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2011 Tax Forms Ez

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2011 Tax Forms Ez

2011 tax forms ez 14. 2011 tax forms ez   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Fuels Used in FarmingBuyer of fuel, including undyed diesel fuel or undyed kerosene. 2011 tax forms ez Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). 2011 tax forms ez Custom application of fertilizer and pesticide. 2011 tax forms ez Fuel not used for farming. 2011 tax forms ez Dyed Diesel Fuel and Dyed Kerosene Fuels Used in Off-Highway Business Use Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines How To Claim a Credit or RefundCredit only. 2011 tax forms ez Claiming a Credit Claiming a Refund Including the Credit or Refund in Income Introduction You may be eligible to claim a credit on your income tax return for the federal excise tax on certain fuels. 2011 tax forms ez You may also be eligible to claim a quarterly refund of the fuel taxes during the year, instead of waiting to claim a credit on your income tax return. 2011 tax forms ez Whether you can claim a credit or refund depends on whether the fuel was taxed and the purpose (nontaxable use) for which you used the fuel. 2011 tax forms ez The nontaxable uses of fuel for which a farmer may claim a credit or refund are generally the following. 2011 tax forms ez Use on a farm for farming purposes. 2011 tax forms ez Off-highway business use. 2011 tax forms ez Uses other than as a fuel in a propulsion engine, such as home use. 2011 tax forms ez Table 14-1 presents an overview of credits and refunds that may be claimed for fuels used for the nontaxable uses listed above. 2011 tax forms ez See Publication 510, Excise Taxes, for more information. 2011 tax forms ez Topics - This chapter discusses: Fuels used in farming Dyed diesel fuel and dyed kerosene Fuels used in off-highway business use Fuels used for household purposes How to claim a credit or refund Including the credit or refund in income Useful Items - You may want to see: Publication 510 Excise Taxes Form (and Instructions) 720 Quarterly Federal Excise Tax Return 4136 Credit for Federal Tax Paid on Fuels 8849 Claim for Refund of Excise Taxes See chapter 16 for information about getting publications and forms. 2011 tax forms ez Fuels Used in Farming Owners, operators, and tenants of farms and certain other persons may be eligible to claim a credit or refund of excise taxes on fuel used in the trade or business of farming, when used on a farm in the United States for farming purposes. 2011 tax forms ez See Table 14-1 for a list of available fuel tax credits and refunds. 2011 tax forms ez Fuel is used on a farm for farming purposes only if used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. 2011 tax forms ez Farm. 2011 tax forms ez   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms, orchards, plantations, ranches, nurseries, ranges, and feed yards for finishing cattle. 2011 tax forms ez It also includes structures such as greenhouses used primarily for raising agricultural or horticultural commodities. 2011 tax forms ez A fish farm is an area where fish are grown or raised and not merely caught or harvested. 2011 tax forms ez Table 14-1. 2011 tax forms ez Fuel Tax Credits and Refunds at a Glance Use this table to see if you can take a credit or refund for a nontaxable use of the fuel listed. 2011 tax forms ez Fuel Used On a Farm for Farming Purposes Off-Highway Business Use Household Use or Use Other Than as a Fuel1 Gasoline Credit only Credit or refund None Aviation gasoline Credit only None None Undyed diesel fuel and undyed kerosene Credit or refund Credit or refund2 Credit or refund2 Kerosene for use in aviation Credit or refund None None Dyed diesel fuel and dyed kerosene None None None Other Fuels (including alternative fuels)3 Credit or refund Credit or refund None 1For a use other than as fuel in a propulsion engine. 2011 tax forms ez 2Applies to undyed kerosene not sold from a blocked pump or, under certain circumstances, for blending with undyed diesel fuel to be used for heating purposes. 2011 tax forms ez See Reg. 2011 tax forms ez 48. 2011 tax forms ez 6427-10 (b)(1) for the definition of a blocked pump. 2011 tax forms ez 3Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under Internal Revenue Code section 4081. 2011 tax forms ez It includes the alternative fuels: liquefied petroleum gas (LPG),“P” Series fuels, compressed natural gas (CNG), liquefied hydrogen, any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, liquid fuel derived from biomass, liquid natural gas (LNG), liquefied gas derived from biomass, and compressed gas derived from biomass. 2011 tax forms ez Farming purposes. 2011 tax forms ez   As the owner, tenant, or operator and the ultimate purchaser of fuel that you purchased, you use the fuel on a farm for farming purposes if you use it in any of the following ways. 2011 tax forms ez To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. 2011 tax forms ez To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. 2011 tax forms ez To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. 2011 tax forms ez To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. 2011 tax forms ez For this use to qualify, you must have produced more than half the commodity so treated during the tax year. 2011 tax forms ez The more-than-one-half test applies separately to each commodity. 2011 tax forms ez Commodity means a single raw product. 2011 tax forms ez For example, apples and peaches are two separate commodities. 2011 tax forms ez To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if these activities are incidental to your farming operations. 2011 tax forms ez Your tree operations are incidental only if they are minor in nature when compared to the total farming operations. 2011 tax forms ez   If any other person, such as a neighbor or custom operator (independent contractor), performs a service for you on your farm for any of the purposes included in list items (1) or (2), above, you are considered to be the ultimate purchaser who used the fuel on a farm for farming purposes. 2011 tax forms ez Therefore, you can still claim the credit or refund for the fuel so used. 2011 tax forms ez However, see Custom application of fertilizer and pesticide, later. 2011 tax forms ez If the other person performs any other services for you on your farm for purposes not included in list items (1) or (2) above, no one can claim the credit or refund for fuel used on your farm for those other services. 2011 tax forms ez Buyer of fuel, including undyed diesel fuel or undyed kerosene. 2011 tax forms ez   If doubt exists whether the owner, tenant, or operator of the farm bought the fuel, determine who actually bore the cost of the fuel. 2011 tax forms ez For example, if the owner of a farm and his or her tenant equally share the cost of gasoline used on the farm, each can claim a credit for the tax on half the fuel used. 2011 tax forms ez Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). 2011 tax forms ez   Usually, the farmer is the only person who can make a claim for credit or refund for the tax on undyed diesel fuel, undyed kerosene, or other fuels (including alternative fuel) used for farming purposes. 2011 tax forms ez However, see Custom application of fertilizer and pesticide, next. 2011 tax forms ez Also see Dyed Diesel Fuel and Dyed Kerosene, later. 2011 tax forms ez Example. 2011 tax forms ez Farm owner Haleigh Blue hired custom operator Tyler Steele to cultivate the soil on her farm. 2011 tax forms ez Tyler used 200 gallons of undyed diesel fuel that he purchased to perform the work on Haleigh's farm. 2011 tax forms ez In addition, Haleigh hired contractor Lee Brown to pack and store her apple crop. 2011 tax forms ez Lee bought 25 gallons of undyed diesel fuel to use in packing the apples. 2011 tax forms ez Haleigh can claim the credit for the 200 gallons of undyed diesel fuel used by Tyler on her farm because it qualifies as fuel used on the farm for farming purposes. 2011 tax forms ez No one can claim a credit for the 25 gallons used by Lee because that fuel was not used for a farming purpose included in list items (1) or (2), above. 2011 tax forms ez In the above example, both Tyler Steele and Lee Brown could have purchased dyed (untaxed) diesel fuel for their tasks. 2011 tax forms ez Custom application of fertilizer and pesticide. 2011 tax forms ez   Fuel used on a farm for farming purposes includes fuel used in the application (including aerial application) of fertilizer, pesticides, or other substances. 2011 tax forms ez Generally, the applicator is treated as having used the fuel on a farm for farming purposes. 2011 tax forms ez For applicators using highway vehicles, only the fuel used on the farm is exempt. 2011 tax forms ez Fuel used traveling on the highway to and from the farm is taxable. 2011 tax forms ez Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as used for a farming purpose. 2011 tax forms ez For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. 2011 tax forms ez For kerosene used in aviation, the ultimate purchaser may make the claim or waive the right to make the claim to the registered ultimate vendor. 2011 tax forms ez A sample waiver is included as Model Waiver L in the appendix of Publication 510. 2011 tax forms ez A registered ultimate vendor is the person who sells undyed diesel fuel, undyed kerosene, or kerosene for use in aviation to the user (ultimate purchaser) of the fuel for use on a farm for farming purposes. 2011 tax forms ez To claim a credit or refund of tax, the ultimate vendor must be registered with the Internal Revenue Service at the time the claim is made. 2011 tax forms ez However, registered ultimate vendors cannot make claims for undyed diesel fuel and undyed kerosene sold for use on a farm for farming purposes. 2011 tax forms ez Fuel not used for farming. 2011 tax forms ez   You do not use fuel on a farm for farming purposes when you use it in any of the following ways. 2011 tax forms ez Off the farm, such as on the highway or in noncommercial aviation, even if the fuel is used in transporting livestock, feed, crops, or equipment. 2011 tax forms ez For personal use, such as lawn mowing. 2011 tax forms ez In processing, packaging, freezing, or canning operations. 2011 tax forms ez In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. 2011 tax forms ez All-terrain vehicles (ATVs). 2011 tax forms ez   Fuel used in ATVs on a farm for farming purposes, discussed earlier, is eligible for a credit or refund of excise taxes on the fuel. 2011 tax forms ez Fuel used in ATVs for nonfarming purposes is not eligible for a credit or refund of the taxes. 2011 tax forms ez If ATVs are used both for farming and nonfarming purposes, only that portion of the fuel used for farming purposes is eligible for the credit or refund. 