21.7.8  Excise Taxes (Cont. 1)

21.7.8.4 
Excise Tax Procedures

21.7.8.4.1 
Form 720, Quarterly Federal Excise Tax Return

21.7.8.4.1.6  (02-20-2013)
Form 720, Schedule C Claims

  1. The Schedule C is used to make a claim against current excise tax liability reported in Part III, line 3, of Form 720. The total Schedule C claim amount is reported on line 4. Adjustments are input on MFT 03 with the appropriate credit reference number (CRN). The CRN will generate a TC 766 (refundable credit). A CRN with a minus sign (-) will generate a TC 767 (reversal of refundable credit).

  2. A taxpayer should not use a Schedule C:

    • If a liability has not been reported on Form 720 , Part l or Part II.

    • To make adjustments to liability reported on Form 720 filed for prior quarters. The Form 720X, Amended Quarterly Federal Excise Tax Return, is used for this purpose.

    • To claim credit amounts already reported or will be reported on Form 4136, Credits for Federal Tax Paid on Fuels, or Form 8849, Claim for Refund of Excise Taxes.

    • For an IRC section 4081(e) refund. The refund must be reported on Form 8849, Schedule 5, IRC Section 4081(e) Claims for Refund.

    • To claim a refund of the surtax on any liquid used in a fractional ownership program aircraft as fuel.

    • If requesting an abatement or refund of interest under section 6404(e), due to an IRS error, or an abatement or refund of a penalty or addition to tax under section 6404(f) due to erroneous IRS written advice. The taxpayer should use Form 843, Claim for Refund and Request for Abatement. Also, use Form 843 to request refund of the penalty for misuse of dyed fuel.

  3. The following table provides the nontaxable uses of fuel allowable on Form 720, Schedule C. The taxpayer must enter the number from the table in the "Type of Use" column on Schedule C (lines 1 through 6, lines 9d and e, and lines 15b through 15d).

    Number Type of Use
    1 On a farm for farming purposes
    2 Off-highway business use (for business use other than in a highway vehicle registered or required to be registered for highway use) (other than use in mobile machinery)
    3 Export
    4 In a boat engaged in commercial fishing
    5 In certain intercity and local buses
    6 In a qualified local bus
    7 In a bus transporting students and employees of schools (school buses)
    8 For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use)
    9 In foreign trade
    10 Certain helicopter and fixed-wing aircraft uses
    11 Exclusive use by a qualified blood collector organization
    12 In a highway vehicle owned by the United States that is not used on a highway
    13 Exclusive use by a nonprofit educational organization
    14 Exclusive use by a state, political subdivision of a state, or the District of Columbia
    15 In an aircraft or vehicle owned by an aircraft museum
    16 In military aircraft

  4. If a claim on lines 1 through 9, 13, 14, or 15b through 15e was not made for any gallons, an annual claim may be made. Generally, an annual claim is made on Form 4136 for the income tax year during which the fuel was used by the ultimate purchaser, sold by the registered ultimate vendor, used to produce a mixture, or used in mobile machinery. The Form 4136 instructions provide additional information.

21.7.8.4.1.6.1  (02-20-2013)
Nontaxable Use of Fuel Claims (Lines 1 through 6 and Lines 15b through 15d)

  1. The nontaxable use of fuel claim requirements for lines 1 through 6 and lines 15b through 15d are:

    • The amount of the claim must be at least $750 (combining amounts on lines 1 through 6 and 15b through 15d). This amount may be met by: making a claim for fuel used during any quarter of the claimant's income tax year or aggregating amounts from any quarter of the claimant's income tax year for which no other claim has been made.

    • Claims must be filed during the first quarter following the last quarter of the claimant's income tax year included in the claim.

    • Only one claim may be filed for any quarter.

    • The fuel must have been used for a nontaxable use during the period of claim.

    • The ultimate purchaser is the only person eligible to make the claim.

    Note:

    Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation. Proof of exportation includes:

    • A copy of the export bill of lading issued by the delivering carrier,

    • A certificate by the agent or representative of the export carrier showing actual exportation of the fuel,

    • A certificate of landing signed by a customs officer of the foreign country to which the fuel is exported, or

    • A statement of the foreign consignee showing receipt of the fuel.

  2. The table below provides the type of non-taxable fuel, type of use, CRN, and tax rate for each non-taxable fuel allowable on Schedule C.

    Type of Non-taxable Fuel Type of Use Credit Reference Number (CRN) Tax Rate per gallon
    Gasoline 2, 4, 5, 7, or 12 (The fuel must have been used during the period of the claim.) Type of use 2 does not include any personal use or use in a motorboat.
    • 362

    • 411

    • $.183

    • $.184

    Aviation Gasoline 9, 10, or 16 (For line 2b, the fuel must have been used during the period of the claim; for line 2d, the fuel must have been used during the period of claim for type of use 9).
    • 354

    • 324

    • 412

    • 433

    • $.15

    • $.193

    • $.194

    • $.001

    Undyed Diesel Fuel 2, 6, 7, 8, or 12 (for line 3a, the fuel must have been used during the period of claim; type of use 2 does not include any personal use or use in a motorboat; type of use 8 includes use as heating oil and use in a motorboat.)
    • 353

    • 350

    • 360

    • 413

    • $.243

    • $.17

    • $.243

    • $.244

    Undyed Kerosene (other than kerosene used in aviation) 2, 6, 7, 8, or 12 (for line 4a, the fuel must have been used during the period of the claim; type of use 2 does not include any personal use or use in a motorboat; type of use 8 includes use as heating oil and use in a motorboat; for lines 4e and 4f, the fuel must have been used during the period of the claim for type of use 2.)
    • 346

    • 347

    • 414

    • 377

    • 369

    • $.243

    • $.17

    • $.244

    • $.043

    • $.218

    Kerosene used in Aviation For lines 5a and 5b, the fuel must have been used during the period of the claim in commercial aviation. For lines 5c and 5d the fuel must have been used during the period of the claim for type of use 1, 9, 10, 11, 13, 15, or 16. For line 5e, the kerosene must have been used during the period of the claim for type of use 9.
    • 417

    • 355

    • 346

    • 369

    • 433

    • $.200

    • $.175

    • $.243

    • $.218

    • $.001

    Alternative Fuel 1, 2, 4, 5, 6, 7, 11, 13, 14, or 15 (The alternative fuel must have been used during the period of the claim and the ultimate purchaser is the only person eligible to make this claim.) For type of use 5, see Form 720 instructions.
    • 419

    • 420

    • 421

    • 422

    • 423

    • 424

    • 425

    • 435

    • $.183

    • $.183

    • $.183

    • $.183

    • $.243

    • $.243

    • $.243

    • $.183

    Note:

    There is a reduced credit rate for use in certain intercity and local buses (type of use 5). See Form 720 instructions for the credit rate for type of use 5.

21.7.8.4.1.6.2  (02-20-2013)
Ultimate Vendor Claims (Lines 7 through 11)

  1. The taxpayer must be registered (Form 637, Application for Registration) to file an ultimate vendor claim on Schedule C.

