Publication 510 Contents (Rev. February 2004)

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

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

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

Revenue

Service Excise Taxes Not Covered .......... 2 for 2004

Registration for Certain Activities ..... 2

Environmental Taxes .............. 2

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 ...................... 8

Definitions ................... 8

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

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

Refunds of Second Tax ........... 9

Gasoline ..................... 9

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 ............... 23

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

Retail Tax on Heavy Trucks,

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

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

Foreign Insurance Taxes ........... 26

Obligations Not in Registered

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

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

Payment of Taxes ................ 28

Tax on Wagering ................. 30

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

Get forms and other information Examination and Appeal faster and easier by: Procedures .................. 31

Rulings Program ................. 31 Internet • www.irs.gov or FTP • ftp.irs.gov

How To Get Tax Help .............. 32 FAX • 703–368–9694 (from your fax machine)

Appendix A ..................... 33
Appendix B ..................... 38 You can write to us at the following address: Form 2290:

Heavy Highway Vehicle Use Index .......................... 47 Internal Revenue Service Tax Return TE/GE and Specialty Forms and Publications Branch You report the Federal excise tax on the use of SE:W:CAR:MP:T:T certain trucks, truck tractors, and buses on pub- Important Changes 1111 Constitution Ave. NW lic highways on Form 2290. The tax applies to Washington, DC 20224 highway motor vehicles with a taxable gross

Use of international air travel facilities. The weight of 55,000 pounds or more. Vans, pickup

tax on use of international air travel facilities has We respond to many letters by telephone. trucks, panel trucks, and similar trucks generally

increased for amounts paid during 2004 to: are not subject to this tax. Therefore, it would be helpful if you would in-

• $13.70 per person for flights that begin or clude your daytime phone number, including the Note: A Spanish version of Form 2290 and end in the United States or area code, in your correspondence. its instructions (Form 2290SP) are also avail-

• $6.90 per person for domestic segments able. Useful Items that begin or end in Alaska or Hawaii (ap- A public highway is any road in the United You may want to see: plies only to departures). States that is not a private roadway. This includes federal, state, county, and city roads. Publication Domestic segment tax. For amounts paid for Canadian and Mexican heavy vehicles operated

each domestic segment of taxable transporta- ❏ 378 Fuel Tax Credits and Refunds on U.S. highways may be subject to this tax. For

tion of persons by air, the domestic segment tax more information, see the Instructions for Form ❏ 509 Tax Calendars for 2004 is $3.10 per segment for transportation that be- 2290.

gins in 2004. Form (and Instructions) Registration of vehicles. Generally, you

❏ 11–C Occupational Tax and Registration must prove that you paid your federal highway

Return for Wagering use tax to register your taxable vehicle with your

state motor vehicle department or to enter the Important Reminders ❏ 637 Application for Registration (For United States in a Canadian or Mexican regis- Certain Excise Tax Activities) tered taxable vehicle. Generally, a copy of Deposit threshold. You do not have to de- ❏ 720 Quarterly Federal Excise Tax Schedule 1 of Form 2290, stamped after pay- posit excise taxes for a calendar quarter if the Return ment and returned to you by the IRS, is accept- net tax liability for the quarter is not more than able proof of payment. $2,500. ❏ 720X Amended Quarterly Federal Excise

Tax Return Note: If you have questions on Form 2290, Deposit due dates. One deposit rule, the reg-

❏ see How To Get Tax Help later, or you can call ular method, applies for all taxes that have to be 730 Monthly Tax Return for Wagers the Form 2290 call site at 1-866-699-4096 (toll deposited other than those deposited under the ❏ 1363 Export Exemption Certificate free) from the United States and alternative method. See When To Make Depos-

❏ 1-859-669-5733 (not toll free) from Canada and its under Payment of Taxes, later. 2290 Heavy Highway Vehicle Use Tax

Return Mexico. The hours of service are 8:00 A.M. to

Amount to deposit. Your deposit of taxes for 6:00 P.M., EST.

❏ 2290–SP Declaracion del Impuesto a semimonthly period generally must be at least sobre el Uso de Vehiculos Pesados 95% of your net tax liability incurred during that en las Carreteras period, unless the safe harbor rule applies. See

Amount of Deposits and Safe Harbor Rule under ❏ 4136 Credit for Federal Tax Paid on Registration for Payment of the Taxes, later. Fuels Certain Activities

Amended Form 720. Use Form 720X to make ❏ 6197 Gas Guzzler Tax

adjustments to liability reported on Forms 720 ❏ 6478 Credit for Alcohol Used as Fuel You must register for certain excise tax activifiled for previous quarters. ties, such as a blending of gasoline, diesel fuel, ❏ 6627 Environmental Taxes or kerosene outside the bulk transfer/terminal Photographs of missing children. The Inter- ❏ 8849 Claim for Refund of Excise Taxes, system. See the instructions for Form 637 for the nal Revenue Service is a proud partner with the and Schedules 1-6 list of activities for which you must register. Also National Center for Missing and Exploited Chil- see Registration Requirements on page 8 for dren. Photographs of missing children selected information on registration for activities related by the Center may appear in this publication on Information Returns to fuel. Each business unit that has, or is re- pages that would otherwise be blank. You can quired to have, a separate employer identifica- help bring these children home by looking at the • Form 720-TO, Terminal Operator Report tion number must register. photographs and calling 1–800–THE–LOST • Form 720-CS, Carrier Summary Report To apply for registration, complete Form 637 (1–800–843– 5678) if you recognize a child. and provide the information requested in its in- See How To Get Tax Help near the end of this structions. If your application is approved, you publication for information about getting publica- will receive a Letter of Registration showing the tions and forms. activities for which you are registered, the effec- Introduction tive date of the registration, and your registration

This publication covers the excise taxes for number. A copy of Form 637 is not a Letter of

which you may be liable during 2004. It covers Registration.

the excise taxes reported on Form 720. It also Excise Taxes

provides information on wagering activities reported on Forms 11–C and 730. Not Covered

Environmental Taxes

Comments and suggestions. We welcome In addition to the taxes discussed in this publicayour comments about this publication and your tion, you may have to report certain other excise Environmental taxes are imposed on the sale or

suggestions for future editions. taxes. use of ozone-depleting chemicals (ODCs)

You can email us at *taxforms@irs.gov. and imported products containing or manufac- For tax forms relating to alcohol and tobacco,

Please put “Publications Comment” on the sub- tured with these chemicals. In addition, a floor visit the Alcohol and Tobacco Bureau of Trade

ject line. website at www.ttb.gov. stocks tax is imposed on ODCs held on

Page 2
January 1 by any person (other than the manu- the original manufacturing or production pro- The tax is based on the weight of the ODCs

facturer or importer of the ODCs) for sale or for used in the manufacture of the product. Use the cess). There is no tax on recycled Halon-1301 or

use in further manufacture. recycled Halon-2402 imported from a country following methods to figure the ODC weight.

Figure the environmental tax on Form 6627. that has signed the Montreal Protocol on Sub- • The actual (exact) weight of each ODC Enter the tax on the appropriate lines of Form stances that Deplete the Ozone Layer (Montreal used as a material in manufacturing the 720 and attach Form 6627 to Form 720. Protocol). product. For environmental tax purposes, United The Montreal Protocol is administered by the States includes the 50 states, the District of United Nations (U.N.). To determine if a country • If the actual weight cannot be determined,

Columbia, the Commonwealth of Puerto Rico, the ODC weight listed for the product in has signed the Montreal Protocol, contact the any possession of the United States, the Com- U.N. The Internet address is the Imported Products Table. http:// monwealth of the Northern Mariana Islands, the untreaty.un.org/. Trust Territory of the Pacific Islands, the conti- However, if you cannot determine the actual

nental shelf areas (applying the principles of Exported ODCs. Generally, there is no tax weight and the table does not list an ODC weight

section 638 of the Internal Revenue Code), and on ODCs sold for export if certain requirements for the product, the rate of tax is 1% of the entry

foreign trade zones. No one is exempt from the are met. For a sale to be nontaxable, you and value of the product.

environmental taxes, including the federal gov- the purchaser must be registered. See Form

ernment, state and local governments, Indian 637, Application for Registration (for Certain Extribal governments, and nonprofit educational cise Tax Activities). Also, you must obtain from Taxable Event

organizations. the purchaser an exemption certificate that you Tax is imposed on an imported taxable product rely on in good faith. Keep the certificate with when the product is first sold or used by its ODCs your records. The certificate must be in substan- importer. The importer is liable for the tax. tially the form set forth in section

For a list of the taxable ODCs and tax rates, see 52.4682–5(d)(3) of the regulations. The tax Use of imported products. You use an im- the Form 6627 instructions. benefit of this exemption is limited. For more ported product if you put it into service in a trade information, see section 52.4682–5 of the regu- or business or for the production of income or lations. use it in the making of an article, including incor- Taxable Event ODCs used as feedstock. There is no tax poration into the article. The loss, destruction,

Tax is imposed on an ODC when it is first used on ODCs sold for use or used as a feedstock. An packaging, repackaging, warehousing, or repair

or sold by its manufacturer or importer. The ODC is used as a feedstock only if the ODC is of an imported product is not a use of that prodmanufacturer or importer is liable for the tax. entirely consumed in the manufacture of another uct.

chemical. The transformation of an ODC into

Use of ODCs. You use an ODC if you put it one or more new compounds qualifies as use as Entry as use. The importer may choose to

into service in a trade or business or for the a feedstock, but use of an ODC in a mixture treat the entry of a product into the United States

production of income. Also, an ODC is used if does not qualify. as the use of the product. Tax is imposed on the

you use it in the making of an article, including For a sale to be nontaxable, you must obtain date of entry instead of when the product is sold

incorporation into the article, chemical transfor- or used. The choice applies to all imported tax- from the purchaser an exemption certificate that mation, or release into the air. The loss, destruc- able products that you own and have not used you rely on in good faith. The certificate must be tion, packaging, repackaging, or warehousing of when you make the choice and all later entries. in substantially the form set forth in section ODCs is not a use of the ODC. Make the choice by checking the box in Part II of 52.4682–2(d)(2) of the regulations. Keep the The creation of a mixture containing an ODC Form 6627. The choice is effective as of the certificate with your records. is treated as the use of that ODC. An ODC is beginning of the calendar quarter to which the

contained in a mixture only if the chemical iden- Form 6627 applies. You can revoke this choice

tity of the ODC is not changed. Generally, tax is Credits or Refunds only with IRS consent.

imposed when the mixture is created and not on

A credit or refund (without interest) of tax paid on Sale of article incorporating imported prod- its sale or use. However, you can choose to

have the tax imposed on its sale or use by ODCs may be claimed if a taxed ODC is : uct. The importer may treat the sale of an

checking the appropriate box in Part I of Form article manufactured or assembled in the United

6627. You can revoke this choice only with IRS • Used as a propellant in a metered-dose States as the first sale or use of an imported

consent. inhaler, then the person who used the taxable product incorporated in that article if

The creation of a mixture for export or for use ODC as a propellant may file a claim. both the following apply.

as a feedstock is not a taxable use of the ODCs • Exported, then the manufacturer may file a • The importer has consistently treated the contained in the mixture. claim. sale of similar items as the first sale or use

of similar taxable imported products. Exceptions. The following may be exempt • Used as a feedstock, then the person who

used the ODC may file a claim. from the tax on ODCs. • The importer has not chosen to treat entry

into the United States as use of the prod- • Metered-dose inhalers. For information on how to file for credits or reuct. funds, see the Instructions for Form 720 or Form • Recycled ODCs. 8849.

• Exported ODCs. Imported Products Table Conditions to allowance for ODCs exported. • ODCs used as feedstock. To claim a credit or refund for ODCs that are The Imported Products Table appears in Appenexported, you must have repaid or agreed to dix A at the end of this publication. The table lists Metered-dose inhalers. There is no tax on repay the tax to the exporter, or obtained the all the products that are subject to the tax on ODCs used or sold for use as propellants in exporter’s written consent to allowance of the imported taxable products and specifies the metered-dose inhalers. For a sale to be nontax- credit or refund. You must also have the evi- ODC weight of each product (discussed later). able, you must obtain from the purchaser an dence required by the Environmental Protection Each listing in the table identifies a product exemption certificate that you rely on in good Agency as proof that the ODCs were exported. by name and includes only products that are faith. The certificate must be in substantially the described by that name. Most listings identify a form set forth in section 52.4682–2(d)(5) of the Imported Taxable Products product by both name and Harmonized Tariff regulations. The certificate may be included as Schedule (HTS) heading. In those cases, a part of the sales documentation. Keep the certifi- An imported product containing or manufac- product is included in that listing only if the prod- cate with your records. tured with ODCs is subject to tax if it is entered uct is described by that name and the rate of

Recycled ODCs. There is no tax on any duty on the product is determined by reference into the United States for consumption, use, or

ODC diverted or recovered in the United States to that HTS heading. A product is included in the warehousing and is listed in the Imported Prodas part of a recycling process (and not as part of listing even if it is manufactured with or contains ucts Table. See Appendix A on page 33.

Page 3
a different ODC than the one specified in the • The ODC weight that should be specified

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

the product meets one of the following tests. Send your request to the following ad- Taxes

dress.

1) It is an electronic component whose oper- Excise taxes are imposed on amounts paid for

ation involves the use of nonmechanical certain facilities and services. If you receive any

payment on which tax is imposed, you are re- amplification or switching devices such as Internal Revenue Service

quired to collect the tax, file returns, and pay the tubes, transistors, and integrated circuits. P.O. Box 7604 tax over to the government. Ben Franklin Station 2) It contains components described in (1), If you fail to collect and pay over the taxes, Attn: CC:PA:LPD:PR which account for more than 15% of the you may be liable for the trust fund recovery (Imported Products Table) cost of the product. penalty. See Penalties and Interest, later. Room 5206

These components do not include passive Washington, DC 20044

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- • Local telephone service. the manufacturer or importer of the ODC) on tronic items. January 1 for sale or use in further manufactur- • Toll telephone service.

Rules for listing products. Products are ing. The person holding title (as determined • Teletypewriter exchange service. listed in the table according to the following under local law) to the ODC is liable for the tax,

rules. whether or not delivery has been made.

These chemicals are taxable without regard Local telephone service. This includes ac1) A product is listed in Part I of the table if it to the type or size of storage container in which cess to a local telephone system and the privi- is a mixture containing ODCs. the ODCs are held. The tax may apply to an 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

ODCs used as materials in the manufac- services provided in connection with this serv- You are liable for the floor stocks tax if you ice. The tax applies to lease payments for cer- ture of the product under the predominant hold any of the following on January 1. tain customer premises equipment (CPE) even method are used for purposes of refrigera- though the lessor does not also provide access tion or air conditioning, creating an aerosol 1) At least 400 pounds of ODCs other than to a local telecommunications system. or foam, or manufacturing electronic com- halons or methyl chloroform,

ponents. Private communication service. Private 2) At least 50 pounds of halons, or 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 methyl chloro- service. Private communication service includes the Commissioner has determined that the form. accessory-type services provided in connection product meets both the following tests. with a Centrex, PBX, or other similar system for If you are liable for the tax, prepare an inven- dual use accessory equipment. However, the a) It is not an imported taxable product. tory on January 1 of the taxable ODCs held on charge for the service must be stated separately b) It would otherwise be included within a that date for sale or for use in further manufac- from the charge for the basic system, and the list in Part II of the table. turing. You must pay this floor stocks tax by accessory must function, in whole or in part, in June 30 of each year. Report the tax on Form connection with intercommunication among the For example, floppy disk drive units are listed 6627 and Part II of Form 720 for the second subscriber’s stations.

in Part III because they are not imported taxable calendar quarter.

products and would have been included in the Toll telephone service. This includes a tele- For the tax rates, see the Form 6627 instrucPart II list for electronic items not specifically phonic quality communication for which a toll is tions.

identified, but for their listing in Part III. charged that varies with the distance and

elapsed transmission time of each communica- ODC weight. The Table ODC weight of a ODCs not subject to floor stocks tax. The tion. The toll must be paid within the United product is the weight, determined by the Com- floor stocks tax is not imposed on any of the States. It also includes (a) a telephonic quality missioner, of the ODCs used as materials in the following ODCs. communication for which a toll is charged that manufacture of the product under the predomi- varies only with elapsed transmission time and

nant method of manufacturing. The ODC weight 1) ODCs mixed with other ingredients that (b) a long distance service that entitles the subis listed in Part II in pounds per single unit of contribute to achieving the purpose for scriber to make unlimited calls (sometimes limproduct unless otherwise specified. which the mixture will be used, unless the ited as to the maximum number of hours) within

mixture contains only ODCs and one or a certain area for a periodic charge. Modifying the table. A manufacturer or immore stabilizers. porter of a product may request the IRS add a Teletypewriter exchange service. This inproduct and its ODC weight to the table. They 2) ODCs contained in a manufactured article cludes access from a teletypewriter or other also may request the IRS remove a product from in which the ODCs will be used for their data station to a teletypewriter exchange system the table, or change or specify the ODC weight intended purpose without being released and the privilege of intercommunication by that of a product. from the article. station with most persons having teletypewriter

To request a modification, include your or other data stations in the same exchange 3) ODCs that have been reclaimed or re- name, address, taxpayer identification number, system. cycled. and principal place of business in your request.

The request must include the following informa- 4) ODCs sold in a qualifying sale for: Figuring the tax. The tax is based on the sum

of all charges for local or toll telephone service tion for each product to be modified. a) Use as a feedstock, included in the bill. However, if the bill groups

• The name of the product. individual items for billing and tax purposes, the b) Export, or tax is based on the sum of the individual items • The HTS heading or subheading. c) Use as a propellant in a metered-dose within that group. The tax on the remaining items

• The type of modification requested. inhaler. not included in any group is based on the charge

Page 4
for each item separately. Do not include in the service furnishing a general news service services and facilities furnished to a nonprofit

tax base state or local sales or use taxes that are similar to that of the public press. educational organization for its use. A nonprofit

separately stated on the taxpayer’s bill. educational organization is one that satisfies all This exemption applies to payments received for If the tax on toll telephone service is paid by messages from one member of the news media the following requirements.

inserting coins in coin-operated telephones, to another member (or to or from their bona fide figure the tax to the nearest multiple of 5 cents. • It normally maintains a regular faculty and correspondents). For the exemption to apply, When the tax is midway between 5-cent multi- curriculum. the charge for these services must be billed in ples, the next higher multiple applies. writing to the person paying for the service and • It normally has a regularly enrolled body of

Prepaid telephone cards. A prepaid tele- that person must certify in writing that the serv- pupils or students in attendance at the

phone card is any card or any other similar ices are used for an exempt purpose. place where its educational activities are

arrangement that allows its holder to get local or regularly carried on. Services not exempted. The tax applies to toll telephone service and pay for those services amounts paid by members of the news media for • It is exempt from income tax under section in advance. The tax is imposed when the card is local telephone service. Toll telephone service 501(a) of the Internal Revenue Code. transferred by a telecommunications carrier to in connection with celebrities or special guests any person who is not a telecommunications This includes a school operated by an organiza- on talk shows is subject to the tax. carrier. The face amount of the card is the tion exempt under section 501(c)(3) of the Inter- amount paid for communications services. If the nal Revenue Code if the school meets the above Common carriers and communications face amount is not a dollar amount, see section qualifications. companies. The tax on toll telephone service 49.4251–4 of the regulations. does not apply to WATS (wide area telephone Federal, state, and local government. The service) used by common carriers, telephone tax does not apply to communication services Exemptions and telegraph companies, or radio broadcasting provided to the government of the United States, stations or networks in their business. A comthe government of any state or its political subdi- Payments for certain services or payments from mon carrier is one holding itself out to the public visions, the District of Columbia, or the United certain users are exempt from the communica- as engaged in the business of transportation of Nations. Treat an Indian tribal government as tions tax. persons or property for compensation and offer- a state for the exemption from the communica- ing its services to the public generally. Installation charges. The tax does not apply tions tax only if the services involve the exercise

to payments received for the installation of any Military personnel serving in a combat zone. of an essential tribal government function.

instrument, wire, pole, switchboard, apparatus, The tax on toll telephone services does not ap- or equipment. However, the tax does apply to ply to telephone calls originating in a combat Exemption certificate. Any form of exemp- payments for the repair or replacement of those zone that are made by members of the U.S. tion certificate will be acceptable if it includes all items incidental to ordinary maintenance. Armed Forces serving there if the person receiv- the information required by the Internal Revenue ing payment for the call receives a properly Answering services. The tax does not apply Code and Regulations. See Regulations section executed exemption certificate. The signed and to amounts paid for a private line, an answering 49.4253-11. File the certificate with the provider dated exemption certificate must contain all the service, and a one-way paging or message of the communication services. following information. service if they do not provide access to a local The following users that are exempt from the telephone system and the privilege of telephonic • The name of the member of the U.S. communications tax do not have to file an an- communication as part of the local telephone Armed Forces performing services in the nual exemption certificate after they have filed system. combat zone who originated the call. the initial certificate to claim an exemption from

Mobile radio telephone service. The tax • The toll charges, point of origin, and name the communications tax.

does not apply to payments for a two-way radio of carrier. • The American National Red Cross and service that does not provide access to a local • A statement that the charges are exempt other international organizations. telephone system. from tax under section 4253(d) of the In- • Nonprofit hospitals. Coin-operated telephones. ternal Revenue Code. The tax for local

• Nonprofit educational organizations. telephone service does not apply to payments • The name and address of the telephone made for services by inserting coins in public subscriber. • State and local governments. coin-operated telephones. The tax for toll tele- This exemption also applies to members of the phone service also does not apply if the charge The federal government does not have to file Armed Forces serving in a qualified hazardous is less than 25 cents. But the tax applies if the any exemption certificate. duty area. A qualified hazardous duty area in- coin-operated telephone service is furnished for cludes an area only while the special pay provi- All other organizations must furnish exemp- a guaranteed amount. Figure the tax on the sion is in effect for that area. tion certificates when required. amount paid under the guarantee plus any fixed

monthly or other periodic charge. For information about areas designated a

combat zone or qualified hazardous duty area, Telephone-operated security systems. The Credits or Refunds see Publication 3, Armed Forces’ Tax Guide. tax does not apply to amounts paid for tele- If tax is collected and paid over for certain serv- phones used only to originate calls to a limited International organizations and the Ameri- ices or users exempt from the communications number of telephone stations for security entry can Red Cross. The tax does not apply to tax: into a building. In addition, the tax does not apply communication services furnished to an interna- to any amounts paid for rented communication tional organization or to the American National equipment used in the security system. 1) The collector may claim a credit or refund Red Cross. if it has:

News services. The tax on toll telephone

service and teletypewriter exchange service Nonprofit hospitals. The tax does not apply a) Repaid the tax to the person from

does not apply to charges for the following news to telephone services furnished to income whom the tax was collected, or

services. tax-exempt nonprofit hospitals for their use. b) Obtained the consent of that person to Also, the tax does not apply to amounts paid by • Services dealing exclusively with the col- the allowance of the credit or refund, or these hospitals to provide local telephone serv- lection or dissemination of news for or ice in the homes of their personnel who must be through the public press or radio or televi- 2) The person who paid the tax may claim a reached during their off-duty hours. sion broadcasting. refund.

• Services used exclusively in the collection Nonprofit educational organizations. The For information about credits or refunds, see

or dissemination of news by a news ticker tax does not apply to payments received for the Instructions for Form 720 or Form 8849.

