Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Federal Free State Tax

How Do I File An Amended ReturnFree E File 1040xTurbotax AmendIrs 1040x Amended ReturnIncome Tax Return PreparationFree State Tax Preparation Software2011 Tax Amendment2014 Tax Forms 1040ezTax FilingFile Taxes Online For Free2014 1040 Ez Tax FormWww H&rblock ComIncome Tax PreparationFree Ohio Tax Form 1040ezPrintable Tax Forms 1040ezFree 1040ez FormsH&r Block Free 1040ez1040x Amended Tax FormTurbotax 2011 Free EditionWww HrblockFree State Tax FileFiling 2011 Taxes For FreeUs Irs Tax FormsHow To Amend Your Tax ReturnTurbotax Deluxe Federal E File 2012 For Pc DownloadFree File Amended Tax ReturnState Income Tax NumberIrs Gov Form 1040nr2011 E FileFile State And Federal Taxes For FreeFile Taxes From 2012State Income Tax HelpAmend A Tax Return Online1040ez Printable Tax FormsIrs Forms 2012E File State Taxes OnlyIrs Form 1040ez FillableAmendedCan I Stillfile My 2012 Taxes OnlineHow To File A Tax Extension

Federal Free State Tax

Federal free state tax 7. Federal free state tax   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. Federal free state tax Costs not included. Federal free state tax Intangible Drilling Costs Exploration CostsPartnerships and S corporations. Federal free state tax Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. Federal free state tax Film and Television Production Costs What's New Film and television productions costs. Federal free state tax  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. Federal free state tax See Film and Television Production Costs , later. Federal free state tax Introduction This chapter discusses costs you can elect to deduct or capitalize. Federal free state tax You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. Federal free state tax If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. Federal free state tax When you capitalize a cost, you add it to the basis of property to which it relates. Federal free state tax A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. Federal free state tax Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. Federal free state tax You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. Federal free state tax For more information on the alternative minimum tax, see the instructions for the following forms. Federal free state tax Form 6251, Alternative Minimum Tax—Individuals. Federal free state tax Form 4626, Alternative Minimum Tax—Corporations. Federal free state tax Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. Federal free state tax Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. Federal free state tax Certain carrying charges must be capitalized under the uniform capitalization rules. Federal free state tax (For information on capitalization of interest, see chapter 4 . Federal free state tax ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. Federal free state tax You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. Federal free state tax For unimproved and unproductive real property, your election is good for only 1 year. Federal free state tax You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. Federal free state tax For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. Federal free state tax For personal property, your election is effective until the date you install or first use it, whichever is later. Federal free state tax How to make the election. Federal free state tax   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. Federal free state tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Federal free state tax Attach the statement to the amended return and write “Filed pursuant to section 301. Federal free state tax 9100-2” on the statement. Federal free state tax File the amended return at the same address you filed the original return. Federal free state tax Research and Experimental Costs The costs of research and experimentation are generally capital expenses. Federal free state tax However, you can elect to deduct these costs as a current business expense. Federal free state tax Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. Federal free state tax If you meet certain requirements, you may elect to defer and amortize research and experimental costs. Federal free state tax For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. Federal free state tax Research and experimental costs defined. Federal free state tax   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. Federal free state tax Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. Federal free state tax Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. Federal free state tax      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. Federal free state tax However, costs paid or incurred to obtain another's patent are not research and experimental costs. Federal free state tax Product. Federal free state tax   The term “product” includes any of the following items. Federal free state tax Formula. Federal free state tax Invention. Federal free state tax Patent. Federal free state tax Pilot model. Federal free state tax Process. Federal free state tax Technique. Federal free state tax Property similar to the items listed above. Federal free state tax It also includes products used by you in your trade or business or held for sale, lease, or license. Federal free state tax Costs not included. Federal free state tax   Research and experimental costs do not include expenses for any of the following activities. Federal free state tax Advertising or promotions. Federal free state tax Consumer surveys. Federal free state tax Efficiency surveys. Federal free state tax Management studies. Federal free state tax Quality control testing. Federal free state tax Research in connection with literary, historical, or similar projects. Federal free state tax The acquisition of another's patent, model, production, or process. Federal free state tax When and how to elect. Federal free state tax   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. Federal free state tax If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. Federal free state tax Deducting or Amortizing Research and Experimentation Costs IF you . Federal free state tax . Federal free state tax . Federal free state tax THEN . Federal free state tax . Federal free state tax . Federal free state tax Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. Federal free state tax Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. Federal free state tax See Research and Experimental Costs in chapter 8. Federal free state tax Research credit. Federal free state tax   If you pay or incur qualified research expenses, you may be able to take the research credit. Federal free state tax For more information see Form 6765, Credit for Increasing Research Activities and its instructions. Federal free state tax Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. Federal free state tax You can usually recover them through depreciation or depletion. Federal free state tax However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. Federal free state tax These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. Federal free state tax You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. Federal free state tax You can elect to deduct only the costs of items with no salvage value. Federal free state tax These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. Federal free state tax Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. Federal free state tax However, see Amounts paid to contractor that must be capitalized , later. Federal free state tax You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. Federal free state tax It does not matter whether there is any intent to produce hydrocarbons. Federal free state tax If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. Federal free state tax Amounts paid to contractor that must be capitalized. Federal free state tax   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. Federal free state tax How to make the election. Federal free state tax   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. Federal free state tax No formal statement is required. Federal free state tax If you file Schedule C (Form 1040), enter these costs under “Other expenses. Federal free state tax ”   For oil and gas wells, your election is binding for the year it is made and for all later years. Federal free state tax For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. Federal free state tax You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. Federal free state tax Energy credit for costs of geothermal wells. Federal free state tax   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. Federal free state tax See the Instructions for Form 3468 for more information. Federal free state tax Nonproductive well. Federal free state tax   If you capitalize your IDCs, you have another option if the well is nonproductive. Federal free state tax You can deduct the IDCs of the nonproductive well as an ordinary loss. Federal free state tax You must indicate and clearly state your election on your tax return for the year the well is completed. Federal free state tax Once made, the election for oil and gas wells is binding for all later years. Federal free state tax You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. Federal free state tax Costs incurred outside the United States. Federal free state tax   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. Federal free state tax However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. Federal free state tax If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. Federal free state tax These rules do not apply to a nonproductive well. Federal free state tax Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. Federal free state tax You recover these costs through depletion as the mineral is removed from the ground. Federal free state tax However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). Federal free state tax How to make the election. Federal free state tax   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. Federal free state tax Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. Federal free state tax The election applies to the tax year you make this election and all later tax years. Federal free state tax Partnerships and S corporations. Federal free state tax   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. Federal free state tax Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. Federal free state tax Reduced corporate deductions for exploration costs. Federal free state tax   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. Federal free state tax It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. Federal free state tax A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. Federal free state tax For more information on this method of amortization, see Internal Revenue Code section 59(e). Federal free state tax   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. Federal free state tax However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. Federal free state tax See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Federal free state tax   These rules also apply to the deduction of development costs by corporations. Federal free state tax See Development Costs , later. Federal free state tax Recapture of exploration expenses. Federal free state tax   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. Federal free state tax Use either of the following methods. Federal free state tax Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. Federal free state tax Your election must be clearly indicated on the return. Federal free state tax Increase your adjusted basis in the mine by the amount included in income. Federal free state tax Generally, you must elect this recapture method by the due date (including extensions) of your return. Federal free state tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Federal free state tax Make the election on your amended return and write “Filed pursuant to section 301. Federal free state tax 9100-2” on the form where you are including the income. Federal free state tax File the