  2. The ultimate vendor table under IRM 21.7.8.4.5.3(2) provides the Credit Reference Number (CRN), credit rate, and claim requirements for each type of fuel.

21.7.8.4.1.6.3  (02-20-2013)
Fuel Mixtures and Alternative Fuel Claims (Lines 12 through 14)

  1. The alcohol fuel mixture credit (line 12) expired on claims for periods after 12/31/2011. The Schedule C section has been reserved for future use.

  2. The biodiesel or renewable diesel mixture credit (line 13) expired on claims that relate to periods after 12/31/2009 (Line 13, Biodiesel or Renewable Diesel Mixture Credit of Form 720, Schedule C). However, the credits were retroactively reinstated by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Pub. L. 111–312). The credits expired again on 12/31/2011 and retroactively reinstated through 12/31/2013 by the American Taxpayer Relief Act of 2012 (Pub. L. 112–240).

    Note:

    For periods during the calendar year 2010, one-time claims for these credits must be made on Form 8849, Schedule 3, or on Form 4136. See Notice 2011–10 and the Form 8849, Schedule 3 (Rev. December 2010), and Form 4136 for additional information.

    Note:

    Form 720X must be used for 2012 retroactive claims. See IRM 21.7.8.4.7.2, American Taxpayer Relief Act (ATRA) of 2012 Retroactive Fuel Claims, for additional information.

  3. For claims that relate to periods other than the calendar years of 2010 and 2012, a biodiesel or renewable diesel mixture credit must first be taken on Form 720, Schedule C, to reduce the taxable fuel liability for gasoline, diesel fuel, and kerosene (IRS Nos. 60, 104, 105, 107, 119, 35, 69, 77, 111, 62, and 14) reported on Form 720. Any excess credit may be filed on Form 720, Schedule C, Form 8849, Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit, Form 4136, Credit for Fuel Tax Paid on Fuels, or Form 8864, Biodiesel and Renewable Diesel Fuels Credit.

  4. The biodiesel fuel credit may not be claimed for biodiesel produced outside the United States for use as a fuel outside the United States. The United States includes any possessions of the United States. The person that produced and sold or used the mixture in their trade or business is the only person eligible to make this claim. The credit is based on the gallons of biodiesel or renewable diesel in the mixture. The claim requirements are below. :

    • The claim must be for a biodiesel or renewable diesel mixture sold or used during a period that is at least 1 week

    • The amount of the claim must be at least $200.00. To meet this minimum, amounts from lines 13 and 14 may be combined. (If this requirement and the one above cannot be met, the taxpayer must file an annual claim Form 4136, Credit for Federal Tax Paid on Fuels.)

    • The biodiesel used to produce the biodiesel mixture must meet ASTM D6751 and meet the Environmental Protection Agency's (EPA) registration requirements for fuels and fuel additives under section 211 of the Clean Air Act. Used in aviation, kerosene is treated as if it is diesel fuel

    • The renewable diesel used to produce the renewable diesel mixture must be derived from biomass, meet ASTM D975, D396, or other equivalent standard approved by the IRS, and meet EPA's registration requirements for fuels and fuel additives under section 211 of the Clean Air Act. Renewable diesel also includes fuel derived from biomass that meets a Department of Defense specification for military jet fuel or an ASTM specification for aviation turbine fuel

    • The Certificate for Biodiesel and if applicable, Statement of Biodiesel Reseller, must be attached to the first claim filed that is supported by the certificate or statement. (See the Form 720 Instructions for additional information.)

  5. The alternative fuel credit and alternative fuel mixture credit (line 14) expired on claims that relate to periods after 12/31/2009. The credits were retroactively reinstated by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Pub. L. 111–312). The credits expired again on 12/31/2011 and retroactively reinstated through 12/31/2013 by the American Taxpayer Relief Act of 2012 (Pub. L. 112–240).

    Note:

    The 2010 calendar year period claims must be a single (one-time) claim submitted on Form 8849, Schedule 3, or Form 4136. See Notice 2011–10 and the Form 8849, Schedule 3 (Rev. December 2010), and Form 4136 for additional information.

    Note:

    The 2012 retroactive claims must be filed on Form 720X. See IRM 21.7.8.4.7.2, American Taxpayer Relief Act (ATRA) of 2012 Retroactive Fuel Claims

    , for additional information.

  6. The alternative fuel credit claimant is the registered alternative fueler who:

    • Sold an alternative fuel at retail and delivered it into the fuel supply tank of a motor vehicle or motorboat,

    • Sold an alternative fuel, delivered it in bulk for taxable use in a motor vehicle or motorboat and received the required statement from the buyer,

    • Used an alternative fuel (not sold at retail or in bulk as described above) in a motor vehicle or motorboat, or

    • Sold an alternative fuel for use as a fuel in aviation.

  7. The alternative fuel credit must first be taken on Schedule C to reduce the liability for alternative fuel (IRS Nos. 112, 118, 120, 121, 122, 123, 124, and 79) reported on Form 720. Any excess credit may be claimed on Schedule C (720), Form 8849 (Schedule 3), or Form 4136.

  8. The alternative fuel mixture credit claimant is the registered alternative fueler that produced and sold or used the mixture as a fuel in their trade or business. The credit is based on the gallons of alternative fuel in the mixture.

  9. The alternative fuel mixture credit must first be taken on Schedule C to reduce the taxable fuel liability for gasoline, diesel fuel, and kerosene (IRS Nos. 60, 104, 105, 107, 119, 35, 69, 77, 111, 62, and 14) reported on Form 720.

    Note:

    Alternative fuel mixtures produced after 12/31/2011 can only be claimed on Schedule C (Form 720).

  10. The alternative fuel credit and alternative fuel mixture credit may not be claimed for alternative fuel produced outside the United States for use as a fuel outside the United States. The United States includes any possession of the United States. The alternative fuel credit claimant must be registered by the IRS with a Form 637 Registration, Activity Letter "AL" . The alternative fuel mixture credit claimant must have an activity letter "AM."

21.7.8.4.1.6.4  (02-20-2013)
Other Claims (Line 15)

  1. Under IRC section 4051(d), if taxed tires are sold on or in connection with the sale of a vehicle that is taxable under IRC section 4051, a credit (only) can be taken in the amount of the tax on Schedule C, Other Claims, line 15a, using CRN 366. The credit must be claimed by the person liable for the tax reported on IRS No. 33 (retail tax on trucks). These claims are not allowable on Form 8849.

  2. Exported dyed diesel fuel, and dyed kerosene claims that are exported in a trade or business, may be filed during the period of the claim on Schedule C, "Other Claims" lines 15b and 15c. Claims for exported gasoline blendstocks taxed at $.001 per gallon may be made on line 15b. (Claims for exported gasoline blendstocks taxed at $.184 per gallon are made on Schedule C, line 1b, Nontaxable Use of Gasoline.) The claim rate for each fuel is $.001 per gallon.