Page 5
Air Transportation Taxes Example. In January 2004, Frank Jones entirely by air that does not begin and end in the

pays $264.20 to a commercial airline for a flight United States or in the 225-mile zone if there is

Taxes are imposed on amounts paid for all the in January from Washington to Chicago with an not more than a 12-hour scheduled interval befollowing services. intermediate stop in Cleveland. The flight com- tween arrival and departure at any station in the

prises two segments. The price includes the United States. For a special rule that applies to • Transportation of persons by air. $240 fare and $24.20 excise tax [($240 × 7.5%) military personnel, see Exemptions from tax,

• Use of international air travel facilities. + (2 × $3.10)] for which Frank is liable. The later.

airline collects the tax from Frank and pays it • Transportation of property by air. Transportation between the continental over to the government. U.S. and Alaska or Hawaii. This transportaCharter flights. If an aircraft is chartered, tion is partially exempt from the tax on transpor- Transportation of the domestic-segment tax for each segment of tation of persons by air. The tax does not apply Persons by Air taxable transportation is figured by multiplying to the part of the trip between the point at which

the tax by the number of passengers trans- the route of transportation leaves or enters the The tax on transportation of persons by air is ported on the aircraft. continental United States (or a port or station in made up of the following two parts. the 225-mile zone) and the point at which it

• The percentage tax. Example. In March 2004, Tim Clark pays enters or leaves Hawaii or Alaska. Leaving or

$1,118.40 to an air charter service to carry 7 entering occurs when the route of the transpor- • The domestic-segment tax. employees from Washington to Detroit with an tation passes over either the United States borintermediate stop in Pittsburgh. The flight com- der or a point 3 nautical miles (3.45 statute

Percentage tax. A tax of 7.5% applies to prises two segments. The price includes the miles) from low tide on the coast line, or when it

amounts paid for taxable transportation of per- $1,000 charter payment and $118.40 excise tax leaves a port or station in the 225-mile zone.

sons by air. Amounts paid for transportation [($1,000 × 7.5%) + (2 × $3.10 × 7 passengers)] Therefore, this transportation is subject to the

include charges for layover or waiting time and for which Tim is liable. The charter service col- percentage tax on the part of the trip in U.S.

movement of aircraft in deadhead service. lects the tax from Tim and pays it over to the airspace, the domestic-segment tax for each

government. domestic segment, and the tax on the use of Mileage awards. The percentage tax may international air travel facilities, discussed later. apply to an amount paid (in cash or in kind) to an Rural airports. The domestic-segment tax

air carrier (or any related person) for the right to does not apply to a segment to or from a rural Transportation within Alaska or Hawaii.

provide mileage awards for, or other reductions The tax on transportation of persons by air ap- airport. An airport is a rural airport for a calendar

in the cost of, any transportation of persons by plies to the entire fare paid in the case of flights year if it satisfies both the following requireair. For example, this applies to mileage awards between any of the Hawaiian Islands, and be- ments.

purchased by credit card companies, telephone tween any ports or stations in the Aleutian Iscompanies, restaurants, hotels, and other busi- lands or other ports or stations elsewhere in 1) Fewer than 100,000 commercial passennesses. gers departed from the airport during the Alaska. The tax applies even though parts of the

Generally, the percentage tax does not apply second preceding calendar year. flights may be over international waters or over

to amounts paid for mileage awards where the Canada, if no point on the direct line of transpor- 2) Either of the following statements is true. mileage awards cannot, under any circum- tation between the ports or stations is more than

stances, be redeemed for air transportation that a) The airport is not located within 75 225 miles from the United States (Hawaii or

is subject to the tax. Until regulations are issued, miles of another airport from which Alaska).

the following rules apply to mileage awards. 100,000 or more commercial passen- Package tours. The air transportation taxes gers departed during the second pre- • Amounts paid for mileage awards that apply to “complimentary” air transportation fur- ceding calendar year. cannot be redeemed for taxable transpor- nished solely to participants in package holiday

tation beginning and ending in the United b) The airport was receiving essential air tours. The amount paid for these package tours

States are not subject to the tax. For this service subsidies as of August 5, 1997. includes a charge for air transportation even

rule, mileage awards issued by a foreign though it may be advertised as “free.” This rule

air carrier are considered to be usable Rev. Proc. 98-18 is the most recent list of rural also applies to the tax on the use of international

only on that foreign air carrier and thus not airports published by the IRS. You can find air travel facilities, discussed later.

redeemable for taxable transportation be- Rev. Proc. 98-18 on page 20 of Internal Reve- Liability for tax. The person paying for tax- ginning and ending in the United States. nue Bulletin 1998-6 at www.irs.gov/pub/ able transportation is liable for the tax and, ordi- Therefore, amounts paid to a foreign air irs-irbs/irb98-06.pdf. An updated list can be narily, the person receiving the payment collects carrier for mileage awards are not subject found on the Department of Transportation the tax, files the returns, and pays the tax over to to the tax. website at www.bts.gov/oai/rural_airports/ the government. However, if payment is made index.html. • Amounts paid by an air carrier to a domes- outside the United States for a prepaid order,

tic air carrier for mileage awards that can exchange order, or similar order, the person Taxable transportation. Taxable transporta- be redeemed for taxable transportation furnishing the initial transportation provided for tion is transportation by air that meets either of are not subject to the tax to the extent under that order must collect the tax. the following tests. those miles will be awarded in connection A travel agency that is an independent

with the purchase of taxable transporta- • It begins and ends either in the United broker and sells tours on aircraft that it charters

tion. States or at any place in Canada or Mex- must collect the transportation tax, file the reico not more than 225 miles from the near- turns, and pay the tax over to the government. • Amounts paid by an air carrier to a domes- est point on the continental United States However, a travel agency that sells tours as the tic air carrier for mileage awards that can boundary (this is the 225-mile zone). agent of an airline must collect the tax and remit be redeemed for taxable transportation it to the airline for the filing of returns and for the are subject to the tax to the extent those • It is directly or indirectly from one port or payment of the tax over to the government. miles will not be awarded in connection station in the United States to another port The fact that the aircraft does not use public with the purchase of taxable transporta- or station in the United States, but only if it or commercial airports in taking off and landing tion. is not a part of uninterrupted international has no effect on the tax. But see Certain helicop- air transportation, discussed later. ter uses, later.

Domestic-segment tax. The domestic-seg- For taxable transportation that begins and Round trip. A round trip is considered two ment tax is a flat dollar amount for each segment ends in the United States, the tax applies re- separate trips. The first trip is from the point of of taxable transportation for which an amount is gardless of whether the payment is made in or departure to the destination. The second trip is paid. However, see Rural airports, later. A seg- outside the United States. the return trip from that destination. ment is a single takeoff and a single landing. If the tax is not paid when payment for the

The domestic-segment tax is $3.10 per segment Uninterrupted international air transportation is made, the air carrier providing

that begins during 2004. transportation. This means transportation the initial segment of the transportation that bePage 6
gins or ends in the United States becomes liable departures. This tax does not apply if all the reenters the United States (Alaska) is more than

for the tax. transportation is subject to the percentage tax, 225 miles from the United States.

discussed earlier. Exemptions. The tax on transportation of per- Liability for tax. The person paying for tax- sons by air does not apply in the following situa- able transportation is liable for the tax and, ordi- tions. See also Special Rules on Transportation Transportation of narily, the person engaged in the business of Taxes, later. Property by Air transporting property by air for hire receives the

Military personnel on international trips. payment, collects the tax, files the returns, and

When traveling in uniform at their own expense, A tax of 6.25% is imposed on amounts paid pays the tax over to the government.

United States military personnel on authorized (whether in or outside the United States) for If tax is not paid when a payment is made

leave are deemed to be traveling in uninter- transportation of property by air. The fact that outside the United States, the person furnishing

rupted international air transportation (defined the aircraft may not use public or commercial the last segment of taxable transportation colearlier) even if the scheduled interval between airports in taking off and landing has no effect on lects the tax from the person to whom the proparrival and departure at any station in the United the tax. The tax applies only to amounts paid to erty is delivered in the United States. States is actually more than 12 hours. However, a person engaged in the business of transportsuch personnel must buy their tickets within 12 ing property by air for hire.

hours after landing at the first domestic airport The tax applies only to transportation (includ- Special Rules on

and accept the first available accommodation of ing layover time and movement of aircraft in Transportation Taxes the type called for by their tickets. The trip must deadhead service) that begins and ends in the

begin or end outside the United States and the United States. Thus, the tax does not apply to In certain circumstances, special rules apply to

225-mile zone. transportation of property by air that begins or the taxes on transportation of persons and propends outside the United States. erty by air. Certain helicopter uses. The tax does not

apply to air transportation by helicopter if the Aircraft used by affiliated corporations. Exemptions. The tax on transportation of helicopter is used for any of the following pur- The taxes do not apply to payments received by property by air does not apply in the following poses. one member of an affiliated group of corpora- situations. See also Special Rules on Transpor- tions from another member for services fur- 1) Transporting individuals, equipment, or tation Taxes, later. nished in connection with the use of an aircraft. supplies in the exploration for, or the de- Cropdusting and firefighting service. The However, the aircraft must be owned or leased velopment or removal of, hard minerals, tax does not apply to amounts paid for cropdust- by a member of the affiliated group and cannot oil, or gas. ing or aerial firefighting service. be available for hire by a nonmember of the

2) Planting, cultivating, cutting, transporting, affiliated group. Determine whether an aircraft is Exportation. The tax does not apply to or caring for trees (including logging oper- available for hire by a nonmember of an affiliated payments for transportation of property by air in ations). group on a flight-by-flight basis. the course of exportation (including to United

3) Providing emergency medical services. States possessions) by continuous movement, For this rule, an affiliated group of corporaas evidenced by the execution of Form 1363, tions is any group of corporations connected However, during a use described in items (1) Export Exemption Certificate. See Form 1363 with a common parent corporation through 80% and (2), the tax applies if the helicopter takes off or more of stock ownership. for more details. from, or lands at, a facility eligible for assistance

under the Airport and Airway Development Act Certain helicopter and fixed-wing air am- Small aircraft. The taxes do not apply to of 1970, or otherwise uses services provided bulance uses. The tax does not apply to transportation furnished by an aircraft having a under section 44509 or 44913(b) or subchapter I amounts paid for the use of helicopters in con- maximum certificated takeoff weight of 6,000 of chapter 471 of title 49, United States Code. struction to set heating and air conditioning units pounds or less. However, the taxes do apply if For item (1), treat each flight segment as a on roofs of buildings, to dismantle tower cranes, the aircraft is operated on an established line. separate flight. and to aid in construction of power lines and ski “Operated on an established line” means the lifts. Fixed-wing air ambulance. The tax does aircraft operates with some degree of regularity

not apply to air transportation by fixed-wing air- The tax also does not apply to air transporta- between definite points. tion by helicopter or fixed-wing aircraft for the craft if used for emergency medical services. Consider an aircraft to be operated on an purpose of providing emergency medical serv- The aircraft must be equipped for and exclu- established line if it is operated on a charter ices. The fixed-wing aircraft must be equipped sively dedicated on that flight to acute care basis between two cities also served by that for and exclusively dedicated on that flight to emergency medical services. carrier on a regularly scheduled basis. acute care emergency medical services.

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

Bonus tickets. The tax does not apply to allocated between the amount subject to the tax Excess baggage. The tax does not apply to free bonus tickets issued by an airline company on transportation of persons and the amount excess baggage accompanying a passenger on to its customers who have satisfied all require- subject to the tax on transportation of property. an aircraft operated on an established line. ments to qualify for the bonus tickets. However, The allocation must be reasonable and supthe tax applies to amounts paid by customers for ported by adequate records. Alaska and Hawaii. For transportation of advance bonus tickets when customers have

property to and from Alaska and Hawaii, the tax traveled insufficient mileage to fully qualify for

the free advance bonus tickets. in general does not apply to the portion of the Credits or Refunds

transportation that is entirely outside the continental United States (or the 225-mile zone if the If tax is collected and paid over for air transportaUse of International aircraft departs from or arrives at an airport in tion that is not taxable air transportation, the

Air Travel Facilities the 225-mile zone). But the tax applies to flights collector may claim a credit or refund if it has

between ports or stations in Alaska and the repaid the tax to the person from whom the tax

A $13.70 tax per person is imposed on amounts Aleutian Islands, as well as between ports or was collected or obtained the consent of that

paid during 2004 (whether in or outside the stations in Hawaii. The tax applies even though person to the allowance of the credit or refund.

United States) for international flights that begin parts of the flights may be over international Alternatively, the person who paid the tax may

or end in the United States. However, for a waters or over Canada, if no point on a line claim a refund. For information on how to file for

domestic segment that begins or ends in Alaska drawn from where the route of transportation credits or refunds, see the Instructions for Form

or Hawaii, a $6.90 tax per person applies only to leaves the United States (Alaska) to where it 720 or Form 8849.

Page 7
Entry. Taxable fuel is entered into the United if the facility is operated by a registrant and all

Fuel Taxes States when it is brought into the United States such taxable fuel stored at the facility has been

and applicable customs law requires that it be previously taxed upon removal from a refinery or

Excise taxes are imposed on all the following entered for consumption, use, or warehousing. terminal.

fuels. This does not apply to fuel brought into Puerto Terminal operator. This is any person that Rico (which is part of the U.S. customs territory), • Gasoline. owns, operates, or otherwise controls a termi- but does apply to fuel brought into the United nal. • Gasohol. States from Puerto Rico.

Measurement of taxable fuel. Volumes of Throughputter. This is any person that is a • Diesel fuel.

taxable fuel can be measured on the basis of position holder or that owns taxable fuel within

• Kerosene. actual volumetric gallons or gallons adjusted to the bulk transfer/terminal system (other than in a

60 degrees Fahrenheit. terminal). • Aviation fuel.

• Special motor fuels (including LPG). Pipeline operator. This is the person that op- Vessel operator. This is the person that opererates a pipeline within the bulk transfer/terminal ates a vessel within the bulk transfer/terminal • Compressed natural gas. system. system. However, vessel does not include a

• Fuels used in commercial transportation deep draft ocean-going vessel. Position holder. This is the person that holds on inland waterways. the inventory position in the taxable fuel in the

terminal, as reflected in the records of the termi- Information Returns

Definitions nal operator. You hold the inventory position Form 720–TO and Form 720–CS are informa- when you have a contractual agreement with the tion returns used to report monthly receipts and The following terms are used throughout the terminal operator for the use of the storage facili- disbursements of liquid products. A liquid prod- discussion of fuel taxes. Other terms are defined ties and terminaling services for the taxable fuel. uct is any liquid transported into storage at a in the discussion of the specific fuels to which A terminal operator that owns taxable fuel in its terminal or delivered out of a terminal. For a list terminal is a position holder. they pertain. of products, see the product code table in the

Rack. This is a mechanism capable of deliver- Instructions for Forms 720-TO and 720-CS. Approved terminal or refinery. This is a ter- ing fuel into a means of transport other than a The returns are due the last day of the month minal operated by a registrant that is a terminal pipeline or vessel. following the month in which the transaction operator or a refinery operated by a registrant occurs. These returns can be filed on paper or that is a refiner. Refiner. This is any person that owns, oper- electronically. For information on filing electroni- ates, or otherwise controls a refinery. Biodiesel. This is a liquid composed of cally, see Publication 3536, Motor Fuel Excise

monoalkyl esters of long chain fatty acids de- Refinery. This is a facility used to produce Tax EDI Guide.

rived from vegetable oils or animal fats that is taxable fuel and from which taxable fuel may be Form 720-TO. This information return is used removed by pipeline, by vessel, or at a rack. covered by ASTM specification D 6751. However, this term does not include a facility by terminal operators to report receipts and dis- Biodiesel does not contain any paraffins. where only blended fuel or gasohol, and no bursements of all liquid products to and from all

Blended taxable fuel. approved terminals. Each terminal operator This means any tax- other type of fuel, is produced. For this purpose, must file a separate form for each approved able fuel produced outside the bulk transfer/ blended fuel is any mixture that would be terminal. terminal system by mixing taxable fuel on which blended taxable fuel if produced outside the bulk

excise tax has been imposed and any other transfer/terminal system. Form 720-CS. This information return must be

liquid on which excise tax has not been im- Registrant. This is a taxable fuel registrant filed by bulk transport carriers (barges, vessels, posed. This does not include a mixture removed (see Registration Requirements, later). and pipelines) who receive liquid product from or sold during the calendar quarter if all such an approved terminal or deliver liquid product to mixtures removed or sold by the blender contain Removal. This is any physical transfer of tax- an approved terminal. less than 400 gallons of a liquid on which the tax able fuel. It also means any use of taxable fuel

has not been imposed. Blended taxable fuel other than as a material in the production of Registration Requirements does not include gasohol that receives an excise taxable or special fuels. However, taxable fuel is

tax benefit. not removed when it evaporates or is otherwise The following discussion applies to excise tax lost or destroyed. Blender. registration requirements for activities relating to This is the person that produces Sale. For taxable fuel not in a terminal, this is fuels only. See Form 637 for other persons who blended taxable fuel. However, if an untaxed

the transfer of title to, or substantial incidents of must register and for more information about liquid is sold as taxed taxable fuel and that ownership in, taxable fuel to the buyer for registration. untaxed liquid is used to produce blended tax- money, services, or other property. For taxable able fuel, the person that sold the untaxed liquid Persons that must register. You must be fuel in a terminal, this is the transfer of the is jointly and severally liable for the tax imposed registered if you are any of the following per- inventory position if the transferee becomes the on the blender’s sale or removal of the blended sons. position holder for that taxable fuel. taxable fuel. • A blender. State. This includes any state, any of its politi- Bulk transfer. This is the transfer of taxable cal subdivisions, the District of Columbia, and • An enterer. fuel by pipeline or vessel. the American Red Cross. An Indian tribal gov- • A pipeline operator. Bulk transfer/terminal system. This is the ernment is treated as a state only if transactions

involve the exercise of an essential tribal gov- • A position holder. taxable fuel distribution system consisting of re- ernment function. fineries, pipelines, vessels, and terminals. Fuel • A refiner.

in the supply tank of any engine, or in any tank Taxable fuel. This means gasoline, diesel car, railcar, trailer, truck, or other equipment • A terminal operator. fuel, or kerosene.

suitable for ground transportation is not in the • A vessel operator. Terminal. This is a storage and distribution bulk transfer/terminal system. facility supplied by pipeline or vessel, and from In addition, bus and train operators must be

Enterer. This is the importer of record for the which taxable fuel may be removed at a rack. It registered if they use dyed diesel fuel in their

taxable fuel. However, if the importer of record is does not include a facility at which gasoline buses or trains and they incur liability for tax at

acting as an agent, such as a customs broker, blendstocks are used in the manufacture of the bus or train rate.

the person for whom the agent is acting is the products other than finished gasoline if no gasoenterer. If there is no importer of record, the line is removed from the facility. A terminal does Persons that may register. You may, but are

owner at the time of entry into the United States not include any facility where finished gasoline, not required to, register if you are any of the

is the enterer. undyed diesel fuel, or undyed kerosene is stored following persons.

Page 8
Optional reporting. A first taxpayer’s report Taxable Events • A feedstock user. is not required for the tax imposed on any of the

• A gasohol blender. following taxable events. The tax on gasoline is 18.4 cents a gallon. The

tax on aviation gasoline is 19.4 cents a gallon. • An industrial user. • Removal at a terminal rack. Tax is imposed on the removal, entry, or sale of

• A throughputter that is not a position gasoline. Each of these events is discussed • Nonbulk entries into the United States.

holder. later. However, see the special rules that apply

• Removals or sales by blenders. to gasoline blendstocks, later. Also, see the dis- • An ultimate vendor. cussion under Gasohol, if applicable. However, if the person liable for the tax expects • An ultimate vendor (blocked pump). If the tax is paid on the gasoline in more than that another tax will be imposed on that fuel, that one event, a refund may be allowed for the Ultimate vendors do not need to be registered to person should (but is not required to) file a first “second” tax paid. See Refunds of Second Tax, taxpayer’s report. buy or sell diesel fuel or kerosene. However, earlier.

they must be registered for filing certain claims Providing information. The first taxpayer for the excise tax on these fuels. must give a copy of the report to the buyer of the Removal from terminal. All removals of gasfuel within the bulk transfer/terminal system or to oline at a terminal rack are taxable. The position Taxable fuel registrant. This is an enterer, an the owner of the fuel immediately before the first holder for that gasoline is liable for the tax. industrial user, a refiner, a terminal operator, or tax was imposed, if the first taxpayer is not the Terminal operator’s liability. The terminal a throughputter who received a Letter of Regis- owner at that time. If an optional report is filed, a operator is jointly and severally liable for the tax tration under the excise tax registration provi- copy should (but is not required to) be given to if the position holder is a person other than the sions and whose registration has not been the buyer or owner. terminal operator and is not a registrant. revoked or suspended. The term registrant as A person that receives a copy of the first However, a terminal operator meeting all the used in the discussions of these fuels means a taxpayer’s report and later sells the fuel within following conditions at the time of the removal taxable fuel registrant. the bulk transfer/terminal system must give the will not be liable for the tax.

Additional information. See the Form 637 copy and a “Statement of Subsequent Seller” to • The terminal operator is a registrant. instructions for the information you must submit the buyer. If the later sale is outside the bulk

when you apply for registration. transfer/terminal system and that person ex- • The terminal operator has an unexpired

pects that another tax will be imposed, that per- notification certificate (discussed later)

Refunds of Second Tax son should (but is not required to) give the copy from the position holder.

and the statement to the buyer. A model state- • The terminal operator has no reason to If the tax is paid on more than one taxable event ment of subsequent seller is shown in Appendix believe any information on the certificate is for a taxable fuel (gasoline, diesel fuel, and ker- B as Model Certificate B. The statement must false. osene), the person paying the “second tax” may contain all information necessary to complete

claim a refund (without interest) of that tax if the model.

certain conditions and reporting requirements Removal from refinery. The removal of gaso- If the first taxpayer’s report relates to fuel

are met. No credit against any tax is allowed for line from a refinery is taxable if the removal sold to more than one buyer, copies of that meets either of the following conditions. this tax. For information about taxable events, report must be made when the fuel is divided.

see the discussions under Gasoline and Diesel Each buyer must be given a copy of the report. • It is made by bulk transfer and the refiner Fuel and Kerosene, later. or the owner of the gasoline immediately

Refund claim. You must have filed Form 720 before the removal is not a registrant.

Conditions to allowance of refund. A claim and paid the second tax before you file for a • It is made at the refinery rack. for refund of the tax is allowed only if all the refund of that tax. You must make your claim for

following conditions are met. refund on Form 8849. Complete Schedule 5 The refiner is liable for the tax.

(Form 8849) and attach it to your Form 8849. Do Exception. The tax does not apply to a re- 1) A tax on the fuel was paid to the govern- not include this claim with a claim under another moval of gasoline at the refinery rack if all the ment and not credited or refunded (the tax provision. You must not have included the following requirements are met. “first tax”). second tax in the price of the fuel and must not

have collected it from the purchaser. You must • The gasoline is removed from an ap- 2) After the first tax was imposed, another tax submit the following information with your claim. proved refinery not served by pipeline was imposed on the same fuel and was (other than for receiving crude oil) or ves- paid to the government (the “second tax”). • A copy of the first taxpayer’s report (dis- sel.

3) The person that paid the second tax filed a cussed earlier). • The gasoline is received at a facility oper- timely claim for refund containing the infor- • A copy of the statement of subsequent ated by a registrant and located within the mation required (see Refund claim, later). seller if the fuel was bought from someone bulk transfer/terminal system.

4) The person that paid the first tax has met other than the first taxpayer. • The removal from the refinery is by railcar. the reporting requirements, discussed

next. • The same person operates the refinery Gasoline and the facility at which the gasoline is

received.

Reporting requirements. Generally, the per- The following discussion provides information

about the excise tax on gasoline. son that paid the first tax must file a “First

Taxpayer’s Report” with its Form 720 for the Entry into the United States. The entry of

Gasoline. This means finished gasoline and gasoline into the United States is taxable if the quarter to which the report relates. A model first

gasoline blendstocks. Finished gasoline means entry meets either of the following conditions. taxpayer’s report is shown in Appendix B as

Model Certificate A all products (including gasohol) that are com- . The report must contain all • It is made by bulk transfer and the enterer monly or commercially known or sold as gaso- information needed to complete the model. is not a registrant. line and are suitable for use as a motor fuel. The By the due date for filing the Form 720, you product must have an octane rating of 75 or • It is not made by bulk transfer. must also send a separate copy of the report to more. Gasoline blendstocks are discussed later. the following address. The enterer is liable for the tax.

Internal Revenue Service Center Aviation gasoline. This means all special Removal from a terminal by unregistered po- Cincinnati, OH 45999–0555 grades of gasoline suitable for use in aviation sition holder. The removal by bulk transfer of

reciprocating engines and covered by ASTM gasoline from a terminal is taxable if the position

Write “EXCISE – FIRST TAXPAYER’S specification D 910 or military specification holder for the gasoline is not a registrant. The

REPORT” across the top of that copy. MIL-G-5572. position holder is liable for the tax. The terminal

Page 9
operator is jointly and severally liable for the tax • The seller is a registrant and the exporter • Mixed xylene (not including any separated

if the position holder is a person other than the of record. isomer of xylene).

terminal operator. However, see Terminal • The fuel was exported. • Natural gasoline. operator’s liability under Removal from terminal,

earlier, for an exception. • Pentane.

