Source: https://excisetaxhelp.com/federal-excise-taxes
Timestamp: 2019-04-22 02:36:45+00:00

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IRS Notice 2016-81provides interim guidance relating to the excise tax imposed by § 4051 of the Internal Revenue Code on the first retail sale of heavy trucks, trailers, and tractors. Specifically, definitions of the terms "chassis" and "body."
.01 A "chassis" is a vehicle’s frame and supporting structure and all those components that are attached to it, except those components that are exempt from tax, such as certain idling reduction devices described in § 4053(9).
For purposes of § 4051(a)(1)(E), a chassis includes a chassis cab within the meaning of § 145.4051-1(e)(1)(ii)(A), (B) and (D).
A chassis does not include a vehicle’s body, as defined in Section 3.02 of this notice.
.02 A "body" is the cargo or load carrying structure of a truck, trailer, or semitrailer. Examples of a body include, but are not limited to, a flatbed body, a tanker body, and a box body.
Section 4052(f)(1) provides that an article taxed under § 4051(a)(1) is not treated as manufactured or produced solely by reason of repairs or modifications to the article if the cost of the repairs and modifications does not exceed 75 percent of the retail price of a comparable new article. The safe harbor provision in § 4052(f)(1) applies only to a § 4051(a)(1) article that has been previously taxed. See § 4052(f)(2).
The § 4051(a)(1) articles are: truck chassis and bodies, truck trailer and semitrailer chassis and bodies, and highway tractors. Therefore, a taxpayer must repair or modify one of the seven articles identified in § 4051(a)(1) in order to use the safe harbor provision in § 4052(f)(1).
For purposes of § 4052(f)(1), the IRS will use the definitions of chassis and body in Section 3 of this notice to determine the threshold issue of whether a § 4051(a)(1) article has been repaired or modified. In other words, the § 4052(f)(1) safe harbor provision may be applied to a chassis or body only if the chassis or body being repaired or modified is identifiable as such within the meaning of Section 3 of this notice.
The Treasury Department and the IRS request comments on the interim definitions of "chassis" and "body" set forth in Section 3 of this notice. The deadline for submission of comments is May 9, 2017.
Written comments should be submitted to: Internal Revenue Service, CC:PA:LPD:PR (Notice 2016-81), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20224. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (Notice 2016-81), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington, DC.
Alternatively, comments may be submitted electronically via the following e-mail address: [email protected] Please include "Notice 2016-81" in the subject line of an electronic communication.
Use Form 8809-EX to request a 30-day extension of time to file an Excise Summary Terminal Activity Reporting System (ExSTARS) information report (Form 720-TO, Terminal Operator Report, or Form 720-CS, Carrier Summary Report). All requests must include an extension reason. All initial 30-day requests will be honored except for those without a reason. File this form with the IRS on or before the due date of the return. If you are requesting an extension of time to file both Form 720-TO and Form 720-CS, you may use one Form 8809-EX. The automatic extension is 30 days from the original due date. You may request one additional extension of not more than 30 days by submitting a second Form 8809-EX before the end of the first extension period (see Line 5, later). Requests for an additional extension of time to file information returns are not automatically granted. Generally, the IRS will not grant additional time except in cases of extreme hardship or catastrophic event.
Examination Operations has asked whether the Service may accept a Form 2678, Employer/Payer Appointment of Agent, that displays an electronic signature. As we understand the proposed electronic signing procedure, the enrollee will fill out the Form 2678 online and sign it with a mouse or stylus. The signature will be created by the person with a live signature, but it will be a digital image of the actual signature. The Form will be mailed to the Service, and the vendor will maintain a digital image of the completed form.
The Court of Federal Claims decided that fuel mixture credits claimed by Sunoco under Code Sec. 6426 does in fact, reduce a taxpayer's gross excise tax liability under Code Sec. 4081. This reduction in the excise tax liabilities affect a taxpayer's costs of goods sold which in essence, results in an increase to taxable income. The court rejected Sunoco's argument that the credit is a tax-free payment that should not increase taxable income. As a side note, fuel mixture credits claimed under Code Sec. 6427 are considered tax-free payments.
The Internal Revenue Service announces an online application to assist taxpayers with balance inquiries in a safe, easy and convenient way. The new tool is available on IRS.gov. It will allow you to view account balance, including tax, penalties and interest.
Taxpayers registered through Secure Access for Get Transcript Online or Get an IP PIN may use their same username and password. To register for the first time, taxpayers must have an email address, a text-enabled mobile phone in the user's name and specific financial information, such as a credit card number or specific loan numbers. Taxpayers may review the Secure Access process prior to starting registration.
In addition to this new functionality, the IRS continues to provide several self-service tools and helpful resources available on IRS.gov for individuals, businesses and tax professionals.
(5) Assessment and collection of an assessable payment imposed by section 4980H and reporting required by section 6056.