  3. Diesel-water emulsion claims may be filed for fuel used during the period of claim. The claim requirements are the same as nontaxable fuel under IRM 21.7.8.4.1.6.1, Nontaxable Use of Fuel Claims. The table below describes the type of fuel, the type of use, CRN, claim rate and claim location (line number) on Schedule C:

    Type of Fuel Type of Use (See Type of Use Table under IRM 21.7.8.4.1.6) CRN Claim Rate Claim Can be Filed On
    Diesel water fuel emulsion 1, 2, 3, 5, 6, 7, 8, or 12 309 $.197 "Other Claims" , Schedule C, line 15(d)
    In certain intercity and local buses 5 309 $.124 "Other Claims" Schedule C, line 15(d)
    Exported 3 306 $.198 "Other Claims" Schedule C, line 15(d)
    Undyed diesel fuel taxed at $.244 Used to produce a diesel-water fuel emulsion 310 $.046 "Other Claims" , Schedule C, line 15(d) Undyed diesel fuel claim can also be filed on Form 8849, Schedule 6. (See IRM 21.7.8.4.5.7.12 for requirements.) The claimant must enter their registration number on line 15d.

  4. Registered credit card issuers can file a claim on Form 720, Schedule C, "Other Forms" line 15e, and Form 8849, Schedule 8, Registered Credit Card Issuers. The registered credit card issuer is the only person eligible to make this claim. The claimant must enter their registration number on line 15e of Schedule C. The allowable sales are:

    Allowable Sales CRN Claim Rate
    Aviation gasoline 324 $.193
    Gasoline 362 $.183
    Diesel fuel 360 $.243
    Kerosene 346 $.243
    Kerosene for use in aviation 369 $.218

  5. Tire credit claims (lines 15f through 15h) are allowed on Form 720, Schedule CForm 8849, Schedule 6. See IRM 21.7.8.4.5.7.10, Form 8849, Schedule 6, Tire Tax. A credit or refund (without interest) is allowable on the tax paid on tires if the tires have been:

    • Exported

    • Sold to a state or local government for its exclusive use

    • Sold to a nonprofit educational organization for its exclusive use

    • Sold to a qualified blood collector organization for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood

    • Used or sold for use as supplies for vessels

    • Sold in connection with qualified intercity, local, or school buses

      Note:

      A credit or refund (without interest) is also allowable on tax paid on tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above.

  6. The person who paid the tire tax is eligible to make the claim and must include:

    • A detailed description of the claim

    • Any additional information required by the regulations

    • How the claim amount was figured

    • Any other information to support the claim

    • The number of tires claimed for each credit reference number

      Note:

      The claim must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later.

  7. See IRM 21.7.8.4.1.4.7.1, Excise Tire Tax, for tire count adjustment procedures. See paragraph 1 above for information on tire credits under IRC section 4051(d).

  8. In addition to other claims reported on line 15 of Form 720 Schedule C, claims relating to the taxes listed in the table below may also be claimed on lines 15(i) thru 15(k). The taxpayer must include:

    • A detailed description of the claim

    • Any additional information required by the regulations

    • The amount of the claim

    • How the claim amount was figured

    • Any other information to support the claim

    Tax CRN Correlating IRS No.
    Ozone-depleting chemicals (ODCs) 398 98 (Tax figured on Form 6627)
    Oil spill liability 349 18 an 21 (Tax figured on Form 6627)
    Truck, trailer, and semitrailer chassis and bodies, and tractors 383 33 (Tax figured on 12 percent of sales price)
    Gas guzzler automobiles 340 40 (Tax figured on Form 6197, could be one time filer.)
    Vaccines 397 97
    Sport fishing equipment 341 41 (Tax is 10 percent of sales price)
    Fishing rods and fishing poles 308 110 (Tax is 3 percent of sales price)
    Fishing tackle boxes 387 114 (Tax is 3 percent of sales price)
    Electronic outboard motors 342 42 (Tax is 3 percent of sales price)
    Bows, quivers, broadheads, and points 344 44 (Tax is 11 percent of sales price)
    Arrow shafts 389 117 (Tax is $.48 per shaft)

21.7.8.4.1.7  (01-08-2010)
Form 720X, Amended Quarterly Federal Excise Tax Return

  1. Form 720X is used to report adjustments to tax liability reported for previous quarters.

  2. Form 720X,, line 2, must be used for any adjustments to IRC section 4051(d), tire credit. A tax credit may be taken equal to the amount of tax that has been imposed on each tire that is sold on, or in connection with, the first retail sale of a taxable vehicle reported on IRS No. 33. Form 720X, must show an adjustment to IRS No. 33 on line 1 to allow the credit. Adjust the credit using CRN 366.

  3. A claimant must be registered to file a claim for an alternative fuel credit and/or an alternative fuel mixture credit. If the claimant is not registered, they must apply for registration on Form 637, Application for Registration. Form 720X, line 2, must be used to report any adjustment to IRC section 6426, fuel credits. The claimant must have first used Form 720, Schedule C, to reduce their IRC section 4041 or IRC section 4081 fuel liability. (See Form 720 X instructions, line 2.) The claimant must use a separate line for each adjustment. See the table below for applicable types of credit, CRNs and credit rates.

    Reminder:

    On 12/31/2009, Biodiesel, Renewable Diesel Mixture Credits, Alternative Fuel Credits, and Alternative Fuel Mixture Credits expired on claims that relate to periods after 12/31/2009. However, the credits were retroactively reinstated by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Pub. L. 111–312). The credits expired on 12/31/2011. For periods during the calendar year 2010, claims for these credits must be made on Form 8849, Schedule 3 , or on Form 4136 . See Notice 2011–10 and IRM 21.7.8.4.5.4 for additional information about how to process claims for these credits received for periods occurring during calendar year 2010. Alcohol Fuel Credits expired 12/31/2011 and the Liquefied Hydrogen Alternative Fuel credit does not expire until 12/31/2014.

    Credit CRN Credit Rate
    Alcohol fuel mixtures containing ethanol 393 $.45
    Alcohol fuel mixtures containing alcohol (other than ethanol) 394 $.60
    Biodiesel (other than agri-biodiesel) mixtures 388 $1.00
    Agri-biodiesel mixtures 390 $1.00
    Renewable diesel mixtures 307 $1.00
    Liquefied petroleum gas (LPG) 426 $.50
    "P Series" fuels 427 $.50
    Compressed natural gas (LPG) 428 $.50
    Liquefied hydrogen 429 $.50 (Does not expire until 12/31/2014)
    Any liquid fuel derived from coal (including peat through the Fischer-Tropsch process 430 $.50
    Liquid hydrocarbons 431 $.50
    Liquefied natural gas (LNG) 432 $.50
    Liquefied gas derived from biomass 436 $.50
    Compressed gas derived from biomass 437 $.50

    Note:

    Form 720X, line 6, must be completed and provide a detailed explanation of each adjustment and the computation of the amount. The computation must include the number of gallons and credit rate per gallon. Any certificates or statements required for Schedule C lines, 12, 13, and 14 must also be attached. See Form 720X for additional information

    .

  4. The IRC section 6415 conditions for claim allowance on Form 720X apply to IRS Nos. 22, 26, 27, and 28. The claimant must have repaid the amount of the tax to the person from whom it was collected or have the consent of that person for the allowance of the adjustment.