Removal or sale of blended gasoline. The • Pentane mixture. Bulk transfers not received at approved ter- removal or sale of blended gasoline by the

minal or refinery. The removal by bulk trans- blender is taxable. See Blended taxable fuel • Polymer gasoline.

under Definitions, earlier. fer of gasoline from a terminal or refinery, or the • Raffinate. The blender is liable for the tax. The tax is entry of gasoline by bulk transfer into the United

States, is taxable if the following conditions ap- figured on the number of gallons not previously • Reformate.

subject to the tax on gasoline. ply. • Straight-run gasoline. However, if an untaxed liquid is sold as taxed

1) No tax was previously imposed (as dis- taxable fuel and that untaxed liquid is used to • Straight-run naphtha.

produce blended taxable fuel, the person that cussed earlier) on any of the following • Tertiary amyl methyl ether (TAME). sold the untaxed liquid is jointly and severally events.

liable for the tax imposed on the blender’s sale • Tertiary butyl alcohol (gasoline grade)

a) The removal from the refinery. or removal of the blended taxable fuel. (TBA).

b) The entry into the United States. Notification certificate. The notification cer- • Thermally cracked gasoline.

tificate is used to notify a person of the registra- c) The removal from a terminal by an un- • Toluene. tion status of the registrant. A copy of the registered position holder. registrant’s letter of registration cannot be used • Transmix containing gasoline.

as a notification certificate. A model notification 2) Upon removal from the pipeline or vessel, certificate is shown in Appendix B as Model However, gasoline blendstocks do not include the gasoline is not received at an ap- Certificate C. A notification certificate must con- any product that cannot be used without further proved terminal or refinery (or at another tain all information necessary to complete the processing in the production of finished gaso- pipeline or vessel). model. line.

The owner of the gasoline when it is removed The certificate may be included as part of

from the pipeline or vessel is liable for the tax. any business records normally used for a sale. A Not used to produce finished gasoline.

However, an owner meeting all the following certificate expires on the earlier of the date the Gasoline blendstocks not used to produce finconditions at the time of the removal will not be registrant provides a new certificate, or the date ished gasoline are not taxable if the following liable for the tax. the recipient of the certificate is notified that the conditions are met.

registrant’s registration has been revoked or • The owner is a registrant. suspended. The registrant must provide a new Removals and entries not connected to

certificate if any information on a certificate has sale. Nonbulk removals and entries are not • The owner has an unexpired notification

changed. taxable if the person otherwise liable for the tax certificate (discussed later) from the oper- (position holder, refiner, or enterer) is a regis- ator of the terminal or refinery where the Additional persons liable. When the person trant. gasoline is received. liable for the tax willfully fails to pay the tax, joint

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

(discussed later) from the buyer.

Sales to unregistered person. The sale of

Gasoline Blendstocks • The person has no reason to believe any gasoline located within the bulk transfer/terminal information in the certificate is false. system to a person that is not a registrant is Gasoline includes gasoline blendstocks. The taxable if tax was not previously imposed under previous discussions apply to these blend- Sales after removal or entry. The sale of a any of the events discussed earlier. stocks. However, if certain conditions are met, gasoline blendstock that was not subject to tax The seller is liable for the tax. However, a the removal, entry, or sale of gasoline blend- on its nonbulk removal or entry, as discussed seller meeting all the following conditions at the stocks is not taxable. Generally, this applies if earlier, is taxable. The seller is liable for the tax. time of the sale will not be liable for the tax. the gasoline blendstock is not used to produce However, the sale is not taxable if, at the time of

finished gasoline or is received at an approved • The seller is a registrant. the sale, the seller meets the following require- terminal or refinery. ments. • The seller has an unexpired notification

certificate (discussed later) from the buyer. Blendstocks. The following are gasoline • The seller has an unexpired certificate blendstocks. (discussed next) from the buyer. • The seller has no reason to believe any • Alkylate. information on the certificate is false. • The seller has no reason to believe any

The buyer of the gasoline is liable for the tax if • Butane. information in the certificate is false.

the seller meets these conditions. The buyer is • Butene.

jointly and severally liable if the seller does not Certificate of buyer. The certificate from the

meet these conditions. • Catalytically cracked gasoline. buyer certifies the gasoline blendstocks will not

Exception. The tax does not apply to a sale • Coker gasoline. be used to produce finished gasoline. The certifif all of the following apply. icate may be included as part of any business • Ethyl tertiary butyl ether (ETBE). records normally used for a sale. A model certifi- • The buyer’s principal place of business is • Hexane. cate is shown in Appendix B as Model Certificate

not in the United States. D. Your certificate must contain all information • Hydrocrackate.

• The sale occurs as the fuel is delivered necessary to complete the model. • Isomerate. into a transport vessel with a capacity of at A certificate expires on the earliest of the

least 20,000 barrels of fuel. • Methyl tertiary butyl ether (MTBE). following dates.

Page 10
ducers, retailers, or users who purchase in bulk proved refinery by bulk transfer and the • The date 1 year after the effective date quantities and accept delivery into bulk storage registered refiner treats itself as not registered. (not earlier than the date signed) of the tanks. A wholesale distributor is not a producer This is in addition to the taxable events dis- certificate. or importer. cussed earlier under Removal from

• The date a new certificate is provided to The wholesale distributor must have sold the refinery.

the seller. gasoline at a tax-excluded price and obtained a Gasohol. Gasohol is a mixture of gasoline and certificate of ultimate purchaser or proof of ex- • The date the seller is notified the buyer’s alcohol that satisfies the alcohol-content re- portation. right to provide a certificate has been with- quirements immediately after the mixture is prodrawn. The wholesale distributor must complete duced. Alcohol includes ethanol and methanol.

Schedule 4 (Form 8849) and attach it to Form Generally, this includes ethanol used to produce The buyer must provide a new certificate if any 8849 to make a claim for refund for gasoline sold ethyl tertiary butyl ether (ETBE) and methanol information on a certificate has changed. to an ultimate purchaser for a purpose listed produced from methane gas formed in waste

The IRS may withdraw the buyer’s right to earlier. disposal sites. However, alcohol produced from

provide a certificate if that buyer uses the gaso- By signing the Form 8849, the gasoline petroleum, natural gas, coal (including peat), or

line blendstocks in the production of finished wholesale distributor certifies that it: any derivative or product of these items, and

gasoline or resells the blendstocks without get- alcohol less than 190 proof do not qualify as • Bought the gasoline at a price that in- ting a certificate from its buyer. alcohol for these rules. cluded the excise tax,

Received at approved terminal or refinery. Alcohol-content requirements. To qualify as • Qualifies as a wholesale distributor, The nonbulk removal or entry of gasoline blend- gasohol, a mixture must contain a specific

stocks received at an approved terminal or refin- • Sold the fuel at a tax-excluded price, and amount of alcohol by volume, without rounding.

ery is not taxable if the person otherwise liable Figure the alcohol content on a batch-by-batch • Has obtained the certificate of the ultimate for the tax (position holder, refiner, or enterer) basis. There are three types of gasohol. purchaser or proof of export from its meets all the following requirements. buyer. • 10% gasohol. This is a mixture that con-

• The person is a registrant. tains at least 9.8% alcohol.

• The person has an unexpired notification Claims by persons who paid the tax to the • 7.7% gasohol. This is a mixture that concertificate (discussed earlier) from the op- government. A credit or refund is allowable to tains at least 7.55%, but less than 9.8%,

erator of the terminal or refinery where the the person that paid the tax to the government if alcohol.

gasoline blendstocks are received. the gasoline was sold to the ultimate purchaser • 5.7% gasohol. This is a mixture that con- (including an exporter) by either that person or • The person has no reason to believe any tains at least 5.59%, but less than 7.55%, by a retailer for a purpose listed earlier. A credit information on the certificate is false. alcohol. or refund also is allowable to that person if the

gasoline was sold to the user by a wholesale Any mixture that contains less than 5.59% alco- Bulk transfers to registered industrial user. distributor and either of the following is true. hol is not gasohol. The removal of gasoline blendstocks from a • The distributor bought the gasoline at a If the mixture is produced within the bulk pipeline or vessel is not taxable if the blend- price that did not include the tax. transfer/terminal system, such as at a refinery, stocks are received by a registrant that is an determine whether the mixture is gasohol when industrial user. An industrial user is any person • The sale to the user was charged on an oil the taxable removal or entry of the mixture oc- that receives gasoline blendstocks by bulk company credit card. curs. transfer for its own use in the manufacture of any By signing the claim, the person that paid the tax If the mixture is produced outside the bulk product other than finished gasoline. certifies that it: transfer/terminal system, determine whether the

mixture is gasohol immediately after the mixture 1) Has obtained one of the three items below. Credits or Refunds is produced. If you splash blend a batch in an

empty tank, figure the volume of alcohol (without a) Proof of exportation. A credit or refund of the gasoline tax (without adjustment for temperature) by dividing the meinterest) may be allowable if gasoline is, by any b) A certificate of ultimate purchaser. tered gallons of alcohol by the total metered

person: gallons of alcohol and gasoline as shown on c) A certificate of ultimate vendor. each delivery ticket. However, if you add me- • Exported, tered gallons of gasoline and alcohol to a tank 2) Has met any of the following conditions. • Used in a boat engaged in commercial already containing more than 0.5% of its capacfishing, a) Has neither included the tax in the price ity in a liquid, include the alcohol and non-alcoof the gasoline nor collected the tax hol fuel contained in that liquid in figuring the • Used in military aircraft, volume of alcohol in that batch. from the buyer. • Used in foreign trade, b) Has repaid, or agreed to repay, the tax Example 1. John uses an empty 8,000 gal- • Sold to a state for its exclusive use, to the ultimate vendor of the gasoline. lon tank to blend alcohol and gasoline. His deliv-

• Sold to a nonprofit educational organiza- c) Has gotten the written consent of the ery tickets show that he blended Batch 1 using

tion for its exclusive use, as discussed ultimate vendor to the allowance of the 7,200 metered gallons of gasoline and 800 meearlier under Communications Tax, tered gallons of alcohol. John divides the gallons credit or refund.

of alcohol (800) by the total gallons of alcohol • Sold to the United Nations for its official and gasoline delivered (8,000). Batch 1 qualifies use, or Claims by the ultimate purchaser. A credit as 10% gasohol.

• Used or sold in the production of special or refund is allowable to the ultimate purchaser motor fuels (defined later). of taxed gasoline used for a nontaxable use. Example 2. John blends Batch 2 in an

See Publication 378 for more information about empty tank. According to his delivery tickets, he

blended 7,220 gallons of gasoline and 780 gal- Claims by wholesale distributors. A credit these claims.

lons of alcohol. Batch 2 contains 9.75% alcohol or refund is allowable to a gasoline wholesale (780 ÷ 8,000); it qualifies as 7.7% gasohol. distributor who buys gasoline at a price that Gasohol

includes the excise tax and then sells it to the Batches containing at least 9.8% alcohol.

ultimate purchaser (including an exporter) for a If a mixture contains at least 9.8% but less than Generally, the same rules that apply to the impopurpose listed in the previous list. 10% alcohol, part of the mixture is considered to sition of tax on the removal and entry of gasoline

A wholesale distributor (discussed earlier) apply to gasohol. is any person who be 10% gasohol. To figure that part, multiply the

makes retail sales of gasoline at 10 or more However, the removal of gasohol from a re- number of gallons of alcohol in the mixture by

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

Page 11
that is subject to the rules on failure to blend, sale. A copy of the registrant’s letter of registra- Diesel Fuel and Kerosene

discussed later. tion cannot be used as a gasohol blender’s certificate. A model certificate is shown in Appendix Generally, diesel fuel and kerosene are taxed in Batches containing at least 7.55% alcohol. B as Model Certificate E. Your certificate must the same manner as gasoline (discussed ear- If a mixture contains at least 7.55% but less than contain all information necessary to complete lier). The following discussion provides informa- 7.7% alcohol, part of the mixture is considered to the model. tion about the excise tax on diesel fuel and be 7.7% gasohol. To figure that part, multiply the A certificate expires on the earliest of the kerosene. number of gallons of alcohol in the mixture by following dates. 12.987. The other part of the mixture is excess Diesel fuel means any liquid that, without fur- liquid subject to the rules on failure to blend, • The date 1 year after the effective date ther processing or blending, is suitable for use discussed later. (which may be no earlier than the date as a fuel in a diesel-powered highway vehicle or signed) of the certificate. Batches containing at least 5.59% alcohol. train. A liquid is suitable for this use if the liquid

If a mixture contains at least 5.59% but less than • The date a new certificate is provided to has practical and commercial fitness for use in

5.7% alcohol, part of the mixture is considered to the seller. the propulsion engine of a diesel-powered highbe 5.7% gasohol. To figure that part, multiply the way vehicle or diesel-powered train. A liquid • The date the seller is notified the gasohol number of gallons of alcohol in the mixture by may possess this practical and commercial fit- blender’s registration has been revoked or 17.544. The other part of the mixture is excess ness even though the specified use is not the suspended. liquid1 liquid that is subject to the rules on failure to s predominant use. However, a liquid

blend, discussed later. The buyer must provide a new certificate if any does not possess this practical and commercial

information on a certificate has changed. fitness solely by reason of its possible or rare

Gasohol blender. A gasohol blender is any use as a fuel in the propulsion engine of a

person that regularly produces gasohol outside Tax on gasohol. The tax on the removal or diesel-powered highway vehicle or diesel-powof the bulk transfer/terminal system for sale or entry of gasohol depends on the type of gasohol. ered train. Diesel fuel does not include gasoline,

use in its trade or business. A “registered gaso- The rates for gasohol containing ethanol are kerosene, excluded liquid, No. 5 and No. 6 fuel

hol blender” is a person that has been registered shown on Form 720. The rates for gasohol con- oils covered by ASTM specification D 396, or

by the IRS as a gasohol blender. See Registra- taining methanol are shown in the instructions F-76 (Fuel Naval Distillate) covered by military

tion Requirements, earlier. for Form 720. specification MIL-F-16884.

An excluded liquid is either of the following. Later separation. If a person separates gasoTax Rates line from gasohol on which a reduced tax rate 1) A liquid that contains less than 4% normal

was imposed, that person is treated as the re- paraffins.

The tax rate depends on the type of gasohol. finer of the gasoline. Tax is imposed on the 2) A liquid with all the following properties. These rates are less than the regular tax rate for removal or sale of the gasoline. This tax rate is

gasoline. The reduced rate also depends on the difference between the regular tax rate for a) Distillation range of 125 degrees Fahr- whether you are liable for the tax on the removal gasoline and the tax rate imposed on the prior enheit or less.

or entry of gasoline used to make gasohol, or on removal or entry of the gasohol. The person that b) Sulfur content of 10 ppm or less. the removal or entry of gasohol. You may be owns the gasohol when the gasoline is sepaliable for additional tax if you later separate the rated is liable for the tax. c) Minimum color of +27 Saybolt. gasoline from the gasohol or fail to blend gaso- Failure to blend. Tax is imposed on the re- line into gasohol. moval, entry, or sale of gasoline on which a Kerosene. This means any of the following

Tax on gasoline. The tax on gasoline re- reduced rate of tax was imposed if the gasoline liquids.

moved or entered for the production of gasohol was not blended into gasohol, or was blended • One of the two grades of kerosene (No. depends on the type of gasohol that is to be into gasohol taxable at a higher rate. This tax is

1-K and No. 2-K) covered by ASTM speci- produced. The rates apply to the tax imposed on the difference between the tax that should have

applied and the tax actually imposed. If the gas- fication D 3699. the removal at the terminal rack or from the

refinery, or on the nonbulk entry into the United oline was not sold, the person liable for this tax is • Aviation-grade kerosene.

States (as discussed under Gasoline, earlier). the person that was liable for the tax on the entry

The rates for gasoline used to produce gasohol or removal. If the gasoline was sold, the person However, kerosene does not include excontaining ethanol are shown on Form 720. The that bought the gasoline in connection with the cluded liquid, discussed earlier. taxable removal or entry is liable for this tax. rates for gasoline used to produce gasohol con- Kerosene also includes any liquid that would

taining methanol are shown in the instructions be described above but for the presence of a

for Form 720. Example. John uses an empty 8,000 gallon dye of the type used to dye kerosene for a tank to blend gasoline and alcohol. The delivery nontaxable use. Requirements. The reduced rates apply if tickets show he blended 7,205 metered gallons the person liable for the tax (position holder, of gasoline and 795 metered gallons of alcohol. Aviation-grade kerosene. This is refiner, or enterer) is a registrant and: He bought the gasoline at a reduced tax rate of kerosene-type jet fuel covered by ASTM specifi14.666 cents per gallon. The batch contains cation D 1655 or military specification 1) A registered gasohol blender that pro- 9.9375% alcohol (795 ÷ 8,000). John deter- MIL-DTL-5624T (Grade JP-5) or MIL-DTL- duces gasohol with the gasoline within 24 mines that 7,950 gallons (10 × 795) of the mix- 83133E (Grade JP-8). hours after removing or entering the gaso- ture qualifies as 10% gasohol. See Batches line, or containing at least 9.8% alcohol, earlier. The Diesel-powered highway vehicle. This is

2) That person, at the time that the gasoline other 50 gallons is excess liquid that he failed to any self-propelled vehicle designed to carry a

is sold in connection with the removal or blend into gasohol. He is liable for a tax of 3.734 load over public highways (whether or not also

entry: cents per gallon (18.40 (full rate) − 14.666 (re- designed to perform other functions) and produced rate)) on this excess liquid. pelled by a diesel-powered engine. Generally, a) Has an unexpired certificate from the do not consider as diesel-powered highway vebuyer, and hicles specially designed mobile machinery for

Credits or Refunds nontransportation functions and vehicles spe- b) Has no reason to believe any informa- cially designed for off-highway transportation. tion in the certificate is false. A credit or refund for part of the gasoline tax may For more information about these vehicles and

be allowed if gasoline taxed at the full rate is for information about vehicles not considered

Certificate. The certificate from the buyer used to produce gasohol for sale or use in a highway vehicles, see Publication 378. certifies that the gasoline will be used by the person’s trade or business. By signing the claim,

buyer to produce gasohol within 24 hours after the person certifies that it has, for each batch of Diesel-powered train. This is any diesel-powpurchase. The certificate may be included as gasohol, the required information related to the ered equipment or machinery that rides on rails.

part of any business records normally used for a purchase of the gasoline. The term includes a locomotive, work train,

Page 12
switching engine, and track maintenance ma- port the diesel fuel from a refinery (de- not previously imposed under any of the events

chine. scribed in (1)) to a facility (described in discussed earlier.

(2)) less than 20 miles from the refin- The seller is liable for the tax. However, a

ery. seller meeting all the following conditions at the

Taxable Events time of the sale will not be liable for the tax.

The tax on diesel fuel and kerosene is 24.4 • The seller is a registrant. Entry into the United States. The entry of

cents a gallon. It is imposed on the removal, undyed diesel fuel or undyed kerosene into the • The seller has an unexpired notification entry, or sale of diesel fuel and kerosene. Each United States is taxable if the entry meets either certificate (discussed under Gasoline) of these events is discussed later. The tax does of the following conditions. from the buyer. not apply to dyed diesel fuel or dyed kerosene,

discussed later. • It is made by bulk transfer and the enterer • The seller has no reason to believe any

is not a registrant. information on the certificate is false. If the tax is paid on the diesel fuel or kerosene in more than one event, a refund may be • It is not made by bulk transfer. The buyer of the undyed diesel fuel or undyed allowed for the “second” tax paid. See Refunds kerosene is liable for the tax if the seller meets The enterer is liable for the tax. of Second Tax, earlier. these conditions. The buyer is jointly and severRemoval from a terminal by unregistered po- ally liable if the seller does not meet these condi- Removal from terminal. All removals of un- tions. sition holder. The removal by bulk transfer of dyed diesel fuel or undyed kerosene at a terminal rack are taxable. The position holder for that undyed diesel fuel or undyed kerosene from a Exception. The tax does not apply to a sale terminal is taxable if the position holder for that fuel is liable for the tax. if all of the following apply. fuel is not a registrant. The position holder is

Terminal operator’s liability. The terminal • The buyer’s principal place of business is liable for the tax. The terminal operator is jointly

operator is jointly and severally liable for the tax not in the United States. and severally liable for the tax if the position

if the terminal operator provides any person with holder is a person other than the terminal opera- • The sale occurs as the fuel is delivered any bill of lading, shipping paper, or similar doc- tor. However, see Terminal operator’s liability into a transport vessel with a capacity of at ument indicating that undyed diesel fuel or un- under Removal from terminal, earlier, for an least 20,000 barrels of fuel. dyed kerosene is dyed (discussed later). exception.

The terminal operator is jointly and severally • The seller is a registrant and the exporter

Bulk transfers not received at approved ter- of record. liable for the tax if the position holder is a person

other than the terminal operator and is not a minal or refinery. The removal by bulk trans- • The fuel was exported. registrant. However, a terminal operator will not fer of undyed diesel fuel or undyed kerosene

be liable for the tax in this situation if, at the time from a terminal or refinery or the entry of undyed

diesel fuel or undyed kerosene by bulk transfer Removal or sale of blended diesel fuel or of the removal, the following conditions are met. kerosene. The removal or sale of blended die- into the United States is taxable if the following • The terminal operator is a registrant. sel fuel or blended kerosene by the blender is conditions apply. taxable. Blended taxable fuel produced using • The terminal operator has an unexpired 1) No tax was previously imposed (as dis- biodiesel is subject to the tax. See Blended notification certificate (discussed under

Gasoline cussed earlier) on any of the following taxable fuel under Definitions, earlier. ) from the position holder. 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. However, if an untaxed liquid is sold as taxed

taxable fuel and that untaxed liquid is used to c) The removal from a terminal by an un- Removal from refinery. The removal of un- produce blended taxable fuel, the person that registered position holder. dyed diesel fuel or undyed kerosene from a sold the untaxed liquid is jointly and severally

refinery is taxable if the removal meets either of liable for the tax imposed on the blender’s sale 2) Upon removal from the pipeline or vessel, or removal of the blended taxable fuel. the following conditions. the undyed diesel fuel or undyed kerosene

• It is made by bulk transfer and the refiner is not received at an approved terminal or Additional persons liable. When the person or owner of the fuel immediately before refinery (or at another pipeline or vessel). liable for the tax willfully fails to pay the tax, joint the removal is not a registrant. and several liability for the tax is imposed on: The owner of the undyed diesel fuel or un-

• It is made at the refinery rack. dyed kerosene when it is removed from the • Any officer, employee, or agent of the per- pipeline or vessel is liable for the tax. However, son who is under a duty to ensure the The refiner is liable for the tax. an owner meeting all the following conditions at payment of the tax and who willfully fails to Exception. The tax does not apply to a re- the time of the removal will not be liable for the perform that duty, or moval of undyed diesel fuel or undyed kerosene tax. • Anyone who willfully causes the person to at the refinery rack if all the following conditions • The owner is a registrant. fail to pay the tax. are met.

• The owner has an unexpired notification 1) The undyed diesel fuel or undyed ker- certificate (discussed under Gasoline) Exemptions osene is removed from an approved refin- from the operator of the terminal or refin- ery not served by pipeline (other than for ery where the undyed diesel fuel or un- The excise tax on diesel fuel or kerosene is not

receiving crude oil) or vessel. dyed kerosene is received. imposed and the dyeing requirements do not

2) The undyed diesel fuel or undyed ker- have to be met if the rules related to the follow- • The owner has no reason to believe any osene is received at a facility operated by ing exemptions are met. information on the certificate is false.

a registrant and located within the bulk • Sale or use in certain areas of Alaska.

transfer/terminal system. The operator of the facility where the undyed

diesel fuel or undyed kerosene is received is • Aviation-grade kerosene used in an air- 3) The removal from the refinery is by: liable for the tax if the owner meets these condi- craft.

tions. The operator is jointly and severally liable a) Railcar and the same person operates • Kerosene used for feedstock purposes. if the owner does not meet these conditions. the refinery and the facility at which the

undyed diesel fuel or undyed kerosene Sales to unregistered person. The sale of Sale or use in certain areas of Alaska. The is received, or undyed diesel fuel or undyed kerosene located excise tax is not imposed on the removal, entry,

b) For undyed diesel fuel only, a trailer or within the bulk transfer/terminal system to a per- or sale of diesel fuel or kerosene in Alaska for

semi-trailer used exclusively to trans- son that is not a registrant is taxable if tax was ultimate sale or use in an exempt area of Alaska.