2011 tax forms ez Dyed Diesel Fuel and Dyed Kerosene If you purchase dyed diesel fuel or dyed kerosene for a nontaxable use, you must use it only on a farm for farming purposes or for other nontaxable purposes. 2011 tax forms ez For example, you should not use dyed diesel fuel in a truck that is used both on the farm for farming purposes and on the highway, even though the highway use is in connection with farm business. 2011 tax forms ez Excise tax applies to the fuel used by the truck on the highways. 2011 tax forms ez In this situation, undyed (taxed) fuel should be purchased for the truck. 2011 tax forms ez You should keep fuel records of the use of the truck on the farm for farming purposes, and for other uses. 2011 tax forms ez You may be eligible for a credit or refund for the excise tax on fuel used on the farm for farming purposes. 2011 tax forms ez Penalty. 2011 tax forms ez   A penalty is imposed on any person who knowingly uses, sells, or alters dyed diesel fuel or dyed kerosene for any purpose other than a nontaxable use. 2011 tax forms ez The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. 2011 tax forms ez After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. 2011 tax forms ez For more information on this penalty, see Publication 510. 2011 tax forms ez Fuels Used in Off-Highway Business Use You may be eligible to claim a credit or refund for the excise tax on fuel used in an off-highway business use. 2011 tax forms ez Off-highway business use. 2011 tax forms ez   This is any use of fuel in a trade or business or in an income-producing activity. 2011 tax forms ez The use must not be in a highway vehicle registered or required to be registered for use on public highways. 2011 tax forms ez Off-highway business use generally does not include any use in a recreational motorboat. 2011 tax forms ez Examples. 2011 tax forms ez   Off-highway business use includes the use of fuels in a trade or business in any of the following ways. 2011 tax forms ez In stationary machines such as generators, compressors, power saws, and similar equipment; For cleaning ; and In forklift trucks, bulldozers, and earthmovers. 2011 tax forms ez   Off-highway nonbusiness (taxable) use of fuel includes: use in minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. 2011 tax forms ez For more information, see Publication 510. 2011 tax forms ez Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines You may be eligible to claim a credit or refund for the excise tax on undyed diesel fuel or kerosene used for home heating, lighting, and cooking. 2011 tax forms ez This also applies to diesel fuel and kerosene used in a home generator to produce electricity for home use. 2011 tax forms ez Home use of a fuel does not include use in a propulsion engine and it is not considered an off-highway business use. 2011 tax forms ez How To Claim a Credit or Refund You may be able to claim a credit or refund of the excise tax on fuels you use for nontaxable uses. 2011 tax forms ez The basic rules for claiming credits and refunds are listed in Table 14-2 . 2011 tax forms ez Table 14-2. 2011 tax forms ez Claiming a Credit or Refund of Excise Taxes This table gives the basic rules for claiming a credit or refund of excise taxes on fuels used for a nontaxable use. 2011 tax forms ez   Credit Refund Which form to use Form 4136, Credit for Federal Tax Paid on Fuels Form 8849, Claim for Refund of Excise Taxes, and Schedule 1 (Form 8849), Nontaxable Use of Fuels Type of form Annual Quarterly When to file With your income tax return By the last day of the quarter following the last quarter included in the claim Amount of tax Any amount $750 or more1 1You may carry over an amount less than $750 to the next quarter. 2011 tax forms ez Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. 2011 tax forms ez You do not have to use any special form, but the records should establish the following information. 2011 tax forms ez The total number of gallons bought and used during the period covered by your claim. 2011 tax forms ez The dates of the purchases. 2011 tax forms ez The names and addresses of suppliers and amounts bought from each during the period covered by your claim. 2011 tax forms ez The nontaxable use for which you used the fuel. 2011 tax forms ez The number of gallons used for each nontaxable use. 2011 tax forms ez It is important that your records separately show the number of gallons used for each nontaxable use that qualifies as a claim. 2011 tax forms ez For more information about recordkeeping, see Publication 583, Starting a Business and Keeping Records. 2011 tax forms ez Credit or refund. 2011 tax forms ez   A credit is an amount that reduces the tax on your income tax return when you file it at the end of the year. 2011 tax forms ez If you meet certain requirements, you may claim a refund during the year instead of waiting until you file your income tax return. 2011 tax forms ez Credit only. 2011 tax forms ez   You can claim the following taxes only as a credit on your income tax return. 2011 tax forms ez Tax on gasoline and aviation gasoline you used on a farm for farming purposes. 2011 tax forms ez Tax on fuels (including undyed diesel fuel or undyed kerosene) you used for nontaxable uses if the total for the tax year is less than $750. 2011 tax forms ez Tax on fuel you did not include in any claim for refund previously filed for any quarter of the tax year. 2011 tax forms ez Claiming a Credit You make a claim for a fuel tax credit on Form 4136 and attach it to your income tax return. 2011 tax forms ez Do not claim a credit for any excise tax for which you have filed a refund claim. 2011 tax forms ez How to claim a credit. 2011 tax forms ez   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, trust, or farmers' cooperative association. 2011 tax forms ez Individuals. 2011 tax forms ez   You claim the credit on the “Credit for federal tax on fuels” line of your Form 1040. 2011 tax forms ez If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. 2011 tax forms ez Partnership. 2011 tax forms ez   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 2011 tax forms ez , showing each partner's share of the number of gallons of each fuel sold or used for a nontaxable use, the type of use, and the applicable credit per gallon. 2011 tax forms ez Each partner claims the credit on his or her income tax return for the partner's share of the fuel used by the partnership. 2011 tax forms ez An electing large partnership can claim the credit on the “Other payments” line of Form 1065-B, U. 2011 tax forms ez S. 2011 tax forms ez Return of Income for Electing Large Partnerships. 2011 tax forms ez Other entities. 2011 tax forms ez   Corporations, S corporations, farmers' cooperative associations, and trusts make the claim on the appropriate line of their income tax return. 2011 tax forms ez When to claim a credit. 2011 tax forms ez   You can claim a fuel tax credit on your income tax return for the year you used the fuel. 2011 tax forms ez You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. 2011 tax forms ez A claim for credit or refund of an overpayment must generally be filed within the later of: Three years from the date the original return was filed, or Two years from the date the tax was paid. 2011 tax forms ez Claiming a Refund Generally, you may claim a refund of excise taxes on Form 8849. 2011 tax forms ez Complete and attach to Form 8849 the appropriate Form 8849 schedule(s). 2011 tax forms ez The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. 2011 tax forms ez If you file Form 720, you can use its Schedule C for your refund claims for the quarter. 2011 tax forms ez See the Instructions for Form 720. 2011 tax forms ez Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Form 720 or Form 4136. 2011 tax forms ez You may file a claim for refund for any quarter of your tax year for which you can claim $750 or more. 2011 tax forms ez This amount is the excise tax on all fuels used for a nontaxable use during that quarter or any prior quarter (for which no other claim has been filed) during the tax year. 2011 tax forms ez If you cannot claim at least $750 at the end of a quarter, you carry the amount over to the next quarter of your tax year to determine if you can claim at least $750 for that quarter. 2011 tax forms ez If you cannot claim at least $750 at the end of the fourth quarter of your tax year, you must claim a credit on your income tax return using Form 4136. 2011 tax forms ez Only one claim can be filed for a quarter. 2011 tax forms ez You cannot claim a refund for excise tax on gasoline and aviation gasoline used on a farm for farming purposes. 2011 tax forms ez You must claim a credit on your income tax return for the tax. 2011 tax forms ez How to file a quarterly claim. 2011 tax forms ez   File the claim for refund by filling out Schedule 1 (Form 8849) and attaching it to Form 8849. 2011 tax forms ez Send it to the address shown in the instructions. 2011 tax forms ez If you file Form 720, you can use its Schedule C for your refund claims. 2011 tax forms ez See the Instructions for Form 720. 2011 tax forms ez When to file a quarterly claim. 2011 tax forms ez   You must file a quarterly claim by the last day of the first quarter following the last quarter included in the claim. 2011 tax forms ez If you do not file a timely refund claim for the fourth quarter of your tax year, you will have to claim a credit for that amount on your income tax return, as discussed earlier. 2011 tax forms ez    In most situations, the amount claimed as a credit or refund will be less than the amount deducted as fuel tax expense because the Leaking Underground Storage Tank (LUST) tax of $0. 2011 tax forms ez 001 per gallon is generally not subject to credit or refund. 2011 tax forms ez Including the Credit or Refund in Income Include any credit or refund of excise taxes on fuels in your gross income if you claimed the total cost of the fuel (including the excise taxes) as an expense deduction that reduced your income tax liability. 2011 tax forms ez Which year you include a credit or refund in gross income depends on whether you use the cash or an accrual method of accounting. 2011 tax forms ez Cash method. 2011 tax forms ez   If you use the cash method and file a claim for refund, include the refund amount in gross income for the tax year in which you receive the refund. 2011 tax forms ez If you claim a credit on your income tax return, include the credit amount in gross income for the tax year in which you file Form 4136. 2011 tax forms ez If you file an amended return and claim a credit, include the credit amount in gross income for the tax year in which you receive the credit. 2011 tax forms ez Example. 2011 tax forms ez Sharon Brown, a farmer who uses the cash method, filed her 2012 Form 1040 on March 3, 2013. 2011 tax forms ez On her Schedule F, she deducted the total cost of gasoline (including $110 of excise taxes) used on the farm for farming purposes. 2011 tax forms ez Then, on Form 4136, she claimed the $110 as a credit. 2011 tax forms ez Sharon reports the $110 as other income on line 8b of her 2013 Schedule F. 2011 tax forms ez Accrual method. 2011 tax forms ez   If you use an accrual method, include the amount of credit or refund in gross income for the tax year in which you used the fuels. 2011 tax forms ez It does not matter whether you filed for a quarterly refund or claimed the entire amount as a credit. 2011 tax forms ez Example. 2011 tax forms ez Patty Green, a farmer who uses the accrual method, files her 2012 Form 1040 on April 15, 2013. 2011 tax forms ez On Schedule F, she deducts the total cost of gasoline (including $155 of excise taxes) she used on the farm for farming purposes during 2012. 2011 tax forms ez On Form 4136, Patty claims the $155 as a credit. 2011 tax forms ez She reports the $155 as other income on line 8b of her 2012 Schedule F. 2011 tax forms ez Prev  Up  Next   Home   More Online Publications