amended return at the same address you filed the original return. Federal free state tax Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Federal free state tax   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. Federal free state tax Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Federal free state tax   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. Federal free state tax Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. Federal free state tax If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. Federal free state tax Foreign exploration costs. Federal free state tax   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. Federal free state tax You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. Federal free state tax (Cost depletion is discussed in chapter 9 . Federal free state tax ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. Federal free state tax These rules also apply to foreign development costs. Federal free state tax Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. Federal free state tax These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. Federal free state tax Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. Federal free state tax Development costs do not include the costs for the acquisition or improvement of depreciable property. Federal free state tax Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. Federal free state tax This election applies each tax year to expenses paid or incurred in that year. Federal free state tax Once made, the election is binding for the year and cannot be revoked for any reason. Federal free state tax How to make the election. Federal free state tax   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. Federal free state tax Generally, you must make the election by the due date of the return (including extensions). Federal free state tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Federal free state tax Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Federal free state tax 9100-2. Federal free state tax ” File the amended return at the same address you filed the original return. Federal free state tax Foreign development costs. Federal free state tax   The rules discussed earlier for foreign exploration costs apply to foreign development costs. Federal free state tax Reduced corporate deductions for development costs. Federal free state tax   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. Federal free state tax Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. Federal free state tax For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. Federal free state tax Circulation costs are deductible even if they normally would be capitalized. Federal free state tax This rule does not apply to the following costs that must be capitalized. Federal free state tax The purchase of land or depreciable property. Federal free state tax The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. Federal free state tax Other treatment of circulation costs. Federal free state tax   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. Federal free state tax Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). Federal free state tax Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. Federal free state tax How to make the election. Federal free state tax   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. Federal free state tax Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. Federal free state tax Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. Federal free state tax However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. Federal free state tax The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Federal free state tax Any remaining costs must be amortized. Federal free state tax For information about amortizing start-up and organizational costs, see chapter 8 . Federal free state tax Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Federal free state tax Organizational costs include the costs of creating a corporation. Federal free state tax For more information on start-up and organizational costs, see chapter 8 . Federal free state tax How to make the election. Federal free state tax   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. Federal free state tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Federal free state tax Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Federal free state tax 9100-2. Federal free state tax ” File the amended return at the same address you filed the original return. Federal free state tax The election applies when computing taxable income for the current tax year and all subsequent years. Federal free state tax Reforestation Costs Reforestation costs are generally capital expenditures. Federal free state tax However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. Federal free state tax The remaining costs can be amortized over an 84-month period. Federal free state tax For information about amortizing reforestation costs, see chapter 8 . Federal free state tax Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Federal free state tax Qualified timber property is property that contains trees in significant commercial quantities. Federal free state tax See chapter 8 for more information on qualifying reforestation costs and qualified timber property. Federal free state tax If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. Federal free state tax Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. Federal free state tax How to make the election. Federal free state tax   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. Federal free state tax If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. Federal free state tax If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. Federal free state tax The unique stand identification numbers. Federal free state tax The total number of acres reforested during the tax year. Federal free state tax The nature of the reforestation treatments. Federal free state tax The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. Federal free state tax   If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Federal free state tax Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Federal free state tax 9100-2. Federal free state tax ” File the amended return at the same address you filed the original return. Federal free state tax The election applies when computing taxable income for the current tax year and all subsequent years. Federal free state tax   For additional information on reforestation costs, see chapter 8 . Federal free state tax Recapture. Federal free state tax   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. Federal free state tax For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. Federal free state tax Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. Federal free state tax However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. Federal free state tax Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. Federal free state tax However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. Federal free state tax You must own or lease the facility or vehicle for use in connection with your trade or business. Federal free state tax A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. Federal free state tax A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). Federal free state tax You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. Federal free state tax Deduction limit. Federal free state tax   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. Federal free state tax However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. Federal free state tax Partners and partnerships. Federal free state tax   The $15,000 limit applies to a partnership and also to each partner in the partnership. Federal free state tax A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. Federal free state tax If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. Federal free state tax   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). Federal free state tax If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. Federal free state tax Example. Federal free state tax Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. Federal free state tax Emilio had $12,000 of similar expenses in his sole proprietorship. Federal free state tax He elected to deduct $7,000 of them. Federal free state tax Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. Federal free state tax Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. Federal free state tax Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. Federal free state tax Qualification standards. Federal free state tax   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. Federal free state tax You can view the Americans with Disabilities Act at www. Federal free state tax ada. Federal free state tax gov/pubs/ada. Federal free state tax htm. Federal free state tax   The following is a list of some architectural barrier removal costs that can be deducted. Federal free state tax Ground and floor surfaces. Federal free state tax Walks. Federal free state tax Parking lots. Federal free state tax Ramps. Federal free state tax Entrances. Federal free state tax Doors and doorways. Federal free state tax Stairs. Federal free state tax Floors. Federal free state tax Toilet rooms. Federal free state tax Water fountains. Federal free state tax Public telephones. Federal free state tax Elevators. Federal free state tax Controls. Federal free state tax Signage. Federal free state tax Alarms. Federal free state tax Protruding objects. Federal free state tax Symbols of accessibility. Federal free state tax You can find the ADA guidelines and requirements for architectural barrier removal at www. Federal free state tax usdoj. Federal free state tax gov/crt/ada/reg3a. Federal free state tax html. Federal free state tax   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. Federal free state tax You can find the guidelines and requirements for transportation barrier removal at www. Federal free state tax fta. Federal free state tax dot. Federal free state tax gov. Federal free state tax   Also, you can access the ADA website at www. Federal free state tax ada. Federal free state tax gov for additional information. Federal free state tax Other barrier removals. Federal free state tax   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. Federal free state tax The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. Federal free state tax The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). Federal free state tax The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. Federal free state tax How to make the election. Federal free state tax   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. Federal free state tax Identify the deduction as a separate item. Federal free state tax The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. Federal free state tax If you make this election, you must maintain adequate records to support your deduction. Federal free state tax   For your election to be valid, you generally must file your return by its due date, including extensions. Federal free state tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Federal free state tax Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Federal free state tax 9100-2. Federal free state tax ” File the amended return at the same address you filed the original return. Federal free state tax Your election is irrevocable after the due date, including extensions, of your return. Federal free state tax Disabled access credit. Federal free state tax   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. Federal free state tax If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Federal free state tax   For more information, see Form 8826, Disabled Access Credit. Federal free state tax Film and Television Production Costs Film and television production costs are generally capital expenses. Federal free state tax However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. Federal free state tax For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. Federal free state tax Prev  Up  Next   Home   More Online Publications
Español