(B) Treatment of entity. An entity that is disregarded as an entity separate from its owner for any purpose under this section is treated as a corporation with respect to items described in paragraph (c)(2)(v)(A) of this section.
Example. (i) LLCB is an eligible entity that has a single owner, B. LLCB is generally disregarded as an entity separate from its owner. However, under paragraph (c)(2)(v) of this section, LLCB is treated as an entity separate from its owner for certain purposes relating to excise taxes.
(ii) LLCB mines coal from a coal mine located in the United States. Section 4121 of chapter 32 of the Internal Revenue Code imposes a tax on the producer's sale of such coal. Section 48.4121-1(a) of this chapter defines a "producer" generally as the person in whom is vested ownership of the coal under state law immediately after the coal is severed from the ground. LLCB is the person that owns the coal under state law immediately after it is severed from the ground. Under paragraph (c)(2)(v)(A)(1) of this section, LLCB is the producer of the coal and is liable for tax on its sale of such coal under chapter 32 of the Internal Revenue Code. LLCB must report and pay tax on Form 720, "Quarterly Federal Excise Tax Return," under its own name and taxpayer identification number.
(iii) LLCB uses undyed diesel fuel in an earthmover that is not registered or required to be registered for highway use. Such use is an off-highway business use of the fuel. Under section 6427(l), the ultimate purchaser is allowed to claim an income tax credit or payment related to the tax imposed on diesel fuel used in an off-highway business use. Under paragraph (c)(2)(v) of this section, for purposes of the credit or payment allowed under section 6427(l), LLCB is the person that could claim the amount on its Form 720 or on a Form 8849, "Claim for Refund of Excise Taxes." Alternatively, if LLCB did not claim a payment during the time prescribed in section 6427(i)(2) for making a claim under section 6427, § 1.34-1 of this chapter provides that B, the owner of LLCB, could claim the income tax credit allowed under section 34 for the nontaxable use of diesel fuel by LLCB.
(iv) Assume the same facts as in paragraph (c)(2)(v)(C) Example (i) and (ii) of this section. If LLCB does not pay the tax on its sale of coal under chapter 32 of the Internal Revenue Code, any notice of lien the Internal Revenue Service files will be filed as if LLCB were a corporation.
The IRS has updated IRM section 8.6.1 to reflect a move towards reducing the in-person appeals conference. As you can see below they will conduct the majority by telephone, however there are instances where in-person meetings are available.
IRM Section 8.6.1.1 states: Appeals uses various conference methods; however, most conferences are held by telephone.
Make multiple attempts to initiate a personal contact with the taxpayer or representative by telephone or by correspondence. During personal contact, discuss whether an alternative conferencing method (other than telephone) is necessary based on the unique facts and circumstances of the case.
Except as set forth below, hold conferences by telephone. Hold conferences on dates that are reasonably convenient for taxpayers and representatives and the Appeals Technical Employee (ATE).
Input code "VSDX" in the LOC7 field.
The ATE will communicate the decision regarding the in-person conference to the taxpayer and/or representative.
81 FR 59445 - The Alcohol and Tobacco Tax and Trade Bureau is amending its regulations concerning denatured alcohol and products made with industrial alcohol. The amendments eliminate outdated specially denatured spirits formulas from the regulations, reclassify some specially denatured spirits formulas as completely denatured alcohol formulas, and issue some new general-use formulas for manufacturing products with specially denatured spirits. The amendments remove unnecessary regulatory burdens on the industrial alcohol industry, as well as on TTB, and align the regulations with current industry practice. The amendments also make other improvements and clarifications, as well as a number of minor technical changes and corrections to the regulations.
There are two types of denatured spirits: Completely denatured alcohol (C.D.A.) and specially denatured spirits (referred to as "S.D.S." for purposes of this preamble). C.D.A. jeopardizes the revenue less than S.D.S. does--first, C.D.A. is more offensive to the taste than S.D.S. and thus C.D.A. is less likely to be used for beverage purposes, and second, it is more difficult to separate potable alcohol from C.D.A. than it is from S.D.S. For these reasons, the withdrawal and use of C.D.A. are subject to less stringent regulatory oversight than are the withdrawal and use of S.D.S.
• An article is any substance or preparation manufactured using denatured spirits.
• Completely Denatured Alcohol (C.D.A.) is alcohol that has been denatured under a formula specified in subpart C of 27 CFR part 21. Only a registered distilled spirits plant may produce C.D.A. TTB and industry generally refer to formulations of C.D.A. by the formula number. For example, a formulation produced in accordance with C.D.A. Formula No. 20 is simply referred to as "C.D.A. 20." To reflect the common parlance, this same shorthand is used throughout this document.
• A formula is an instruction for manufacturing a product, and is analogous to a recipe that a cook follows. This document refers to two broad types of formulas: denatured alcohol formulas and article formulas. Denatured alcohol formulas specify the instructions for producing either S.D.S (as specified in 27 CFR part 21 subpart D) or C.D.A. (as specified in 27 CFR part 21 subpart C). Article formulas include both formulas approved individually by TTB on TTB Form 5150.19 and general-use formulas (as specified in 27 CFR 20.112 through 20.119).