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The 2011 Tax Forms Ez

2011 tax forms ez 1. 2011 tax forms ez   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. 2011 tax forms ez Gasoline and Aviation GasolineTaxable Events Gasoline Blendstocks Diesel Fuel and KeroseneTaxable Events Dyed Diesel Fuel and Dyed Kerosene Alaska and Feedstocks Back-up Tax Diesel-Water Fuel Emulsion Kerosene for Use in AviationTaxable Events Liability For Tax Surtax on any liquid used in a fractional ownership program aircraft as fuel Certificate for Commercial Aviation and Exempt UsesExempt use. 2011 tax forms ez Reseller statement. 2011 tax forms ez Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. 2011 tax forms ez Deep-draft ocean-going vessels. 2011 tax forms ez Passenger vessels. 2011 tax forms ez Ocean-going barges. 2011 tax forms ez State or local governments. 2011 tax forms ez Cellulosic or Second Generation Biofuel Not Used as Fuel Biodiesel Sold as But Not Used as Fuel Definitions Excise taxes are imposed on all the following fuels. 2011 tax forms ez Gasoline, including aviation gasoline and gasoline blendstocks. 2011 tax forms ez Diesel fuel, including dyed diesel fuel. 2011 tax forms ez Diesel-water fuel emulsion. 2011 tax forms ez Kerosene, including dyed kerosene and kerosene used in aviation. 2011 tax forms ez Other Fuels (including alternative fuels). 2011 tax forms ez Compressed natural gas (CNG). 2011 tax forms ez Fuels used in commercial transportation on inland waterways. 2011 tax forms ez Any liquid used in a fractional ownership program aircraft as fuel. 2011 tax forms ez The following terms are used throughout the discussion of fuel taxes. 2011 tax forms ez Other terms are defined in the discussion of the specific fuels to which they pertain. 2011 tax forms ez Agri-biodiesel. 2011 tax forms ez   Agri-biodiesel means biodiesel derived solely from virgin oils, including esters derived from virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, mustard seeds, and camelina, and from animal fats. 2011 tax forms ez Approved terminal or refinery. 2011 tax forms ez   This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner. 2011 tax forms ez Biodiesel. 2011 tax forms ez   Biodiesel means the monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet the registration requirements for fuels and fuel additives established by the Environmental Protection Agency (EPA) under section 211 of the Clean Air Act, and the requirements of the American Society of Testing Materials (ASTM) D6751. 2011 tax forms ez Blended taxable fuel. 2011 tax forms ez   This means any taxable fuel produced outside the bulk transfer/terminal system by mixing taxable fuel on which excise tax has been imposed and any other liquid on which excise tax has not been imposed. 2011 tax forms ez This does not include a mixture removed or sold during the calendar quarter if all such mixtures removed or sold by the blender contain less than 400 gallons of a liquid on which the tax has not been imposed. 2011 tax forms ez Blender. 2011 tax forms ez   This is the person that produces blended taxable fuel. 2011 tax forms ez Bulk transfer. 2011 tax forms ez   This is the transfer of taxable fuel by pipeline or vessel. 2011 tax forms ez Bulk transfer/terminal system. 2011 tax forms ez   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. 2011 tax forms ez Fuel in the supply tank of any engine, or in any tank car, railcar, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system. 2011 tax forms ez Cellulosic biofuel. 2011 tax forms ez   Cellulosic biofuel means any liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis that meets the registration requirements for fuels and fuel additives established by the EPA under section 211 of the Clean Air Act. 2011 tax forms ez Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). 2011 tax forms ez For fuels sold or used after December 31, 2009, cellulosic biofuel does not include fuel of which more than 4% (determined by weight) is any combination of water and sediment, fuel of which the ash content is more than 1%, or fuel that has an acid number greater than 25. 2011 tax forms ez Also see Second generation biofuel below. 2011 tax forms ez Diesel-water fuel emulsion. 2011 tax forms ez   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. 2011 tax forms ez The emulsion additive used to produce the fuel must be registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. 2011 tax forms ez Dry lease aircraft exchange. 2011 tax forms ez   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. 2011 tax forms ez Enterer. 2011 tax forms ez   This is the importer of record (under customs law) for the taxable fuel. 2011 tax forms ez However, if the importer of record is acting as an agent, such as a customs broker, the person for whom the agent is acting is the enterer. 2011 tax forms ez If there is no importer of record, the owner at the time of entry into the United States is the enterer. 2011 tax forms ez Entry. 2011 tax forms ez   Taxable fuel is entered into the United States when it is brought into the United States and applicable customs law requires that it be entered for consumption, use, or warehousing. 2011 tax forms ez This does not apply to fuel brought into Puerto Rico (which is part of the U. 2011 tax forms ez S. 2011 tax forms ez customs territory), but does apply to fuel brought into the United States from Puerto Rico. 2011 tax forms ez Fractional ownership aircraft program and fractional program aircraft. 2011 tax forms ez   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. 2011 tax forms ez Measurement of taxable fuel. 2011 tax forms ez   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. 2011 tax forms ez Other fuels. 2011 tax forms ez   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. 2011 tax forms ez Pipeline operator. 2011 tax forms ez   This is the person that operates a pipeline within the bulk transfer/terminal system. 2011 tax forms ez Position holder. 2011 tax forms ez   This is the person that holds the inventory position in the taxable fuel in the terminal, as reflected in the records of the terminal operator. 2011 tax forms ez You hold the inventory position when you have a contractual agreement with the terminal operator for the use of the storage facilities and terminaling services for the taxable fuel. 2011 tax forms ez A terminal operator that owns taxable fuel in its terminal is a position holder. 2011 tax forms ez Rack. 2011 tax forms ez   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. 2011 tax forms ez Refiner. 2011 tax forms ez   This is any person that owns, operates, or otherwise controls a refinery. 2011 tax forms ez Refinery. 2011 tax forms ez   This is a facility used to produce taxable fuel and from which taxable fuel may be removed by pipeline, by vessel, or at a rack. 2011 tax forms ez However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. 2011 tax forms ez For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. 2011 tax forms ez Registrant. 2011 tax forms ez   This is a taxable fuel registrant (see Registration Requirements, later). 2011 tax forms ez Removal. 2011 tax forms ez   This is any physical transfer of taxable fuel. 2011 tax forms ez It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. 2011 tax forms ez However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. 2011 tax forms ez Renewable diesel. 2011 tax forms ez   See Renewable Diesel Credits in chapter 2. 2011 tax forms ez Sale. 2011 tax forms ez   For taxable fuel not in a terminal, this is the transfer of title to, or substantial incidents of ownership in, taxable fuel to the buyer for money, services, or other property. 2011 tax forms ez For taxable fuel in a terminal, this is the transfer of the inventory position if the transferee becomes the position holder for that taxable fuel. 2011 tax forms ez Second generation biofuel. 2011 tax forms ez   This is any liquid fuel derived by, or from, qualified feedstocks, and meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U. 2011 tax forms ez S. 2011 tax forms ez C. 2011 tax forms ez 7545). 2011 tax forms ez It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. 2011 tax forms ez It is not alcohol of less than 150 proof (disregard any added denaturants). 2011 tax forms ez See Form 6478 for more information. 2011 tax forms ez State. 2011 tax forms ez   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. 2011 tax forms ez An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. 2011 tax forms ez Taxable fuel. 2011 tax forms ez   This means gasoline, diesel fuel, and kerosene. 2011 tax forms ez Terminal. 2011 tax forms ez   This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. 2011 tax forms ez It does not include a facility at which gasoline blendstocks are used in the manufacture of products other than finished gasoline if no gasoline is removed from the facility. 2011 tax forms ez A terminal does not include any facility where finished gasoline, diesel fuel, or kerosene is stored if the facility is operated by a registrant and all such taxable fuel stored at the facility has been previously taxed upon removal from a refinery or terminal. 2011 tax forms ez Terminal operator. 2011 tax forms ez   This is any person that owns, operates, or otherwise controls a terminal. 2011 tax forms ez Throughputter. 2011 tax forms ez   This is any person that is a position holder or that owns taxable fuel within the bulk transfer/terminal system (other than in a terminal). 2011 tax forms ez Vessel operator. 2011 tax forms ez   This is the person that operates a vessel within the bulk transfer/terminal system. 2011 tax forms ez However, vessel does not include a deep draft ocean-going vessel. 2011 tax forms ez Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. 2011 tax forms ez A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. 2011 tax forms ez For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. 2011 tax forms ez The returns are due the last day of the month following the month in which the transaction occurs. 