Know Your Rights

The Federal Deposit Insurance Corporation and other federal regulators require banks, insurance companies, brokerage firms and certain businesses who share financial information to tell you their privacy policies. They must give you this information when you open an account, and at least once every year after. They must include:

  • the kinds of information being collected;
  • how the confidentiality and security of this information will be protected; and
  • what types of businesses may be provided this information.

If a business is going to share the information with anyone outside its corporate family, it must also give you the chance to "opt-out" or say no to information sharing. Even if you don't opt out, your actual account numbers may not be shared with third parties for marketing purposes.

You cannot prevent certain types of information from being shared, including information needed to conduct normal business or protect against fraud, or information that is already publicly available. Also, a bank can share your information with a partner company to market products.

Your credit information has additional privacy protections under the Fair Credit Reporting Act. Only people with a legitimate business need can get a copy of your report. An employer can only get your report with your written consent. For more information on your rights under this federal law and to find out how you can get a copy of your credit report, visit the Credit Bureaus and Credit Scores section.

If Your Wallet is Lost or Stolen

Your wallet contains some of your most important personal items, from hard-earned money to credit cards and driver’s license. For an identity thief, your wallet offers a treasure trove of personal information. If your wallet is lost or stolen:

  • File a report with the police immediately.
  • Cancel your credit and debit cards and request new cards and account numbers.
  • Report the missing cards to the major credit reporting agencies.
  • Report your missing license to the department of motor vehicles.

Check with the Federal Trade Commission for more information on protecting your privacy