• A formulation is a physical product manufactured in accordance with a formula, and is analogous to a cooked meal that has been prepared using a recipe. The word "formulation" can refer to S.D.S., C.D.A., or an article.
• A general-use formula is a formula for making a certain type of article that is prescribed by 27 CFR 20.112 through 20.119, approved by TTB as an alternate method, or published as a TTB ruling. Specific formula approval by TTB on Form 5150.19 is not required for an article made pursuant to a general-use formula.
• Specially Denatured Alcohol (S.D.A) is alcohol that has been denatured following a formula specified in subpart D of 27 CFR part 21. A formulation of S.D.A. may be used only for the uses specified for the corresponding formula in 27 CFR part 21.
• Specially Denatured Rum (S.D.R.) is a rum that has been denatured following the formula specified in subpart D of 27 CFR part 21. S.D.R. may be used only for the uses specified for that formula in 27 CFR part 21.
• Specially Denatured Spirits (S.D.S.) are specially denatured alcohol (S.D.A.) and/or specially denatured rum (S.D.R.). Only a registered distilled spirits plant may produce S.D.S. TTB and industry generally refer to formulations of S.D.S. by the formula number. For example, a formulation produced in accordance with S.D.A. Formula No. 40-B is simply referred to as "S.D.A. 40-B." To reflect the common parlance, this same shorthand is used throughout this document.
The Internal Revenue Service (IRS) revels in paying out over $400 billion in refunds annually, but the respect and affection of the American people is not for sale. The IRS betrayed the trust of Americans when it became known that the IRS inappropriately singled out certain tax-exempt groups for extra scrutiny based on their political beliefs. The magnitude of this betrayal cannot be overstated, but it is just one incident--albeit a mammoth one--of the seemingly never-ending torrent of IRS mismanagement.
The Committee is troubled by the IRS's willingness to neglect taxpayers in need of assistance and by a recent revelation of cybersecurity weaknesses. The IRS blames budget cuts without acknowledging the degree of discretion it has to spend funds relatively unencumbered. The Government Accountability Office, however, has observed, "Although resources are constrained, IRS has flexibility in how it allocates resources to ensure that limited resources are utilized as effectively as possible . . .[magnifying] the importance of strategically managing operations to make tough choices about which services to continue providing and which services to cut."
The Committee strongly advises the IRS to make improving the quality and security of customer service a high priority and includes an additional $290,000,000 for this purpose.
The Committee continues to be concerned with the IRS' role in implementation of the Affordable Care Act and, in particular, the individual mandate. At a time when the IRS has demonstrated little ability to either self-police or self-correct, the IRS has even more authority over Americans' health coverage. The Committee finds this expansion of IRS authority to be unacceptable and, therefore, prohibits funding to implement the individual mandate and prohibits transfers from the Department of Health and Human Services to fund the IRS' implementation of the Affordable Care Act.
Synopsis: John B. Larsen, (D-CT) sponsored this bill to amend the Internal Revenue Code of 1986 to establish an excise tax on the production and importation of opioid pain relievers, and for other purposes.
SEC. 2. EXCISE TAX ON OPIOID PAIN RELIEVERS.
"SEC. 4192. OPIOID PAIN RELIEVERS.
"(a) IN GENERAL.—There is hereby imposed on the sale of any taxable active opioid by the manufacturer, producer, or importer a tax equal to 1 cent per milligram so sold.
effect on the date of the enactment of this section) which is opium, an opiate, or any derivative thereof.
such product that is a taxable active opioid.".
"Sec. 4192. Opioid pain relievers.".
(c) EFFECTIVE DATE.- The amendments made by this section shall apply to sales on or after the date that is 1 year after the date of the enactment of this Act.
in the Secretary's determination, most effective and efficient in ensuring eligible patients face no economic burden from such tax.
SEC. 3. BLOCK GRANTS FOR PREVENTION AND TREATMENT OF SUBSTANCE ABUSE.
(a) GRANTS TO STATES.- Section 1921(b) of the Public Health Service Act (42 U.S.C. 300x-21(b)) is amended by inserting ", and, as applicable, for carrying out section 1923A" before the period.
(b) NONAPPLICABILITY OF PREVENTION PROGRAM PROVISION.- Section 1922(a)(1) of the Public Health Service Act (42 U.S.C. 300x-22(a)(1)) is amended by inserting "except with respect to amounts made available as described in section 1923A," before "will expend".
other treatment programs, as the Secretary determines appropriate.".
(d) ADDITIONAL FUNDING.- Section 1933(a)(1)(B)(i) of the Public Health Service Act (42 U.S.C. 300x-33(a)(1)(B)(i)) is amended by inserting ", plus any increase in revenues to the Treasury in the previous fiscal year resulting from the enactment of section 4192 of the Internal Revenue Code of 1986, reduced by any amounts rebated or discounted under section 2(d) of the Budgeting for Opioid Addiction Treatment Act" before the period.