2011 tax forms ez Generally, these returns can be filed on paper or electronically. 2011 tax forms ez For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. 2011 tax forms ez Publication 3536 is only available on the IRS website. 2011 tax forms ez Form 720-TO. 2011 tax forms ez   This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. 2011 tax forms ez Each terminal operator must file a separate form for each approved terminal. 2011 tax forms ez Form 720-CS. 2011 tax forms ez   This information return must be filed by bulk transport carriers (barges, vessels, and pipelines) who receive liquid product from an approved terminal or deliver liquid product to an approved terminal. 2011 tax forms ez Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. 2011 tax forms ez See Form 637 for other persons who must register and for more information about registration. 2011 tax forms ez Persons that are required to be registered. 2011 tax forms ez   You are required to be registered if you are a: Blender; Enterer; Pipeline operator; Position holder; Refiner; Terminal operator; Vessel operator; Producer or importer of alcohol, biodiesel, agri-biodiesel, and renewable diesel; or Producer of cellulosic or second generation biofuel. 2011 tax forms ez Persons that may register. 2011 tax forms ez   You may, but are not required to, register if you are a: Feedstock user, Industrial user, Throughputter that is not a position holder, Ultimate vendor, Diesel-water fuel emulsion producer, Credit card issuer, or Alternative fuel claimant. 2011 tax forms ez Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. 2011 tax forms ez However, they must be registered to file claims for certain sales and uses of fuel. 2011 tax forms ez See Form 637 for more information. 2011 tax forms ez Taxable fuel registrant. 2011 tax forms ez   This is an enterer, an industrial user, a refiner, a terminal operator, or a throughputter who received a Letter of Registration under the excise tax registration provisions and whose registration has not been revoked or suspended. 2011 tax forms ez The term registrant as used in the discussions of these fuels means a taxable fuel registrant. 2011 tax forms ez Additional information. 2011 tax forms ez   See the Form 637 instructions for the information you must submit when you apply for registration. 2011 tax forms ez Failure to register. 2011 tax forms ez   The penalty for failure to register if you must register, unless due to reasonable cause, is $10,000 for the initial failure, and then $1,000 each day thereafter you fail to register. 2011 tax forms ez Gasoline and Aviation Gasoline Gasoline. 2011 tax forms ez   Gasoline means all products commonly or commercially known or sold as gasoline with an octane rating of 75 or more that are suitable for use as a motor fuel. 2011 tax forms ez Gasoline includes any gasoline blend other than: Qualified ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from coal, including peat), Partially exempt ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from natural gas), or Denatured alcohol. 2011 tax forms ez Gasoline also includes gasoline blendstocks, discussed later. 2011 tax forms ez Aviation gasoline. 2011 tax forms ez   This means all special grades of gasoline suitable for use in aviation reciprocating engines and covered by ASTM specification D910 or military specification MIL-G-5572. 2011 tax forms ez Taxable Events The tax on gasoline is $. 2011 tax forms ez 184 per gallon. 2011 tax forms ez The tax on aviation gasoline is $. 2011 tax forms ez 194 per gallon. 2011 tax forms ez When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. 2011 tax forms ez 141 per gallon. 2011 tax forms ez See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. 2011 tax forms ez Tax is imposed on the removal, entry, or sale of gasoline. 2011 tax forms ez Each of these events is discussed later. 2011 tax forms ez Also, see the special rules that apply to gasoline blendstocks, later. 2011 tax forms ez If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. 2011 tax forms ez See Refunds of Second Tax in chapter 2. 2011 tax forms ez Removal from terminal. 2011 tax forms ez   All removals of gasoline at a terminal rack are taxable. 2011 tax forms ez The position holder for that gasoline is liable for the tax. 2011 tax forms ez Two-party exchanges. 2011 tax forms ez   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. 2011 tax forms ez A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. 2011 tax forms ez The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. 2011 tax forms ez The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. 2011 tax forms ez The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. 2011 tax forms ez The transaction is subject to a written contract. 2011 tax forms ez Terminal operator's liability. 2011 tax forms ez   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. 2011 tax forms ez   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. 2011 tax forms ez The terminal operator is a registrant. 2011 tax forms ez The terminal operator has an unexpired notification certificate (discussed later) from the position holder. 2011 tax forms ez The terminal operator has no reason to believe any information on the certificate is false. 2011 tax forms ez Removal from refinery. 2011 tax forms ez   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. 2011 tax forms ez It is made by bulk transfer and the refiner, the owner of the gasoline immediately before the removal, or the operator of the pipeline or vessel is not a registrant. 2011 tax forms ez It is made at the refinery rack. 2011 tax forms ez The refiner is liable for the tax. 2011 tax forms ez Exception. 2011 tax forms ez   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. 2011 tax forms ez The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. 2011 tax forms ez The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. 2011 tax forms ez The removal from the refinery is by railcar. 2011 tax forms ez The same person operates the refinery and the facility at which the gasoline is received. 2011 tax forms ez Entry into the United States. 2011 tax forms ez   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. 2011 tax forms ez It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. 2011 tax forms ez It is not made by bulk transfer. 2011 tax forms ez The enterer is liable for the tax. 2011 tax forms ez Importer of record's liability. 2011 tax forms ez   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. 2011 tax forms ez   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. 2011 tax forms ez The importer of record has an unexpired notification certificate (discussed later) from the enterer. 2011 tax forms ez The importer of record has no reason to believe any information in the certificate is false. 2011 tax forms ez Customs bond. 2011 tax forms ez   The customs bond will not be charged for the tax imposed on the entry of the gasoline if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. 2011 tax forms ez Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. 2011 tax forms ez   The removal by bulk transfer of gasoline from a terminal is taxable if the position holder for the gasoline or the operator of the pipeline or vessel is not a registrant. 2011 tax forms ez The position holder is liable for the tax. 2011 tax forms ez The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. 2011 tax forms ez However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. 2011 tax forms ez Bulk transfers not received at approved terminal or refinery. 2011 tax forms ez   The removal by bulk transfer of gasoline from a terminal or refinery, or the entry of gasoline by bulk transfer into the United States, is taxable if the following conditions apply. 2011 tax forms ez No tax was previously imposed (as discussed earlier) on any of the following events. 2011 tax forms ez The removal from the refinery. 2011 tax forms ez The entry into the United States. 2011 tax forms ez The removal from a terminal by an unregistered position holder. 2011 tax forms ez Upon removal from the pipeline or vessel, the gasoline is not received at an approved terminal or refinery (or at another pipeline or vessel). 2011 tax forms ez   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. 2011 tax forms ez However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. 2011 tax forms ez The owner is a registrant. 2011 tax forms ez The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. 2011 tax forms ez The owner has no reason to believe any information on the certificate is false. 2011 tax forms ez The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. 2011 tax forms ez The operator is jointly and severally liable if the owner does not meet these conditions. 2011 tax forms ez Sales to unregistered person. 2011 tax forms ez   The sale of gasoline located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. 2011 tax forms ez   The seller is liable for the tax. 2011 tax forms ez However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. 2011 tax forms ez   The seller is a registrant. 2011 tax forms ez The seller has an unexpired notification certificate (discussed later) from the buyer. 2011 tax forms ez The seller has no reason to believe any information on the certificate is false. 2011 tax forms ez The buyer of the gasoline is liable for the tax if the seller meets these conditions. 2011 tax forms ez The buyer is jointly and severally liable if the seller does not meet these conditions. 2011 tax forms ez Exception. 2011 tax forms ez   The tax does not apply to a sale if all of the following apply. 2011 tax forms ez The buyer's principal place of business is not in the United States. 2011 tax forms ez The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. 2011 tax forms ez The seller is a registrant and the exporter of record. 2011 tax forms ez The fuel was exported. 2011 tax forms ez Removal or sale of blended gasoline. 2011 tax forms ez   The removal or sale of blended gasoline by the blender is taxable. 2011 tax forms ez See Blended taxable fuel under Definitions, earlier. 2011 tax forms ez   The blender is liable for the tax. 2011 tax forms ez The tax is figured on the number of gallons not previously subject to the tax on gasoline. 2011 tax forms ez   Persons who blend alcohol with gasoline to produce an alcohol fuel mixture outside the bulk transfer/terminal system must pay the gasoline tax on the volume of alcohol in the mixture. 2011 tax forms ez See Form 720 to report this tax. 2011 tax forms ez You also must be registered with the IRS as a blender. 2011 tax forms ez See Form 637. 2011 tax forms ez   However, if an untaxed liquid is sold as taxed taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. 2011 tax forms ez Notification certificate. 2011 tax forms ez   The notification certificate is used to notify a person of the registration status of the registrant. 2011 tax forms ez A copy of the registrant's letter of registration cannot be used as a notification certificate. 