Page 13
The removal or entry of any diesel fuel or ker- disqualifying sale. The seller in that sale is liable stock user is a person that has been registered

osene is not taxable if all the following require- for the tax. However, a later sale is not a disqual- by the IRS as a feedstock user. See Registration

ments are satisfied. ifying sale if either of the following apply to that Requirements, earlier.

sale. Later sales. The excise tax applies to ker- 1) The person otherwise liable for the tax (po- • The seller has, at the time of the later sale, osene sold for use by the buyer for a feedstock sition holder, refiner, or enterer): an unexpired certificate from the buyer purpose (item (3)(b)) if the buyer in that sale

a) Is a registrant, and has no reason to believe any informa- later sells the kerosene. The tax is imposed at

tion on the certificate is false. the time of the later sale and that seller is liable

b) Can show satisfactory evidence of the for the tax.

nontaxable nature of the transaction, • The seller delivers the kerosene into the

and fuel supply tank of an aircraft. Certificate. The certificate from the buyer

certifies the buyer is a registered feedstock user c) Has no reason to believe the evidence Certificate. The certificate from the buyer and the kerosene will be used by the buyer for a is false. certifies the kerosene will be used by the buyer feedstock purpose. The certificate may be inas a fuel in an aircraft or resold for that use. The cluded as part of any business records normally 2) In the case of a removal from a terminal, certificate may be included as part of any busi- used for a sale. A model certificate is shown in

the terminal is an approved terminal. ness records normally used for a sale. A model Appendix B as Model Certificate G. Your certifi3) The owner of the fuel immediately after the certificate is shown in Appendix B as Model cate must contain all information necessary to

Certificate F. Your certificate must contain all complete the model. removal or entry holds the fuel for its own

use in a nontaxable use (discussed later) A certificate expires on the earliest of the information necessary to complete the model.

or is a qualified dealer. A certificate expires on the earliest of the following dates.

following dates. A qualified dealer is any person that holds a • The date 1 year after the effective date

qualified dealer license from the state of Alaska • The date 1 year after the effective date (not earlier than the date signed) of the

or has been registered by the IRS as a qualified (not earlier than the date signed) of the certificate.

certificate. retailer. Satisfactory evidence may include • The date the seller is provided a new cer- copies of qualified dealer licenses or exemption • The date the seller is provided a new cer- tificate or notice that the current certificate certificates obtained for state tax purposes. tificate or notice that the current certificate is invalid.

Later sales. The excise tax applies to diesel is invalid. • The date the seller is notified the buyer’s fuel or kerosene sold by a qualified dealer after • The date the seller is notified the buyer’s registration has been revoked or sus- the removal or entry. The tax is imposed at the right to provide a certificate has been with- pended. time of the sale and the qualified dealer is liable drawn.

for the tax. However, the sale is not taxable if all The buyer must provide a new certificate if the following requirements are met. The buyer must provide a new certificate if any information on a certificate has changed. any information on a certificate has changed. • The fuel is sold in an exempt area of The IRS may withdraw the buyer’s right to Alaska. provide a certificate if the buyer uses the Credits or Refunds • The buyer buys the fuel for its own use in aviation-grade kerosene other than as a fuel in

a nontaxable use or is a qualified dealer. an aircraft or sells the kerosene without first A credit or refund is allowable to the ultimate

obtaining a certificate from its buyer. purchaser or registered ultimate vendor for the • The seller can show satisfactory evidence tax on undyed diesel fuel or undyed kerosene of the nontaxable nature of the transaction Kerosene used for feedstock purposes. used for a nontaxable use. See Publication 378. and has no reason to believe the evidence The excise tax on kerosene is not imposed on

is false. the removal or entry of kerosene if all the following conditions are met. Dyed Diesel Fuel Aviation-grade kerosene. The excise tax on 1) The person otherwise liable for tax (posi- and Dyed Kerosene kerosene is not imposed on the removal from tion holder, refiner, or enterer) is a regis- the terminal or refinery rack or non-bulk entry of The excise tax is not imposed on the removal, trant. aviation-grade kerosene if all the following con- entry, or sale of diesel fuel or kerosene if all the

ditions are met. 2) In the case of a removal from a terminal, following tests are met.

the terminal is an approved terminal. • The person otherwise liable for tax (for 1) The person otherwise liable for tax (posi- 3) Either: example, the position holder) is a regis- tion holder, refiner, or enterer) is a regis- trant. trant. a) The person otherwise liable for tax

uses the kerosene for a feedstock pur- • In the case of a removal from a terminal, 2) In the case of a removal from a terminal,

pose, or the terminal is an approved terminal. the terminal is an approved terminal.

b) The kerosene is sold for use by the • The diesel fuel or kerosene satisfies the 3) Either: buyer for a feedstock purpose and, at dyeing requirements (described next).

a) The person otherwise liable for tax de- the time of the sale, the person otherlivers the kerosene into the fuel supply wise liable for tax has an unexpired cer- Dyeing requirements. Diesel fuel or ker- tank of an aircraft and this delivery is tificate (described later) from the buyer osene satisfies the dyeing requirements only if it not in connection with a sale, or and has no reason to believe any infor- satisfies one of the following requirements. mation on the certificate is false. b) The kerosene is sold for use as a fuel • It contains the dye Solvent Red 164 (and in an aircraft, and, at the time of the Kerosene is used for a feedstock purpose no other dye) at a concentration spectrally sale, the person otherwise liable for tax when it is used for nonfuel purposes in the man- equivalent to at least 3.9 pounds of the has an unexpired certificate (described ufacture or production of any substance other solid dye standard Solvent Red 26 per later) from the buyer and has no reason than gasoline, diesel fuel, or special fuels. For thousand barrels of fuel. to believe any information on the certifi- example, kerosene is used for a feedstock pur- cate is false. • It contains any dye of a type and in a pose when it is used as an ingredient in the concentration that has been approved by production of paint, but is not used for a feed- the Commissioner. Certain later sales. The excise tax applies stock purpose when it is used to power machinto kerosene sold for use as a fuel in an aircraft ery at a factory where paint is produced. A

(item (3)(b)) if there is a later disqualifying sale. feedstock user is a person that uses kerosene Notice required. A legible and conspicuous

The tax is imposed at the time of the first later for a feedstock purpose. A registered feed- notice stating either: DYED DIESEL FUEL,

Page 14
NONTAXABLE USE ONLY, PENALTY FOR • The alteration or attempted alteration oc- 6) Use in a highway vehicle that:

TAXABLE USE or DYED KEROSENE, curs in an exempt area of Alaska. See

NONTAXABLE USE ONLY, PENALTY FOR Sale or use in Alaska, a) Is not registered (and is not required to earlier.

be registered) for highway use under TAXABLE USE must be: • Diesel fuel or kerosene meeting the dye- the laws of any state or foreign country, ing requirements (described earlier) is 1) Provided by the terminal operator to any and

blended with diesel fuel or kerosene not person that receives dyed diesel fuel or meeting the dyeing requirements and the b) Is used in the operator’s trade or busi- dyed kerosene at a terminal rack of that ness or for the production of income. blending occurs as part of a nontaxable operator, and use (other than export), discussed later.

2) Posted by a seller on any retail pump or 7) Exclusive use by a nonprofit educational

other delivery facility where it sells dyed organization, as discussed earlier under

diesel fuel or dyed kerosene for use by its Back-Up Tax Communications Tax.

buyer. Tax is imposed on the delivery of any of the 8) Use in a highway vehicle owned by the

The notice under item (1) must be provided following into the fuel supply tank of a United States that is not used on a highby the time of the removal and must appear on diesel-powered highway vehicle, train, or bus. way.

all shipping papers, bills of lading, and similar • Any dyed diesel fuel or dyed kerosene for 9) Exported. documents accompanying the removal of the other than a nontaxable use. fuel. 10) Use other than as a fuel in a propulsion

Any seller that fails to post the required no- • Any diesel fuel or kerosene on which a engine of a diesel-powered highway vehicredit or refund (for fuel used for a nontax- cle (such as home heating oil). tice under item (2) is presumed to know that the

fuel will be used for a taxable use (a use other able purpose) has been allowed. 11) Use as a fuel in a propulsion engine of a than a nontaxable use listed later). That seller is • Any liquid other than gasoline, diesel fuel, diesel-powered train (subject to back-up subject to the penalty described next. or kerosene. tax, discussed earlier).

Penalty. A penalty is imposed on a person if 12) Use in an intercity or local bus meeting Generally, this back-up tax is imposed at a any of the following situations apply. certain qualifications, discussed later (sub- rate of 24.4 cents a gallon. However, the rate for ject to back-up tax, discussed earlier). fuel for a diesel-powered train is 4.4 cents a 1) Any dyed fuel is sold or held for sale by gallon. The rate for delivery into the fuel supply the person for a use the person knows or Used on a farm for farming purposes. Die- tank of certain intercity or local buses is 7.4 has reason to know is not a nontaxable sel fuel or kerosene is used on a farm for farming cents a gallon. use of the fuel. purposes only if used in carrying on a trade or

Liability for tax. Generally, the operator of the business of farming, on a farm in the United 2) Any dyed fuel is held for use or used by vehicle, bus, or train into which the fuel is deliv- States, and for farming purposes. the person for a use other than a nontaxable use and the person knew, or had rea- ered is liable for the tax. In addition, the seller of Farm. A farm includes livestock, dairy, fish, the diesel fuel or kerosene is jointly and sever- son to know, that the fuel was dyed. poultry, fruit, fur-bearing animals, and truck ally liable for the tax if the seller knows or has farms, orchards, plantations, ranches, nur- 3) The person willfully alters, or attempts to reason to know that the fuel will be used for series, ranges, and feedyards for fattening cat- alter, the strength or composition of any other than a nontaxable use. Generally, a seller tle. It also includes structures such as dye in dyed fuel. of diesel fuel or kerosene is not liable for tax on greenhouses used primarily for raising agriculThe 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

delivery, the deliverer and the train operator are Farming purposes. Diesel fuel or kerosene ing on the number of violations. both registered by the IRS as train operators and is used on a farm for farming purposes if it is This penalty is in addition to any tax imposed a written agreement between them requires the bought by the owner, tenant, or operator of the on the fuel.

deliverer to pay the tax. farm and used for any of the following purposes. If the penalty is imposed, each officer, employee, or agent of a business entity who willfully Exemptions from the back-up tax. The 1) To cultivate the soil, or to raise or harvest

participated in any act giving rise to the penalty back-up tax does not apply to a delivery of diesel any agricultural or horticultural commodity.

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

However, the penalty applies only to dyed diesel diesel-powered vehicle, bus, or train, the tax 3) To operate, manage, conserve, improve,

fuel and dyed kerosene, while the back-up tax does not apply to diesel fuel or kerosene used or maintain your farm and its tools and

may apply to other fuels. The penalty may apply as heating oil or in stationary engines. equipment.

if the fuel is held for sale or use for a taxable use 4) To handle, dry, pack, grade, or store any while the back-up tax does not apply unless the raw agricultural or horticultural commodity fuel is delivered into a fuel supply tank. Nontaxable Uses (as provided below).

Exception to penalty. The penalty under The following are nontaxable uses of diesel fuel 5) To plant, cultivate, care for, or cut trees or item (3) will not apply in any of the following and kerosene. to prepare (other than sawing logs into situations. lumber, chipping, or other milling) trees for 1) Use on a farm for farming purposes (dis- • Diesel fuel or kerosene meeting the dye- market, but only if the planting, etc., is inci- cussed later). ing requirements (described earlier) is dental to your farming operations (as problended with any undyed liquid and the 2) Exclusive use by a state (defined earlier vided below).

resulting product meets the dyeing re- under Definitions). Diesel fuel or kerosene is treated as used on quirements. 3) Use in a vehicle owned by an aircraft mu- a farm for farming purposes if it is bought by a

• Diesel fuel or kerosene meeting the dye- seum (as discussed later under Aviation person other than the owner, tenant, or operator

ing requirements (described earlier) is Fuel). of the farm and used on the farm for any of the

blended with any other liquid (other than purposes in item (1) or (2). 4) Use in a school bus (discussed later). diesel fuel or kerosene) that contains the Item (4) applies only if more than one-half of

type and amount of dye required to meet 5) Use in a qualified local bus (discussed the commodity so treated during the tax year

the dyeing requirements. later). was produced on the farm. Commodity refers to

Page 15
a single raw product. For example, apples would into the fuel supply tank of an intercity or local Bulk storage tanks. A bulk storage tank is

be one commodity and peaches another. The bus. (See Back-Up Tax, earlier.) This is a bus a container that holds at least 50 gallons and is

more-than-one-half test applies separately to engaged in furnishing (for compensation) pas- not the fuel supply tank of any engine mounted

each commodity. senger land transportation available to the gen- on, or attached to, an aircraft.

eral public. The bus must be engaged in one of Item (5) applies if the operations are minor in

nature when compared to the total farming oper- the following activities.

ations. Refunds of Prior Tax • Scheduled transportation along regular

Not used for farming purposes. Diesel routes regardless of the size of the bus. A registered aviation fuel producer holding aviafuel or kerosene is not used for farming pur- tion fuel on which a prior tax was paid (and not • Nonscheduled transportation if the seating poses if it is used in any of the following ways. credited or refunded), can get a refund (without capacity of the bus is at least 20 adults interest) of the tax. Generally, this applies when (not including the driver). • Off the farm, such as on the highway or in a producer buys taxed fuel from a retailer. No noncommercial aviation, even if the fuel is A bus is available to the general public if the bus credit against any tax is allowed. used in transporting livestock, feed, crops, is available for hire to more than a limited numor equipment. ber of persons, groups, or organizations. Conditions to allowance of refund. A claim

• For personal use, such as mowing the for refund of the tax is allowed only if all the

Aviation Fuel following conditions are met. lawn.

• In processing, packaging, freezing, or can- Aviation fuel is any liquid (other than gasoline or 1) A tax on the aviation fuel was paid to the

ning operations. government by an importer or producer diesel fuel) that is suitable for use as a fuel in an (the first producer) and the tax has not • aircraft. In processing crude gum into gum spirits been credited or refunded. of turpentine or gum resin or in processing

maple sap into maple syrup or maple 2) After the tax was imposed, the fuel was Taxable Event sugar. acquired by a registered aviation fuel producer (the second producer). Tax of 21.9 cents per gallon is imposed on the

Buses. Diesel fuel or kerosene used in a sale or use of aviation fuel by its producer or 3) The second producer has filed a timely

school bus or in a qualified local bus is used for a importer. The producer or importer is liable for claim for refund that contains the informanontaxable use and is not subject to excise tax. the tax. tion required (see Refund claim, later).

However, fuel used in an intercity or local bus is

Additional persons liable. When the person 4) The first producer and any person that subject to a reduced rate of tax. owns the fuel after its sale by the first pro- liable for the tax willfully fails to pay the tax, joint School bus. A school bus is a bus engaged ducer and before its purchase by the sec- and several liability for the tax is imposed on: in the transportation of students and employees ond producer (a subsequent seller) have

of schools. A school is an educational organiza- • Any officer, employee, or agent of the per- met the reporting requirements, discussed

tion with a regular faculty and curriculum and a son who is under a duty to ensure the next.

regularly enrolled body of students who attend payment of the tax and who willfully fails to

perform that duty, or the place where the educational activities occur. Reporting requirements. Generally, the first

Qualified local bus. A qualified local bus is • Anyone who willfully causes the person to producer must file a report (the first producer’s

a bus meeting all the following tests. fail to pay the tax. report). A model first producer’s report is shown

in Appendix B as Model Certificate H. The report • It is engaged in furnishing (for compensa- must contain all information needed to complete Producers. Producers include refiners, blend- tion) intracity passenger land transporta- the model. ers, and wholesale distributors of aviation fuel tion available to the general public. and dealers selling aviation fuel exclusively to Providing information. The first producer • It operates along scheduled, regular producers of aviation fuel if these persons have must give a copy of the report to the person to routes. been registered by the IRS. The term also in- whom the first producer sells the aviation fuel.

• It has a seating capacity of at least 20 cludes the actual producer of aviation fuel. See Each subsequent seller must give to its

adults (excluding the driver). Registration for Certain Activities, earlier. buyer a statement that provides all the informaAny person buying aviation fuel at a reduced tion necessary to complete the “Statement of • It is under contract with (or receiving more rate is the producer of that fuel. Subsequent Seller (Aviation Fuel)” shown in Ap- than a nominal subsidy from) any state or Wholesale distributors. pendix B as Model Certificate I. The statement To qualify as a local government to furnish that transpor- can be at the bottom or on the back of the copy wholesale distributor, you must hold yourself out tation. of the first producer’s report (or in an attached to the public as being engaged in the trade or document). Intracity passenger land transportation means business of either of the following. If the first producer’s report relates to avia- land transportation of passengers between

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 Refund claim. You must make your claim for the following applies. A bus is under contract with a state or local 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 b) At least 50% of the volume of aviation equal to 3 cents multiplied by the number of following information to Schedule 6. fuel is sold to these buyers and at least gallons of fuel used in buses on subsidized 500 of your sales during the preceding • Volume and type of aviation fuel. routes.

12-month period are made to these A company that operates its buses along • 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.

Page 16
• A copy of the first producer’s report (dis- aircraft or vehicle (such as a ground servicing To buy at a tax-reduced rate, the airline gives

cussed earlier) that relates to the aviation vehicle for aircraft) owned by an aircraft mu- the seller a signed exemption certificate statfuel covered by the claim. seum and used exclusively for purposes de- ing the buyer’s name, address, employer identiscribed in item (3) of the following definition. fication number, registration number, and • A copy of any statement of subsequent An aircraft museum is an organization with intended use of the fuel. An airline may give a seller that you received with respect to the all the following characteristics. separate exemption certificate for each aviation fuel. purchase or may give one certificate to cover all

1) It is exempt from income tax as an organi- purchases from a particular seller for up to 1

Aviation Fuel Exemptions zation described in section 501(c)(3) of the year.

Internal Revenue Code.

Registered producers may sell aviation fuel tax 2) It is operated as a museum under a state Credits or Refunds

free or at a tax-reduced rate for sales to the (or District of Columbia) charter. persons or for the nontaxable uses described A credit or refund is allowable to the ultimate

below, but only if certain prescribed conditions 3) It is operated exclusively for acquiring, ex- purchaser for taxed aviation fuel used for a nonare met. No seller of aviation fuel is eligible to hibiting, and caring for aircraft of the type taxable use. See Publication 378.

claim a credit or refund for aviation fuel used by used for combat or transport in World

the buyer for a nontaxable use. War II. Special Motor Fuels

Sales to other producers. Registered pro- Special motor fuel means any liquid fuel includ- ducers may sell aviation fuel tax free to other Certain helicopter uses. A registered pro- ing liquefied petroleum gas, liquefied natural registered producers of aviation fuel. The buyer ducer may sell aviation fuel tax free for use in a gas, benzol, benzene, and naptha. However, must give the seller a written statement contain- helicopter used for one of the following pur- gasoline, diesel fuel, kerosene, gas oil, and fuel poses. ing the buyer’s registration number. oil do not qualify as special motor fuel.

Sales for nontaxable uses. A registered pro- 1) Transporting individuals, equipment, or

ducer may sell aviation fuel tax free for any of Special motor fuels/alcohol mixture. This is supplies in the exploration for, or the dethe following uses. velopment or removal of, hard minerals, a blend of alcohol with special motor fuels. The

oil, or gas. blend must be at least 10% alcohol that is 190 • Use other than as a fuel in the propulsion proof or more. Figure the proof of any alcohol engine of an aircraft (such as use as heat- 2) Planting, cultivating, cutting, transporting, without regard to any added denaturants. ing oil). or caring for trees (including logging oper- The alcohol includes methanol or ethanol. ations). • Use in military aircraft owned by the This includes methanol produced from methane

United States or a foreign country. 3) Providing emergency medical services. gas formed in waste disposal sites. But it does

not include alcohol produced from petroleum, • Use in a domestic air carrier engaged in For items (1) and (2), this applies if the helicop- natural gas, coal (including peat), or any deriva- foreign trade or trade between the United ter does not take off from, or land at, a facility tive or product of these items. States and any of its possessions. eligible for assistance under the Airport and Air- Treat the separation of special motor fuel way Development Act of 1970, or otherwise use • Use in a foreign air carrier engaged in from an alcohol mixture on which tax has been services provided pursuant to section 44509 or foreign trade or trade between the United imposed at a rate for special motor fuels/alcohol 44913(b) or subchapter I of chapter 471 of title States and any of its possessions, but only mixture as a sale of special motor fuel. The tax 49, United States Code, during such use. For if the country in which the foreign carrier is on the sale is imposed on the person who makes item (1), each flight segment is treated as a registered allows U.S. carriers reciprocal the separation. Reduce the tax on special motor separate flight. privileges. For a list of these countries, fuel by the tax already paid on the alcohol mixsee Revenue Ruling 74–346 in Cumula- ture. Fixed-wing air ambulance uses. A regis- tive Bulletin 1974–2, Revenue Ruling tered producer may sell aviation fuel tax free for 75–109 in Cumulative Bulletin 1975–1, Qualified methanol and ethanol fuels. A use in a fixed-wing aircraft providing air trans- and Revenue Rulings 75–398 and special rate applies to these fuels. These fuels portation for emergency medical services. The 75–526 in Cumulative Bulletin 1975–2. consist of at least 85% methanol, ethanol, or exemption applies if the aircraft is equipped for, other alcohol produced from a substance other • Use on a farm for farming purposes, as and exclusively dedicated on that flight to, acute than petroleum or natural gas. discussed earlier under Diesel Fuel and care emergency medical services.

Kerosene. Partially exempt methanol and ethanol fuels. Sales to commercial airlines. A registered • Use in an aircraft or vehicle owned by an A special rate applies to these fuels. These fuels producer may sell aviation fuel at the tax-re- aircraft museum, discussed next. consist of at least 85% methanol, ethanol, or duced rate of 4.4 cents a gallon to a registered other alcohol produced from natural gas. • Certain helicopter and fixed-wing air am- commercial aircraft operator for use as a fuel in

bulance uses, discussed later. commercial aviation (other than foreign trade). Motor vehicle. For the purpose of applying See Registration for Certain Activities, earlier. • Exclusive use by a state, as defined ear- the tax on the delivery of special motor fuels, Commercial aviation is any use of an aircraft motor vehicles include all types of vehicles, lier under Definitions. in the business of transporting persons or prop- whether or not registered (or required to be • Official use by the United Nations. erty by air for pay. However, commercial avia- registered) for highway use, that have both the tion does not include any of the following uses. • Exclusive use by a nonprofit educational following characteristics.

organization, as discussed earlier under • Any use of an aircraft that has a maximum • They are propelled by a motor. Communications Tax. certificated takeoff weight of 6,000 pounds

or less, unless the aircraft is operated on • They are designed for carrying or towing • Export. an established line. For more information, loads from one place to another, regardsee Small aircraft under Special Rules on less of the type of material or load carried A buyer for these uses gives its supplier a Transportation Taxes or towed. , earlier. signed exemption certificate stating the

buyer’s name, address, employer identification • Any use exclusively for the purpose of Motor vehicles do not include any vehicle that

number, registration number (if applicable), and skydiving. moves exclusively on rails, or any of the followintended use. A buyer may give a separate ex- ing items. • Any use of an aircraft owned or leased by emption certificate for each purchase or may

give one certificate to cover all purchases from a a member of an affiliated group and un- Farm tractors Trench diggers available for hire by nonmembers. For Power shovels Bulldozers particular seller for up to 1 year. more information, see Aircraft used by af- Road graders Road rollers

Aircraft museums. A registered producer filiated corporations under Special Rules Similar equipment that does

may sell aviation fuel tax free for use in an on Transportation Taxes, earlier. not carry or tow a load

Page 17
Taxable Event Compressed Natural Gas Certificate. The certificate from the buyer certifies the CNG will be used in a nontaxable use

Tax is imposed on the delivery of special motor Tax applies to compressed natural gas (CNG) (listed earlier). The certificate may be included

fuels into the fuel supply tank of the propulsion under the circumstances described next. as part of any business records normally used

engine of a motor vehicle or motorboat. How- for a sale. A model certificate is shown in Appenever, there is no tax on the delivery if tax was dix B as Model Certificate J. Your certificate

imposed under the bulk sales rule, discussed Taxable Event must contain all information necessary to comlater, or the delivery is for a nontaxable use, plete the model.

listed later. If the delivery is in connection with a A certificate expires on the earliest of the Tax is imposed on the delivery of CNG into the

sale, the seller is liable for the tax. If it is not in fuel supply tank of the propulsion engine of a following dates. motor vehicle or motorboat. However, there is connection with a sale, the operator of the vehi- • The date 1 year after the effective date no tax on the delivery if tax was imposed under cle or boat is liable for the tax. (which may be no earlier than the date the bulk sales rule discussed next, or the deliv- signed) of the certificate. ery is for a nontaxable use, listed later. If the Liquefied petroleum gas (LPG). Tax is im- delivery is in connection with a sale, the seller is • The date a new certificate is provided to posed on the delivery of LPG into the fuel supply liable for the tax. If it is not in connection with a the seller. tank of certain intercity and local buses and sale, the operator of the boat or vehicle is liable qualified local and school buses and must be • The date the seller is notified the buyer’s for the tax. reported on Form 720 even though a credit or right to provide a certificate has been withrefund may be allowable for LPG used in those Bulk sales. Tax is imposed on the sale of drawn.

buses. CNG that is not in connection with delivery into

the fuel supply tank of the propulsion engine of a

Bulk sales. Tax is imposed on the sale of motor vehicle or motorboat if the buyer furnishes Fuels Used on Inland

special motor fuels that is not in connection with a written statement to the seller that the entire Waterways

delivery into the fuel supply tank of the propul- quantity of the CNG covered by the sale is for

use as a fuel in a motor vehicle or motorboat and Tax applies to liquid fuel used in the propulsion sion engine of a motor vehicle or motorboat if the

the seller has given the buyer a written acknowl- system of commercial transportation vessels buyer furnishes a written statement to the seller

edgement of receipt of the statement. The seller while traveling on certain inland and intracoastal stating the entire quantity of the fuel covered by of the CNG is liable for the tax. waterways. The tax generally applies to all types the sale is for other than a nontaxable use, listed of vessels, including ships, barges, and tug- later. The seller is liable for this tax. Tax rate. The rate is 48.54 cents per thousand boats.

cubic feet (determined at standard temperature Tax rate. The special motor fuels tax rate de- and pressure). Inland and intracoastal waterways. Inland

pends on the type of fuel involved. The tax rate and intracoastal waterways on which fuel confor LPG is shown on Form 720 (IRS No. 61). The Motor vehicle. For this purpose, motor vehi- sumption is subject to tax are specified in seccle has the same meaning as given under Spe- tax rates for all other special motor fuels are tion 206 of the Inland Waterways Revenue Act

shown in the Form 720 instructions for other cial Motor Fuels, earlier. of 1978, as amended. See section

fuels (IRS No. 79). 48.4042–1(g) of the regulations for a list of

these waterways. Nontaxable Uses

Commercial waterway transportation. Nontaxable Uses The following are nontaxable uses of CNG. Commercial waterway transportation is the use

The following are nontaxable uses of special of a vessel on inland or intracoastal waterways • In an off-highway business use, as dis- motor fuels. for either of the following purposes. cussed earlier under Special Motor Fuels.