  5. The IRC section 6416(a) conditions for claim allowance on Form 720X apply to all other IRS Nos. except 18, 19, 20, 21, 29, 30, 31, 51, 64, 98, and 115, 116 and 117; or if tax is based on use of IRS Nos. 61, 71, 79, and 112, 118, 120-124, and 101. IRS Nos. 61 and 101 can only be adjusted for periods ending before October 1, 2006. The claimant must not have included the tax in the price of the article and has not collected the tax from the purchaser or has the written consent of the ultimate purchaser for the allowance of the adjustment.

  6. For each adjustment reported on line one of Form 720X, a statement must be attached, or line 6 can be used for providing:

    1. A detailed description of each adjustment, and

    2. A computation of the amount claimed

      Note:

      The supporting evidence is not required to be submitted with the claim.

  7. Input any adjustment on MFT 03 for the quarter in which the tax was originally reported, or should have been reported, using TC 291 for a tax decrease or TC 290 for a tax increase, using the appropriate IRS No. Credit interest is allowable on an overpayment of tax liability report on a Form 720 filed for previous quarters.

  8. If the box on line 5b of Form 720X is checked, the overpayment is shown on line 7 of Form 720. Line 6 of Form 720 should include the amount from line 7, if any, as an overpayment from a previous quarter.

  9. Input any adjustment on MFT 03 for the quarter in which the tax was originally reported, or should have been reported, using TC 291 for a tax decrease or TC 290 for a tax increase on MFT 03 and appropriate IRS No. See IRM 20.1.4.10, Form 720 Reporting Requirements, if a failure to deposit penalty may apply.

21.7.8.4.1.7.1  (02-09-2005)
Form 720X, Tax Increase

  1. For tax increases, input the tax increase on the appropriate prior tax period.

  2. If you cannot determine there is an overpayment from the current period to satisfy the tax increase:

    1. Wait for the TC 150 to post on the current quarter.

    2. If there is an overpayment on the current quarter, apply the overpayment to the prior quarter being adjusted, using TC 820 and TC 700.

    3. Use the date the overpayment became available, which would be the due date/received date (whichever is later) of the current quarter.

    4. Do not restrict interest. Normal debit interest (underpayment) rules apply.

    5. Address the late deposit penalty and assess if applicable.

21.7.8.4.1.7.2  (02-09-2005)
Form 720X, Tax Decrease

  1. For tax decreases, see chart below:

    If Then
    Decrease is over ≡ ≡ ≡ Send Category A.
    Decrease is over ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Use expedite procedures and send Category A.
    Claim (Form 720X) allowed
    1. Input the tax decrease on tax period being corrected.

    2. If the taxpayer requested a refund (Line 5, a), use amended claims date and allow overpayment to refund.

    3. If the taxpayer is using the overpayment against their tax liability on the current quarter (Line 5, b), apply credit using TC 820 and TC 700.

      • On the 820 side, use the RDD of the tax period you are adjusting as the date the overpayment became available. On the 700 side, use the return due date (RDD) of the current quarter.

      • Compute interest from the later of the RDD, Late Return Received Date, Return Processible Date, or Credit Availability Date of the quarter being adjusted to the RDD of quarter where the overpayment is being used.

    4. If the taxpayer does not check either Line 5 box, use amended claims date and allow overpayment to refund.

    Claim (Form 720X) disallowed Input appropriate disallowance adjustment and letter. If CAT-A, follow any special instructions provided by the Excise Revenue Agent.

  2. If it is necessary to compute credit interest on a Form 720X overpayment, see IRM 20.2.4, Overpayment Interest, and the chart below for assistance:

    If Then
    Credit interest before 1/1/99 for a "Non-Corporate" taxpayer Compute using COMPAC.
    Credit interest on or after 1/1/99 for a "Non-Corporate" taxpayer Compute using COMPA or COMPAD.
    Credit interest before 1/1/95 for a "Corporate" taxpayer, regardless of the overpayment amount (See IRM 20.2.4.9 , Special Credit Interest Rules for Corporations, for the definition of a "Corporate" taxpayer.) Compute using COMPAC.
    Credit interest on or after 1/1/95 for a "Corporate" taxpayer and the overpayment amount is less than or equal to $10,000

    Caution:

    If the GATT threshold has been met, the overpayment will be computed at the GATT interest rate (COMPAG), regardless of the overpayment amount. See IRM 20.2.4.9.2, Determining the GATT Threshold.

    Compute using COMPAC.
    Credit interest after 12/31/94 for a "Corporate" taxpayer and the overpayment amount is greater than $10,000, or the GATT threshold has previously been met (See IRM 20.2.4.9.2, Determining the GATT Threshold.) Compute using COMPAG (GATT).

    Note:

    Add the COMPAC (first $10,000) with the GATT interest (over $10,000) for the total interest allowed.

21.7.8.4.1.8  (10-01-2008)
CP 183, Missing IRS No., Form 720

  1. A CP 183 is generated and issued to the taxpayer when the taxpayer does not indicate an IRS No. on an original Form 720. In these cases:

    1. The returns are processed with IRS No. 80.

    2. The CP 183 requests the taxpayer to furnish a breakdown of the reported tax liability by IRS No.

  2. If taxpayer replies:

    1. Determine the correct IRS No. from taxpayer's correspondence.

    2. Input TC 290 in the appropriate blocking series.

    3. Adjust IRS Nos. by inputting the IRS No. 80 originally used with a minus (-) amount and inputting the correct IRS No. for the same amount.

    4. Adjust any penalties and/or interest as needed. Pay particular attention to FTD penalties which may need to be adjusted. (IRS Nos. 20, 41, 42, 44, 51, 64, 106, 110, 114, and 117; net tax liability of less than $2,500; or one time filings on gas guzzler and luxury tax do not require deposits.)

  3. If taxpayer fails to reply:

    1. Reject back to the taxpayer for correct IRS No.

    2. If information is received by telephone, see (2) above.

21.7.8.4.1.9  (10-01-2008)
Form 720-TO, Terminal Operator Report, and Form 720-CS, Carrier Summary Report

  1. Form 720-TO, Terminal Operator Report, is an information return used by terminal operators to report their monthly receipts and disbursements of all liquid products to and from all approved terminals.

  2. Form 720-CS, Carrier Summary, is an information return used by bulk transport carriers who receive liquid product from an approved terminal or deliver liquid product to an approved terminal to report their monthly receipts and deliveries.

  3. Form 720-TO and Form 720-CS must be filed monthly. The report is due the last day of the month following the month in which the transaction occurs.

    Example:

    The first month for reporting was April, 2009. The return had to be filed by May 31, 2009.

  4. Electronic filing is required for each return reporting 25 or more transactions a month. However, all taxpayers are encouraged to electronically file. The forms are filed electronically through the Excise Summary Terminal Activity Reporting System (ExSTARS). Additional information is available at www.irs.gov/excise and in Pub 3536, Motor Fuel Excise Tax EDI Guide.