(B) substance abuse treatment efforts under such section 1923A.
Synopsis: A bill ( "Fishing Equipment Tax Relief Act of 2016"), sponsored by David W. Jolly (R-FL) to amend the Internal Revenue Code of 1986 to provide a reduced excise tax rate for portable, electronically-aerated bait containers.
THREE PERCENT RATE FOR PORTABLE, ELECTRONICALLY-AERATED BAIT CONTAINERS.
In the case of portable, electronically-aerated bait containers, paragraph (1) shall be applied by substituting '3 percent' for '10 percent'.".
DATES: Comments should be received on or before August 29, 2016 to be assured of consideration.
OMB Control Number: 1513-0016. Type of Review: Revision of a currently approved collection.
Title: Drawback on Wines Exported.
Abstract: The Internal Revenue Code (IRC) at 26 U.S.C. 5062(b), provides, in general, that exporters of taxpaid domestic wine may claim "drawback" of the Federal excise tax paid or determined on the exported wine. Exporters use TTB F 5120.24 to document the wine's exportation and to submit drawback claims for the exported wine. TTB uses the provided information to determine if the exported wine is eligible for drawback and to calculate the amount of drawback due. This information is necessary to protect the revenue.
Estimated Total Annual Burden Hours: 179.
OMB Control Number: 1513-0031. Type of Review: Revision of a currently approved collection.
Title: Specific and Continuing Transportation Bond--Distilled Spirits or Wines Withdrawn for Transportation to Manufacturing Bonded Warehouse--Class Six.
Form: TTB F 5100.12, TTB F 5110.67.
Abstract: The IRC at 26 U.S.C. 5214(a)(6) and 5362(c)(4) authorizes the transfer without payment of tax of, respectively, distilled spirits and wine from a bonded premises to certain customs bonded warehouses. Under 19 U.S.C. 1311, bonds are required for such transfers to protect the revenue. In order to provide proprietors of manufacturing bonded warehouses with operational flexibility based on individual need, TTB allows the filing of either a specific bond to cover a single shipment, using form TTB F 5100.12, or a continuing bond to cover multiple shipments, using form TTB F 5110.67.
Estimated Total Annual Burden Hours: 50.
OMB Control Number: 1513-0061. Type of Review: Extension of a currently approved collection.
Title: Letterhead Applications and Notices Relating to Denatured Spirits (TTB REC 5150/2).
Abstract: Under the IRC at 26 U.S.C. 5214, denatured spirits (alcohol to which denaturants have been added to render it unfit for beverage purposes) may be withdrawn from distilled spirits plants free of tax for nonbeverage industrial purposes in the manufacture of personal and household products. Since it is possible to recover potable alcohol from denatured spirits and articles made with denatured spirits, a comprehensive system of controlling denatured spirits and articles made with denatured spirits is imposed by the IRC at 26 U.S.C. 5271-5275. In order to protect the revenue and public safety, these IRC sections and their implementing regulations in 27 CFR part 20 require an application and permit to withdraw and use specially denatured spirits, and require formulas, recordkeeping, reporting, and other operational procedures.
Affected Public: Businesses or other for-profits; Not-for-profit institutions; State, local or tribal governments.
Estimated Total Annual Burden Hours: 1,890.
OMB Control Number: 1513-0071. Type of Review: Revision of a currently approved collection.
Title: Tobacco Products Importer or Manufacturer--Records of Large Cigar Wholesale Prices (TTB REC 5230/1).
Abstract: The IRC, at 26 U.S.C. 5701, imposes a federal excise tax on large cigars based on a percentage of the price for which such cigars are sold by the manufacturer or importer. Pursuant to the authority provided by the IRC at 26 U.S.C. 5741 to require recordkeeping, TTB has prescribed by regulation that manufacturers and importers maintain a list of large cigar sale prices. This provides TTB a means of verifying that the correct amount of tax was determined and ultimately paid by the manufacturer or importer of large cigars.
Estimated Total Annual Burden Hours: 699.
OMB Control Number: 1513-0127. Type of Review: Revision of a currently approved collection.
Title: Petitions to Establish or Modify American Viticultural Areas.
Abstract: Under the Federal Alcohol Administration Act at 27 U.S.C. 205(e), TTB regulates the use of applications of origin on wine labels, including the use of American viticultural area (AVA) names. Based on petitions submitted by interested parties, TTB establishes new AVAs or modifies existing AVAs through the rulemaking process. The TTB regulations in 27 CFR part 9 specify the information that must be included in such petitions so that TTB is able to evaluate the petitioner's proposal and determine if it meets TTB's regulatory requirements for creating a new AVA or amending the name, boundary, or other terms of an existing AVA.
Affected Public: Businesses or other for-profits; Farms.