The Federal Free State Tax

Federal free state tax 1. Federal free state tax   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. Federal free state tax 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. Federal free state tax Reseller statement. Federal free state tax Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. Federal free state tax Deep-draft ocean-going vessels. Federal free state tax Passenger vessels. Federal free state tax Ocean-going barges. Federal free state tax State or local governments. Federal free state tax 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. Federal free state tax Gasoline, including aviation gasoline and gasoline blendstocks. Federal free state tax Diesel fuel, including dyed diesel fuel. Federal free state tax Diesel-water fuel emulsion. Federal free state tax Kerosene, including dyed kerosene and kerosene used in aviation. Federal free state tax Other Fuels (including alternative fuels). Federal free state tax Compressed natural gas (CNG). Federal free state tax Fuels used in commercial transportation on inland waterways. Federal free state tax Any liquid used in a fractional ownership program aircraft as fuel. Federal free state tax The following terms are used throughout the discussion of fuel taxes. Federal free state tax Other terms are defined in the discussion of the specific fuels to which they pertain. Federal free state tax Agri-biodiesel. Federal free state tax   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. Federal free state tax Approved terminal or refinery. Federal free state tax   This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner. Federal free state tax Biodiesel. Federal free state tax   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. Federal free state tax Blended taxable fuel. Federal free state tax   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. Federal free state tax 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. Federal free state tax Blender. Federal free state tax   This is the person that produces blended taxable fuel. Federal free state tax Bulk transfer. Federal free state tax   This is the transfer of taxable fuel by pipeline or vessel. Federal free state tax Bulk transfer/terminal system. Federal free state tax   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Federal free state tax 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. Federal free state tax Cellulosic biofuel. Federal free state tax   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. Federal free state tax Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). Federal free state tax 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. Federal free state tax Also see Second generation biofuel below. Federal free state tax Diesel-water fuel emulsion. Federal free state tax   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. Federal free state tax 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. Federal free state tax Dry lease aircraft exchange. Federal free state tax   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Federal free state tax Enterer. Federal free state tax   This is the importer of record (under customs law) for the taxable fuel. Federal free state tax 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. Federal free state tax If there is no importer of record, the owner at the time of entry into the United States is the enterer. Federal free state tax Entry. Federal free state tax   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. Federal free state tax This does not apply to fuel brought into Puerto Rico (which is part of the U. Federal free state tax S. Federal free state tax customs territory), but does apply to fuel brought into the United States from Puerto Rico. Federal free state tax Fractional ownership aircraft program and fractional program aircraft. Federal free state tax   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Federal free state tax Measurement of taxable fuel. Federal free state tax   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. Federal free state tax Other fuels. Federal free state tax   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. Federal free state tax Pipeline operator. Federal free state tax   This is the person that operates a pipeline within the bulk transfer/terminal system. Federal free state tax Position holder. Federal free state tax   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. Federal free state tax 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. Federal free state tax A terminal operator that owns taxable fuel in its terminal is a position holder. Federal free state tax Rack. Federal free state tax   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. Federal free state tax Refiner. Federal free state tax   This is any person that owns, operates, or otherwise controls a refinery. Federal free state tax Refinery. Federal free state tax   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. Federal free state tax However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. Federal free state tax For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. Federal free state tax Registrant. Federal free state tax   This is a taxable fuel registrant (see Registration Requirements, later). Federal free state tax Removal. Federal free state tax   This is any physical transfer of taxable fuel. Federal free state tax It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. Federal free state tax However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. Federal free state tax Renewable diesel. Federal free state tax   See Renewable Diesel Credits in chapter 2. Federal free state tax Sale. Federal free state tax   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. Federal free state tax 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. Federal free state tax Second generation biofuel. Federal free state tax   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. Federal free state tax S. Federal free state tax C. Federal free state tax 7545). Federal free state tax It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. Federal free state tax It is not alcohol of less than 150 proof (disregard any added denaturants). Federal free state tax See Form 6478 for more information. Federal free state tax State. Federal free state tax   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. Federal free state tax An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. Federal free state tax Taxable fuel. Federal free state tax   This means gasoline, diesel fuel, and kerosene. Federal free state tax Terminal. Federal free state tax   This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. Federal free state tax 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. Federal free state tax 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. Federal free state tax Terminal operator. Federal free state tax   This is any person that owns, operates, or otherwise controls a terminal. Federal free state tax Throughputter. Federal free state tax   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). Federal free state tax Vessel operator. Federal free state tax   This is the person that operates a vessel within the bulk transfer/terminal system. Federal free state tax However, vessel does not include a deep draft ocean-going vessel. Federal free state tax Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. Federal free state tax A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. Federal free state tax For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. Federal free state tax The returns are due the last day of the month following the month in which the transaction occurs. Federal free state tax Generally, these returns can be filed on paper or electronically. Federal free state tax For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. Federal free state tax Publication 3536 is only available on the IRS website. Federal free state tax Form 720-TO. Federal free state tax   This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. Federal free state tax Each terminal operator must file a separate form for each approved terminal. Federal free state tax Form 720-CS. Federal free state tax   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. Federal free state tax Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. Federal free state tax See Form 637 for other persons who must register and for more information about registration. Federal free state tax Persons that are required to be registered. Federal free state tax   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. Federal free state tax Persons that may register. Federal free state tax   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. Federal free state tax Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. Federal free state tax However, they must be registered to file claims for certain sales and uses of fuel. Federal free state tax See Form 637 for more information. Federal free state tax Taxable fuel registrant. Federal free state tax   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. Federal free state tax The term registrant as used in the discussions of these fuels means a taxable fuel registrant. Federal free state tax Additional information. Federal free state tax   See the Form 637 instructions for the information you must submit when you apply for registration. Federal free state tax Failure to register. Federal free state tax   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. Federal free state tax Gasoline and Aviation Gasoline Gasoline. Federal free state tax   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. Federal free state tax 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. Federal free state tax Gasoline also includes gasoline blendstocks, discussed later. Federal free state tax Aviation gasoline. Federal free state tax   