  5. Forward Form 720-TO and Form 720-CS returns and correspondence to:


    Internal Revenue Service
    Attn: Excise Operation
    Stop 5701 G
    Cincinnati, OH 45999

21.7.8.4.1.10  (10-01-2008)
Disregarded Entities

  1. Generally, after December 31, 2007, qualified subchapter's subsidiaries (QSubs) and eligible single-owner disregarded entities are treated as separate entities for excise tax payments and reporting purposes. QSubs and eligible single-owner disregarded entities must pay and report excise tax activities, register for excise tax activities, and claim any refunds, credits, and payments under the entity's Employer Identification Number (EIN). These actions cannot take place under the owner's Taxpayer Identification Number (TIN). Some QSubs and disregarded entities may already have an EIN. If the taxpayer is unsure if they have an EIN, the taxpayer may call the IRS Business and Specialty Tax line at 1-800-829-4933.

  2. Generally, QSubs and eligible single-owner disregarded entities will continue to be treated as disregarded entities for other federal tax purposes (other than employment taxes). Example: Taxpayers filing a Form 4136, Credit for Federal Tax Paid on Fuels, with Form 1040, Individual Income Tax Return, can use the owner's TIN.

21.7.8.4.1.11  (01-28-2010)
Electronic Filing for Form 720, Quarterly Excise Tax Return

  1. Electronic filing for Form 720, Quarterly Federal Excise Tax Return is available through an Electronic Return Originator (ERO), transmitter, and/or Intermediate Service Provider (ISP) participating in the IRS e-file program for excise taxes. The ERO, ISP and Transmitter can be separate entities; however, most of the electronic filed returns are filed using a web based service provider.

  2. The Modernized e-File (MeF) system allows two alternative signature options for business taxpayers and the ERO to sign electronic returns filed via MeF. The taxpayer must decide whether to use a Personal Identification Number (PIN) to sign the return or whether they authorize the ERO to enter the PIN chosen by the ERO. The filer can choose to sign the applicable Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, that must be scanned and attached to the return when transmitted. A paper copy of the scanned Form 8453, should not be mailed to the IRS. The business filer can also choose the Practitioner PIN Option, using the applicable Form 8879, e-file Signature Authorization, that is retained by the ERO as part of the taxpayer's record and is not sent to the IRS. An electronic return will be rejected if the required signatures are not present. See IRM 3.42.4, IRS e-file For Business Income Tax Returns, for additional information.

  3. The Centralized Excise Operations (CEO) uses a Service Level Agreement with the Input Corrections Operations (ICO) to identify and review Line 4 credits reported on an e-filed Form 720 , Quarterly Federal Excise Tax Return.

21.7.8.4.1.12  (10-01-2009)
Form 720, Excise Tax Reported on Duplicate, Amended, or Supplemental Returns

  1. A duplicate filing condition occurs when a return (TC 976) posts to a module already containing an original return (TC 150). IDRS generates a -A freeze which prevents any refund or offset from the tax module until an adjustment (TC 29X) is input. IDRS also generates a Transcript (TRNS) 193 or TRNS 293 which is associated with the TC 976 tax return. All excise duplicate filing conditions are systemically controlled on IDRS with category DUPX. All duplicate filing conditions age in 45 days and are not considered correspondence. If correspondence is attached to the duplicate return, the case must be re-controlled with category "TPRQ" . See IRM 21.7.9, BMF Duplicate Filing Conditions, for additional information.

  2. The -A freeze must be resolved before closing the case. Determine and resolve the duplicate filing condition by examining and comparing the return and IDRS information. Use the TRNS 193, duplicate return, CFOL command codes (CCs), and original return (secure only if absolutely necessary) to resolve the case.

  3. If the TRNS 193 is received with the duplicate return:

    • Research IDRS CCs and/or pull returns from Files to determine if the tax reported on the duplicate, amended or supplemental return should be considered as a tax increase or tax decrease. See IRM 21.7.9.4.1, Resolving TRNS 193s and Amended/Corrected/Supplemental Returns, for additional information.

    • If it is determined the duplicate return is a true duplicate (no change), see IRM 21.7.9.4.1.3, True Duplicate.

  4. If the TRNS 193 is received without the duplicate return attached:

    1. Research the Business Return Transaction File View (CC BRTVU) to determine if it is a true duplicate and/or for another tax period.

    2. If Files is unable to secure the return, attempt to call the taxpayer for a copy of the return(s).

    3. If unable to contact the taxpayer by telephone, input another request as "Special Search" , send Letter 418C to request a copy of the return, and suspend the case for 40 days.

    4. See IRM 21.7.9.4.1.2, TRNS 193 Received Without Duplicate Return.

  5. When adjusting accounts:

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • Use caution when inputting Hold Codes. See IRM 21.5.2.4.15, Rules on Hold Codes.

    • Posting Delay Codes are used to make some transactions post later than others when multiple transactions are required to adjust an account. See IRM 21.5.2.4.17, Posting Delay Code (PDC).

  6. Input TC 29X to adjust tax, use appropriate IRS No. to match tax adjustment. For credit adjustment, use appropriate CRN to match credit adjustment.

21.7.8.4.2  (06-15-2005)
Form 2290, Heavy Highway Vehicle Use Tax Return

  1. Form 2290, Heavy Highway Vehicle Use Tax Return, is used to figure and pay the tax due on highway motor vehicles with a taxable gross weight of 55,000 pounds or more used on public highways during the taxable period.

  2. A highway motor vehicle includes any self-propelled vehicle designed to carry a load over public highways, whether or not also designed to perform other functions.

  3. A public highway is any road in the United States that is not a private roadway. This includes federal, state, county, and city roads.

  4. The MFT is 60 and the tax class is 4.

21.7.8.4.2.1  (09-13-2012)
Form 2290, Taxable Period and Due Date

  1. The taxable period begins each July 1 and ends the following June 30.

  2. For vehicles first used in July of the taxable period, Form 2290 is due by August 31.

  3. For vehicles first used after July of the taxable period, Form 2290 for that period is due by the last day of the month following the month of first use.

  4. Some taxpayers file several tax returns for one tax period. This is usually done because they have several offices and each office needs its own Schedule 1. Do not send a 673C letter in these situations.

  5. The Form 2290 due date was extended for the tax period beginning July 1, 2011. On July 20, 2011, the IRS published temporary regulations (IR-2011–35; T.D. 9537; REG-122813–11) that postponed the return due date for vehicles first used in July, August, or September 2011 to November 30, 2011. The Form 2290 Instructions (Rev. July 2011) provide additional information.

  6. The Modernized eFile (MeF) system was not available from August 31, 2012 through September 4, 2012 for electronic filing of Form 2290. The IRS issued Notice 2012–57, Certain Filing Changes for Heavy Highway Vehicle Use Tax Return, to notify taxpayers of the e-file outage and provide guidance on extended filing and payment deadlines available to affected taxpayers. Taxpayers that electronically filed Form 2290 with a due date of August 31, 2012 are considered affected taxpayers. The notice provided specific guidance regarding the following:

    • The IRS granted an extension of time to electronically file Form 2290 to affected taxpayers whose due date is August 31, 2012. The extended due date is September 7, 2012. Taxpayers filing a paper Form 2290 must continue to file by the original due date of August 31, 2012.