Estimated Total Annual Burden Hours: 1,950.
OMB Control Number: 1513-NEW. Type of Review: New collection (request for a new OMB control number).
Title: Alternate Method--Automated Commercial Environment (ACE) and Partner Government Agency Message Set for Imports Regulated by the Alcohol and Tobacco Tax and Trade Bureau.
Abstract: TTB administers several provisions of the U.S. Code that relate to the importation of alcohol beverages, industrial spirits, tobacco products, processed tobacco, and cigarette papers and tubes. The International Trade Data System (ITDS) is an interagency program to establish a single electronic access point through which importers and exporters may submit the data required by Federal government agencies for importation and exportation. The Security and Accountability for Every Port Act (SAFE Port Act) (Pub. L. 109-347) of 2006 mandated participation in ITDS for all agencies that require documentation for clearing or licensing the importation and exportation of cargo.
The Automated Commercial Environment (ACE) provides a "single window" that allows importers and exporters to enter one set of data for each shipment of imported or exported goods. The TTB Partner Government Agency (PGA) Message Set defines the TTB-specific information that importers may submit electronically through ACE to meet TTB requirements.
With regard to imports, TTB intends to issue an alternate method to allow importers to submit the TTB PGA Message Set electronically, in lieu of submitting paper documents to U.S. Customs and Border Protection (CBP) at importation. This information collection covers the data that would be submitted electronically through ACE under that alternate method. Most of the information that the alternate method will require importers to submit through ACE is already required by TTB's regulations. However, there are some additional requirements. For example, importers who are required to have a TTB permit number will submit their TTB permit number when filing electronically in ACE. In general, importers of TTB-regulated commodities are required to obtain a permit from TTB, but they have not previously been required by regulation to file that number with CBP. The information collected under this information collection appears in the "ACE Filing Instructions for TTB-Regulated Commodities" available at www.cbp.gov.
Estimated Total Annual Burden Hours: 36,838.
SECTION 1. SHORT TITLE. This Act may be cited as the "Biodiesel Tax Incentive Reform and Extension Act of 2016"
SEC. 2. REFORM OF BIODIESEL TAX INCENTIVES.
"SEC. 40A. BIODIESEL FUELS CREDIT.
"(2) is used by such taxpayer for any purpose described in paragraph (1).
"(1) IN GENERAL.- In the case of any eligible small biodiesel producer, subsection (a) shall be applied by increasing the dollar amount contained therein by 10 cents.
"(2) LIMITATION.- Paragraph (1) shall only apply with respect to the first 15,000,000 gallons of biodiesel produced by any eligible small biodiesel producer during any taxable year.".
"(II) used by the producer of such mixture as a fuel.
"(ii) SALE OR USE MUST BE IN TRADE OR BUSINESS, ETC.- A biodiesel mixture shall not be treated as a qualified biodiesel mixture unless the sale or use described in clause (i) is in a trade or business of the person producing the biodiesel mixture.
"(B) BIODIESEL MIXTURE.- The term 'biodiesel mixture' means a mixture which consists of biodiesel and diesel fuel (as defined in section 4083(a)(3)), determined without regard to any use of kerosene.
"(B) any person uses such biodiesel for a purpose not described in subsection (a), then there is hereby imposed on such person a tax equal to the product of the rate applicable under subsection (a) and the number of gallons of such biodiesel.
"(4) PASS-THRU IN THE CASE OF ESTATES AND TRUSTS.- Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply.
"(A) IN GENERAL.- No credit shall be determined under subsection (a) with respect to biodiesel unless such biodiesel is produced in the United States from qualified feedstocks. For purposes of this paragraph, the term 'United States' includes any possession of the United States.
"(B) QUALIFIED FEEDSTOCKS.- For purposes of subparagraph (A), the term 'qualified feedstock' means any feedstock which is allowable for a fuel that is assigned a D code of 4 under section 80.1426(f) of title 40, Code of Federal Regulations.".
(iii) by striking "subsection (a)(3)" each place it appears in paragraphs (5)(A), (6)(A)(i), and (6)(B)(i) and inserting "subsection (b)".
(B) The heading for subsection (e) of section 40A [26 USCS § 40A] of such Code is amended by striking "AGRI-BIODIESEL" and inserting "BIODIESEL".
(C) The headings for paragraphs (1) and (6) of section 40A(e) [26 USCS § 40A] of such Code are each amended by striking "AGRI-BIODIESEL" and inserting "BIODIESEL".
"(iii) meets the requirements for any Grade No. 1-D fuel or Grade No. 2-D fuel covered under the American Society for Testing and Materials specification D-975-13a.
"(iii) any fuel that is not chemically equivalent to petroleum diesel fuels that can meet fuel quality specifications applicable to diesel fuel, gasoline, or aviation fuel.
"(C) BIOMASS.- For purposes of this paragraph, the term 'biomass' has the meaning given such term by section 45K(c)(3).".