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. Federal free state tax Taxable Events The tax on gasoline is $. Federal free state tax 184 per gallon. Federal free state tax The tax on aviation gasoline is $. Federal free state tax 194 per gallon. Federal free state tax When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. Federal free state tax 141 per gallon. Federal free state tax See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. Federal free state tax Tax is imposed on the removal, entry, or sale of gasoline. Federal free state tax Each of these events is discussed later. Federal free state tax Also, see the special rules that apply to gasoline blendstocks, later. Federal free state tax If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. Federal free state tax See Refunds of Second Tax in chapter 2. Federal free state tax Removal from terminal. Federal free state tax   All removals of gasoline at a terminal rack are taxable. Federal free state tax The position holder for that gasoline is liable for the tax. Federal free state tax Two-party exchanges. Federal free state tax   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. Federal free state tax 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. Federal free state tax 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. Federal free state tax The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. Federal free state tax 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. Federal free state tax The transaction is subject to a written contract. Federal free state tax Terminal operator's liability. Federal free state tax   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. Federal free state tax   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. Federal free state tax The terminal operator is a registrant. Federal free state tax The terminal operator has an unexpired notification certificate (discussed later) from the position holder. Federal free state tax The terminal operator has no reason to believe any information on the certificate is false. Federal free state tax Removal from refinery. Federal free state tax   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. Federal free state tax 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. Federal free state tax It is made at the refinery rack. Federal free state tax The refiner is liable for the tax. Federal free state tax Exception. Federal free state tax   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. Federal free state tax The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Federal free state tax The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Federal free state tax The removal from the refinery is by railcar. Federal free state tax The same person operates the refinery and the facility at which the gasoline is received. Federal free state tax Entry into the United States. Federal free state tax   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. Federal free state tax It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Federal free state tax It is not made by bulk transfer. Federal free state tax The enterer is liable for the tax. Federal free state tax Importer of record's liability. Federal free state tax   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. Federal free state tax   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Federal free state tax The importer of record has an unexpired notification certificate (discussed later) from the enterer. Federal free state tax The importer of record has no reason to believe any information in the certificate is false. Federal free state tax Customs bond. Federal free state tax   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. Federal free state tax Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Federal free state tax   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. Federal free state tax The position holder is liable for the tax. Federal free state tax The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Federal free state tax However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Federal free state tax Bulk transfers not received at approved terminal or refinery. Federal free state tax   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. Federal free state tax No tax was previously imposed (as discussed earlier) on any of the following events. Federal free state tax The removal from the refinery. Federal free state tax The entry into the United States. Federal free state tax The removal from a terminal by an unregistered position holder. Federal free state tax Upon removal from the pipeline or vessel, the gasoline is not received at an approved terminal or refinery (or at another pipeline or vessel). Federal free state tax   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. Federal free state tax However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Federal free state tax The owner is a registrant. Federal free state tax The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. Federal free state tax The owner has no reason to believe any information on the certificate is false. Federal free state tax The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. Federal free state tax The operator is jointly and severally liable if the owner does not meet these conditions. Federal free state tax Sales to unregistered person. Federal free state tax   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. Federal free state tax   The seller is liable for the tax. Federal free state tax However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Federal free state tax   The seller is a registrant. Federal free state tax The seller has an unexpired notification certificate (discussed later) from the buyer. Federal free state tax The seller has no reason to believe any information on the certificate is false. Federal free state tax The buyer of the gasoline is liable for the tax if the seller meets these conditions. Federal free state tax The buyer is jointly and severally liable if the seller does not meet these conditions. Federal free state tax Exception. Federal free state tax   The tax does not apply to a sale if all of the following apply. Federal free state tax The buyer's principal place of business is not in the United States. Federal free state tax The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Federal free state tax The seller is a registrant and the exporter of record. Federal free state tax The fuel was exported. Federal free state tax Removal or sale of blended gasoline. Federal free state tax   The removal or sale of blended gasoline by the blender is taxable. Federal free state tax See Blended taxable fuel under Definitions, earlier. Federal free state tax   The blender is liable for the tax. Federal free state tax The tax is figured on the number of gallons not previously subject to the tax on gasoline. Federal free state tax   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. Federal free state tax See Form 720 to report this tax. Federal free state tax You also must be registered with the IRS as a blender. Federal free state tax See Form 637. Federal free state tax   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. Federal free state tax Notification certificate. Federal free state tax   The notification certificate is used to notify a person of the registration status of the registrant. Federal free state tax A copy of the registrant's letter of registration cannot be used as a notification certificate. Federal free state tax A model notification certificate is shown in the Appendix as Model Certificate C. Federal free state tax A notification certificate must contain all information necessary to complete the model. Federal free state tax   The certificate may be included as part of any business records normally used for a sale. Federal free state tax 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. Federal free state tax The registrant must provide a new certificate if any information on a certificate has changed. Federal free state tax Additional persons liable. Federal free state tax   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. Federal free state tax Gasoline Blendstocks Gasoline blendstocks may be subject to $. Federal free state tax 001 per gallon LUST tax as discussed below. Federal free state tax Gasoline includes gasoline blendstocks. Federal free state tax The previous discussions apply to these blendstocks. Federal free state tax However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. Federal free state tax 001 per gallon or are not subject to the excise tax. Federal free state tax Blendstocks. Federal free state tax   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. Federal free state tax   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. Federal free state tax Not used to produce finished gasoline. Federal free state tax   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. Federal free state tax Removals and entries not connected to sale. Federal free state tax   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant. Federal free state tax Removals and entries connected to sale. Federal free state tax   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. Federal free state tax The person has an unexpired certificate (discussed later) from the buyer. Federal free state tax The person has no reason to believe any information in the certificate is false. Federal free state tax Sales after removal or entry. Federal free state tax   The sale of a gasoline blendstock that was not subject to tax on its nonbulk removal or entry, as discussed earlier, is taxable. Federal free state tax The seller is liable for the tax. Federal free state tax However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. Federal free state tax The seller has an unexpired certificate (discussed next) from the buyer. Federal