• The use is in the business of transporting • In an off-highway business use (discussed • Use in a boat engaged in commercial fish- property for compensation or hire. later). ing.

• The use is in transporting property in the • Use in a boat engaged in commercial fish- • Use in a school bus or qualified local bus, business of the owner, lessee, or operator ing. as discussed earlier under Diesel Fuel and of the vessel, whether or not a fee is Kerosene. • Use on a farm for farming purposes, as charged.

discussed earlier under Diesel Fuel and • Use on a farm for farming purposes, as

Kerosene. discussed earlier under Diesel Fuel and The operation of all vessels meeting either of

Kerosene. these requirements is commercial waterway • Exclusive use by a state, as defined ear- transportation regardless of whether the vessel lier under Definitions. • Exclusive use by a state, as defined ear- is actually transporting property on a particular lier under Definitions. • By nonprofit educational organizations for voyage. (However, see Exemptions, later.) The

their exclusive use, as discussed earlier • By nonprofit educational organizations for tax is imposed on fuel consumed in vessels

under Communications Tax. their exclusive use, as discussed earlier while engaged in any of the following activities.

under Communications Tax. • Official use by the United Nations. • Moving without cargo.

• Official use by the United Nations. • Use in a vehicle owned by an aircraft mu- • Awaiting passage through locks.

seum as discussed earlier under Aviation • Use in a vehicle owned by an aircraft mu- • Moving to or from a repair facility. Fuel. seum, as discussed earlier under Aviation

Fuel. • Dislodging vessels grounded on a sand • Use in any boat operated by the United bar.

States for its exclusive use or any vessel • Use in any boat operated by the United

of war of any foreign nation. States for its exclusive use or any vessel • Fleeting barges into a single tow.

of war of any foreign nation. • Maneuvering around loading and unloadOff-highway business use. This is use in a ing docks. There is no tax on a delivery in connection highway vehicle that is not registered (or re- with a sale of CNG only if, by the time of sale, the quired to be registered) for highway use under seller meets both the following conditions. Liquid fuel. Liquid fuel includes diesel fuel,

the laws of any state or foreign country and is Bunker C residual fuel oil, special motor fuel, • The seller has an unexpired certificate used in the operator’s trade or business or for and gasoline. The tax is imposed on liquid fuel from the buyer. the production of income. It also includes use in actually consumed by a vessel’s propulsion ena vehicle owned by the United States that is not • The seller has no reason to believe any gine and not on the unconsumed fuel in a

used on a highway. information in the certificate is false. vessel’s tank.

Page 18
Dual use of liquid fuels. The tax applies to all used in commercial passenger vessels while • Used the mixture or straight alcohol other taxable liquid used as a fuel in the propulsion of being operated as passenger vessels, even if than as a fuel. the vessel, regardless of whether the engine (or such vessels also transport property. Nor does it

other propulsion system) is used for another apply to ferryboats carrying passengers and • Separated the alcohol from a mixture.

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

The tax does not apply to fuel consumed in However, it is taxable when any of the followengines not used to propel the vessel. ing conditions apply.

If you draw liquid fuel from the same tank to Manufacturers Taxes • One or more of the barges in the tow is operate both a propulsion engine and a non- not a LASH barge, SEABEE barge, or The following discussion of manufacturers taxes propulsion engine, determine the fuel used in other ocean-going barge carried aboard applies to the tax on the following items. the nonpropulsion engine and exclude that fuel an ocean-going vessel. from the tax. IRS will accept a reasonable esti- • Sport fishing equipment.

mate of the fuel based on your operating experi- • One or more of the barges is not on an • Bows. ence, but you must keep records to support your international voyage.

allocation. • Arrow components. • Part of the cargo carried is not being

Voyages crossing boundaries of the speci- transported internationally. • Coal.

fied waterways. The tax applies to fuel con- • Tires. sumed by a vessel crossing the boundaries of State or local governments. No tax is imthe specified waterways only to the extent of fuel posed on the fuel used in a vessel operated by a • Gas guzzler automobiles.

consumed for propulsion while on those water- state or local government in transporting prop- • Vaccines. ways. Generally, the operator may figure the erty on official business. The ultimate use of the

fuel so used during a particular voyage by multi- cargo must be for a function ordinarily carried

plying total fuel consumed in the propulsion en- out by governmental units. An Indian tribal gov- Manufacturer. The term “manufacturer” ingine by a fraction. The numerator of the fraction cludes a producer or importer. A manufacturer is ernment is treated as a state only if the fuel is is the time spent operating on the specified wa- any person who produces a taxable article from used in the exercise of an essential tribal gov- terways and the denominator is the total time new or raw material, or from scrap, salvage, or ernment function.

spent on the voyage. This calculation cannot be junk material, by processing or changing the All operators of vessels used in com- used where it is found to be unreasonable. form of an article or by combining or assembling mercial waterway transportation who two or more articles. If you furnish the materials Taxable event. Tax of 24.4 cents a gallon is RECORDS acquire liquid fuel must keep adequate and keep title to those materials and to the imposed on liquid fuel used in the propulsion records of all fuel used for taxable purposes. finished article, you are considered the manu- system of a vessel. Operators who are seeking an exclusion from facturer even though another person actually The person who operates (or whose employ- the tax must keep records that will support any manufactures the taxable article. ees operate) the vessel in which the fuel is exclusion claimed. A manufacturer who sells a taxable article in consumed is liable for the tax. If a vessel owner Your records should include all of the follow- knockdown (unassembled) condition is liable for (or lessee) contracts with an independent con- ing information. the tax. The person who buys these component tractor to operate the vessel, the independent parts and assembles a taxable article may also contractor is the person liable for tax, regardless • The acquisition date and quantity of fuel be liable for tax as a further manufacturer de- of who purchases the fuel. The tax is paid with delivered into storage tanks or the tanks pending on the labor, material, and overhead Form 720. No tax deposits are required. on your vessel. required to assemble the completed article if the

Exemptions. Certain types of commercial wa- • The identification number or name of each article is assembled for business use.

terway transportation are excluded from the tax. vessel using the fuel. Importer. An importer is a person who

Fishing vessels. Fuel is not taxable when • The departure time, departure point, route brings a taxable article into the United States, or

used by a fishing vessel while traveling to a traveled, destination, and arrival time for withdraws a taxable article from a customs

fishing site, while engaged in fishing, or while each vessel. bonded warehouse for sale or use in the United

returning from the fishing site with its catch. A States.

vessel is not transporting property in the busi- If you claim an exemption from the tax, include Sale. A sale is the transfer of the title to, or the ness of the owner, lessee, or operator by merely in your records the following additional informa- substantial incidents of ownership in, an article transporting fish or other aquatic animal life tion as it pertains to you. to a buyer for consideration which may consist of caught on the voyage. money, services, or other things. However, the tax does apply to fuel used by • The draft of the vessel on each voyage.

a commercial vessel along the specified water- Use considered sale. A manufacturer who • The type of vessel in which you used the ways while traveling to pick up aquatic animal uses a taxable article is liable for the tax in the fuel. life caught by another vessel and while trans- same manner as if it were sold.

porting the catch of that other vessel. • The ultimate use of the cargo (for vessels Lease considered sale. The lease of an operated by state or local governments). Deep-draft ocean-going vessels. Fuel is article (including any renewal or extension of the

not taxable when used by a vessel designed lease) by the manufacturer is generally considprimarily for use on the high seas if it has a draft Alcohol Sold as Fuel ered a taxable sale. However, for the gas guzof more than 12 feet on the voyage. For each But Not Used as Fuel zler tax, only the first lease (excluding any

voyage, figure the draft when the vessel has its renewal or extension) of the automobile by the

greatest load of cargo and fuel. A voyage is a manufacturer is considered a sale. If you sell or use alcohol (either mixed or round trip. If a vessel has a draft of more than 12 straight) as a fuel, you may be eligible for an Manufacturers taxes based on sales price. feet on at least one way of the voyage, the income tax credit. Use Form 6478, Credit for The manufacturers taxes imposed on the sale of vessel satisfies the 12-foot draft requirement for Alcohol Used as Fuel, to figure the credit. For sport fishing equipment, electric outboard mo- the entire voyage. more information about this credit, see Alcohol tors, sonar devices, bows, and arrow compoPassenger vessels. Fuel is not taxable nents are based on the sale price of the article. Fuel Credit in Publication 378.

when used by vessels primarily for the transpor- The taxes imposed on coal are based either on If the credit was claimed, you are liable for an

tation of persons. The tax does not apply to fuel the sale price or the weight. excise tax if you did any of the following.

Page 19
The price for which an article is sold includes diction where the sale occurs determine when • Sales of articles of native Indian handithe total consideration paid for the article, title passes. craft, such as bows and arrow compowhether that consideration is in the form of If the taxable article is used by the manufac- nents, manufactured by Indians on

money, services, or other things. However, you reservations, in Indian schools, or under turer, the tax attaches at the time use begins.

include certain charges made when a taxable U.S. jurisdiction in Alaska. The manufacturer is liable for the tax.

article is sold and you exclude others. To figure

the price on which you base the tax, use the Partial payments. The tax applies to each Requirements for Exempt Sales following rules. partial payment received when taxable articles The following requirements must be met for a are: 1) Include both the following charges in the sale to be exempt from the manufacturers tax.

price. • Leased,

Registration requirements. The manufaca) Any charge for coverings or containers • Sold conditionally, turer, first purchaser, and second purchaser in

(regardless of their nature). • Sold on installment with chattel mortgage, the case of resales must be registered. See the

or Form 637 instructions for more information. b) Any charge incident to placing the article in a condition packed ready for ship- Exceptions to registration requirements. • Sold on installment with title to pass in the ment. Registration is not required for any of the follow- future.

ing.

2) Exclude all the following amounts from the To figure the tax, multiply the partial payment by • State or local governments. price. the tax rate in effect at the time of the payment.

• Foreign purchasers of articles sold or re- a) The manufacturers excise tax, whether Exemptions sold for export. or not it is stated as a separate charge. • The United States. The following sales by the manufacturer are b) The transportation charges pursuant to exempt from the manufacturers tax. • Parties to a sale of supplies for vessels the sale. (The cost of transportation of and aircraft. goods to a warehouse before their • Sale of an article to a state or local gov- bona fide sale is not excludable.) ernment for the exclusive use of the state

or local government. (This exemption does Certification requirement. If the purchaser is c) Delivery, insurance, installation, retail

not apply to the taxes on coal, gas guz- required to be registered, the purchaser must dealer preparation charges, and other give the manufacturer its registration number charges you incur in placing the article zlers, and vaccines.) State is defined in

Definitions and certify the exempt purpose for which the under Fuel Taxes, earlier. in the hands of the purchaser under a article will be used. The information must be in bona fide sale. • Sale of an article to a nonprofit educa- writing and may be noted on the purchase order

d) Discounts, rebates, and similar al- tional organization for its exclusive use. or other document furnished by the purchaser to

lowances actually granted to the pur- (This exemption does not apply to the the seller in connection with the sale.

chaser. taxes on coal, gas guzzlers, and vac- For a sale to a state or local government, an

cines.) Nonprofit educational organization exemption certificate must be signed by an of- e) Local advertising charges. A charge is defined under Communications Tax. ficer or employee authorized by the state or local made separately when the article is government. See section 48.4221–5(c) of the sold and that qualifies as a charge for • Sale of an article for use by the purchaser regulations for the certificate requirements. “local advertising” may, within certain as supplies for vessels. (This exemption For sales for use as supplies for vessels and limits, be excluded from the sale price. does not apply to the taxes on coal and aircraft, if the manufacturer and purchaser are vaccines.) Supplies for vessels means f) Charges for warranty paid at the not registered, the owner or agent of the vessel ships’ stores, sea stores, or legitimate purchaser’s option. However, a charge must provide an exemption certificate to the equipment on vessels of war of the United for a warranty of an article that the manufacturer before or at the time of sale. See States or any foreign nation, vessels em- manufacturer requires the purchaser to section 48.4221–4(d) of the regulations for the ployed in the fisheries or whaling busi- pay to obtain the article is included in certificate requirements. ness, or vessels actually engaged in the sale price on which the tax is fig- foreign trade. Proof of export requirement. Within 6 ured. months of the date of sale or shipment by the • Sale of an article for use by the purchaser manufacturer, whichever is earlier, the manu- for further manufacture, or for resale by Bonus goods. Allocate the sale price if you facturer must receive proof of exportation. See the purchaser to a second purchaser for give free nontaxable goods with the purchase of section 48.4221–3(d) of the regulations for evi- use by the second purchaser for further taxable merchandise. Figure the tax only on the dence that qualifies as proof of exportation. manufacture. (This exemption does not sale price attributable to the taxable articles. apply to the tax on coal.) Use for further Proof of resale for further manufacture remanufacture means use in the manufac- quirement. Within 6 months of the date of sale Example. A manufacturer sells a quantity of ture or production of an article subject to or shipment by the manufacturer, whichever is taxable articles and gives the purchaser certain the manufacturers excise taxes. If you buy earlier, the manufacturer must receive proof that nontaxable articles as a bonus. The sale price of articles tax free and resell or use them the article has been resold for use in further the shipment is $1,500. The normal sale price is other than in the manufacture of another manufacture. See section 48.4221–2(c) of the $2,000: $1,500 for the taxable articles and $500 article, you are liable for the tax on their regulations for evidence that qualifies as proof of for the nontaxable articles. Since the taxable resale or use just as if you had manufac- resale. items represent 75% of the normal sale price, tured and sold them. the tax is based on 75% of the actual sale price, Information to be furnished to purchaser.

or $1,125 (75% of $1,500). The remaining $375 • Sale of an article for export or for resale by The manufacturer must indicate to the puris allocated to the nontaxable articles. the purchaser to a second purchaser for chaser that the articles normally would be subexport. The article may be exported to a ject to tax and are being sold tax free for an

Taxable Event foreign country or to a possession of the exempt purpose because the purchaser has

United States. (A vaccine shipped to a provided the required certificate.

Tax attaches when the title to the article sold possession of the United States is not

passes from the manufacturer to the buyer. considered to be exported.) If an article is Credits or Refunds

When the title passes depends on the intention sold tax free for export and the manufacof the parties as gathered from the contract of turer does not receive proof of export, de- The manufacturer may be eligible to obtain a

sale. In the absence of expressed intention, the scribed later, the manufacturer is liable for credit or refund of the manufacturers tax for

legal rules of presumption followed in the juris- certain uses, sales, exports, and price readjust- the tax.

Page 20
ments. The claim must set forth in detail the ond article manufactured or produced by finding fish. This includes any parts or accessofacts upon which the claim is based. the manufacturer. ries sold on or in connection with the sale of

those articles. The tax on any sonar device, • An identification of the second article. Uses, sales, and exports. A credit or refund however, cannot exceed $30. A sonar device

(without interest) of the manufacturers taxes suitable for finding fish does not include any For claims by the exporter or shipper, the may be allowable if a tax-paid article is, by any device that is a graph recorder, a digital type, a claim must contain the proof of export and a person: meter readout, a combination graph recorder, or statement signed by the person that paid the tax a combination meter readout. • Exported, waiving the right to claim a credit or refund. The

statement must include the amount of tax paid, • Used or sold for use as supplies for ves- Certain equipment resale. The tax on the the date of payment, and the office to which it sels (except for coal and vaccines), sale of sport fishing equipment is imposed a was paid. second time under the following circumstances. • Sold to a state or local government for its Claim for price readjustment. To claim a If the manufacturer sells a taxable article to any exclusive use (except for coal, gas guz- credit or refund for a price readjustment, the person, the manufacturer is liable for the tax. If zlers, and vaccines), person who paid the tax must include with the the purchaser or any other person then sells it to

• Sold to a nonprofit educational organiza- claim, a statement that contains the following. a person who is related (discussed next) to the

tion for its exclusive use (except for coal, manufacturer, that related person is liable for a • A description of the circumstances that gas guzzlers, and vaccines), or second tax on any subsequent sale of the arti- gave rise to the price readjustment. cle. The second tax, however, is not imposed if • Used for further manufacture of another • An identification of the article whose price the constructive sale price rules under section article subject to the manufacturers taxes was readjusted. 4216(b) of the Internal Revenue Code apply to (except for coal). the sale by the manufacturer. • The price at which the article was sold. If the second tax is imposed, a credit for tax Export. If a tax-paid article is exported, the • The amount of tax paid on the article and previously paid by the manufacturer is available exporter or shipper may claim a credit or refund the date on which it was paid. provided the related person can document the if the manufacturer waives its right to claim the tax paid. The documentation requirement is • The name and address of the purchaser. credit or refund. In the case of a tax-paid article generally satisfied only through submission of used to make another taxable article, the subse- • The amount repaid to the purchaser or copies of actual records of the person that previ- quent manufacturer may claim the credit or re- credited to the purchaser’s account. ously paid the tax. fund.

Related person. For the tax on sport fishing

Price readjustments. In addition, a credit or Sport Fishing Equipment equipment, a person is a related person of the

refund (without interest) may be allowable for a manufacturer if that person and the manufactax-paid article for which the price is readjusted A tax of 10% of the sale price is imposed on turer have a relationship described in section

by reason of return or repossession of the article many articles of sport fishing equipment sold by 465(b)(3)(C) of the Internal Revenue Code.

or a bona fide discount, rebate, or allowance for the manufacturer. This includes any parts or

taxes based on price. accessories sold on or in connection with the Bows

sale of those articles.

Conditions to allowance. To claim a credit or Pay this tax with Form 720. No tax deposits A tax of 11% of the sale price is imposed on the

refund in the case of export, supplies for ves- are required. sale by the manufacturer of any bow having a

sels, or sales to a state or local government or Sport fishing equipment includes all the fol- draw weight of 10 pounds or more. The tax also

nonprofit educational organization, the person lowing items. is imposed on the sale of any part or accessory

who paid the tax must certify on the claim that suitable for inclusion in or attachment to a taxone of the following applies and that the claimant 1) Fishing rods and poles (and component able bow and any quiver suitable for use with

has the required supporting information. parts), fishing reels, fly fishing lines, and arrows, described next. For a list of taxable and

other fishing lines not over 130 pounds nontaxable articles, see Revenue Ruling 98-5. • The claimant sold the article at a tax-ex- test, fishing spears, spear guns, and spear You can find Revenue Ruling 98-5 on page 20 of cluded price. tips. Internal Revenue Bulletin 1998-2 at

• The person has repaid, or agreed to re- www.irs.gov/pub/irs-irbs/irb98-02.pdf. 2) Items of terminal tackle, including leaders, pay, the tax to the ultimate vendor of the Pay this tax with Form 720. No tax deposit is artificial lures, artificial baits, artificial flies, article. required. fishing hooks, bobbers, sinkers, snaps,

• The person has obtained the written con- drayles, and swivels (but not including natsent of the ultimate vendor to make the ural bait or any item of terminal tackle de- Arrow Components

claim. signed for use and ordinarily used on A tax of 12.4% of the sale price is imposed on fishing lines not described in (1)). The ultimate vendor generally is the seller mak- the sale by the manufacturer of any shaft, point, ing the sale that gives rise to the overpayment of 3) The following items of fishing supplies and nock, or vane of a type used in the manufacture tax. accessories: fish stringers, creels, tackle of any arrow that after its assembly meets either

Claim for further manufacture. To claim a boxes, bags, baskets, and other contain- of the following conditions.

ers designed to hold fish, portable bait credit or refund for further manufacture, the • It measures 18 inches or more in overall containers, fishing vests, landing nets, gaff claimant must include a statement that contains

hooks, fishing hook disgorgers, and dress- length. the following. ing for fishing lines and artificial flies. • It measures less than 18 inches in overall • The name and address of the manufac4) Fishing tip-ups and tilts. length but is suitable for use with a taxable turer and the date of payment. bow, discussed earlier. 5) Fishing rod belts, fishing rodholders, fish- • An identification of the article for which the

credit or refund is claimed. ing harnesses, fish fighting chairs, fishing Pay this tax with Form 720. No tax deposit is outriggers, and fishing downriggers. required. • The amount of tax paid on the article and See Revenue Ruling 88–52 in Cumulative Bul- the date on which it was paid. letin 1988–1 for a more complete description of Coal • Information indicating that the article was the items of taxable equipment.

used as material in the manufacture or A tax is imposed on the first sale of coal mined in

production of, or as a component part of, a Electric outboard boat motors and sonar the United States. The producer of the coal is

second article manufactured or produced devices. A tax of 3% of the sale price is im- liable for the tax. The producer is the person

by the manufacturer, or was sold on or in posed on the sale by the manufacturer of electric who has vested ownership of the coal under

connection with, or with the sale of a sec- outboard motors and sonar devices suitable for state law immediately after the coal is severed

Page 21
from the ground. Determine vested ownership clean it, size it, or apply any other process con- The tax is based on the weight of each tire.

without regard to any contractual arrangement sidered mining under the rules for depletion. In The tax does not apply to tires that weigh 40

for the sale or other disposition of the coal or the this case, the tax applies only when you sell the pounds or less. The tax rates are shown in the

payment of any royalties between the producer coal. The tax does not apply to coal used as fuel Form 720 instructions.

and third parties. A producer includes any per- in the coal drying process since it is considered Determination of weight. Do not include son who extracts coal from coal waste refuse to be used in a mining process. However, the tax metal rims or rim bases in figuring the total piles (or from the silt waste product that results does apply when you use the coal as fuel or as weight of a tire. But include in the total weight, from the wet washing of coal). an ingredient in making coke since the coal is the wire, staples, darts, clips, and other material The tax is not imposed on coal extracted not used in a mining process. or fastening devices that form a part of the tire or from a riverbed by dredging if it can be shown You must use a constructive sale price to are required for its use. that the coal has been taxed previously. figure the tax under the 4.4% rate if you use the Consider studs as part of a tire, and include coal in other than a mining process. Base your Tax rates. The tax on underground-mined them in the total weight. The total weight of a constructive sale price on sales of a like kind and coal is the lower of: tubeless tire includes the weight of the air valve grade of coal by you or other producers made and stem or any other mechanism that functions • $1.10 a ton, or f.o.b. mine or cleaning plant. Normally, you use as a part of the tire and is used in connection the same constructive price used to figure your • 4.4% of the sale price. with inflating the tire or maintaining its air pres- percentage depletion deduction. sure.