"(4) CERTAIN AVIATION FUEL.- Except as provided paragraph (3)(B), the term 'renewable diesel' shall include fuel derived from biomass which meets the requirements of a Department of Defense specification for military jet fuel or an American Society for Testing and Materials specification for aviation turbine fuel.".
(5) EXTENSION.- Subsection (g) of section 40A [26 USCS § 40A] of such Code is amended by striking "December 31, 2016" and inserting "December 31, 2019".
"Sec. 40A. Biodiesel fuels credit.".
"(B) is used by such taxpayer for any purpose described in subparagraph (A).
"(3) TERMINATION.- This subsection shall not apply to any sale, use, or removal after December 31, 2019.".
(2) PRODUCER REGISTRATION REQUIREMENT.- Subsection (a) of section 6426 [26 USCS § 6426] of such Code is amended by striking "subsections (d) and (e)" in the flush sentence at the end and inserting "subsections (c), (d), and (e)".
"(2) BIODIESEL.- If any credit was determined under this section or paid pursuant to section 6427(e) with respect to the production of any biodiesel and any person uses such biodiesel for a purpose not described in subsection (c)(1), then there is hereby imposed on such person a tax equal to $1 for each gallon of such biodiesel.".
(B) CONFORMING AMENDMENTS.- (i) Paragraph (3) of section 6426(f) [26 USCS § 6426] of such Code, as redesignated by subparagraph (A)(iii), is amended by inserting "or (2)" after "paragraph (1)".
(ii) The heading for paragraph (1) of section 6426(f) [26 USCS § 6426] of such Code is amended by striking "IMPOSITION OF TAX" and inserting "IN GENERAL".
"(3) BIODIESEL.- No credit shall be determined under subsection (a) with respect to biodiesel unless such biodiesel is produced in the United States from qualified feedstocks (as defined in section 40A(d)(5)(B)).".
(A) The heading of section 6426 [26 USCS § 6426] of such Code is amended by striking "ALCOHOL FUEL, BIODIESEL, AND ALTERNATIVE FUEL MIXTURES" and inserting "ALCOHOL FUEL MIXTURES, BIODIESEL PRODUCTION, AND ALTERNATIVE FUEL MIXTURES".
(B) The item relating to section 6426 in the table of sections for subchapter B of chapter 65 of such Code is amended by striking "alcohol fuel, biodiesel, and alternative fuel mixtures" and inserting "alcohol fuel mixtures, biodiesel production, and alternative fuel mixtures".
(B) by striking "December 31, 2016" and inserting "December 31, 2019".
(d) GUIDANCE.- Not later than 30 days after the date of the enactment of this Act, the Secretary of the Treasury, or the Secretary's delegate, shall issue preliminary guidance with respect to the amendments made by this subsection.
(e) EFFECTIVE DATE.- The amendments made by this section shall apply to fuel sold or used after December 31, 2016.
Don't wait to the last minute. If you have 2015 biodiesel or alternative fuel claims and want to file it on Form 8849 you only have until August 8, 2016. Review IRS Notice 2016 - 05 for details.
define a highway vehicle, and among other items address the reorganization and restatement of the retail tax on tractors, trailers, and trucks, clarifies chassis characterization, and reflects a change to tread rubber, inner tubes, and the determination of a tire’s weight, among other information. The IRS is accepting comments and requests for a public hearing.
A federal excise tax exemption is available for taxable fuel liquids that are used in a non-highway purpose. As a reminder, a vehicle that is registered or required to be registered for highway use under the law of any state, the District of Columbia does not meet the non-highway exemption provision.
In conclusion, any vehicle that is registered or required to be registered invalidates the non-highway use exemption. Furthermore, alternative fuels (e.g., CNG, propane, or liquid derived from biomass) used in a registered or required to be registered vehicle are taxable even if the vehicle’s use is primarily off-road (e.g., internal facility use).
Per IRS Notice 2016-15, a registered terminal operator (within the meaning of §48.4081-1), may now request the SAT designation for an airport terminal. The terminal, restricted to authorized vehicles only, must receive, store, and remove kerosene for the exclusive delivery into the fuel tank of an aircraft. Read the IRS Notice for additional information.
IR-2016-23 states in part: "The Internal Revenue Service today warned taxpayers to avoid schemes to erroneously claim tax credits on their returns, which is on the annual list of tax scams known as the “Dirty Dozen” again for the 2016 filing season. IR-2016-22 included the following: "The fuel tax credit is generally limited to off-highway business use or use in farming. Consequently, the credit is not available to most taxpayers."
Please keep in mind that a fuel tax claim is not permitted for any vehicle that is registered or "required to be registered" regardless of the amount of off-highway business use.
The IRS has issued Notice 2016-05 that allows for a one-time 2015 claim for IRC 6426(c) - biodiesel (including renewable diesel) mixture credit, IRC 6426(d) - alternative fuel credit, and IRC 6427(e) biodiesel (including renewable diesel) mixture or alternative fuel credit.