2011 tax forms ez A model notification certificate is shown in the Appendix as Model Certificate C. 2011 tax forms ez A notification certificate must contain all information necessary to complete the model. 2011 tax forms ez   The certificate may be included as part of any business records normally used for a sale. 2011 tax forms ez A certificate expires on the earlier of the date the registrant provides a new certificate, or the date the recipient of the certificate is notified that the registrant's registration has been revoked or suspended. 2011 tax forms ez The registrant must provide a new certificate if any information on a certificate has changed. 2011 tax forms ez Additional persons liable. 2011 tax forms ez   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax is imposed on: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty, or Anyone who willfully causes the person to fail to pay the tax. 2011 tax forms ez Gasoline Blendstocks Gasoline blendstocks may be subject to $. 2011 tax forms ez 001 per gallon LUST tax as discussed below. 2011 tax forms ez Gasoline includes gasoline blendstocks. 2011 tax forms ez The previous discussions apply to these blendstocks. 2011 tax forms ez However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. 2011 tax forms ez 001 per gallon or are not subject to the excise tax. 2011 tax forms ez Blendstocks. 2011 tax forms ez   Gasoline blendstocks are: Alkylate, Butane, Butene, Catalytically cracked gasoline, Coker gasoline, Ethyl tertiary butyl ether (ETBE), Hexane, Hydrocrackate, Isomerate, Methyl tertiary butyl ether (MTBE), Mixed xylene (not including any separated isomer of xylene), Natural gasoline, Pentane, Pentane mixture, Polymer gasoline, Raffinate, Reformate, Straight-run gasoline, Straight-run naphtha, Tertiary amyl methyl ether (TAME), Tertiary butyl alcohol (gasoline grade) (TBA), Thermally cracked gasoline, and Toluene. 2011 tax forms ez   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. 2011 tax forms ez Not used to produce finished gasoline. 2011 tax forms ez   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. 2011 tax forms ez Removals and entries not connected to sale. 2011 tax forms ez   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant. 2011 tax forms ez Removals and entries connected to sale. 2011 tax forms ez   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant, and at the time of the sale, meets the following requirements. 2011 tax forms ez The person has an unexpired certificate (discussed later) from the buyer. 2011 tax forms ez The person has no reason to believe any information in the certificate is false. 2011 tax forms ez Sales after removal or entry. 2011 tax forms ez   The sale of a gasoline blendstock that was not subject to tax on its nonbulk removal or entry, as discussed earlier, is taxable. 2011 tax forms ez The seller is liable for the tax. 2011 tax forms ez However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. 2011 tax forms ez The seller has an unexpired certificate (discussed next) from the buyer. 2011 tax forms ez The seller has no reason to believe any information in the certificate is false. 2011 tax forms ez Certificate of buyer. 2011 tax forms ez   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. 2011 tax forms ez The certificate may be included as part of any business records normally used for a sale. 2011 tax forms ez A model certificate is shown in the Appendix as Model Certificate D. 2011 tax forms ez The certificate must contain all information necessary to complete the model. 2011 tax forms ez   A certificate expires on the earliest of the following dates. 2011 tax forms ez The date 1 year after the effective date (not earlier than the date signed) of the certificate. 2011 tax forms ez The date a new certificate is provided to the seller. 2011 tax forms ez The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. 2011 tax forms ez The buyer must provide a new certificate if any information on a certificate has changed. 2011 tax forms ez   The IRS may withdraw the buyer's right to provide a certificate if that buyer uses the gasoline blendstocks in the production of finished gasoline or resells the blendstocks without getting a certificate from its buyer. 2011 tax forms ez Received at approved terminal or refinery. 2011 tax forms ez   The nonbulk removal or entry of gasoline blendstocks received at an approved terminal or refinery is not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) meets all the following requirements. 2011 tax forms ez The person is a registrant. 2011 tax forms ez The person has an unexpired notification certificate (discussed earlier) from the operator of the terminal or refinery where the gasoline blendstocks are received. 2011 tax forms ez The person has no reason to believe any information on the certificate is false. 2011 tax forms ez Bulk transfers to registered industrial user. 2011 tax forms ez   The removal of gasoline blendstocks from a pipeline or vessel is not taxable (other than LUST) if the blendstocks are received by a registrant that is an industrial user. 2011 tax forms ez An industrial user is any person that receives gasoline blendstocks by bulk transfer for its own use in the manufacture of any product other than finished gasoline. 2011 tax forms ez Credits or Refunds. 2011 tax forms ez   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. 2011 tax forms ez For more information, see chapter 2. 2011 tax forms ez Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). 2011 tax forms ez However, special rules (discussed later) apply to dyed diesel fuel and dyed kerosene, and to undyed diesel fuel and undyed kerosene sold or used in Alaska for certain nontaxable uses and undyed kerosene used for a feedstock purpose. 2011 tax forms ez Diesel fuel means: Any liquid that without further processing or blending is suitable for use as a fuel in a diesel-powered highway vehicle or train, and Transmix. 2011 tax forms ez A liquid is suitable for this use if the liquid has practical and commercial fitness for use in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. 2011 tax forms ez A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. 2011 tax forms ez However, a liquid does not possess this practical and commercial fitness solely by reason of its possible or rare use as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. 2011 tax forms ez Diesel fuel does not include gasoline, kerosene, excluded liquid, No. 2011 tax forms ez 5 and No. 2011 tax forms ez 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. 2011 tax forms ez An excluded liquid is either of the following. 2011 tax forms ez A liquid that contains less than 4% normal paraffins. 2011 tax forms ez A liquid with all the following properties. 2011 tax forms ez Distillation range of 125 degrees Fahrenheit or less. 2011 tax forms ez Sulfur content of 10 ppm or less. 2011 tax forms ez Minimum color of +27 Saybolt. 2011 tax forms ez Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. 2011 tax forms ez Kerosene. 2011 tax forms ez   This means any of the following liquids. 2011 tax forms ez One of the two grades of kerosene (No. 2011 tax forms ez 1-K and No. 2011 tax forms ez 2-K) covered by ASTM specification D3699. 2011 tax forms ez Kerosene-type jet fuel covered by ASTM specification D1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8). 2011 tax forms ez See Kerosene for Use in Aviation, later. 2011 tax forms ez   However, kerosene does not include excluded liquid, discussed earlier. 2011 tax forms ez   Kerosene also includes any liquid that would be described above but for the presence of a dye of the type used to dye kerosene for a nontaxable use. 2011 tax forms ez Diesel-powered highway vehicle. 2011 tax forms ez   This is any self-propelled vehicle designed to carry a load over public highways (whether or not also designed to perform other functions) and propelled by a diesel-powered engine. 2011 tax forms ez Specially designed mobile machinery for nontransportation functions and vehicles specially designed for off-highway transportation are generally not considered diesel-powered highway vehicles. 2011 tax forms ez For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. 2011 tax forms ez 2) in chapter 2. 2011 tax forms ez Diesel-powered train. 2011 tax forms ez   This is any diesel-powered equipment or machinery that rides on rails. 2011 tax forms ez The term includes a locomotive, work train, switching engine, and track maintenance machine. 2011 tax forms ez Taxable Events The tax on diesel fuel and kerosene is $. 2011 tax forms ez 244 per gallon. 2011 tax forms ez It is imposed on the removal, entry, or sale of diesel fuel and kerosene. 2011 tax forms ez Each of these events is discussed later. 2011 tax forms ez Only the $. 2011 tax forms ez 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. 2011 tax forms ez If the tax is paid on the diesel fuel or kerosene in more than one event, a refund may be allowed for the “second” tax paid. 2011 tax forms ez See Refunds of Second Tax in chapter 2. 2011 tax forms ez Use in certain intercity and local buses. 2011 tax forms ez   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. 2011 tax forms ez A claim for $. 2011 tax forms ez 17 per gallon may be made by the registered ultimate vendor (under certain conditions) or the ultimate purchaser for undyed diesel fuel or undyed kerosene sold for use in certain intercity or local buses. 2011 tax forms ez An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. 2011 tax forms ez The bus must be engaged in one of the following activities. 2011 tax forms ez Scheduled transportation along regular routes regardless of the size of the bus. 2011 tax forms ez Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). 2011 tax forms ez A bus is available to the general public if the bus is available for hire to more than a limited number of persons, groups, or organizations. 2011 tax forms ez Removal from terminal. 2011 tax forms ez   All removals of diesel fuel and kerosene at a terminal rack are taxable. 2011 tax forms ez The position holder for that fuel is liable for the tax. 2011 tax forms ez Two-party exchanges. 2011 tax forms ez   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. 2011 tax forms ez A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. 2011 tax forms ez The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. 2011 tax forms ez The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. 2011 tax forms ez The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. 2011 tax forms ez The transaction is subject to a written contract. 2011 tax forms ez Terminal operator's liability. 2011 tax forms ez   The terminal operator is jointly and severally liable for the tax if the terminal operator provides any person with any bill of lading, shipping paper, or similar document indicating that diesel fuel or kerosene is dyed (discussed later). 