The tax on surface-mined coal is the lower of: Blending. If you blend surface-mined coal When you sell tires with metal rims or rim

with underground-mined coal during the clean- bases attached, you must keep records estab- • 55 cents a ton, or ing process, you must figure the excise tax on lishing what portion of the total weight of the

• 4.4% of the sale price. the sale of the blended, cleaned coal. Figure the finished product represents the tire without the

tax separately for each type of coal in the blend. metal rim or rim base.

Coal will be taxed at the 4.4% rate if the selling Base the tax on the amount of each type in the Alternative method of determining weight. price is less than $25 a ton for blend if you can determine the proportion of If you have received permission from the IRS, underground-mined coal and less than $12.50 a each type of coal contained in the final blend. you may determine total weight of tires that you ton for surface-mined coal. Apply the tax propor- Base the tax on the ratio of each type originally manufactured and sold using the average tionately if a sale or use includes a portion of a put into the cleaning process if you cannot deter- weight for each type, size, grade, and classifica- ton. mine the proportion of each type of coal in the tion. blend. However, the tax is limited to 4.4% of the See Revenue Procedure 92–82 in Cumula- Example. If you sell 21,000 pounds (10.5 sale price per ton of the blended coal. tive Bulletin 1992–2 for several alternative tons) of coal from an underground mine for Exemption from tax. The tax does not apply methods you can use to determine tire weight. $525, the price per ton is $50. The tax is $1.10 × to sales of lignite and imported coal. The only 10.5 tons ($11.55). Special rule, manufacturer’s retail stores. other exemption from the tax on the sale of coal The excise tax on tires is imposed at the time the Coal production. Coal is produced from sur- is for coal exported as discussed next. tires are delivered to the manufacturer-owned face mines if all geological matter (trees, earth, Exported. The tax does not apply to the retail stores, not at the time of sale. rock) above the coal is removed before the coal sale of coal if the coal is in the stream of export is mined. Treat coal removed by auger and coal Tires on imported articles. The importer of when sold by the producer and the coal is actu- reclaimed from coal waste refuse piles as pro- an article equipped with taxable tires is treated ally exported. duced from a surface mine. as the manufacturer of the tires and is liable for

Treat coal as produced from an underground Coal is in the stream of export when sold by the tire excise tax when the article is sold (exmine when the coal is not produced from a the producer if the sale is a step in the exporta- cept in the case of an automobile bus chassis or tion of the coal to its ultimate destination in a surface mine. In some cases, a single mine may body with tires). foreign country. For example, coal is in the yield coal from both surface mining and under- stream of export when: Tires exempt from tax. The tax does not ap- ground mining. Determine if the coal is from a ply to the following items. surface mine or an underground mine for each 1) The coal is loaded on an export vessel and ton of coal produced and not on a mine-by-mine • Tires of extruded tiring with an internal title is transferred from the producer to a basis. wire fastening agent. foreign purchaser, or

Determining tonnage or selling price. The • Recapped or retreaded tires if the tires 2) The producer sells the coal to an export producer pays the tax on coal at the time of sale have been sold previously in the United broker in the United States under terms of or use. In figuring the selling price for applying States and were taxable tires at the time a contract showing that the coal is to be the tax, the point of sale is f.o.b. (free on board) of sale. shipped to a foreign country. mine or f.o.b. cleaning plant if you clean the coal • Tire carcasses not suitable for commercial before selling it. This applies even if you sell the Proof of export includes any of the following use. coal for a delivered price. The f.o.b. mine or items.

f.o.b. cleaning plant is the point at which you • Tires for use on qualifying intercity, local, • A copy of the export bill of lading issued figure the number of tons sold for applying the and school buses. For tax-free treatment, by the delivering carrier. applicable tonnage rate, and the point at which the registration requirements discussed

you figure the sale price for applying the 4.4% • A certificate signed by the export carrier’s earlier under Requirements for Exempt

rate. agent or representative showing actual ex- Sales apply.

The tax applies to the full amount of coal portation of the coal.

sold. However, the IRS allows a calculated re- Qualifying intercity or local bus. This is • A certificate of landing signed by a cus- duction of the taxable weight of the coal for the any bus used mainly (more than 50%) to trans- toms officer of the foreign country to which weight of the moisture in excess of the coal’s port the general public for a fee and that either the coal is exported. inherent moisture content. Include in the sale operates on a schedule along regular routes or

price any additional charge for a freeze-condi- • If the foreign country does not have a cus- seats at least 20 adults (excluding the driver).

tioning additive in figuring the tax. toms administrator, a statement of the for- Qualifying school bus. This is any bus Do not include in the sales price the excise eign consignee showing receipt of the substantially all the use (85% or more) of which tax imposed on coal. coal. is to transport students and employees of

Coal used by the producer. The tax on coal schools.

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

apply if, before selling the coal, you break it, made all or in part of rubber. • Exported,

Page 22
• Sold to a state or local government for its Treat an Indian tribal government as a state • Any vaccine containing pertussis bacteria,

exclusive use, only if the police or other law enforcement pur- extracted or partial cell bacteria, or speposes are an essential tribal government func- cific pertussis antigens. • Sold to a nonprofit educational organiza- tion. tion for its exclusive use, as discussed • Any vaccine containing polio virus.

earlier under Communications Tax, Model type. Model type is a particular class of • Any vaccine against measles.

• Used or sold for use as supplies for ves- automobile as determined by EPA regulations. • Any vaccine against mumps. sels, or

Fuel economy. Fuel economy is the average • Any vaccine against rubella. • Sold in connection with certain intercity, number of miles an automobile travels on a

local, or school buses. • Any vaccine against hepatitis B. gallon of gasoline (or diesel fuel) rounded to the

nearest 0.1 mile as figured by the EPA. • Any vaccine against chicken pox. Also, a credit or refund (without interest) is

allowable on tax-paid tires sold by any person Imported automobiles. The tax also ap- • Any vaccine against rotavirus gastroenteron, or in connection with, any other article that is plies to automobiles that do not have a itis.

sold or used in an activity listed above or with a prototype-based fuel economy rating assigned • Any conjugate vaccine against streptococ- bus chassis or body. by the EPA. An automobile imported into the cus pneumoniae. The person who paid the tax is eligible to United States without a certificate of conformity

make the claim. to United States emission standards and which • Any HIB vaccine.

has no assigned fuel economy rating must be

Gas Guzzler Tax either: The tax is 75 cents per dose of each taxable

vaccine. The tax per dose on a vaccine that • Converted by installation of emission conTax is imposed on the sale by the manufacturer contains more than one taxable vaccine is 75 trols to conform in all material respects to

of automobiles of a model type that has a fuel cents times the number of taxable vaccines. an automobile already certified for sale in

economy standard as measured by the Environ- the United States, or

mental Protection Agency (EPA) of less than Taxable use. Any manufacturer (including a

• Modified by installation of emission control governmental entity) that uses a taxable vaccine 22.5 miles per gallon. If you import an automo- components and individually tested to before it is sold will be liable for the tax in the bile for personal use, you may be liable for this demonstrate emission compliance. same manner as if the vaccine was sold by the tax. Figure the tax on Form 6197, as discussed

manufacturer. later. The tax rate is based on fuel economy An imported automobile that has been con- rating. The tax rates for the gas guzzler tax are verted to conform to an automobile already certi- Credit or refund. A credit or refund (without shown on Form 6197.

fied for sale in the United States may use the interest) is available if the vaccine is: A person that lengthens an existing automo- fuel economy rating assigned to that certified bile (for example, to make a stretch limousine) is • Returned to the person who paid the tax automobile. the manufacturer of an automobile. (other than for resale), or A fuel economy rating is not generally availAutomobiles. An automobile is any able for modified imported automobiles because • Destroyed.

the EPA does not require a highway fuel econ- four-wheeled vehicle that is: The claim for a credit or refund must be filed omy test on them. A separate highway fuel • Rated at an unloaded gross vehicle weight within 6 months after the vaccine is returned or economy test would be required to devise a fuel of 6,000 pounds or less, destroyed. economy rating (otherwise the automobile is

• Propelled by an engine powered by gaso- presumed to fall within the lowest fuel economy Conditions to allowance. To claim a credit

rating category). or refund, the person who paid the tax must line or diesel fuel, and

For more information about fuel economy have repaid or agreed to repay the tax to the • Intended for use mainly on public streets, ratings for imported automobiles, see Revenue ultimate purchaser of the vaccine or obtained roads, and highways. Ruling 86–20 and Revenue Procedure 86–9 in the consent of such purchaser to allowance of

Cumulative Bulletin 1986–1, and Revenue Pro- the credit or refund.

Limousines. The tax generally applies to cedure 87–10 in Cumulative Bulletin 1987–1.

limousines (including stretch limousines) regardless of their weight. Exemptions. No one is exempt from the gas

guzzler tax, including the federal government, Vehicles not subject to tax. For the gas Retail Tax on state and local governments, and nonprofit edu- guzzler tax, the following vehicles are not considered automobiles. cational organizations. However, see Vehicles Heavy Trucks, not subject to tax, earlier.

1) Vehicles operated exclusively on a rail or Trailers, and Tractors Form 6197. Use Form 6197 to figure your tax rails.

liability for each quarter. Attach Form 6197 to A tax of 12% of the sales price is imposed on the 2) Vehicles sold for use and used primarily: your Form 720 for the quarter. See the instruc- first retail sale of the following articles, including tions for Form 6197 for more information and the a) As ambulances or combination related parts and accessories sold on or in con- one-time filing rules. ambulance-hearses, nection with, or with the sale of, the articles.

b) For police or other law enforcement Credit or refund. If the manufacturer paid the • Truck chassis and bodies.

purposes by federal, state, or local gov- tax on a vehicle that is used or resold for an • Truck trailer and semitrailer chassis and

ernments, or emergency use (see item (2) under Vehicles not bodies. subject to tax), the manufacturer can claim a c) For firefighting purposes. credit or refund. For information about how to file • Tractors of the kind chiefly used for highfor credits or refunds, see the Instructions for way transportation in combination with a 3) Vehicles treated under 49 USC 32901 Form 720 or Form 8849. trailer or semitrailer. (1978) as non-passenger automobiles.

This includes limousines manufactured pri- Vaccines A truck is a highway vehicle primarily de- marily to transport more than 10 persons. signed to transport its load on the same chassis

The manufacturer can sell a vehicle de- Tax is imposed on certain vaccines sold by the as the engine, even if it is equipped to tow a

scribed in item (2) tax free only when the sale is manufacturer in the United States. A taxable vehicle, such as a trailer or semitrailer.

made directly to a purchaser for the described A tractor is a highway vehicle primarily de- vaccine means any of the following vaccines.

emergency use and the manufacturer and pur- signed to tow a vehicle, such as a trailer or • Any vaccine containing diphtheria toxoid. chaser (other than a state or local government) semitrailer, but does not carry cargo on the

are registered. • Any vaccine containing tetanus toxoid. same chassis as the engine.

Page 23
A sale of a truck, truck trailer, or semitrailer is vehicle weight. See Regulations section • The sale qualifies as a tax-free sale under

considered a sale of a chassis and a body. 145.4051-1(e)(3) for more information. section 4221 of the Internal Revenue

The seller is liable for the tax. Code (see Sales exempt from tax, later).

Parts or accessories. The tax applies to parts • The seller in good faith accepts from the Chassis or body. A chassis or body is taxable or accessories sold on or in connection with, or purchaser a statement signed under pen- only if you sell it for use as a component part of a with the sale of, a taxable article. For example, if alties of perjury and executed in good faith highway vehicle that is a truck, truck trailer or at the time of the sale by the retailer, the part or that the purchaser intends to resell the ar- semitrailer, or a tractor of the kind chiefly used accessory has been ordered from the retailer, ticle or lease it on a long-term basis. There for highway transportation in combination with a the part or accessory will be considered as sold is no registration requirement. trailer or semitrailer. in connection with the sale of the vehicle. The

tax applies in this case whether or not the re- Highway vehicle. A highway vehicle is any Leases. A long-term lease (a lease with a tailer bills the parts or accessories separately. self-propelled vehicle designed to carry a load term of 1 year or more, taking into account If the retailer sells a taxable chassis, body, or over public highways, whether or not it is also options to renew) before a first retail sale is tractor without parts or accessories considered designed to perform other functions. Examples treated as a taxable sale. The tax is imposed on essential for the operation or appearance of the of vehicles designed to carry a load over public the lessor at the time of the lease. taxable article, the sale of the parts or accesso- highways are passenger automobiles, A short-term lease (a lease with a term of ries by the retailer to the purchaser is considered motorcycles, buses, and highway-type trucks less than 1 year, taking into account options to made in connection with the sale of the taxable

and truck tractors. A vehicle is a highway vehicle renew) before a first retail sale is treated as a article even though they are shipped separately, even though the vehicle’s design allows it to taxable use. The tax is imposed on the lessor at at the same time, or on a different date. The tax perform a highway transportation function for the time of the lease. applies unless there is evidence to the contrary. only one of the following. For example, if a retailer sells to any person a Exported vehicle. A vehicle exported

chassis and the bumpers for the chassis, or sells before its first retail sale, used in a foreign coun- • A particular type of load, such as passen- a taxable tractor and the fifth wheel and attach- try, and then returned to the United States, is gers, furnishings, and personal effects (as ments, the tax applies to the parts or accesso- subject to the retail tax on its first retail sale after in a house, office, or utility trailer). ries regardless of the method of billing or the importation. • A special kind of cargo, goods, supplies, time at which the shipments were made. The tax Tax on resale of tax-paid trailers and or materials. does not apply to parts and accessories that are semitrailers. The tax applies to a trailer or spares or replacements. • Some off-highway task unrelated to high- semitrailer resold within 6 months after having

way transportation, except as discussed Separate purchase. The tax generally ap- been sold in a taxable sale. The seller liable for

next. plies to the price of a part or accessory and its the tax on the resale can claim a credit equal to

installation if the following conditions are met. the tax paid on the prior taxable sale. The credit

Vehicles not considered highway vehicles. cannot exceed the tax on the resale. See section • The owner, lessee, or operator of any ve- The following vehicles are not highway vehicles 145.4052–1(a)(4) of the regulations for informa- hicle that contains a taxable article installs for purposes of the retail tax. tion on the conditions to allowance for the credit. any part or accessory on the vehicle.

1) Certain specially-designed mobile machin- Use treated as sale. If any person uses a • The installation occurs within 6 months afery for nontransportation functions. taxable article before the first retail sale of the ter the vehicle is first placed in service. article, that person is liable for the tax as if the 2) Certain trailers and semitrailers specially article had been sold at retail by that person. designed to serve only as an enclosed sta- The owners of the trade or business installing Figure the tax on the price at which similar arti- tionary shelter for the carrying on of certain the parts or accessories are secondarily liable cles are sold in the ordinary course of trade by nontransportation functions off the high- for the tax. retailers. The tax attaches when the use begins.

way. A vehicle is placed in service on the date the If the seller of an article regularly sells the owner takes actual possession of the vehicle. 3) Certain specially-designed vehicles for the articles at retail in arm’s-length transactions, fig- This date is established by a signed delivery primary function of transporting a specific ure the tax on its use on the lowest established ticket or other comparable document indicating retail price for the articles in effect at the time of type of load other than over the public delivery to and acceptance by the owner. highway for certain operations (construc- the taxable use. The tax does not apply if the installed part or If the seller of an article does not regularly tion, manufacturing, mining, processing, accessory is a replacement part or accessory. sell the articles at retail in arm’s-length transac- farming, drilling, timbering, or similar oper- The tax also does not apply if the total price of tions, a constructive price on which the tax is ations). Their use in carrying this load over the parts and accessories, including installation figured will be determined by the IRS after con- public highways is substantially limited or charges, during the 6-month period is $1,000 or sidering the selling practices and price struc- impaired because of their design. less. However, if the total price is more than tures of sellers of similar articles. $1,000, the tax applies to the cost of all parts If a seller of an article incurs liability for tax on Gross vehicle weight. The tax does not apply and accessories (and installation charges) dur- the use of the article and later sells or leases the

to truck chassis and bodies suitable for use with ing that period. article in a transaction that otherwise would be

a vehicle that has a gross vehicle weight of taxable, liability for tax is not incurred on the later 33,000 pounds or less. It also does not apply to Example. You bought a taxable vehicle and sale or lease.

truck trailer and semitrailer chassis and bodies placed it in service on April 8. On May 3, you

suitable for use with a trailer or semitrailer that bought and installed parts and accessories at a Presumptive retail sales price. There are

has a gross vehicle weight of 26,000 pounds or cost of $850. On July 15, you bought and in- rules to ensure that the tax base of transactions stalled parts and accessories for $300. Tax of less. Tractors (and truck chassis completed as considered to be taxable sales includes either $138 (12% of $1,150) applies on July 15. Also, tractors) are subject to tax without regard to an actual or presumed markup percentage. If tax will apply to any costs of additional parts and gross vehicle weight. the person liable for tax is the vehicle’s manufac- accessories installed on the vehicle before Oc- The gross vehicle weight means the maxi- turer, producer, or importer, the following dis- tober 8. mum total weight of a loaded vehicle. Generally, cussions show how you figure the presumptive

this maximum total weight is the gross vehicle retail sales price depending on the type of trans- First retail sale defined. The sale of an article weight rating provided by the manufacturer or action and the persons involved in the transac- is treated as the first retail sale, and the seller determined by the seller of the completed arti- tion. Table 1 outlines the appropriate tax base will be liable for the tax imposed on the sale cle. The seller’s gross vehicle weight rating is calculation for various transactions. unless one of the following exceptions applies. determined solely on the basis of the strength of The presumed markup percentage to be

the chassis frame and the axle capacity and • There has been a prior taxable sale, used for trucks and truck-tractors is 4%. But for

placement. The seller may not take into account lease, or use of the article (however, see truck trailers and semitrailers and remanufacany readily attachable components (such as Tax on resale of tax-paid trailers and tured trucks and tractors, the presumed markup

tires or rim assemblies) in determining the gross semitrailers, later). percentage is zero.

Page 24
Sale. For a taxable sale by a manufacturer, separator, silencer or muffler, control cabinet, • You do not perform any significant activi- producer, importer, or related person, you gen- and ladder. Similarly, for a sewer cleaning vehi- ties relating to the processing of the sale erally figure the tax on a tax base of the sales cle, exclude amounts charged for the high pres- of a taxable article. price plus an amount equal to the presumed sure water pump, hose components, and the

markup percentage times that sales price. • The main reason for processing the sale vacuum pipe.

through you is to avoid or evade the pre- Long-term lease. In the case of a long-term Sales not at arm’s length. For any taxable sumed markup. lease by a manufacturer, producer, importer, or article sold (not at arm’s length) at less than the

related person, figure the tax on a tax base of • You do not have records proving that the fair market price, figure the excise tax on the

the constructive sales price plus an amount article was sold for a price that included a price for which similar articles are sold at retail in

equal to the presumed markup percentage markup equal to or greater than the pre- the ordinary course of trade.

times the constructive sales price. sumed markup percentage. A sale is not at arm’s length if either of the

Short-term lease. When a manufacturer, In these situations, your tax base is the sales following apply.

producer, importer, or related person leases an price plus an amount equal to the presumed • One of the parties is controlled (in law or article in a short-term lease considered a tax- markup percentage times that selling price. in fact) by the other or there is common able use, figure the tax on a constructive sales control, whether or not the control is actu- price at which those or similar articles generally Determination of tax base. These rules ap- ally exercised to influence the sales price. are sold in the ordinary course of trade by retail- ply to both normal retail sales price and preers. sumptive retail sales price computations. To • The sale is made under special arrangeBut if the lessor in this situation regularly arrive at the tax base, the price is the total ments between a seller and a purchaser.

sells articles at retail in arm’s-length transac- consideration paid (including trade-in allowtions, figure the tax on the lowest established ance) for the item and includes any charge inci- Installment sales. If the first retail sale is an

retail price in effect at the time of the taxable dent to placing the article in a condition ready for installment sale, or other form of sale in which

use. use. However, see Presumptive retail sales the sales price is paid in installments, tax liability

If a person other than the manufacturer, pro- price, earlier. arises at the time of the sale. The tax is figured

ducer, importer, or related person leases an on the entire sales price. No part of the tax is Exclusions from tax base. Exclude from

article in a short-term lease considered a tax- deferred because the sales price is paid in in- the tax base the retail excise tax imposed on the able use, figure the tax on a tax base of the price stallments. sale. Exclude any state or local retail sales tax if for which the article was sold to the lessor plus stated as a separate charge from the price Repairs and modifications. The tax does the cost of parts and accessories installed by the whether the sales tax is imposed on the seller or not apply to the sale or use of an article that has lessor and a presumed markup percentage. purchaser. Also exclude the value of any used been repaired or modified unless the cost of the

component of the article furnished by the first Related person. A related person is any repairs and modifications is more than 75% of

member of the same controlled group as the the retail price of a comparable new article. This user of the article.

manufacturer, producer, or importer. Do not Exclude charges for transportation, delivery, includes modifications that change the transporinsurance, and installation (other than installa- treat as a related person a person that sells the tation function of an article or restore a wrecked

articles through a permanent retail establish- tion charges for parts and accessories, dis- article to a functional condition. However, this

ment in the normal course of being a retailer if cussed earlier) and other expenses incurred in exception generally does not apply to an article

that person has records to prove the article was connection with the delivery of an article to a that was not subject to the tax when it was new.

sold for a price that included a markup equal to purchaser. These expenses are those incurred Further manufacture. The tax does not ap- or greater than the presumed markup percent- in delivery from the retail dealer to the customer. ply to the use by a person of a taxable article as age. In the case of delivery directly from the manufac- material in the manufacture or production of, or turer to the dealer’s customer, include the transGeneral rule for sales by dealers to the con- as a component part of, another article to be portation and delivery charges to the extent the manufactured or produced by that person. Do sumer. For a taxable sale, other than a charges do not exceed what it would have cost not treat a person as engaged in the manufac- long-term lease, by a person other than a manu- to ship the article to the dealer. ture of any article merely because that person facturer, producer, importer, or related person, Exclude amounts charged for machinery or

your tax base is the retail sales price as dis- combines the article with any of the following equipment that does not contribute to the high- items. cussed next under Determination of tax base. way transportation function of the vehicle, proWhen you sell an article to the consumer, vided those charges are supported by adequate • Coupling device (including any fifth generally you do not add a presumed markup to records. For example, for an industrial vacuum wheel). the tax base. However, you do add a markup if loader vehicle, exclude amounts charged for the

all the following apply. vacuum pump and hose, filter system, material • Wrecker crane.

• Loading and unloading equipment (includ- Table 1. Tax Base ing any crane, hoist, winch, or power liftgate). IF the transaction is a... THEN figuring the base by using the...

• Aerial ladder or tower.

Sale by the manufacturer, producer, Sales price plus (presumed markup • Ice and snow control equipment. importer, or related person percentage × sales price)

• Earth moving, excavation, and construc- Sale by the dealer Total consideration paid for the item including tion equipment. any charges incident to placing it in a

condition ready for use • Spreader.

Long-term lease by the manufacturer, Constructive sales price plus (presumed • Sleeper cab.

producer, importer, or related person markup percentage × constructive sales price) • Cab shield.

Short-term lease by the manufacturer, Constructive sales price at which such or • Wood or metal floor. producer, importer, or related person similar articles are sold

Combining an article with an item in this list does Short-term lease by a lessor other than the Price for which the article was sold to the not give rise to taxability. However, see Parts or manufacturer, producer, importer, or related lessor plus the cost of parts and accessories accessories, discussed earlier. person installed by the lessor plus a presumed

markup percentage Articles exempt from tax. The tax on heavy

Short-term lease where the articles are Lowest established retail price in effect at the trucks, trailers, and tractors does not apply to

regularly sold at arm’s length time of the taxable use sales of the articles described in the following

discussions.

Page 25
Rail trailers and rail vans. This is any • Sales for use by the purchaser for further imposed even if a passenger does not make

chassis or body of a trailer or semitrailer de- manufacture of other taxable articles (see both an outward and a homeward passage as

signed for use both as a highway vehicle and a below). long as the voyage begins or ends in the United

railroad car (including any parts and accessories States. • Sales for export or for resale by the pur- designed primarily for use on and in connection chaser to a second purchaser for export. with it). Do not treat a piggyback trailer or semi- Passenger. A passenger is an individual cartrailer as designed for use as a railroad car. • Sales to the United Nations for official use. ried on the vessel other than the Master or a

crew member or other individual engaged in the Parts and accessories. This is any part or Registration requirement. In general, the business of the vessel or its owners. accessory sold separately from the truck or seller and buyer must be registered for a sale to trailer, except as described earlier under Parts be tax free. See the Form 637 instructions for Example 1. John Smith works as a guest or accessories and Separate purchase. more information. Certain registration excep- lecturer. The cruise line hired him for the benefit

Trash containers. This is any box, tions apply in the case of sales to state and local of the passengers. Therefore, he is engaged in

container, receptacle, bin, or similar article that governments and to foreign purchasers for ex- the business of the vessel and is not a passenmeets all the following conditions. port. ger.