    • The IRS granted an extension of time to pay the tax imposed by IRC 4481. Because this tax is due when a taxpayer files theForm 2290, affected taxpayers that take advantage of the September 7, 2012 electronic filing deadline and pay the tax by that date will be considered to have timely paid such tax. Taxpayers filing a paper Form 2290 must continue to pay their tax by August 31, 2012.

    • If an affected taxpayer e-files after September 7, 2012 and receives a system generated notice that imposes a penalty, the taxpayer may call the toll-free number provided on the notice with any questions about the computation of the penalty. The Centralized Excise Operation will have procedures to handle penalty computations.

21.7.8.4.2.2  (10-01-2010)
Form 2290, Who Must File

  1. A person must file a Form 2290 if the vehicle is registered, or required to be registered, in the person's name under state, District of Columbia, Canadian, or Mexican law, at the time:

    • The vehicle is first used on public highways during the period,

    • A suspended vehicle exceeds the mileage use limit (5,000 miles, 7,500 miles for agricultural vehicles), or

    • An increase in the taxable gross weight of the vehicle results in an additional tax liability

  2. A Form 2290 must also be filed by a person who acquires a vehicle for which tax had been suspended under the previous owner.

21.7.8.4.2.3  (09-19-2012)
Form 2290, Required Proof of Payment

  1. A State must receive proof of payment or an acceptable substitute from the taxpayer before it will register a taxable vehicle subject to the IRC 4481 tax, which is reported on Form 2290. In general, proof of payment consists of a receipted (stamped) Schedule 1 that is returned by the IRS after processing the tax return. The following list provides acceptable substitutes:

    • Photocopy of the Form 2290 (with the Schedule 1 attached) which was filed with the IRS and a photocopy of both sides of the cancelled check [Treas. Reg. 41–6001–2(c)(2)].

    • Original or a photocopy of the bill of sale showing that the vehicle was purchased either new or used within the last 60 days [Treas. Req. 41–6001–2(b)(1)].

      Note:

      During the extension period for the tax period beginning July 1, 2011 (See IRM 21.7.8.4.2.1, Form 2290, Taxable Period and Due Date), the taxpayer could register a newly acquired vehicle without proof of tax payment if they presented a bill of sale showing that the vehicle was purchased by the owner during the 150 days before the date the state received the application for registration.

    • The State may use the proof of payment for the immediately preceding taxable period if the taxpayer submits an application for registration in the months of July, August, or September [Treas. Reg. 41–6001–2(b)(4)].

  2. The table below will assist Centralized Excise Operations and Taxpayer Assistance Centers (TAC) employees with proof of payment determination.

    If ... And ... Then ...
    First Owner States they need a Schedule 1 so they can register their vehicle Ask if they have purchased the vehicle within the last 60 days:
    1. If yes,

      • they do not need a Schedule 1 to register the vehicle.

      • they must file a return and pay the tax.

      • State agency will register the vehicle with a Bill of Sale (original or photocopy.

    2. If no (more than sixty days),

      • the owner must file a return and pay the tax to receive a stamped Schedule 1 for registration.

    Second Owner Second owner is inquiring if they need to file Form 2290 and pay the tax on their vehicle Second owner must file Form 2290 by the last day of the month following the month the vehicle is first used by them on a public highway.
    • Second owner is liable for the tax for remaining months the vehicle is used by that owner on public highways through June 30th.

    • Return and payment are due by the last day of the month following the month they first use the vehicle on a public highway.

    • If tax was suspended by first owner, second owner may continue the suspension on the Form 2290 they file.

    • Second owner can use Bill of Sale (original or photocopy) within 60 days of purchase to register the vehicle.

    Note:

    The July 2011 revision of Schedule 1 was expanded to a full page to allow the entry of 24 vehicles. Taxpayers are instructed to complete and file two copies of the Schedule 1. Prior to July 2011, the Schedule 1 contained two sections. The top section was retained with the original tax return and the bottom section was stamped and returned to the taxpayer as proof of payment.

21.7.8.4.2.4  (01-08-2013)
Form 2290, Missing Schedule 1

  1. If the taxpayer filed a paper Form 2290, there is a possibility that the paper Schedule 1 can be misplaced by the taxpayer or lost during the mailing process described under IRM 21.7.8.4.2.3, Form 2290 Required Proof of Payment. Telephone requests for a missing Schedule 1 are received frequently by the Centralized Excise Operations.

  2. The Service will replace a missing Schedule 1 for the current tax period. If the taxpayer makes a request for a prior tax period, advise the taxpayer to file Form 4506, Request for Copy of Tax Return. See IRM 21.3.6.4.3, Taxpayer Request for Copies of Tax Returns, for additional information.

    Exception:

    If a state agency requires the taxpayer to provide a prior year(s) proof of payment for registration purposes, the Service will provide copies without a Form 4506. The taxpayer must provide documentation indicating the state’s prior year proof of payment requirement.

  3. The tax return must be filed and the tax paid before a stamped Schedule 1 can be obtained as proof of payment. If a payment is not found on the appropriate tax module and the caller indicates payment was sent to the IRS, research IDRS for the missing payment. See IRM 21.5.7.3, Missing Payments Research, for additional information.

  4. The taxpayer may use an acceptable proof of payment substitute to register a taxable vehicle. See IRM 21.7.8.4.2.3, Form 2290, Required Proof of Payment, for additional information.

  5. Before providing a replacement for a missing Schedule 1, verify that the replacement Schedule 1 reports the same amount and category of vehicles that was originally reported by the taxpayer.

  6. Use the chart below to assist an established (after the first year) Form 2290 filer with securing a replacement Schedule 1

    Note:

    If the taxpayer calls the Excise toll-free line and indicates a stamped Schedule 1 is required within 24 to 48 hours (i.e., the taxpayer is calling from a state Department of Motor Vehicles (DMV) office), this will be considered an emergency situation.

    Scenario If Taxpayer And Then
    1 Filed the return electronically (e-file) Paid the tax Advise the taxpayer to secure the Schedule 1 from their software developer/transmitter (online vendor). If the taxpayer does not have access to the vendor's website and the taxpayer needs a Schedule 1 immediately, follow these steps:
    1. Secure the Schedule 1 via the Employee User Portal (EUP).

    2. Verify the tax has been paid in full.

    3. Stamp the Schedule 1 with the official IRS "Received" or "Received with Remittance" date stamp, using the date of the payment shown on CC BMFOLT, or, if no tax due, the date the return was filed.

    2 Has not filed a return, not paid the tax This is an emergency Provide the following options:
    • The taxpayer may e-file the Form 2290. Direct the caller to the IRS e-file provider link at www.irs.gov/trucker.

    • The taxpayer may visit the nearest Taxpayer Assistance Center (TAC), to file a return, pay the tax, and have the Schedule 1 stamped.