Claimants must use Form 8849, Claim for Refund of Excise Taxes, along with Schedule 3 (Form 8849), Certain Fuel Mixtures and the Alternative Fuel Credit. Be careful to include all 2015 transactions in the claim as the Notice states that all 2015 biodiesel and alternative fuel incentives must be on a single Form 8849. Do not include any 2016 transactions on the 2015 claim. Furthermore, a Form 637 Activity Letter "AL" or "AM" registration (depending on claim type) is required for alternative fuel claims. If you are not registered submit Form 637, Application for Registration (For Certain Excise Tax Activities), as soon as possible as it takes a bit of time to get registered. As a side note, biodiesel and renewable diesel producers or importers require a Form 637 Activity Letter "AB" or "NB" registration (depending on product type). Claimants have until August 8, 2016 to submit a 2015 claim for the above referenced code sections.
To file an IRC §6426(e) alternative fuel mixture claim you must amend Form 720, Quarterly Federal Excise Tax Return, with Form 720X, Amended Quarterly Federal Excise Tax Return. The amount of the credit can not exceed the IRC §4081 tax reported on the original return. And, according to the IRS Notice you must first file a 2015 4th Quarter Form 720 and then submit Form 720X to request a credit. Do not attempt to include the credit on your 2015 4th quarter Form 720 return.
The IRS Notice warns that failure to remit payment for the taxes due on the 4th quarter return will increase the risk of processing delays. In most cases you probably already made estimated tax payments for most of the 4th quarter. It probably makes sense to follow normal reporting and payment procedures to keep the bookkeeping straight and then submit the Form 720X credit after the original has been processed. (Note - Form 720X allows claimants to adjust multiple quarters on a single Form 720X.) In general, if you timely filed and paid the tax on your Form 720 you have 3 years from the time the tax return was due to amend the return and submit an IRC §6426(e ) alternative fuel mixture credit.
As a friendly reminder, please do not rely on this post for preparing or submitting a claim. Download Notice 2016-05 at irs.gov for the proper claim filing procedures.
The IRS provides a number of ways to request advice. Here is a summary of different forms and associated 2016 fees.
Letter Ruling - This is a written determination to a taxpayer’s specific set of facts prior to the return or report being filed. A letter ruling may be revoked or modified unless a closing agreement is a component of the determination, (excluding the presence of fraud, malfeasance, or material misrepresentation). In general, the fee for a letter ruling is $$28,300.
Closing Agreement - This is a final arrangement between a taxpayer and the IRS for a specific issue or liability. A closing agreement may be requested with a letter ruling or in lieu of a letter ruling. The fee is $28,300.
Determination Letter - A Director will issue a determination on a specific set of facts. This letter is available only when a conclusion can be clearly established from statutes, tax treaty, regulations, revenue rulings, or an opinion or court decision. The fee is $275.
Information Letter – The IRS issues a statement from well-established interpretations of tax law. The information letter request may not include specific facts. There is no fee for an information letter.
Oral Guidance - Verbal guidance can come in a variety of ways and from different personnel. This form of guidance is considered advisory only and is not binding on the IRS. There is no fee for verbal guidance.
Excise tax registrations are required by federal and state agencies. I know, I know, it’s a burden. I’ve heard it from many of you during my IRS career. Frustration can abound from awareness to the invasive application and review process. And, lest we forget penalties such as the one imposed under IRC §6719 that is $10,000 for each initial failure to register or reregister plus $1,000 a day thereafter such person fails to register or reregister.
I completely understand the lack of enthusiasm for these programs but it is important to understand that government agencies could not effectively administer tax and claim/credit programs without them. Now that we got that out of the way, the best way to deal with registrations is to embrace the concept, be aware of your responsibilities, and follow government agency policies and procedures, (which by the way should include a regular review of the registration terms and conditions).
Ethanol or Biodiesel Mixed at the Rack?
If you pull blended taxable fuel such as E10 or B5 from a taxable fuel terminal, you need to ask the terminal operator how the fuel is blended. If the blend is created in the loading arm where pure ethanol (E00) or biodiesel (B00) is blended with taxable fuel (e.g., gasoline or diesel), and it is purchased from 2 distinct position holders, that fuel is considered to be splash blended outside the bulk transfer/terminal system. In this case the person that owns the blended product immediately after the load arm blending is considered the blender and responsible for the tax on the E00 or B00. They would also have to hold an IRS Form 637 - Activity Letter M registration.
H.R.2029 - Consolidated Appropriations Act, 2016, SEC. 185. Extension of biodiesel and renewable diesel incentives was signed by the President on 12/18/2015 that extends excise tax incentives under Section 6426(c)(6), biodiesel, and alternative fuel mixtures and Section 6427(e)(6)(B), biodiesel, or alternative fuel, to December 31, 2016.