• It is designed to be used as a trash Further manufacture. If you buy articles Example 2. Marian Green is a travel agent. container. tax free and resell or use them other than in the She is taking the cruise as a promotional trip to manufacture of another article, you are liable for • determine if she wants to offer it to her clients. It is not designed to carry freight other the tax on their resale or use just as if you had She is a passenger. than trash. manufactured and sold them.

• It is not designed to be permanently Taxable situations. There are two taxable sitmounted on or affixed to a truck chassis or Credits and refunds. A credit or refund (with- uations. The first situation involves voyages on body. out interest) of the tax on heavy vehicles may be commercial passenger vessels extending over allowable if the tax has been paid with respect to one or more nights. A voyage extends over one House trailers. This is any house trailer (re- an article and, before any other use, such article or more nights if it extends for more than 24 gardless of size) suitable for use in connection is used by any person as a component part of hours. A passenger vessel is any vessel with with either passenger automobiles or trucks. another taxable article manufactured or pro- stateroom or berth accommodations for more duced. The person using the article as a compo- Camper coaches or bodies for self-pro- than 16 passengers. nent part is eligible for the credit or refund. pelled mobile homes. This is any article de- The second situation involves voyages on a A credit or refund is allowable if, before any signed to be mounted or placed on trucks, truck commercial vessel transporting passengers en- other use, an article is, by any person: chassis, or automobile chassis and to be used gaged in gambling on the vessel beyond the

primarily as living quarters or camping accom- • Exported, territorial waters of the United States. Territorial

modations. Further, the tax does not apply to waters of the United States are those waters • Used or sold for use as supplies for ves- chassis specifically designed and constructed to within the international boundary line between sels, accommodate and transport self-propelled mo- the United States and any contiguous foreign

bile home bodies. If a chassis is not specifically • Sold to a state or local government for its country or within 3 nautical miles (3.45 statute

designed and constructed to accommodate and exclusive use, or miles) from low tide on the coastline. If passentransport self-propelled mobile home bodies, gers participate as players in any policy game or • Sold to a nonprofit educational organiza- the chassis is subject to tax unless the chassis is other lottery, or any other game of chance for tion for its exclusive use.

suitable for use with a vehicle that has a gross money or other thing of value that the owner or

vehicle weight of 33,000 pounds or less. A credit or refund is also allowable if there is a operator of the vessel (or their employee, agent,

price readjustment by reason of the return or or franchisee) conducts, sponsors, or operates, Farm feed, seed, and fertilizer equipment. repossession of an article or by reason of a bona the voyage is subject to the ship passenger tax. This is any body primarily designed to process fide discount, rebate, or allowance. The tax applies regardless of the duration of the or prepare, haul, spread, load, or unload feed, voyage. A casual, friendly game of chance with seed, or fertilizer to or on farms. This exemption See also Conditions to allowance under Manother passengers that is not conducted, spon- applies only to the farm equipment body (and ufacturers Taxes, earlier. sored, or operated by the owner or operator is parts and accessories) and not to the chassis Tire credit. A credit is allowed against the tax not gambling for determining if the voyage is upon which the farm equipment is mounted. on heavy vehicles if tires are sold on or in con- subject to the ship passenger tax.

Ambulances and hearses. This is any am- nection with the sale of the article. The credit is

bulance, hearse, or combination Exemptions. The tax does not apply when a equal to the manufacturers excise tax imposed

ambulance-hearse. vessel is on a voyage of less than 12 hours on the tires (discussed earlier). This is the sec- between 2 points in the United States or if a tion 4051(d) tire credit and is claimed on line 11a Truck-tractors. This is any truck-tractor vessel is owned or operated by a state or local of Schedule C (Form 720) for the same quarter specifically designed for use in shifting semitrail- government. for which the tax on the heavy vehicle is re- ers in and around freight yards and freight termi- ported. nals.

Concrete mixers. This is any article designed to be placed or mounted on a truck, truck Foreign Insurance trailer, or semitrailer chassis to be used to pro- Ship Passenger Tax cess or prepare concrete. This exemption does Taxes

not apply to the chassis on which the article is A tax of $3 per passenger is imposed on certain mounted. Tax is imposed on insurance policies issued by ship voyages, as explained later under Taxable

foreign insurers. Any person who makes, signs, situations. The tax is imposed only once for each Sales exempt from tax. The following sales passenger, either at the time of first embarkation issues, or sells any of the documents and instru- are ordinarily exempt from tax. or disembarkation in the United States. ments subject to the tax, or for whose use or

• Sales to a state or local government for its The person providing the voyage (the opera- benefit they are made, signed, issued, or sold, is

exclusive use. liable for the tax. tor of the vessel) is liable for the tax.

The following tax rates apply to each dollar • Sales to Indian tribal governments, but Voyage. A voyage is the vessel’s journey that (or fraction thereof) of the premium paid. only if the transaction involves the exer- includes the outward and homeward trips or cise of an essential tribal government passages. The voyage starts when the vessel 1) Casualty insurance and indemnity, fidelity, function. begins to load passengers and continues until and surety bonds: 4 cents (for example, on

• Sales to a nonprofit educational organiza- the vessel has completed at least one outward a premium payment of $10.10, the tax is

tion for its exclusive use. and one homeward passage. The tax may be 44 cents).

Page 26
2) Life, sickness, and accident insurance, to claim a refund of this tax under certain U.S. • Form 6197 for the gas guzzler tax. and annuity contracts: 1 cent (for example, treaties.

on a premium payment of $10.10, the tax • Form 6627 for environmental taxes.

is 11 cents).

3) Reinsurance policies covering any of the Form 720X. This form is used to make adjusttaxable contracts described in items (1) Obligations Not ments to liability reported on Forms 720 filed in

and (2): 1 cent. prior quarters. You can file Form 720X by itself in Registered Form or, if it shows a decrease in tax, you can attach it However, the tax does not apply to casualty to Form 720. See the form and its instructions for insurance premiums paid to foreign insurers for Tax is imposed on any person who issues a more information. coverage of export goods in transit to foreign registration-required obligation not in registered

destinations. form. The tax is: Conditions to allowance. For tax decreases, the claimant must check the appropri- Premium. Premium means the agreed • 1% of the principal of the obligation, multi- ate box on Form 720X stating that: price or consideration for assuming and carrying plied by

the risk or obligation. It includes any additional • The number of calendar years (or portions 1) For adjustments of communications or air charge or assessment payable under the con- of calendar years) during the period start- transportation taxes, the claimant has: tract, whether in one sum or installments. If ing on the date the obligation was issued premiums are refunded, claim the tax paid on a) Repaid the tax to the person from and ending on the date it matures. those premiums as an overpayment against tax whom it was collected, or

due on other premiums paid or file a claim for A registration-required obligation is any b) Obtained the consent of that person to refund.

obligation other than one that meets any of the the allowance of the adjustment.

When liability attaches. The liability for this following conditions.

2) For other adjustments, the claimant has: tax attaches when the premium payment is 1) It is issued by a natural person. transferred to the foreign insurer or reinsurer a) Not included the tax in the price of the (including transfers to any bank, trust fund, or 2) It is not of a type offered to the public. article and not collected the tax from similar recipient designated by the foreign in- 3) It has a maturity (at issue) of not more the purchaser, surer or reinsurer) or to any nonresident agent, than one year. solicitor, or broker. A person can pay the tax b) Repaid the tax to the ultimate purbefore the liability attaches if the person keeps 4) It can only be issued to a foreign person. chaser, or

records consistent with that practice. For item (4), if the obligation is not in regis- c) Attached the written consent of the ultiWho must file. tered form, the interest on the obligation must be mate purchaser to the allowance of the The person who pays the premium to the foreign insurer (or to any nonresi- payable only outside the United States and its adjustment.

possessions. Also, the obligation must state on dent person such as a foreign broker) must pay its face that any U.S. person who holds it shall However, the conditions listed under (2) do not the tax and file the return. Otherwise, any person

who issued or sold the policy, or who is insured be subject to limits under the U.S. income tax apply to environmental taxes, the ship passenlaws. ger tax, obligations not in registered form, for- under the policy, is required to pay the tax and eign insurance taxes, fuels used on inland file the return.

waterways, alcohol sold as fuel but not used as The person liable for this tax must keep fuel, and certain fuel taxes if the tax was based accurate records that identify each pol- Filing Form 720 on use (for example, dyed diesel fuel used in RECORDS icy or instrument subject to tax. These trains or buses, LPG, and CNG). records must clearly establish the type of policy Use Form 720 to report and pay the excise taxes or instrument, the gross premium paid, the iden- previously discussed in this publication. File Employer identification number. If you file tity of the insured and insurer, and the total Form 720 for each calendar quarter until you file Form 720, you need an employer identification premium charged. If the premium is to be paid in a final Form 720. number (EIN), unless you are a one-time filer installments, the records must also establish the You may be required to file your returns on a (discussed later). If you do not have an EIN, you amount and anniversary date of each install- monthly or semimonthly basis instead of quar- may apply for one online. Go to the IRS website ment. terly if you do not make deposits as required at www.irs.gov/smallbiz and click on the “On- The records must be kept at the place of (see Payment of Taxes, later) or are liable for line Application-Form SS-4” link. You may also business or other convenient location for at least the excise tax on gasoline, diesel fuel, or ker- apply for an EIN by telephone by calling 3 years after the later of the date any part of the osene and meet certain conditions. 1-800-829-4933, or you can fax or mail Form tax became due, or the date any part of the tax Form 720 has 3 parts. SS-4, Application for Employer Identification was paid. During this period, the records must Number, to the IRS. be readily accessible to the IRS. • Part I consists of excise taxes generally

The person having control or possession of a required to be deposited (See Payment of Final return. File a final return if either of the policy or instrument subject to this tax must keep Taxes, later). following apply to you. the policy for at least 3 years after the date any • Part II consists of excise taxes that are part of the tax on it was paid. • You go out of business. not required to be deposited.

• You will not owe excise taxes that are re- Treaty-based positions under IRC 6114. • Part III is used to figure your tax liability for portable on Form 720 in future quarters. You may have to file an annual report disclosing the quarter and the amount of any balance

the amount of premiums exempt from United due or overpayment.

States excise tax as a result of the application of Due dates. Form 720 must be filed by the • Schedule A, Excise Tax Liability, is used a treaty with the United States that overrides (or following due dates. to record your net tax liability for each otherwise modifies) any provision of the Internal semimonthly period in a quarter. Complete Revenue Code. Quarter Covered Due Dates it if you have an entry in Part I. Attach any disclosure statement to the first January, February, March ..... April 30 quarter Form 720. You may be able to use Form • Schedule C, Claims, is used to make April, May, June ............ July 31 8833, Treaty-Based Return Position Disclosure claims. However, Schedule C can only be July, August, September ...... October 31 Under Section 6114 or 7701(b), as a disclosure used if you are reporting a liability in Part I October, November, December January 31 statement. See the Form 720 instructions for or Part II.

how and where to file. If any due date falls on a Saturday, Sunday,

See Revenue Procedure 92–14 in Cumula- Attachments to Form 720. You may have or legal holiday, you can file the return on the

tive Bulletin 1992–1 for procedures you can use to attach the following forms. next business day.

Page 27
One-time filing. See the Instructions for book for additional information. If you do not Special rule for deposits of taxes in SeptemForm 720 for information on eligibility to make a have a coupon book, call 1-800-829-4933. ber 2004. If you are required to make deposone-time filing of Form 720 for the gas guzzler its, see the chart below. The special rule does Beginning in January 2004, you will tax. not apply to taxes not required to be deposited automatically be enrolled in EFTPS (see Payment of Taxes above). See Regula- when you apply for an EIN. You will

TIP

Payment voucher. Form 720-V, Payment tions section 40.6302(c)-2 for rules to figure the Voucher, must be included with Form 720 and receive a separate mailing containing instruc- net tax liability for the deposits due in Septem- tions for activating your EFTPS enrollment after your payment if you have a balance due on ber. you receive your EIN. You will still have the line 10 of Form 720.

option to use FTD coupons, but see Electronic Additional deposit of taxes in September deposit requirement above. 2004

Payment of Taxes When To Make Deposits For the Period

Beginning Ending Due

Generally, semimonthly deposits of excise taxes There are two methods for determining depos- Type of Tax on on Date

are required. A semimonthly period is the first its: the regular method and the alternative Regular method 15 days of a month (the first semimonthly pe- method. taxes riod) or the 16th through the last day of a month The regular method applies to all taxes in EFTPS1 Sept. 16 Sept. Sept. (the second semimonthly period). Part I of Form 720 except for communications 26 29 However, no deposit is required for the situa- and air transportation taxes if deposits are Non-EFTPS Sept. 16 Sept. Sept. tions listed below; the taxes are payable with based on amounts billed or tickets sold, rather 25 28 Form 720. than on amounts actually collected. See Alternative method below. Alternative method • The net liability for taxes listed in Part I If you are depositing more than one tax taxes (IRS Nos. 22, (Form 720) does not exceed $2,500 for under a method, combine all the taxes under the 26, 27, and 28) the quarter. method and make one deposit for the semi- (based on amounts

• The gas guzzler tax is being paid on a monthly period. billed)

one-time filing. EFTPS1 Sept. 1 Sept. Sept.

Regular method. The deposit of tax for a 11 29 • The liability is for taxes listed in Part II semimonthly period is due by the 14th day fol- Non-EFTPS Sept. 1 Sept. Sept. (Form 720), except for the floor stocks tax, lowing that period. Generally, this is the 29th day 10 28

that generally requires a single deposit. of a month for the first semimonthly period and 1See Electronic deposit requirement above.

• The tax liability is for the removal of a the 14th day of the following month for the secbatch of gasohol from an approved refin- ond semimonthly period. If the 14th or the 29th

ery by bulk transfer, if the refiner elects to day falls on a Saturday, Sunday, or legal holiday, you must make the deposit by the immedi- Amount of Deposits treat itself for that removal as not regisately preceding day that is not a Saturday, tered under section 4101. See Regula- Deposits for a semimonthly period generally Sunday, or legal holiday. tions section 48.4081-3. must be at least 95 percent of the net tax liability

Alternative method (IRS Nos. 22, 26, 27, and for that period unless the safe harbor rule (disHow To Make Deposits 28). Deposits of communications and air cussed later) applies. Generally, you do not

transportation taxes may be based on taxes have to make a deposit for a period in which you

To avoid a penalty, make your deposits timely incurred no tax liability. included in amounts billed or tickets sold during

and do not mail your deposits directly to the IRS. a semimonthly period instead of on taxes actuRecords of your deposits will be sent to the IRS ally collected during the period. Under the alter- Net tax liability. Your net tax liability is your

for crediting to your accounts. native method, the tax included in amounts tax liability for the period minus any claims on

billed or tickets sold during a semimonthly pe- Schedule C (Form 720) for the period. You may Electronic deposit requirement. You must riod is considered collected during the first 7 figure your net tax liability for a semimonthly make electronic deposits of all depository taxes days of the second following semimonthly pe- period by dividing your net liability incurred dur- (such as deposits for employment tax, excise riod. The deposit of tax is due by the 3rd banking ing the calendar month by two. If you use this tax, and corporate income tax) using the Elec- day after the 7th day of that period. method, you must use it for all semimonthly tronic Federal Tax Payment System (EFTPS) in Example. The tax included in amounts periods in the calendar quarter. 2004 if:

billed or tickets sold for the period June 16-30, Do not reduce your liability by any • The total deposits of such taxes in 2002 2004, is considered collected from July 16-22, amounts from Form 720X. exceeded $200,000 or 2004, and must be deposited by July 27, 2004. CAUTION

!

• You were required to use EFTPS in 2003. To use the alternative method, you must

keep a separate account of the tax included in

If you are required to use EFTPS and use amounts billed or tickets sold during the month

Form 8109, Federal Tax Deposit Coupon, in- and report on Form 720 the tax included in

amounts billed or tickets sold and not the Safe Harbor Rule stead, you may be subject to a 10% penalty. If amount of tax that is actually collected. For ex- you are not required to use EFTPS, you may The safe harbor rule applies separately to de- participate voluntarily. To get more information ample, amounts billed in December, January, posits under the regular method and the alterna- or to enroll in EFTPS, call 1-800-555-4477 or and February are considered collected during tive method. Persons who filed Form 720 for the

1-800-945-8400; or visit the EFTPS website at January, February, and March and are reported look-back quarter (the 2nd calendar quarter pre- www.eftps.gov. Also see Publication 966, on Form 720 as the tax for the 1st quarter of the ceding the current quarter) are considered to Electronic Choices for Paying ALL Your Federal calendar year. meet the semimonthly deposit requirement if the Taxes. The net amount of tax that is considered

deposit for each semimonthly period in the cur- Depositing on time. For EFTPS deposits to collected during the semimonthly period must be rent quarter is at least 1

/6 (16.67%) of the net tax be on time, you must initiate the transaction at either:

liability reported for the look-back quarter. least one business day before the date the de- • The net amount of tax reflected in the sep- For the semimonthly period for which the posit is due. arate account for the corresponding semi- additional deposit is required, the additional de- monthly period of the preceding month or posit must be at least 11/90 (12.23%), 10 Federal Tax Deposit Coupons. If you are not /90

making deposits by EFTPS, use Form 8109 to • One-half of the net amount of tax reflected (11.12%) for non-EFTPS, of the net tax liability

make the deposits at an authorized financial in the separate account for the preceding reported for the look-back quarter. Also, the total

institution. See the instructions in the coupon month. deposit for that semimonthly period must be at

Page 28
least 1/6 (16.67%) of the net tax liability reported • For deposits under the alternative method, The IRS may withdraw the right to

for the look-back quarter. any quarter if liability includes any tax not make deposits of tax using the safe

in effect throughout the look-back quarter harbor rule from any person not com- CAUTION

!

Exceptions. The safe harbor rule does not and the month preceding the look-back plying with these rules. apply to: quarter. Tax rate increases. You must modify the safe • The 1st and 2nd quarters beginning on or harbor rule if there has been an increase in the after the effective date of an increase in Requirements to be met. For the safe harbor rate of tax. You must figure your tax liability in the rate of tax unless the deposit of taxes rule to apply, you must: the look-back quarter as if the increased rate for each semimonthly period in the calen-

• Make each deposit timely at an authorized had been in effect. To qualify for the safe harbor dar quarter is at least 1

/6 (16.67%) of the

financial institution and rule, your deposits cannot be less than 1/6 of the tax liability you would have had for the refigured tax liability. look-back quarter if the increased rate of • Pay any underpayment for the current tax had been in effect for that look-back quarter by the due date of the return. quarter,

• Any quarter if liability includes any tax not

in effect throughout the look-back quarter,

or

Page 29
• Log-rolling contests. mail Form SS-4, Application for Employer IdenTax on Wagering tification Number, to the IRS. • Wood-chopping contests. If you are a principal, you must show the

The following two taxes are imposed on wager- • Weightlifting contests. number of agents that accept wagers for you

ing activities. and their names, addresses, and EINs. If you • Beauty contests. engage a new agent after filing Form 11–C, you • Occupational tax. You must pay the occu- • Spelling bees. must file a supplemental registration showing pational tax if you accept taxable wagers this information within 10 days after you engage for yourself or another person. See Form

Wagering pool. the agent. A wagering pool conducted 11–C, later, for more information. Agents must show the name, address, and for profit includes any method or scheme for • Wagering tax. You must pay the tax on EIN of each of their principals. If you are en- giving prizes to one or more winning bettors wagering if you are in the business of ac- gaged by a new principal after having filed a based on the outcome of a sports event, a concepting taxable wagers or running a wa- Form 11–C, you must file a supplemental regis- test, or a combination or series of these events

gering pool or lottery. You must also pay tration within 10 days after being engaged by the or contests if the wagering pool is managed and the tax on wagering if you have not prop- new principal. If you do not provide the required conducted for the purpose of making a profit. A erly registered the name and address of information about the principal, you will be liable wagering pool or lottery may be conducted for your principal on Form 11–C. See Form for the excise tax on wagers you accept as if you profit even if a direct profit does not occur. If you

730, were the principal. later, for more information. operate the wagering pool or lottery with the

expectation of a profit in the form of increased Example. Ken operates a numbers game Exempt organizations. Organizations ex- sales, attendance, or other indirect benefits, you and engages 10 people to receive wagers from empt from income tax under section 501 or 521 conduct it for profit. the public on his behalf. Ken also employs a of the Internal Revenue Code are not exempt Lottery. This includes the numbers game, pol- secretary and a bookkeeper. Ken and each of from the tax on wagering or the occupational tax. icy, punch boards, and similar types of wager- the 10 agents are liable for the tax. They must However, see Lottery, later, for an exception. ing. In general, a lottery conducted for profit each file Form 11–C. The secretary and the

Confidentiality. No Treasury Department em- includes any method or scheme for the distribu- bookkeeper are not liable for the tax unless they

tion of prizes among persons who have paid or also accept wagers for Ken. ployee may disclose any information that you

promised to pay for a chance to win the prizes. On Ken’s Form 11–C, he lists all required supply in relation to the wagering taxes, unless

The winning prizes are usually determined by information (name, address, and EIN) for each necessary to administer or enforce the Internal

Revenue laws. the drawing of numbers, symbols, or tickets from of his ten agents as well as himself. He does not

a wheel or other container or by the outcome of list his secretary or bookkeeper.

a given event. Each of the 10 agents file Form 11–C show- Definitions It does not include either of the following ing his or her name, address, and EIN, as well

kinds of events. as Ken’s. The following definitions apply to Form 11–C

and Form 730. 1) Games of a type in which usually the wa- Figuring the tax. The following tax must be

Principal. A principal is a person who is in the gers are placed, winners are determined, paid annually for every year in which taxable

business of accepting wagers for his or her own and the prizes are distributed in the pres- wagers are accepted.

account. This is the person who makes a profit ence of everyone who placed a wager. • $50 if all wagers accepted are authorized or risks loss depending on the outcome of the 2) Drawings conducted by a tax-exempt or- under the laws of the state in which acevent or contest for which the wager is ac- ganization, if the net proceeds of the draw- cepted. cepted. ing do not benefit a private shareholder or • $500 for all other wagers. Agent. This is the agent of the principal who individual.

accepts wagers for the principal. The tax year begins on July 1. If you start ac- Card games, roulette games, dice games, cepting wagers after July 31, the tax is prorated Wagers. Wagers include any wager: bingo, keno, and gambling wheels usually fall for the first year. The prorated amounts are within exception (1) above. shown in the table in the Form 11–C instruc- • Made on a sports event or a contest with a tions. person in the business of accepting wagers, Form 11–C

Refund. A refund for an overpayment of the • Placed in a wagering pool on a sports You use Form 11–C to register with the IRS occupational tax may be claimed on Form 8849

event or contest, if the pool is conducted certain information on wagering activity and to using Schedule 6. See the Form 8849 instrucfor profit, or pay the occupational tax on wagering. Your can- tions for details.

celed check is proof of registration and payment. • Placed in a lottery conducted for profit.

Who must file. You must file Form 11–C if Form 730

you are a principal or an agent, defined earlier. Sports event. A sports event includes every Form 730 is used for figuring the tax on wagers. type of amateur, scholastic, or professional When to file. You must file your first Form The wagering tax applies to the wagers (as sports competition, such as: 11–C before you begin accepting wagers. After defined earlier), regardless of the outcome of

that, file a renewal return by July 1 for each year the individual wagers. Auto racing Baseball Basketball that you accept wagers. You may also be re- The tax applies only to a wager that meets Billiards Bowling Boxing quired to file a first return for a new entity created either of the following conditions. Cards Checkers Cricket when certain changes in ownership or control Croquet Dog racing Football • It is accepted in the United States.