free state tax The seller has no reason to believe any information in the certificate is false. Federal free state tax Certificate of buyer. Federal free state tax   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. Federal free state tax The certificate may be included as part of any business records normally used for a sale. Federal free state tax A model certificate is shown in the Appendix as Model Certificate D. Federal free state tax The certificate must contain all information necessary to complete the model. Federal free state tax   A certificate expires on the earliest of the following dates. Federal free state tax The date 1 year after the effective date (not earlier than the date signed) of the certificate. Federal free state tax The date a new certificate is provided to the seller. Federal free state tax The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. Federal free state tax The buyer must provide a new certificate if any information on a certificate has changed. Federal free state tax   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. Federal free state tax Received at approved terminal or refinery. Federal free state tax   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. Federal free state tax The person is a registrant. Federal free state tax The person has an unexpired notification certificate (discussed earlier) from the operator of the terminal or refinery where the gasoline blendstocks are received. Federal free state tax The person has no reason to believe any information on the certificate is false. Federal free state tax Bulk transfers to registered industrial user. Federal free state tax   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. Federal free state tax 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. Federal free state tax Credits or Refunds. Federal free state tax   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. Federal free state tax For more information, see chapter 2. Federal free state tax Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). Federal free state tax 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. Federal free state tax 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. Federal free state tax 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. Federal free state tax A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. Federal free state tax 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. Federal free state tax Diesel fuel does not include gasoline, kerosene, excluded liquid, No. Federal free state tax 5 and No. Federal free state tax 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. Federal free state tax An excluded liquid is either of the following. Federal free state tax A liquid that contains less than 4% normal paraffins. Federal free state tax A liquid with all the following properties. Federal free state tax Distillation range of 125 degrees Fahrenheit or less. Federal free state tax Sulfur content of 10 ppm or less. Federal free state tax Minimum color of +27 Saybolt. Federal free state tax Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. Federal free state tax Kerosene. Federal free state tax   This means any of the following liquids. Federal free state tax One of the two grades of kerosene (No. Federal free state tax 1-K and No. Federal free state tax 2-K) covered by ASTM specification D3699. Federal free state tax 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). Federal free state tax See Kerosene for Use in Aviation, later. Federal free state tax   However, kerosene does not include excluded liquid, discussed earlier. Federal free state tax   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. Federal free state tax Diesel-powered highway vehicle. Federal free state tax   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. Federal free state tax Specially designed mobile machinery for nontransportation functions and vehicles specially designed for off-highway transportation are generally not considered diesel-powered highway vehicles. Federal free state tax For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. Federal free state tax 2) in chapter 2. Federal free state tax Diesel-powered train. Federal free state tax   This is any diesel-powered equipment or machinery that rides on rails. Federal free state tax The term includes a locomotive, work train, switching engine, and track maintenance machine. Federal free state tax Taxable Events The tax on diesel fuel and kerosene is $. Federal free state tax 244 per gallon. Federal free state tax It is imposed on the removal, entry, or sale of diesel fuel and kerosene. Federal free state tax Each of these events is discussed later. Federal free state tax Only the $. Federal free state tax 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. Federal free state tax 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. Federal free state tax See Refunds of Second Tax in chapter 2. Federal free state tax Use in certain intercity and local buses. Federal free state tax   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. Federal free state tax A claim for $. Federal free state tax 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. Federal free state tax An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. Federal free state tax The bus must be engaged in one of the following activities. Federal free state tax Scheduled transportation along regular routes regardless of the size of the bus. Federal free state tax Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). Federal free state tax 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. Federal free state tax Removal from terminal. Federal free state tax   All removals of diesel fuel and kerosene at a terminal rack are taxable. Federal free state tax The position holder for that fuel is liable for the tax. Federal free state tax Two-party exchanges. Federal free state tax   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. Federal free state tax 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. Federal free state tax 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. Federal free state tax The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. Federal free state tax 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. Federal free state tax The transaction is subject to a written contract. Federal free state tax Terminal operator's liability. Federal free state tax   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). Federal free state tax   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. Federal free state tax 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. Federal free state tax The terminal operator is a registrant. Federal free state tax The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. Federal free state tax The terminal operator has no reason to believe any information on the certificate is false. Federal free state tax Removal from refinery. Federal free state tax   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. Federal free state tax 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. Federal free state tax It is made at the refinery rack. Federal free state tax The refiner is liable for the tax. Federal free state tax Exception. Federal free state tax   The tax does not apply to a removal of diesel fuel or kerosene at the refinery rack if all the following conditions are met. Federal free state tax The diesel fuel or kerosene is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Federal free state tax The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Federal free state tax 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. Federal free state tax Entry into the United States. Federal free state tax   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. Federal free state tax It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Federal free state tax It is not made by bulk transfer. Federal free state tax The enterer is liable for the tax. Federal free state tax Importer of record's liability. Federal free state tax   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. Federal free state tax   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Federal free state tax The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. Federal free state tax The importer of record has no reason to believe any information in the certificate is false. Federal free state tax Customs bond. Federal free state tax   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. Federal free state tax Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Federal free state tax   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. Federal free state tax The position holder is liable for the tax. Federal free state tax The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Federal free state tax However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Federal free state tax Bulk transfers not received at approved terminal or refinery. Federal free state tax   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. Federal free state tax No tax was previously imposed (as discussed earlier) on any of the following events. Federal free state tax The removal from the refinery. Federal free state tax The entry into the United States. Federal free state tax The removal from a terminal by an unregistered position holder. Federal free state tax 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). Federal free state tax   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. Federal free state tax However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Federal free state tax The owner is a registrant. Federal free state tax 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. Federal free state tax The owner has no reason to believe any information on the certificate is false. Federal free state tax The operator of the facility where the diesel