2011 tax forms ez   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. 2011 tax forms ez However, a terminal operator will not be liable for the tax in this situation if, at the time of the removal, the following conditions are met. 2011 tax forms ez The terminal operator is a registrant. 2011 tax forms ez The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. 2011 tax forms ez The terminal operator has no reason to believe any information on the certificate is false. 2011 tax forms ez Removal from refinery. 2011 tax forms ez   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. 2011 tax forms ez It is made by bulk transfer and the refiner, the owner of the fuel immediately before the removal, or the operator of the pipeline or vessel is not a registrant. 2011 tax forms ez It is made at the refinery rack. 2011 tax forms ez The refiner is liable for the tax. 2011 tax forms ez Exception. 2011 tax forms ez   The tax does not apply to a removal of diesel fuel or kerosene at the refinery rack if all the following conditions are met. 2011 tax forms ez The diesel fuel or kerosene is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. 2011 tax forms ez The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. 2011 tax forms ez The removal from the refinery is by: Railcar and the same person operates the refinery and the facility at which the diesel fuel or kerosene is received, or For diesel fuel only, a trailer or semi-trailer used exclusively to transport the diesel fuel from a refinery (described in (1)) to a facility (described in (2)) less than 20 miles from the refinery. 2011 tax forms ez Entry into the United States. 2011 tax forms ez   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. 2011 tax forms ez It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. 2011 tax forms ez It is not made by bulk transfer. 2011 tax forms ez The enterer is liable for the tax. 2011 tax forms ez Importer of record's liability. 2011 tax forms ez   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. 2011 tax forms ez   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. 2011 tax forms ez The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. 2011 tax forms ez The importer of record has no reason to believe any information in the certificate is false. 2011 tax forms ez Customs bond. 2011 tax forms ez   The customs bond will not be charged for the tax imposed on the entry of the diesel fuel or kerosene if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. 2011 tax forms ez Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. 2011 tax forms ez   The removal by bulk transfer of diesel fuel or kerosene from a terminal is taxable if the position holder for that fuel or the operator of the pipeline or vessel is not a registrant. 2011 tax forms ez The position holder is liable for the tax. 2011 tax forms ez The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. 2011 tax forms ez However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. 2011 tax forms ez Bulk transfers not received at approved terminal or refinery. 2011 tax forms ez   The removal by bulk transfer of diesel fuel or kerosene from a terminal or refinery or the entry of diesel fuel or kerosene by bulk transfer into the United States is taxable if the following conditions apply. 2011 tax forms ez No tax was previously imposed (as discussed earlier) on any of the following events. 2011 tax forms ez The removal from the refinery. 2011 tax forms ez The entry into the United States. 2011 tax forms ez The removal from a terminal by an unregistered position holder. 2011 tax forms ez Upon removal from the pipeline or vessel, the diesel fuel or kerosene is not received at an approved terminal or refinery (or at another pipeline or vessel). 2011 tax forms ez   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. 2011 tax forms ez However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. 2011 tax forms ez The owner is a registrant. 2011 tax forms ez The owner has an unexpired notification certificate (discussed under Gasoline) from the operator of the terminal or refinery where the diesel fuel or kerosene is received. 2011 tax forms ez The owner has no reason to believe any information on the certificate is false. 2011 tax forms ez The operator of the facility where the diesel fuel or kerosene is received is liable for the tax if the owner meets these conditions. 2011 tax forms ez The operator is jointly and severally liable if the owner does not meet these conditions. 2011 tax forms ez Sales to unregistered person. 2011 tax forms ez   The sale of diesel fuel or kerosene located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. 2011 tax forms ez   The seller is liable for the tax. 2011 tax forms ez However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. 2011 tax forms ez The seller is a registrant. 2011 tax forms ez The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. 2011 tax forms ez The seller has no reason to believe any information on the certificate is false. 2011 tax forms ez The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. 2011 tax forms ez The buyer is jointly and severally liable if the seller does not meet these conditions. 2011 tax forms ez Exception. 2011 tax forms ez   The tax does not apply to a sale if all of the following apply. 2011 tax forms ez The buyer's principal place of business is not in the United States. 2011 tax forms ez The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. 2011 tax forms ez The seller is a registrant and the exporter of record. 2011 tax forms ez The fuel was exported. 2011 tax forms ez Removal or sale of blended diesel fuel or kerosene. 2011 tax forms ez   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. 2011 tax forms ez Blended taxable fuel produced using biodiesel is subject to the tax. 2011 tax forms ez See Blended taxable fuel under Definitions, earlier. 2011 tax forms ez   The blender is liable for the tax. 2011 tax forms ez The tax is figured on the number of gallons not previously subject to the tax. 2011 tax forms ez   Persons who blend biodiesel with undyed diesel fuel to produce and sell or use a biodiesel mixture outside the bulk transfer/terminal system must pay the diesel fuel tax on the volume of biodiesel in the mixture. 2011 tax forms ez Generally, the biodiesel mixture must be diesel fuel (defined earlier). 2011 tax forms ez See Form 720 to report this tax. 2011 tax forms ez You also must be registered by the IRS as a blender. 2011 tax forms ez See Form 637 for more information. 2011 tax forms ez   However, if an untaxed liquid is sold as taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. 2011 tax forms ez Additional persons liable. 2011 tax forms ez   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax applies to: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty; or Anyone who willfully causes the person to fail to pay the tax. 2011 tax forms ez Credits or Refunds. 2011 tax forms ez   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. 2011 tax forms ez For more information, see chapter 2. 2011 tax forms ez Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. 2011 tax forms ez 001 per gallon LUST tax as discussed below, unless the fuel is for export. 2011 tax forms ez The excise tax is not imposed on the removal, entry, or sale of diesel fuel or kerosene (other than the LUST tax) if all the following tests are met. 2011 tax forms ez The person otherwise liable for tax (for example, the position holder) is a registrant. 2011 tax forms ez In the case of a removal from a terminal, the terminal is an approved terminal. 2011 tax forms ez The diesel fuel or kerosene satisfies the dyeing requirements (described next). 2011 tax forms ez Dyeing requirements. 2011 tax forms ez   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. 2011 tax forms ez It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. 2011 tax forms ez 9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of fuel or any dye of a type and in a concentration that has been approved by the Commissioner. 2011 tax forms ez Is indelibly dyed by mechanical injection. 2011 tax forms ez See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. 2011 tax forms ez Notice required. 2011 tax forms ez   A legible and conspicuous notice stating either: DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE or DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE must be: Provided by the terminal operator to any person that receives dyed diesel fuel or dyed kerosene at a terminal rack of that operator, and Posted by a seller on any retail pump or other delivery facility where it sells dyed diesel fuel or dyed kerosene for use by its buyer. 2011 tax forms ez   The notice under item (1) must be provided by the time of the removal and must appear on all shipping papers, bills of lading, and similar documents accompanying the removal of the fuel. 2011 tax forms ez   Any seller that fails to post the required notice under item (2) is presumed to know that the fuel will be used for a taxable use (a use other than a nontaxable use listed later). 2011 tax forms ez That seller is subject to the penalty described next. 2011 tax forms ez Penalty. 2011 tax forms ez   A penalty is imposed on a person if any of the following situations apply. 2011 tax forms ez Any dyed fuel is sold or held for sale by the person for a use the person knows or has reason to know is not a nontaxable use of the fuel. 2011 tax forms ez Any dyed fuel is held for use or used by the person for a use other than a nontaxable use and the person knew, or had reason to know, that the fuel was dyed. 2011 tax forms ez The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. 2011 tax forms ez The person has knowledge that a dyed fuel that has been altered, as described in (3) above, sells or holds for sale such fuel for any use for which the person knows or has reason to know is not a nontaxable use of the fuel. 2011 tax forms ez   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. 2011 tax forms ez After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. 2011 tax forms ez   This penalty is in addition to any tax imposed on the fuel. 2011 tax forms ez   If the penalty is imposed, each officer, employee, or agent of a business entity who willfully participated in any act giving rise to the penalty is jointly and severally liable with that entity for the penalty. 2011 tax forms ez   There is no administrative appeal or review allowed for the third and subsequent penalty imposed by section 6715 on any person except for: Fraud or a mistake in the chemical analysis, or Mathematical calculation of the penalty. 2011 tax forms ez   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. 2011 tax forms ez However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. 2011 tax forms ez The penalty may apply if the fuel is held for sale or use for a taxable use while the back-up tax does not apply unless the fuel is delivered into a fuel supply tank. 2011 tax forms ez Exception to penalty. 