Golf Gymnastics Hockey occur. In addition, you are required to file a

supplemental registration when certain events • It is placed by a person who is in the Horse racing Lacrosse Rugby

Soccer Squash Tennis occur. See the Form 11–C instructions. United States with a U.S. citizen or resiTrack Tug of war Wrestling dent, or in a wagering pool or lottery con- Information required. Follow the instructions ducted by a U.S. citizen or resident. on the back of the form. All filers must have an Contest. A contest is any competition involv- employer identification number (EIN). You can- Wagers made within the United States are ing speed, skill, endurance, popularity, politics, not use your social security number. If you do taxable regardless of the citizenship or place of strength, or appearance, such as the following. not have an EIN, you may apply for one online. residence of the parties to the wager. • Elections. Go to the IRS website at www.irs.gov/smallbiz

and click on the “Online Application-Form SS-4” Laid-off wagers. Persons accepting more • The outcome of nominating conventions. link. You may also apply for an EIN by telephone wagers than they are willing to carry may lay off

• Dance marathons. by calling 1-800-829-4933, or you can fax or a portion of the wagers with another person to

Page 30
avoid the risk of loss. If you accept a wager Each person liable for the wagering tax accounting for, and paying over these taxes. If

taken initially by someone else (other than an must keep records to reflect each day’s this person knows that these required actions

agent acting for you) include the wager in your operations. Your records should in- are not taking place for whatever reason, the RECORDS

gross receipts. If you accept a wager and lay off clude the following information. person is acting willfully. Paying other expenses

all or part of it with a person who is liable for the of the business instead of paying the taxes is • The gross amount of all wagers accepted. tax, you may be entitled to a credit or refund, willful behavior.

discussed later. • The gross amount of each class or type of A responsible person can be an officer or

wager accepted on each event, contest, or employee of a corporation, a partner or em- Excluded wagers. Tax is not imposed on any other wagering medium. ployee of a partnership, or any other person who of the following. had responsibility for certain aspects of the busi- • The gross amount of any wagers laid off • Parimutuel wagering, including horse rac- ness and financial affairs of the employer (or with other persons and the name, ad- ing, dog racing, and jai alai when licensed business). This may include accountants, trust- dress, and registration number of each under state law. ees in bankruptcy, members of a board, banks, person with whom you placed the laid-off insurance companies, or sureties. The responsi- • Coin-operated devices such as pinball ma- wagers. ble person could even be another corporation— chines. For more information on records, see sections in other words, anyone who has the duty and the

• Sweepstakes, wagering pools, or lotteries 44.4403–1 and 44.6001–1 of the regulations. ability to direct, account for, or pay over the

that are conducted by an agency of a state money. Having signature power on the business

if the wager is placed with the state checking account could be a significant factor in

agency or its authorized agents or employ- determining responsibility.

ees.

Penalties

Figuring the tax. The amount of the wager is

the amount risked by the bettor, including any and Interest Examination and

fee or charge incident to placing the wager. It is

not the amount that the bettor stands to win. Penalties and interest may result from any of the Appeal Procedures

The tax is 2% of the wager if it is not author- following acts. If your excise tax return is examined and you ized under the laws of the state in which ac- • Failing to collect and pay over tax as the disagree with the findings, you can get informa- cepted. If the wager is authorized, the rate is collecting agent (see Trust fund recovery tion about audit and appeal procedures from 0.25% of the wager. penalty, next). Publication 556, Examination of Returns, ApWhen to file. Once you have filed Form 730 • Failing to keep adequate records. peal Rights, and Claims for Refund. An

reporting tax, file a return for each subsequent unagreed case involving an excise tax covered

month whether or not you have taxable wagers • Failing to file returns. in this publication differs from other tax cases in

to report. File Form 730 for each month by the • Failing to pay taxes. that you can only contest it in court after paylast day of the following month. If you have none ment of the tax by filing suit for a refund in the • Filing returns late. to report, write “0” in the last box of the dollar United States District Court or the United States

amount column. If you stop accepting wagers • Filing false or fraudulent returns. Court of Federal Claims.

permanently, check the final return box on the • Paying taxes late. form.

Credit or refund. A credit or refund may be • Failing to make deposits.

claimed for an overpayment of the wagering tax • Depositing taxes late. Rulings Program

or for the amount of tax imposed on a wager that

is laid off with another person who is liable for • Making false statements relating to tax. The IRS has a program for assisting taxpayers

the tax on the amount laid off. Claim a credit on who have technical problems with tax laws and • Failing to register. line 5 of Form 730 or file a claim for refund on regulations. The IRS will answer inquiries from

Form 8849 using Schedule 6. No credit or refund • Misrepresenting that tax is excluded from individuals and organizations about the tax efwill be allowed unless the timely filed claim has the price of an article. fect of their acts or transactions. The National

Office of the IRS issues rulings on those mat- the required statements, certificates, and consents attached. For more information, see the ters. Trust fund recovery penalty. If you provide A ruling is a written statement to a taxpayer instructions for Form 730 and Form 8849. taxable communications or air transportation that interprets and applies tax laws to the Conditions to allowance. One of the fol- services, you have to collect excise taxes (as taxpayer’s specific set of facts. There are also discussed earlier) from those persons who pay lowing statements must be attached to the claim determination letters issued by IRS directors you for those services. You must pay over these for credit or refund. and information letters issued by IRS directors taxes to the U.S. Government. • The tax has not been collected from the or the National Office. If you willfully fail to collect or pay over these person who placed the wager. There is a fee for most types of determination taxes, or if you evade or defeat them in any way, letters and rulings. For complete details of the the trust fund recovery penalty may apply. Will- • The tax has been repaid to that person. rulings program, see Rev. Proc. 2004-01. You fully means voluntarily, consciously, and inten- • The written consent of that person to can find Rev. Proc. 2004-01 on page 1 of Inter- tionally. The trust fund recovery penalty equals make the claim has been obtained. nal Revenue Bulletin 2004-01 at www.irs.gov/ 100% of the taxes not collected or not paid over pub/irs-irbs/irb04-01.pdf. to the U.S. Government.

If the claim is for a laid-off wager accepted by The trust fund recovery penalty may be im- the claimant, the statement must be attached for posed on any person responsible for collecting, both the person who placed the laid-off wager

and the person who placed the original wager.

Page 31
faxed to you. For help with transmission your account, or help you set up a payHow To Get Tax Help problems, call 703-487-4608. Long-distance ment plan. You can set up an appointment

charges may apply. by calling your local Center and, at the

You can get help with unresolved tax issues, prompt, leaving a message requesting

order free publications and forms, ask tax ques- Phone. Many services are available by Everyday Tax Solutions help. A represen- phone. tions, and get more information from the IRS in tative will call you back within 2 business

several ways. By selecting the method that is days to schedule an in-person appointbest for you, you will have quick and easy ac- ment at your convenience. To find the

cess to tax help. • Ordering forms, instructions, and publica- number, go to www.irs.gov or look in the

phone book under “United States Govern- tions. Call 1-800-829-3676 to order Contacting your Taxpayer Advocate. If you ment, Internal Revenue Service.” current-year forms, instructions, and publi- have attempted to deal with an IRS problem cations and prior-year forms and instruc- unsuccessfully, you should contact your Tax- tions. You should receive your order within Mail. You can send your order for payer Advocate. 10 days. forms, instructions, and publications to The Taxpayer Advocate independently rep- the Distribution Center nearest to you resents your interests and concerns within the • Asking tax questions. Call the IRS with and receive a response within 10 workdays after IRS by protecting your rights and resolving your tax questions at 1-800-829-4933. For your request is received. Use the address that problems that have not been fixed through nor- questions on Form 2290, call the Form applies to your part of the country. mal channels. While Taxpayer Advocates can- 2290 call site at 1-866-699-4096 (toll free)

not change the tax law or make a technical tax from the United States and • Western part of U.S.:

decision, they can clear up problems that re- 1-859-669-5733 (not toll free) from Can- Western Area Distribution Center

sulted from previous contacts and ensure that ada and Mexico. The hours of service are Rancho Cordova, CA 95743–0001

your case is given a complete and impartial 8:00 A.M. to 6:00 P.M., EST. • Central part of U.S.: review. • Solving problems. You can get Central Area Distribution Center To contact your Taxpayer Advocate: face-to-face help solving tax problems P.O. Box 8903

• Call the Taxpayer Advocate toll free at every business day in IRS Taxpayer As- Bloomington, IL 61702–8903

1–877–777–4778. sistance Centers. An employee can ex- • Eastern part of U.S. and foreign plain IRS letters, request adjustments to • Call, write, or fax the Taxpayer Advocate addresses: your account, or help you set up a pay- office in your area. Eastern Area Distribution Center ment plan. Call your local Taxpayer Assis- P.O. Box 85074 • Call 1–800–829–4059 if you are a tance Center for an appointment. To find Richmond, VA 23261–5074 TTY/TDD user. the number, go to www.irs.gov or look in

the phone book under “United States Gov- • Visit the website at www.irs.gov/advo- CD-ROM for tax products. You can ernment, Internal Revenue Service.” cate. order IRS Publication 1796, Federal • TTY/TDD equipment. If you have access Tax Products on CD-ROM, and obtain:

For more information, see Publication 1546, to TTY/TDD equipment, call

The Taxpayer Advocate Service of the IRS. 1-800-829-4059 to ask tax or account • Current-year forms, instructions, and pub- questions or to order forms and publica- Free tax services. To find out what services lications. tions. are available, get Publication 910, Guide to Free

Tax Services. • Prior-year forms and instructions. It contains a list of free tax publications and an index of tax topics. It also de- Evaluating the quality of our telephone serv- • Frequently requested tax forms that may scribes other free tax information services, ices. To ensure that IRS representatives give be filled in electronically, printed out for including tax education and assistance pro- accurate, courteous, and professional answers, submission, and saved for recordkeeping. grams and a list of TeleTax topics. we use several methods to evaluate the quality • Internal Revenue Bulletins. of our telephone services. One method is for a Internet. You can access the IRS web- second IRS representative to sometimes listen site 24 hours a day, 7 days a week at Buy the CD-ROM from National Technical In- in on or record telephone calls. Another is to ask www.irs.gov to: formation Service (NTIS) on the Internet at some callers to complete a short survey at the www.irs.gov/cdorders for $22 (no handling end of the call.

• Download forms, instructions, and publica- fee) or call 1–877–233–6767 toll free to buy

the CD-ROM for $22 (plus a $5 handling fee). tions. Walk-in. Many products and services The first release is available in early January • Order IRS products online. are available on a walk-in basis. and the final release is available in late Febru-

• See answers to frequently asked tax ques- ary.

tions. CD-ROM for small businesses. IRS • Products. You can walk in to many post • Search publications online by topic or Publication 3207, Small Business Re- offices, libraries, and IRS offices to pick up keyword. source Guide, is a must for every small certain forms, instructions, and publica- business owner or any taxpayer about to start a • Send us comments or request help by tions. Some IRS offices, libraries, grocery business. This handy, interactive CD contains email. stores, copy centers, city and county gov- all the business tax forms, instructions, and pub- ernment offices, credit unions, and office • Sign up to receive local and national tax lications needed to successfully manage a busi- supply stores have a collection of products news by email. ness. In addition, the CD provides an available to print from a CD-ROM or pho- abundance of other helpful information, such as • Get information on starting and operating tocopy from reproducible proofs. Also, how to prepare a business plan, finding financ- a small business. some IRS offices and libraries have the

ing for your business, and much more. The de- Internal Revenue Code, regulations, Inter- sign of the CD makes finding information easy nal Revenue Bulletins, and Cumulative and quick and incorporates file formats and Bulletins available for research purposes. Fax. You can get over 100 of the most browsers that can be run on virtually any requested forms and instructions 24 • Services. You can walk in to your local desktop or laptop computer. hours a day, 7 days a week, by fax. Taxpayer Assistance Center every busi- It is available in early April. You can get a Just call 703-368-9694 from your fax machine. ness day to ask tax questions or get help free copy by calling 1–800–829–3676 or by Follow the directions from the prompts. When with a tax problem. An employee can ex- visiting the website at www.irs.gov/smallbiz. you order forms, enter the catalog number for plain IRS letters, request adjustments to

the form you need. The items you request will be

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 A

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 B

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
To help us develop a more useful index, please let us know if you have ideas for index entries. Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

A Exemptions . . . . . . . . . . . 22 Common carriers ........ 5 Gasoline .............. 9

Affiliated corporations ..... 7 Producer . . . . . . . . . . . . . 21 Installation charges ....... 5 Kerosene . . . . . . . . . . . . 12

Air transportation taxes: Production . . . . . . . . . . . . 22 International Special motor fuel . . . . . . . 17

Selling price . . . . . . . . . . . 22 organizations ......... 5 Used on inland 225-mile-zone rule ....... 6

Alaska Tax rates . . . . . . . . . . . . 22 Military personnel ........ 5 waterways . . . . . . . . . . 18 . . . . . . . . . . . . . 6, 7

Baggage Coin-operated telephones . . . 5 Mobile radio telephone .............. 7

Bonus tickets Comments ............. 2 service ............. 5 ........... 7 G

Credits or refunds News services .......... 5 ........ 7 Commercial waterway Gambling . . . . . . . . . . . . . 26

Exemptions Nonprofit educational ............ 7 transportation . . . . . . . . 18 Gas guzzler tax: Export organizations ......... 5 ............... 7 Communications taxes: Automobiles . . . . . . . . . . 23 Fixed-wing ambulance Nonprofit hospitals ....... 5 ..... 7 Coin-operated telephones . . 5 Credit or refund . . . . . . . . 23 Hawaii Private communication . . . . . . . . . . . . . 6, 7 Credits or refunds ........ 5 Limousines . . . . . . . . . . . 23 Helicopters service ............. 4 ............ 7 Exemptions ............ 5 Vehicles not subject to Radio broadcasts ........ 5 International air travel Figuring the tax ......... 4 tax . . . . . . . . . . . . . . . 23 Security systems ........ 5 facilities ............. 7 Local telephone service .... 4 Gasohol . . . . . . . . . . . . . . 11 Military personnel ........ 7 Exempt sales, heavy Prepaid telephone cards . . . 5 Gasoline blendstocks . . . . . 10 Package tours .......... 6 trucks . . . . . . . . . . . . . . 26 Private communication

Exemptions: Gasoline, defined ......... 9 Persons by air .......... 6 service ............. 4

Persons liable . . . . . . . . 6, 7 Teletypewriter exchange Air transportation taxes .... 7

Property by air .......... 7 service ............. 4 Bonus tickets ........... 7 H

Tax rates ............. 6 Toll telephone service Coal . . . . . . . . . . . . . . . . 22 ..... 4 Hawaii, air transportation Taxable transportation ..... 6 WATS service Communications taxes .... 5 .......... 5 taxes ................ 6

Travel agency .......... 6 Federal government ...... 5 Compressed natural gas . . . 18 Heavy trucks: Uninterrupted Fixed-wing air ambulance . . 7 Credit or refund: First retail sale, defined . . . 24 international .......... 6 For export . . . . . . . . . . . . 20 Gas guzzler tax . . . . . . . . 23 Further manufacture . . . . . 25

Aircraft: Further manufacturing . . . . 20 Gasoline tax . . . . . . . . . . 11 Installment sales . . . . . . . 25

Affiliated corporations ..... 7 Helicopters ............ 7 Manufacturers taxes . . . . . 20 Parts or accessories . . . . . 24

Fixed-wing air ambulance . . 7 Indian handicrafts . . . . . . . 20 Resale of tax-paid Presumptive retail sales Helicopters ............ 7 Indian tribal governments . . . 5 semitrailers . . . . . . . . . . 24 price . . . . . . . . . . . . . . 24

Museums . . . . . . . . . . . . 17 Military personnel ........ 7 Retail tax . . . . . . . . . . . . 26 Related persons . . . . . . . . 25

Small planes Nonprofit educational ........... 7 Tire tax . . . . . . . . . . . . . . 22 Separate purchases . . . . . 24

Alaska: organizations . . . . . . . 5, 20 Vaccines . . . . . . . . . . . . . 23 Tax base . . . . . . . . . . . . . 25

Air transportation taxes State and local .... 6 Wagering taxes . . . . . . . . 31 Tax rate . . . . . . . . . . . . . 23

Tax on diesel fuel or governments . . . . . . . 5, 20 Helicopters . . . . . . . . . . . 7, 17 Tires . . . . . . . . . . . . . . . 22 kerosene . . . . . . . . . . . 13 Help (See Tax help) D Vessel supplies . . . . . . . . 20 American Red Cross ...... 5 Highway use tax ......... 2

Answering service ........ 5 Deposits: Highway vehicle Appeal procedures . . . . . . . 31 Net tax liability . . . . . . . . . 28 F (Diesel-powered) . . . . . . . 12

Approved refinery, Deposits, How to make . . . . 28 Farming . . . . . . . . . . . . . . 15

defined .............. 8 Diesel fuel: Federal government ....... 5 I Approved terminal, Buses . . . . . . . . . . . . . . . 16 Fixed-wing air Definitions . . . . . . . . . . . . 12 Imported taxable products defined .............. 8 ambulance . . . . . . . . . . . 17 Exemption . . . . . . . . . . . . 13 (ODCs) ............... 3 Arrow components . . . . . . 21 Floor stocks tax: Farm . . . . . . . . . . . . . . . 15 Information returns, liquid Assistance (See Tax help) Ozone-depleting Dyed diesel fuel . . . . . . . . . 14 products ............. 8 Aviation fuel . . . . . . . . . . . 16 chemicals ............ 4

Dyed kerosene . . . . . . . . . . 14 Interest and penalties . . . . . 31 Aviation gasoline, defined . . 9 Form 720: International air travel Attachments . . . . . . . . . . 27 facilities .............. 7 Due dates . . . . . . . . . . . . 27 B E Final return . . . . . . . . . . . 27

Back-up tax . . . . . . . . . . . . 15 Electric outboard motors . . 21 Schedule A . . . . . . . . . . . 27 K

Biodiesel, defined ........ 8 Employer identification Schedule C . . . . . . . . . . . 27 Kerosene:

Blended taxable fuel, number . . . . . . . . . . . . . 27 Form: Buses . . . . . . . . . . . . . . . 16

defined .............. 8 Enterer, defined .......... 8 11–C . . . . . . . . . . . . . . . 30 Definitions . . . . . . . . . . . . 12

Blender, defined ......... 8 Entry, defined ........... 8 1363 ................ 7 Exemption . . . . . . . . . . . . 13

Bonus tickets ........... 7 Environmental taxes: 2290 ................ 2 Farming . . . . . . . . . . . . . 15

Bows . . . . . . . . . . . . . . . . 21 Credit or refund ......... 3 6197 ............. 23, 27

Bulk transfer, defined ...... 8 Exceptions ............ 3 637 . . . . . . . . . . . . . . . . . 2 L

Bulk transfer/terminal Ozone-depleting 6478 . . . . . . . . . . . . . . . 19 Liquid products, information chemicals ............ 2 6627 . . . . . . . . . . . . . . 2, 27 system, defined ........ 8 returns ............... 8 United States (defined) .... 3 720 . . . . . . . . . . . . . . 23, 27 Buses: Local telephone service .... 4 Examination procedures . . . 31 720X . . . . . . . . . . . . . . . 27 Diesel fuel . . . . . . . . . . . . 16

Excluded liquid . . . . . . . . . 12 730 . . . . . . . . . . . . . . . . 30 Kerosene . . . . . . . . . . . . 16

Tire tax . . . . . . . . . . . . . . 22 Exempt articles, retail SS-4 . . . . . . . . . . . . . . . 27 M

tax . . . . . . . . . . . . . . . . . 25 Free tax services . . . . . . . . 32 Manufacturer, defined . . . . 19

Exempt communication Fuels: Manufacturers taxes: C services: Aviation . . . . . . . . . . . . . 16 Arrow components . . . . . . 21

Chemicals, ozone-depleting: American Red Cross ...... 5 Compressed natural gas . . 18 Bows . . . . . . . . . . . . . . . 21

Coal: Answering service ....... 5 Diesel . . . . . . . . . . . . . . . 12 Coal . . . . . . . . . . . . . . . . 21

Blending . . . . . . . . . . . . . 22 Coin-operated telephones . . 5 Gasohol . . . . . . . . . . . . . 11 Credits or refunds . . . . . . . 20

Page 47
Exemptions . . . . . . . . . . . 20 R Ship passenger tax . . . . . . 26 Terminal, defined ......... 8

Gas guzzler tax . . . . . . . . 23 Rack, defined ........... 8 Sonar devices . . . . . . . . . . 21 Throughputter, defined ..... 8

Lease . . . . . . . . . . . . . . . 19 Radio broadcasts ......... 5 Special motor fuels . . . . . . 17 Tires:

Lease payments . . . . . . . . 20 Refiner, defined .......... 8 Special September rule, Credit against heavy truck

Partial payments . . . . . . . 20 Refinery, defined When to deposit . . . . . . . 28 tax . . . . . . . . . . . . . . . 26 ......... 8 Registration . . . . . . . . . . . 20 Sport fishing equipment: Credit or refund of tax . . . . 22 Refund of second tax ...... 9 Related person . . . . . . . . 21 List of equipment . . . . . . . 21 Exemptions . . . . . . . . . . . 22 Registrant .............. 9 Requirements for exempt Resales . . . . . . . . . . . . . 21 Manufacturers taxes . . . . . 22 Registrant, defined ........ 8 sales . . . . . . . . . . . . . . 20 Weight determination . . . . 22 State and local Sale Registration: . . . . . . . . . . . . . . . . 19 governments .......... 5 Toll telephone services .... 4

Sport fishing equipment . . . 21 Form 637 ............. 2

State, defined ........... 8 Train (Diesel-powered) . . . . 12

Tires . . . . . . . . . . . . . . . 22 Gasoline .............. 8

Suggestions ............ 2 Travel agency ........... 6 Vaccines . . . . . . . . . . . . . 23 Kerosene ............. 8

TTY/TDD information . . . . . 32 Mobile radio telephone Registration-required

service ............... 5 obligations . . . . . . . . . . . 27 T

More information (See Tax help) Related persons: Tax help . . . . . . . . . . . . . . 32 U

Heavy trucks . . . . . . . . . . 25 Tax rate: Uninterrupted

Sport fishing equipment . . . 21 Air transportation of international air N Removal, defined ......... 8 persons ............. 6 transportation . . . . . . . 6, 7 News services ........... 5 Retail tax: Air transportation of Nonprofit educational

organizations .......... 5 Credits and refunds . . . . . . 26 property ............. 7 V

Heavy trucks . . . . . . . . . . 23 Arrow components . . . . . . 21 Vaccines:

Rulings Program . . . . . . . . 31 Bows . . . . . . . . . . . . . . . 21 Credit or refund . . . . . . . . 23 O Rural airports ........... 6 Coal . . . . . . . . . . . . . . . . 22 Manufacturers tax . . . . . . . 23

Obligations not in Communications tax ...... 4 Vehicles: registered form . . . . . . . . 27 Electric outboard motor . . . 21 S Gas guzzler . . . . . . . . . . . 23

Ozone-depleting chemicals: International air travel Sale, defined ............ 8 Imported . . . . . . . . . . . . . 23

Floor stocks tax ......... 4 facilities ............. 7 Law enforcement . . . . . . . 23

Imported taxable Sales price: Obligations not in Bonus goods . . . . . . . . . . 20 Vessel operator, defined .... 8 products ............ 3 registered form . . . . . . . 27

Cost of transportation . . . . 20 Policies issued by foreign Delivery costs . . . . . . . . . 20 persons . . . . . . . . . . . . 26 W P Discounts . . . . . . . . . . . . 20 Ship passenger tax . . . . . . 26 Wagering taxes: Payment of taxes . . . . . . . . 28 Installation costs . . . . . . . . 20 Sonar devices . . . . . . . . . 21 Credit or refund . . . . . . . . 31

Penalties: Insurance costs . . . . . . . . 20 Sport fishing equipment . . . 21 Definitions . . . . . . . . . . . . 30

Dyed diesel fuel . . . . . . . . 15 Local advertising Trucks . . . . . . . . . . . . . . 23 Waterways . . . . . . . . . . . . 18 Dyed kerosene . . . . . . . . . 15 charges . . . . . . . . . . . . 20 Taxable fuel registrant ..... 9 WATS service ........... 5 Pipeline operator, defined . . . 8 Manufacturers excise Taxes, Payment of . . . . . . . 28 When to deposit . . . . . . . . 28 Position holder, defined .... 8 tax . . . . . . . . . . . . . . . 19 Taxpayer Advocate . . . . . . 32

Prepaid telephone cards .... 5 Rebates . . . . . . . . . . . . . 20 ■ Teletypewriter exchange Retail dealer preparation Publications (See Tax help) service ............... 4 costs . . . . . . . . . . . . . . 20

Warranty charges Terminal operator, . . . . . . . 20

defined .............. 8 Security systems ......... 5

Page 48