    3 Has not filed a return, not paid the tax This is not an emergency Provide the following options:
    • The taxpayer may e-file the Form 2290. Direct the caller to the IRS e-file provider link at www.irs.gov/trucker.

    • The phone assistor may assist the caller with securing a blank Form 2290 and provide preparation guidance, if needed.

    • The taxpayer may visit the nearest Taxpayer Assistance Center (TAC), to file a return, pay the tax, and have the Schedule 1 stamped.

    4 Filed a return, paid the tax, has a copy of the Schedule 1 This is an emergency situation Provide the following options:
    • The phone assistor may assist the caller with obtaining a replacement Schedule 1 by following these steps:

    1. Advise the caller to fax a copy of the Schedule 1 to the local fax number.

    2. Verify the return has been filed and the tax paid in full.

    3. Stamp the Schedule 1 with the official IRS "Received" or "Received with Remittance" date stamp, using the date of the payment shown on CC BMFOL, or, it no tax was due, the date the return was filed. Fax or mail the Schedule 1 to the taxpayer.

    • The Taxpayer may visit the nearest Taxpayer Assistance Center (TAC) to obtain a stamped Schedule 1.

    5 Filed a return, paid the tax, did not keep a copy of Schedule 1, can provide you with the VIN(s) This is an emergency situation Provide the following options:
    • The phone assistor may assist the caller with obtaining a replacement Schedule 1 by following these steps:

    1. Prepare a new Schedule 1 for taxpayer by duplicating the original in its entirety.

    2. Verify the return has been filed and the tax paid in full.

    3. Stamp the Schedule 1 with the official IRS "Received" or "Received with Remittance" date stamp, using the date of the payment shown on CC BMFOLT, or, if no tax was due, the date the return was filed.

    4. Advise the caller that the IRS will review the original return and match the VIN numbers with the VIN numbers provided by phone. If the VIN numbers do not match, the IRS will assess any additional tax due and issue a balance due notice.

    • The taxpayer may visit the nearest Taxpayer Assistance Center (TAC) to obtain a stamped Schedule 1.

    6 Filed a return, paid the tax, did not receive stamped Schedule 1 This is not an emergency situation Provide the following options:
    • The taxpayer may be able to use an acceptable proof of payment substitute. Probe the caller and determine whether a substitute applies to the situation (See IRM 21.7.8.4.2.3, Form 2290, Required Proof of Payment.

    • The phone assistor may assist the caller with obtaining a replacement Schedule 1 by following these steps:

    1. Verify the return has been filed and the tax paid in full.

    2. Advise the caller we can request the original Form 2290 and send a copy of the Schedule 1. This process may take 4 to 6 weeks.

    3. If the caller prefers not to wait, provide the caller with the Form 2290, Schedule 1, Expedite Fax Line number (859–669–3981) OR advise the taxpayer to visit the nearest Taxpayer Assistance Center (TAC) to obtain a stamped Schedule 1..

21.7.8.4.2.5  (11-14-2011)
Form 2290, Taxpayer Payment

  1. The payment must show an Employer Identification Number (EIN) and the beginning date of the tax period. A Social Security Number (SSN) cannot be used to make a payment.

  2. There are three methods of payment:

    • Electronic Federal Tax Payment System (EFTPS)

    • Electronic funds withdrawal (direct debit) with electronic filing

    • Check or money order using the Form 2290–V, Payment Voucher

  3. Using EFTPS is voluntary. For the EFTPS payment to be timely, the taxpayer must make the transaction one business day before the payment is due. See IRM 21.7.8.4.2.11, Form 2290, Electronic Filing For Taxpayers Reporting 25 Or More Vehicles.

21.7.8.4.2.5.1  (11-14-2011)
Balance Due Payment

  1. Assisting taxpayers with balance due accounts is the responsibility of all contact employees. When a balance due inquiry is received by phone or correspondence, it is important to be aware of the Master File and Collection Status Codes to determine whether you should work the issue. See IRM 5.19.1–1, Collection Status Codes and Definitions, for detailed information.

  2. If the taxpayer can full pay the balance due amount now, provide the taxpayer with a payoff amount. See Exhibit 5.19.1.5.2, Can Full Pay Balance Due Now (Payoff), for additional information.

  3. If the taxpayer is unable to pay the Form 2290 tax liability in full, requests an extension to pay the tax, or has an outstanding balance due, the taxpayer is entitled to request an installment agreement (IA). However, the taxpayer cannot receive a stamped Schedule 1 to register a vehicle until the total tax is paid in full.

  4. If the taxpayer elects to request an IA, initiate the appropriate IA action (See IRM 5.19.1, Balance Due). If you do not have the authority to initiate an IA, forward the taxpayer to the appropriate Collection function. Once the installment payments are received and the total tax is paid in full, the taxpayer may request a stamped Schedule 1 from the Centralized Excise Operation. The Operation will verify full payment and issue the stamped Schedule 1.

    Reminder:

    The installment agreement (Status 60) is not the same as the previously allowed installment privilege (Status 20). Before the installment privilege was repealed in July 2005, it allowed the Form 2290 filer to pay the tax in four equal payments and receive a stamped Schedule 1 with the filing of the return and one-fourth of the tax paid.

21.7.8.4.2.6  (10-01-2010)
Form 2290, Taxable Gross Weight

  1. The "Tax Computation" table on page 2 provides the taxable gross weight for each vehicle category code (A through V) and the annual tax (vehicles used during July) due per taxable vehicle.

  2. Refer to Form 2290 instructions, Partial Period Tax Tables, Table 1, for the amount of prorated tax due for vehicles first used after July.

  3. The tax rate for logging vehicles is reduced by 25 percent. This reduction is reflected in the annual tax and partial period tax tables. A vehicle qualifies as a logging vehicle if:

    1. It is used exclusively for the transportation of products harvested from the forested site, or it exclusively transports the products harvested from the forested site to and from locations on a forested site (public highways may be used between the forested site locations), and

    2. It is registered (under the laws of the State or States in which the vehicle is required to be registered) as a highway motor vehicle used exclusively in the transportation of harvested forest products.

  4. Beginning July 1, 2005, the reduced rate of tax for Canadian and Mexican vehicles was repealed per the American Jobs Creation Act, HR 4520. Taxpayers reporting Canadian or Mexican vehicles must use column (1) (a) of Form 2290, "Tax Computation" table to figure their annual tax.

21.7.8.4.2.7  (01-01-2005)
Form 2290, Statement In Support Of Suspension Of Tax

  1. Statement in Support of Suspension of Tax, Part II of Form 2290, must be completed if taxpayer expects to use a vehicle on public highways 5,000 miles or less (7,500 miles or less for agricultural vehicles) during the tax period.

  2. Tax on that vehicle is suspended for the tax period if the mileage use limit is not exceeded.

21.7.8.4.2.8  (01-01-2005)
Form 2290, Vehicle Transferred while Tax is Suspended

  1. If vehicle is transferred while the suspension in effect, the suspension of tax continues until vehicle is used more than 5,000 miles (7,500 for agricultural vehicles), during taxable period. This includes miles vehicle was used by seller for portion of taxable period prior to transfer.