2011 tax forms ez   The penalty under item (3) will not apply in any of the following situations. 2011 tax forms ez Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any undyed liquid and the resulting product meets the dyeing requirements. 2011 tax forms ez Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any other liquid (other than diesel fuel or kerosene) that contains the type and amount of dye required to meet the dyeing requirements. 2011 tax forms ez The alteration or attempted alteration occurs in an exempt area of Alaska. 2011 tax forms ez See Removal for sale or use in Alaska, later. 2011 tax forms ez Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with diesel fuel or kerosene not meeting the dyeing requirements and the blending occurs as part of a nontaxable use (other than export), discussed later. 2011 tax forms ez Alaska and Feedstocks Tax of $. 2011 tax forms ez 001 per gallon is imposed on: Undyed diesel fuel or undyed kerosene sold or used in Alaska for certain nontaxable uses (see Later sales on page 10). 2011 tax forms ez Undyed kerosene used for feedstock purposes. 2011 tax forms ez Removal for sale or use in Alaska. 2011 tax forms ez   No tax is imposed on the removal, entry, or sale of diesel fuel or kerosene in Alaska for ultimate sale or use in certain areas of Alaska for certain nontaxable uses. 2011 tax forms ez The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. 2011 tax forms ez The person otherwise liable for the tax (position holder, refiner, or enterer): Is a registrant, Can show satisfactory evidence of the nontaxable nature of the transaction, and Has no reason to believe the evidence is false. 2011 tax forms ez In the case of a removal from a terminal, the terminal is an approved terminal. 2011 tax forms ez The owner of the fuel immediately after the removal or entry holds the fuel for its own use in a nontaxable use (discussed later) or is a qualified dealer. 2011 tax forms ez   If all three of the requirements above are not met, then tax is imposed at $. 2011 tax forms ez 244 per gallon. 2011 tax forms ez   A qualified dealer is any person that holds a qualified dealer license from the state of Alaska or has been registered by the IRS as a qualified retailer. 2011 tax forms ez Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. 2011 tax forms ez Later sales. 2011 tax forms ez   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. 2011 tax forms ez The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. 2011 tax forms ez However, the sale is not taxable (other than the LUST tax at $. 2011 tax forms ez 001 per gallon) if all the following requirements are met. 2011 tax forms ez The fuel is sold in Alaska for certain nontaxable uses. 2011 tax forms ez The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. 2011 tax forms ez The seller can show satisfactory evidence of the nontaxable nature of the transaction and has no reason to believe the evidence is false. 2011 tax forms ez Feedstock purposes. 2011 tax forms ez   The $. 2011 tax forms ez 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. 2011 tax forms ez The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. 2011 tax forms ez In the case of a removal from a terminal, the terminal is an approved terminal. 2011 tax forms ez Either: The person otherwise liable for tax uses the kerosene for a feedstock purpose, or The kerosene is sold for use by the buyer for a feedstock purpose and, at the time of the sale, the person otherwise liable for tax has an unexpired certificate (described later) from the buyer and has no reason to believe any information on the certificate is false. 2011 tax forms ez   If all of the requirements above are not met, then tax is imposed at $. 2011 tax forms ez 244 per gallon. 2011 tax forms ez   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. 2011 tax forms ez For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. 2011 tax forms ez A feedstock user is a person that uses kerosene for a feedstock purpose. 2011 tax forms ez A registered feedstock user is a person that has been registered by the IRS as a feedstock user. 2011 tax forms ez See Registration Requirements, earlier. 2011 tax forms ez Later sales. 2011 tax forms ez   The excise tax ($. 2011 tax forms ez 244 per gallon) applies to kerosene sold for use by the buyer for a feedstock purpose (item (3)(b) above) if the buyer in that sale later sells the kerosene. 2011 tax forms ez The tax is imposed at the time of the later sale and that seller is liable for the tax. 2011 tax forms ez Certificate. 2011 tax forms ez   The certificate from the buyer certifies the buyer is a registered feedstock user and the kerosene will be used by the buyer for a feedstock purpose. 2011 tax forms ez The certificate may be included as part of any business records normally used for a sale. 2011 tax forms ez A model certificate is shown in the Appendix as Model Certificate G. 2011 tax forms ez Your certificate must contain all information necessary to complete the model. 2011 tax forms ez   A certificate expires on the earliest of the following dates. 2011 tax forms ez The date 1 year after the effective date (not earlier than the date signed) of the certificate. 2011 tax forms ez The date the seller is provided a new certificate or notice that the current certificate is invalid. 2011 tax forms ez The date the seller is notified the buyer's registration has been revoked or suspended. 2011 tax forms ez   The buyer must provide a new certificate if any information on a certificate has changed. 2011 tax forms ez Back-up Tax Tax is imposed on the delivery of any of the following into the fuel supply tank of a diesel-powered highway vehicle. 2011 tax forms ez Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. 2011 tax forms ez Any undyed diesel fuel or undyed kerosene on which a credit or refund (for fuel used for a nontaxable purpose) has been allowed. 2011 tax forms ez Any liquid other than gasoline, diesel fuel, or kerosene. 2011 tax forms ez Generally, this back-up tax is imposed at a rate of $. 2011 tax forms ez 244 per gallon. 2011 tax forms ez Liability for tax. 2011 tax forms ez   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. 2011 tax forms ez In addition, the seller of the diesel fuel or kerosene is jointly and severally liable for the tax if the seller knows or has reason to know that the fuel will be used for other than a nontaxable use. 2011 tax forms ez Exemptions from the back-up tax. 2011 tax forms ez   The back-up tax does not apply to a delivery of diesel fuel or kerosene for uses 1, 2, 6, 7, 12, 13, 14, and 15 listed under Definitions of Nontaxable Uses in chapter 2. 2011 tax forms ez   In addition, since the back-up tax is imposed only on the delivery into the fuel supply tank of a diesel-powered vehicle or train, the tax does not apply to diesel fuel or kerosene used as heating oil or in stationary engines. 2011 tax forms ez Diesel-Water Fuel Emulsion Diesel-water fuel emulsion means diesel fuel at least 14% of which is water and for which the emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. 2011 tax forms ez A reduced tax rate of $. 2011 tax forms ez 198 per gallon is imposed on a diesel-water fuel emulsion. 2011 tax forms ez To be eligible for the reduced rate, the person who sells, removes, or uses the diesel-water fuel emulsion must be registered by the IRS. 2011 tax forms ez If the diesel-water fuel emulsion does not meet the requirements above, or if the person who sells, removes, or uses the fuel is not registered, the diesel-water fuel emulsion is taxed at $. 2011 tax forms ez 244 per gallon. 2011 tax forms ez Credits or refunds. 2011 tax forms ez   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. 2011 tax forms ez Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. 2011 tax forms ez 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). 2011 tax forms ez For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $. 2011 tax forms ez 219. 2011 tax forms ez The rate of $. 2011 tax forms ez 219 also applies if kerosene is removed into any aircraft from a qualified refueler truck, tanker, or tank wagon that is loaded with the kerosene from a terminal that is located within an airport. 2011 tax forms ez The airport terminal does not need to be a secured airport terminal for this rate to apply. 2011 tax forms ez However, the refueler truck, tanker, or tank wagon must meet the requirements discussed under Certain refueler trucks, tankers, and tank wagons, treated as terminals, later. 2011 tax forms ez For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. 2011 tax forms ez 044 per gallon. 2011 tax forms ez For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. 2011 tax forms ez 044 rate applies only if the truck, tanker, or tank wagon is loaded at a terminal that is located in a secured area of the airport. 2011 tax forms ez See Terminal located within a secured area of an airport, later. 2011 tax forms ez In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. 2011 tax forms ez For kerosene removed directly into the fuel tank of an aircraft for a use exempt from tax under section 4041(c) (such as use in an aircraft for the exclusive use of a state or local government), the rate of tax is $. 2011 tax forms ez 001. 2011 tax forms ez There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. 2011 tax forms ez The kerosene must be removed from a qualifying refueler truck, tanker, or tank wagon loaded at a terminal located within a secured area of an airport. 2011 tax forms ez See Terminal located within a secured area of an airport, later. 2011 tax forms ez In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. 2011 tax forms ez The position holder is liable for the $. 2011 tax forms ez 001 per gallon tax. 2011 tax forms ez For kerosene removed directly from a terminal into the fuel tank of an fractional ownership program aircraft after March 31, 2012, a surtax of $. 2011 tax forms ez 141 per gallon applies. 2011 tax forms ez Certain refueler trucks, tankers, and tank wagons treated as terminals. 2011 tax forms ez   For purposes of the tax imposed on kerosene for use in aviation removed directly into the fuel tank of an aircraft for use in commercial aviation, certain refueler trucks, tankers, and tank wagons are treated as part of a terminal if the following conditions are met. 2011 tax forms ez Such terminal is located within an area of an airport. 2011 tax forms ez Any kerosene for use in aviation that is loaded in a refueler truck, tanker, or tank wagon at a terminal is for delivery into aircraft at the airport in which the terminal is located. 2011 tax forms ez Except in exigent circumstances, such as those identified in Notice 2005-80, no vehicle registered for highway use is loaded with kerosene for use in aviation at the terminal. 