . . . 9 Local advertising charges . . 20 Credit or refund . . . . . . . . 26 Penalties: Terminal, defined .......... 9 Manufacturers excise tax . . 19 Exemptions . . . . . . . . . . . 26 Dyed diesel fuel . . . . . . . . 14 Throughputter, defined ...... 9 Rebates . . . . . . . . . . . . . 20 Parts and accessories . . . . 26 Dyed kerosene . . . . . . . . . 14 Tires: Retail dealer preparation Passenger vehicles . . . . . . 26 Pipeline operator, defined .... 9 Credit against heavy truck costs . . . . . . . . . . . . . . 20 Resale . . . . . . . . . . . . . . 26 Position holder, defined ..... 9 tax . . . . . . . . . . . . . . . 26 Warranty charges . . . . . . . 20 Tax rate . . . . . . . . . . . . . 26 Prepaid telephone cards ..... 5 Credit or refund of tax . . . . 22 Security systems .......... 5 Exemptions . . . . . . . . . . . 22 Publications (See Tax help) Ship passenger tax . . . . . . . 26 M Manufacturers taxes . . . . . 22

Manufacturer, defined Sonar devices . . . . . . . . . . . 21 Weight determination . . . . 22 . . . . . . 19 R Special motor fuels . . . . . . . 17 Manufacturers taxes: Toll telephone services ...... 4

Rack, defined ............ 9 Sport fishing equipment: Arrow components . . . . . . 21 Train (Diesel-powered) . . . . . 12

Radio broadcasts ......... 5 List of equipment . . . . . . . 21 Bows . . . . . . . . . . . . . . . 21 Travel agency ............ 6

Refiner, defined ........... 9 Resales . . . . . . . . . . . . . 21 Coal . . . . . . . . . . . . . . . . 21 TTY/TDD information . . . . . . 31

Refinery, defined .......... 9 State and local governments . . 5 Credits or refunds . . . . . . . 20

Exemptions Refund of second tax ....... 8 State, defined ............ 9 . . . . . . . . . . . 20 U Gas guzzler tax . . . . . . . . 22 Registrant .............. 8 Suggestions ............. 2

Uninterrupted international air Lease . . . . . . . . . . . . . . . 19 Registrant, defined ......... 9 transportation ........... 6 Lease payments . . . . . . . . 20 Registration-required T

Partial payments . . . . . . . 20 obligations . . . . . . . . . . . . 27 Tax help . . . . . . . . . . . . . . . 31

Registration . . . . . . . . . . . 20 Registration: V Tax rate: Related person . . . . . . . . 21 Form 637 Vaccines: ............. 2 Air transportation of Requirements for exempt Gasoline .............. 8 Credit or refund . . . . . . . . 23 persons ............. 6 sales . . . . . . . . . . . . . . 20 Kerosene ............. 8 Manufacturers tax . . . . . . . 23 Air transportation of Sale . . . . . . . . . . . . . . . . 19 Regular method deposits . . . 28 Vehicles: property ............. 7 Sport fishing equipment . . . 21 Related persons: Gas guzzler . . . . . . . . . . . 22 Arrow components . . . . . . 21 Tires . . . . . . . . . . . . . . . 22 Heavy trucks Imported . . . . . . . . . . . . . 23 . . . . . . . . . . 24 Bows . . . . . . . . . . . . . . . 21 Vaccines . . . . . . . . . . . . . 23 Law enforcement . . . . . . . 22 Sport fishing equipment . . . 21 Coal . . . . . . . . . . . . . . . . 21

Mobile radio telephone Communications tax Passenger (luxury tax) . . . . 26 Removal, defined ......... 9 ...... 4

service ............... 5 Electric outboard motor . . . 21 Vessel operator, defined ..... 9 Restoration of vehicles . . . . . 25 More information (See Tax help) Retail tax: International air travel

Credits and refunds . . . . . . 25 facilities ............. 7 W

N Heavy trucks Luxury tax . . . . . . . . . . . . 26 . . . . . . . . . . 23 Wagering taxes:

News services Obligations not in ............ 5 Rulings Program . . . . . . . . . 31 Credit or refund . . . . . . . . 31

registered form . . . . . . . 27 Nonprofit educational Rural airports ............ 6 Definitions . . . . . . . . . . . . 29

Policies issued by foreign organizations ........... 5 Waterways . . . . . . . . . . . . . 18

persons . . . . . . . . . . . . 27 WATS service ............ 5 S Ship passenger tax . . . . . . 26

O Sale, defined ............ 9 Sonar devices . . . . . . . . . 21 ■

Obligations not in registered Sales price: Sport fishing equipment . . . 21

form . . . . . . . . . . . . . . . . 27 Bonus goods . . . . . . . . . . 20 Trucks . . . . . . . . . . . . . . 23

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