fuel or kerosene is received is liable for the tax if the owner meets these conditions. Federal free state tax The operator is jointly and severally liable if the owner does not meet these conditions. Federal free state tax Sales to unregistered person. Federal free state tax   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. Federal free state tax   The seller is liable for the tax. Federal free state tax However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Federal free state tax The seller is a registrant. Federal free state tax The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. Federal free state tax The seller has no reason to believe any information on the certificate is false. Federal free state tax The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. Federal free state tax The buyer is jointly and severally liable if the seller does not meet these conditions. Federal free state tax Exception. Federal free state tax   The tax does not apply to a sale if all of the following apply. Federal free state tax The buyer's principal place of business is not in the United States. Federal free state tax The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Federal free state tax The seller is a registrant and the exporter of record. Federal free state tax The fuel was exported. Federal free state tax Removal or sale of blended diesel fuel or kerosene. Federal free state tax   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. Federal free state tax Blended taxable fuel produced using biodiesel is subject to the tax. Federal free state tax See Blended taxable fuel under Definitions, earlier. Federal free state tax   The blender is liable for the tax. Federal free state tax The tax is figured on the number of gallons not previously subject to the tax. Federal free state tax   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. Federal free state tax Generally, the biodiesel mixture must be diesel fuel (defined earlier). Federal free state tax See Form 720 to report this tax. Federal free state tax You also must be registered by the IRS as a blender. Federal free state tax See Form 637 for more information. Federal free state tax   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. Federal free state tax Additional persons liable. Federal free state tax   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. Federal free state tax Credits or Refunds. Federal free state tax   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. Federal free state tax For more information, see chapter 2. Federal free state tax Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. Federal free state tax 001 per gallon LUST tax as discussed below, unless the fuel is for export. Federal free state tax 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. Federal free state tax The person otherwise liable for tax (for example, the position holder) is a registrant. Federal free state tax In the case of a removal from a terminal, the terminal is an approved terminal. Federal free state tax The diesel fuel or kerosene satisfies the dyeing requirements (described next). Federal free state tax Dyeing requirements. Federal free state tax   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. Federal free state tax It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. Federal free state tax 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. Federal free state tax Is indelibly dyed by mechanical injection. Federal free state tax See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. Federal free state tax Notice required. Federal free state tax   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. Federal free state tax   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. Federal free state tax   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). Federal free state tax That seller is subject to the penalty described next. Federal free state tax Penalty. Federal free state tax   A penalty is imposed on a person if any of the following situations apply. Federal free state tax 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. Federal free state tax 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. Federal free state tax The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. Federal free state tax 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. Federal free state tax   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. Federal free state tax After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. Federal free state tax   This penalty is in addition to any tax imposed on the fuel. Federal free state tax   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. Federal free state tax   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. Federal free state tax   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. Federal free state tax However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. Federal free state tax 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. Federal free state tax Exception to penalty. Federal free state tax   The penalty under item (3) will not apply in any of the following situations. Federal free state tax Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any undyed liquid and the resulting product meets the dyeing requirements. Federal free state tax 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. Federal free state tax The alteration or attempted alteration occurs in an exempt area of Alaska. Federal free state tax See Removal for sale or use in Alaska, later. Federal free state tax 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. Federal free state tax Alaska and Feedstocks Tax of $. Federal free state tax 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). Federal free state tax Undyed kerosene used for feedstock purposes. Federal free state tax Removal for sale or use in Alaska. Federal free state tax   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. Federal free state tax The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. Federal free state tax 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. Federal free state tax In the case of a removal from a terminal, the terminal is an approved terminal. Federal free state tax 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. Federal free state tax   If all three of the requirements above are not met, then tax is imposed at $. Federal free state tax 244 per gallon. Federal free state tax   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. Federal free state tax Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. Federal free state tax Later sales. Federal free state tax   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. Federal free state tax The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. Federal free state tax However, the sale is not taxable (other than the LUST tax at $. Federal free state tax 001 per gallon) if all the following requirements are met. Federal free state tax The fuel is sold in Alaska for certain nontaxable uses. Federal free state tax The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. Federal free state tax The seller can show satisfactory evidence of the nontaxable nature of the transaction and has no reason to believe the evidence is false. Federal free state tax Feedstock purposes. Federal free state tax   The $. Federal free state tax 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. Federal free state tax The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. Federal free state tax In the case of a removal from a terminal, the terminal is an approved terminal. Federal free state tax 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. Federal free state tax   If all of the requirements above are not met, then tax is imposed at $. Federal free state tax 244 per gallon. Federal free state tax   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. Federal free state tax For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. Federal free state tax A feedstock user is a person that uses kerosene for a feedstock purpose. Federal free state tax A registered feedstock user is a person that has been registered by the IRS as a feedstock user. Federal free state tax See Registration Requirements, earlier. Federal free state tax Later sales. Federal free state tax   The excise tax ($. Federal free state tax 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. Federal free state tax The tax is imposed at the time of the later sale and that seller is liable for the tax. Federal free state tax Certificate. Federal free state tax   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. Federal free state tax The certificate may be included as part of any business records normally used for a sale. Federal free state tax A model certificate is shown in the Appendix as Model Certificate G. Federal free state tax Your certificate must contain all information necessary to complete the model. Federal free state tax   A certificate expires on the earliest of the following dates. Federal free state tax The date 1 year after the effective date (not earlier than the date signed) of the certificate. Federal free state tax The date the seller is provided a new certificate or notice that the current certificate is invalid. Federal free state tax The date the seller is notified the buyer's registration has been revoked or suspended. Federal free state tax   The buyer must provide a new certificate if any information on a certificate has changed. Federal free state tax 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. Federal free state tax Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. Federal free state tax Any undyed diesel fuel or undyed kerosene on which a credit or refund (for fuel used for a nontaxable purpose) has been allowed. Federal free state tax Any liquid other than gasoline, diesel fuel, or kerosene. Federal free state tax Generally, this