2011 tax forms ez The refueler truck, tanker, or tank wagon meets the following requirements: Has storage tanks, hose, and coupling equipment designed and used for fueling aircraft, Is not registered for highway use, and Is operated by the terminal operator or a person that makes a daily accounting to the terminal operator of each delivery of fuel from the refueler truck, tanker, or tank wagon. 2011 tax forms ez Information reporting will be required by terminal operators regarding this provision. 2011 tax forms ez Until the format of this information reporting is issued, taxpayers are required to retain records regarding the daily accounting, but are not required to report such information. 2011 tax forms ez Terminal located within a secured area of an airport. 2011 tax forms ez   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. 2011 tax forms ez This list refers to fueling operations at airport terminals as it applies to the federal excise tax on kerosene for use in aviation, and has nothing to do with the general security of airports either included or not included in the list. 2011 tax forms ez Liability For Tax If the kerosene is removed directly into the fuel tank of an aircraft for use in commercial aviation, the operator of the aircraft in commercial aviation is liable for the tax on the removal at the rate of $. 2011 tax forms ez 044 per gallon. 2011 tax forms ez However, the position holder is liable for the LUST tax for kerosene for use in aviation removed directly into the fuel tank of an aircraft for use exempt from tax under section 4041(c) (except foreign trade). 2011 tax forms ez For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. 2011 tax forms ez For the aircraft operator to be liable for the tax $. 2011 tax forms ez 044 rate, the position holder must meet the following requirements: Is a taxable fuel registrant, Has an unexpired certificate (a model certificate is shown in the Appendix as Model Certificate K) from the operator of the aircraft, and Has no reason to believe any of the information in the certificate is false. 2011 tax forms ez Commercial aviation. 2011 tax forms ez   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. 2011 tax forms ez However, commercial aviation does not include any of the following uses. 2011 tax forms ez Any use exclusively for the purpose of skydiving. 2011 tax forms ez Certain air transportation by seaplane. 2011 tax forms ez See Seaplanes under Transportation of Persons by Air in chapter 4. 2011 tax forms ez Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. 2011 tax forms ez For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. 2011 tax forms ez Any use of an aircraft that has a maximum certificated takeoff weight of 6,000 pounds or less, unless the aircraft is operated on an established line. 2011 tax forms ez For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. 2011 tax forms ez Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. 2011 tax forms ez See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. 2011 tax forms ez Surtax on any liquid used in a fractional ownership program aircraft as fuel Fuel used in a fractional ownership program aircraft (as defined below) after March 31, 2012, is subject to a surtax of $. 2011 tax forms ez 141 per gallon. 2011 tax forms ez The fractional ownership program manager is liable for the tax. 2011 tax forms ez The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. 2011 tax forms ez If the surtax is imposed, the following air transportation taxes do not apply. 2011 tax forms ez Transportation of persons by air. 2011 tax forms ez Transportation of property by air. 2011 tax forms ez Use of international air travel facilities. 2011 tax forms ez These taxes are described under Air Transportation Taxes, later. 2011 tax forms ez A fractional ownership program aircraft flight is considered noncommercial aviation, for the rules for kerosene used in noncommercial aviation, see Kerosene for Use in Aviation above. 2011 tax forms ez Fractional ownership aircraft program    is a program under which:  A single fractional ownership program manager provides fractional ownership program management services on behalf of the fractional owners; There are one or more fractional owners per fractional program aircraft, with at least one fractional program aircraft having more than one owner; For at least two fractional program aircraft, none of the ownership interests in the aircraft are less than the minimum fractional ownership interest or held by the program manager; There exists a dry-lease aircraft exchange arrangement among all of the fractional owners; and There are multi-year program agreements covering the fractional ownership, fractional ownership program management services, and dry-lease aircraft exchange aspects of the program. 2011 tax forms ez Fractional program aircraft. 2011 tax forms ez   Any aircraft that, in any fractional ownership aircraft program, is listed as a fractional program aircraft in the management specifications issued to the manager of such program by Federal Aviation Administration under subpart K of part 91 title 14, Code of Federal Regulations, and is registered in the U. 2011 tax forms ez S. 2011 tax forms ez   Fractional program aircraft are not considered used for transportation of a qualified fractional owner, or on account of such qualified fractional owner when they are used for flight demonstration, maintenance or crew training. 2011 tax forms ez In such situations, the flight is not commercial aviation. 2011 tax forms ez Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. 2011 tax forms ez Fractional owner. 2011 tax forms ez   Any person owning any interest (including the entire interest) in a fractional program aircraft. 2011 tax forms ez Dry lease aircraft exchange. 2011 tax forms ez   An agreement, documented by the written program agreements, under which the fractional program aircraft are available, on an as-needed basis without crew, to each fractional owner. 2011 tax forms ez Special rule relating to deadhead service. 2011 tax forms ez   A fractional program aircraft will not be considered to be used on account of a qualified fractional owner when it is used in deadhead service and a person other than a qualified fractional owner is separately charged for such service. 2011 tax forms ez More information. 2011 tax forms ez   See section 4043 for more information on the surtax. 2011 tax forms ez Certificate for Commercial Aviation and Exempt Uses A certificate is required from the aircraft operator: To support aircraft operator liability for tax on removal of kerosene for use in aviation directly into the fuel tank of an aircraft in commercial aviation, or For exempt uses. 2011 tax forms ez Certificate. 2011 tax forms ez   The certificate may be included as part of any business records normally used for a sale. 2011 tax forms ez See Model Certificate K in the Appendix. 2011 tax forms ez   A certificate expires on the earliest of the following dates. 2011 tax forms ez The date 1 year after the effective date (not earlier than the date signed) of the certificate. 2011 tax forms ez The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. 2011 tax forms ez The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. 2011 tax forms ez   The buyer must provide a new certificate if any information on a certificate has changed. 2011 tax forms ez   The IRS may withdraw the buyer's right to provide a certificate if the buyer uses the kerosene for use in aviation to which a certificate relates other than as stated in the certificate. 2011 tax forms ez Exempt use. 2011 tax forms ez   The rate on kerosene for use in aviation is $. 2011 tax forms ez 001 (LUST tax) if it is removed from any refinery or terminal directly into the fuel tank of an aircraft for an exempt use. 2011 tax forms ez An exempt use includes kerosene for the exclusive use of a state or local government. 2011 tax forms ez There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. 2011 tax forms ez Flash title transaction. 2011 tax forms ez   A position holder is not liable for tax if, among other conditions, it obtains a certificate (described above) from the operator of the aircraft into which the kerosene is delivered. 2011 tax forms ez In a “flash title transaction” the position holder sells the kerosene to a wholesale distributor (reseller) that in turn sells the kerosene to the aircraft operator as the kerosene is being removed from a terminal into the fuel tank of an aircraft. 2011 tax forms ez In this case, the position holder will be treated as having a certificate from the operator of the aircraft if: The aircraft operator puts the reseller's name, address, and EIN on the certificate in place of the position holder's information; and The reseller provides the position holder with a statement of the kerosene reseller. 2011 tax forms ez Reseller statement. 2011 tax forms ez   This is a statement that is signed under penalties of perjury by a person with authority to bind the reseller; is provided at the bottom or on the back of the certificate (or in an attached document); and contains: The reseller's name, address, and EIN; The position holder's name, address, and EIN; and A statement that the reseller has no reason to believe that any information in the accompanying aircraft operator's certificate is false. 2011 tax forms ez Credits or Refunds. 2011 tax forms ez   A claim may be made by the ultimate purchaser (the operator) for taxed kerosene for use in aviation used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia). 2011 tax forms ez A claim may be made by a registered ultimate vendor for certain sales. 2011 tax forms ez For more information, see chapter 2. 2011 tax forms ez Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. 2011 tax forms ez Other Fuels include alternative fuels. 2011 tax forms ez Alternative fuels are: Liquefied petroleum gas (LPG), “P Series” fuels, Compressed natural gas (CNG) (discussed later), Liquefied hydrogen, Any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, Liquid fuel derived from biomass, Liquefied natural gas (LNG), and Liquefied gas derived from biomass. 2011 tax forms ez Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. 2011 tax forms ez Qualified methanol and ethanol fuels. 2011 tax forms ez   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. 2011 tax forms ez The tax rates are listed in the Instructions for Form 720. 2011 tax forms ez Partially exempt methanol and ethanol fuels. 2011 tax forms ez   A reduced tax rate applies to these fuels. 2011 tax forms ez Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. 2011 tax forms ez The tax rates are listed in the Instructions for Form 720. 2011 tax forms ez Motor vehicles. 2011 tax forms ez   Motor vehicles include all types of vehicles, whether or not registered (or required to be registered) for highway use, that have both the following characteristics. 2011 tax forms ez They are propelled by a motor. 2011 tax forms ez They are designed for carrying or towing loads from one place to another, regardless of the type of material or load carried or t