SPECIAL RULE FOR 2015.— The Secretary of the Treasury (or the Secretary’s delegate) shall issue guidance within 30 days of enactment (12/18/2015) that will provide instruction for a one-time 2015 claim submission. The Secretary's guidance shall provide a 180-day period for a claim submission to begin not later than 30 days after the guidance is issued. The claims shall be paid by within 60 days after receipt. If the IRS does not pay a valid claim within the 60 day requirement interest will be paid from such date determined by using the overpayment rate and method under section 6621 of such Code.
The IRS Notice warns that failure to remit payment for the taxes due on the 4th quarter return will increase the risk of processing delays. In most cases you probably already made estimated tax payments for most of the 4th quarter. It probably makes sense to follow normal reporting and payment procedures to keep the bookkeeping straight and then submit the Form 720X credit after the original has been processed. (Note - Form 720X allows claimants to adjust multiple quarters on a single Form 720X.) In general, if you timely filed and paid the tax on your Form 720 you have 3 years from the time the tax return was due to amend the return and submit an IRC §6426(e) alternative fuel mixture credit.
As a friendly reminder, please do not rely on this post for preparing or submitting a claim. Download Notice 2016-05 for the proper claim filing procedures. Should you have additional questions or need claim preparation or submission assistance contact excisetaxhelp.com. Thank you and good luck!
H.R.2029 - Consolidated Appropriations Act, 2016, SEC. 185. Extension of biodiesel and renewable diesel incentives was signed by the President on 12/18/2015. It extends excise tax incentives under Section 6426(c)(6), biodiesel, and alternative fuel mixtures and Section 6427(e)(6)(B), biodiesel, or alternative fuel, to December 31, 2016.
Excise tax is a unique area of taxation, that imposes tax, information reporting, and registration requirements on certain manufacturers, sales, and consumers of specific products and services. Failure to meet excise tax laws may result in significant tax, penalty assessments, or registration denial/revocation. I've worked in excise tax as an IRS Revenue Agent and Sr. Fuel Policy Analyst. I then did a short stint with EY, a public accounting firm, but felt too restricted to provide full value so I resigned from EY to start my own business. The information provided in this website is provided for discussion purposes only and not to be cited as professional advice. As I stated above, excise tax is a unique area of taxation. Any decision relating to tax imposition and reporting, or registration requirements needs analysis of all the facts and circumstances surrounding specific transactions. If you have an excise tax question or matter that has you scratching your head, please contact me and let me help you.
Understand and Maintain Your Registrations!
Excise tax registrations are required by federal and state agencies. I know, I know, it’s a burden. I’ve heard it from many of you when I worked at the IRS. Frustration can abound from just being aware of the requirements to the invasive nature of the application and review process. And, lest we forget about associated penalties such as IRC §6719 that prescribes $10,000 for each initial failure to register or reregister plus $1,000 a day thereafter such person fails to register or reregister.
I completely understand the lack of enthusiasm toward these programs but it is important to understand that government agencies could not effectively administer tax and claim/credit programs without registering participants.
Now that we got that out of the way, the best way to deal with registrations is to embrace the concept! That's right, be aware of your responsibilities and follow government agency policies and procedures, (which by the way should include a regular review of the registration terms and conditions).
As a review of the IRS process, here is a nice overview of the Form 637 Registration Program described in the IRS Internal Revenue Manual (IRM) Section 4.24.2.1.
Click on image for printable version that includes IRS IRM 4.24.2.1 information.
fractional program aircraft used in noncommercial aviation.
removed for consumption or sale, within the United States, or imported into the United States.
- FET imposed on a person who is engaged in the business of accepting wagers.
- FET imposed on coal mined in the United States sold by producer.
annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer.
(e.g., camper coaches bodies, Feed, seed, fertilizer equipment, House trailers, mobile machinery).
- Heavy vehicle tax >55,000 Ibs Highway vehicle tax per vehicle per year (Form 2290) that begins July 1.
specific chemical as a component of the product.
initial infraction and $1,000 per day until registered.
- FET imposed on manufacturer or importer of certain sales of sport fishing equipment, bows, and arrows.
- FET imposed on the amount paid for tanning services, whether paid by insurance or otherwise.
- FET imposed on bulk transfer/terminal storage transactions (i.e., refinery, terminal, pipeline, and vessel).
transfer/terminal storage title transfers to unregistered position holders.
- Terminal and carrier (vessel and pipeline) operators have ExSTARS reporting requirement.
- FET (with certain exceptions) imposed on taxable tires sold by manufacturer, producer, or importer.
- FET on manufacturer, producer, or importer - only certain vaccines subject to tax.
during which passengers embark or disembark the vessel in the United States.

References: § 4051
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 § 145
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 § 4052
 § 4052
 § 4051
 § 4052
 § 1
 § 40
 § 40
 § 40
 § 6426
 § 6426
 § 6426
 § 6426
 §48
 §6426
 §4081
 §6426
 §6719
 §6426
 §6719