back-up tax is imposed at a rate of $. Federal free state tax 244 per gallon. Federal free state tax Liability for tax. Federal free state tax   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. Federal free state tax 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. Federal free state tax Exemptions from the back-up tax. Federal free state tax   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. Federal free state tax   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. Federal free state tax 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. Federal free state tax A reduced tax rate of $. Federal free state tax 198 per gallon is imposed on a diesel-water fuel emulsion. Federal free state tax 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. Federal free state tax 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 $. Federal free state tax 244 per gallon. Federal free state tax Credits or refunds. Federal free state tax   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. Federal free state tax Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. Federal free state tax 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). Federal free state tax For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $. Federal free state tax 219. Federal free state tax The rate of $. Federal free state tax 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. Federal free state tax The airport terminal does not need to be a secured airport terminal for this rate to apply. Federal free state tax 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. Federal free state tax For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. Federal free state tax 044 per gallon. Federal free state tax For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. Federal free state tax 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. Federal free state tax See Terminal located within a secured area of an airport, later. Federal free state tax In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Federal free state tax 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 $. Federal free state tax 001. Federal free state tax There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Federal free state tax 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. Federal free state tax See Terminal located within a secured area of an airport, later. Federal free state tax In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Federal free state tax The position holder is liable for the $. Federal free state tax 001 per gallon tax. Federal free state tax For kerosene removed directly from a terminal into the fuel tank of an fractional ownership program aircraft after March 31, 2012, a surtax of $. Federal free state tax 141 per gallon applies. Federal free state tax Certain refueler trucks, tankers, and tank wagons treated as terminals. Federal free state tax   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. Federal free state tax Such terminal is located within an area of an airport. Federal free state tax 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. Federal free state tax 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. Federal free state tax 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. Federal free state tax Information reporting will be required by terminal operators regarding this provision. Federal free state tax 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. Federal free state tax Terminal located within a secured area of an airport. Federal free state tax   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. Federal free state tax 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. Federal free state tax 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 $. Federal free state tax 044 per gallon. Federal free state tax 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). Federal free state tax For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. Federal free state tax For the aircraft operator to be liable for the tax $. Federal free state tax 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. Federal free state tax Commercial aviation. Federal free state tax   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. Federal free state tax However, commercial aviation does not include any of the following uses. Federal free state tax Any use exclusively for the purpose of skydiving. Federal free state tax Certain air transportation by seaplane. Federal free state tax See Seaplanes under Transportation of Persons by Air in chapter 4. Federal free state tax Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. Federal free state tax For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. Federal free state tax 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. Federal free state tax For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. Federal free state tax Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. Federal free state tax See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. Federal free state tax 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 $. Federal free state tax 141 per gallon. Federal free state tax The fractional ownership program manager is liable for the tax. Federal free state tax The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. Federal free state tax If the surtax is imposed, the following air transportation taxes do not apply. Federal free state tax Transportation of persons by air. Federal free state tax Transportation of property by air. Federal free state tax Use of international air travel facilities. Federal free state tax These taxes are described under Air Transportation Taxes, later. Federal free state tax 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. Federal free state tax 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. Federal free state tax Fractional program aircraft. Federal free state tax   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. Federal free state tax S. Federal free state tax   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. Federal free state tax In such situations, the flight is not commercial aviation. Federal free state tax Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. Federal free state tax Fractional owner. Federal free state tax   Any person owning any interest (including the entire interest) in a fractional program aircraft. Federal free state tax Dry lease aircraft exchange. Federal free state tax   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. Federal free state tax Special rule relating to deadhead service. Federal free state tax   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. Federal free state tax More information. Federal free state tax   See section 4043 for more information on the surtax. Federal free state tax 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. Federal free state tax Certificate. Federal free state tax   The certificate may be included as part of any business records normally used for a sale. Federal free state tax See Model Certificate K in the Appendix. Federal free state tax   A certificate expires on the earliest of the following dates. Federal free state tax The date 1 year after the effective date (not earlier than the date signed) of the certificate. Federal free state tax The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. Federal free state tax The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. Federal free state tax   The buyer must provide a new certificate if any information on a certificate has changed. Federal free state tax   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. Federal free state tax Exempt use. Federal free state tax   The rate on kerosene for use in aviation is $. Federal free state tax 001 (LUST tax) if it is removed from any refinery or terminal directly into the fuel tank of an aircraft for an exempt use. Federal free state tax An exempt use includes kerosene for the exclusive use of a state or local government. Federal free state tax There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Federal free state tax Flash title transaction. Federal free state tax   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. Federal free state tax 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. Federal free state tax 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. Federal free state tax Reseller statement. Federal free state tax   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. Federal free state tax Credits or Refunds. Federal free state tax   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). Federal free state tax A claim may be made by a registered ultimate vendor for certain sales. Federal free state tax For more information, see chapter 2. Federal free state tax Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. Federal free state tax Other Fuels include alternative fuels. Federal free state tax 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. Federal free state tax Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. Federal free state tax Qualified methanol and ethanol fuels. Federal free state tax   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. Federal free state tax The tax rates are listed in the Instructions for Form 720. Federal free state tax Partially exempt methanol and ethanol fuels. Federal free state tax   A reduced tax rate applies to these fuels. Federal free state tax Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. Federal free state tax The tax rates are listed in the Instructions for Form 720. Federal free state tax Motor vehicles. Federal free state tax   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. Federal free state tax They are propelled by a motor. Federal free state tax They are designed for carrying or towing loads from one place to another, regardless of the type of material or load carried or t