  2. Once vehicle use exceeds 5,000 miles (7,500 for agricultural vehicles), the new owner is liable for tax for taxable period.

  3. Seller (transferor) is to provide buyer (transferee) with statement that includes:

    • Transferor's name, address, and EIN

    • Vehicle Identification Number (VIN)

    • Date of transfer of vehicle

    • Odometer reading at beginning of period

    • Odometer reading at time of transfer

    • Transferee's name, address, and EIN

  4. New owner files Form 2290 by the last day of the month following the month in which vehicle was first used by the new owner and attaches statement to return.

  5. If transferor does not provide statement to transferee, then transferor is also liable for tax if the mileage use limit is exceeded. See IRM 21.7.8.4.2.12, Tax on Used Vehicles Acquired During the Tax Period, for filing and tax payment information for the second owner of a vehicle that was transferred during a taxable period when the vehicle was not under a suspension of tax.

21.7.8.4.2.9  (05-23-2006)
Form 2290, Taxable Gross Weight Increases within same Taxable Period

  1. If after filing Form 2290 , the taxable gross weight category of a vehicle increases within same taxable period, the taxpayer must file another Form 2290 reporting additional tax due.

  2. The required return and payment of tax is due by last day of month following month in which taxable gross weight increased and is reported on Form 2290, line 3, "Additional tax from increase in taxable gross weight."

  3. The Form 2290 Instructions provide a computation worksheet to determine the additional tax due. The worksheet is located under the Line 3 instructions.

  4. Because additional tax is not due until the last day of month following the month in which weight increased, input additional tax assessment with TC 298 using due date of second required return as interest start date.

21.7.8.4.2.10  (05-23-2007)
Form 2290, Exceeding Mileage Use Limit

  1. If Form 2290 has been filed to suspend the tax and the vehicle is used more than 5,000 miles (7,500 for agricultural vehicles), an amended Form 2290 must be filed and the tax paid.

  2. Once the mileage use limit is exceeded, tax is due for the taxable period, regardless of when the limit was exceeded and is computed on the basis of the month the vehicle was first used in that period. If a suspended vehicle exceeds 5,000 miles (7,500 for agriculture) within the tax period, the tax is due as follows:

    Vehicle Suspended First Used on Highway Exceeded 5,000 Miles (7,500 Agriculture Vehicle) Liable for Tax From
    July July April July 1 through June 30th
    July February May February 1 through June 30th

  3. No interest is charged if return is filed and tax is paid by last day of month following month in which vehicle use exceeded 5,000 miles (7,500 for agricultural vehicles).

  4. Assess tax using TC 298 with due date of return, on which vehicles were reported as taxable, as interest start date.

  5. The taxpayer is required to check the Amended Return box on page 1 of Form 2290 and to the right of "Amended Return" write the month in which the mileage use limit was exceeded. If the taxpayer does not indicate when the vehicle exceeded 5,000 miles (7,500 miles for agricultural vehicles), assess tax with TC 290 and let interest compute as normal. Contact taxpayer explaining that the month vehicle exceeded 5,000 miles (7,500 for agricultural vehicles) could not be established.

21.7.8.4.2.11  (10-01-2010)
Form 2290, Electronic Filing for Taxpayers Reporting 25 or More Vehicles

  1. Electronic filing for taxpayers reporting 25 or more vehicles is mandatory, per the American Jobs Creation Act, HR 4520, beginning July 1, 2005. The Excise Tax E-filing and Compliance Program (ETEC) became available for tax periods July 2007 and subsequent on August 8th, 2007.

    Note:

    Even though electronic filing is required by statute for taxpayers reporting 25 or more vehicles they may still file on paper until IRS issues regulations and further guidance.

  2. The Employee User Portal (EUP) is used to access electronically filed tax returns. See IRM 3.42.8.4.1, Employee User Portal (EUP), for system access information.

  3. If the tax is fully paid, the Schedule 1 for an electronically filed return is systemically sent to the electronic return originator (ERO). The ERO and/or the Intermediate Service Provider (ISP) will provide the taxpayer with the original electronic (water marked), copy of Schedule 1.

  4. The taxpayer can file multiple tax returns and/or amended returns electronically. See IRM 21.7.8.4.1.11, Electronic Filing for Form 720, Quarterly Excise Tax Return, for information on signature requirements.

21.7.8.4.2.11.1  (05-23-2007)
Schedule 1 (Form 2290), Consent to Disclosure of Tax Information

  1. Beginning July 1, 2007, the Consent to Disclose Tax Information document was included with the Form 2290. The document must be signed by the taxpayer and/or third party before information can be shared with participating states. The information shared includes:

    • VINS (vehicle identification numbers) reported on Schedule 1

    • Verification that tax has been paid (reported on line 6 of Form 2290)

  2. If the document is signed, IRS may disclose the information to the federal Department of Transportation (DOT), U.S. Customs and Border Protection (CBP), and to the state Departments of Motor Vehicles (DMV).

21.7.8.4.2.12  (02-04-2011)
Tax on Used Vehicles Acquired During the Tax Period

  1. If a previous owner of a registered vehicle uses the vehicle first during a taxable period, the previous owner is liable for the tax only for the months the vehicle was used by the previous owner. See IRM 21.7.8.4.2.15, Form 2290, Claims, for information about prorating the tax for claiming a refund. See IRM 21.7.8.4.2.8, Form 2290, Vehicle Transferred While Tax is Suspended, for information about vehicles transferred while tax is suspended.

  2. The second owner is liable for the tax for the remaining months of the taxable period the vehicle is used on public highways by the second owner. Form 2290 must be filed and the tax paid by the last day of the month after the month the vehicle is first used on a public highway.

  3. If the previous owner used the vehicle on public highways and has not paid the tax, and the new owner uses the vehicle before the end of the taxable period, the new owner becomes liable for the total tax for the entire period to the extent not paid by the previous owner. The new owner must file Form 2290 and pay the tax by the last day of the month after the month notification is received from the IRS that the tax has not been paid in full.

21.7.8.4.2.13  (09-17-2013)
Form 2290(SP) and Form 2290(FR)

  1. Form 2290(SP) and instructions are available for Spanish speaking taxpayers.

  2. Form 2290(FR) and instructions are available for French speaking taxpayers. The French version has been discontinued and is only available for the tax periods July 1, 2005 through July 1, 2011.

    Reminder:

    Form 2290 filers must have an Employer Identification Number to file the return and pay the tax. A Social Security Number cannot be used to file the tax return.

21.7.8.4.2.14  (06-15-2005)
Dual Registration

  1. If a taxable vehicle is registered in the name of both the owner and another person, the owner is liable for the tax. This rule also applies to dual registration of a leased vehicle.

  2. Any vehicle operated under a dealer's tag, license, or permit is considered registered in the name of the dealer.

21.7.8.4.2.15  (01-08-2013)
Form 2290, Claims

  1. Beginning January 1, 2005, use CRN 365 for line 5 (credit) adjustments. Submission Processing transcribes line 5 using CRN 365 in initial processing. If a credit adjustment is required for line 5, input using TC 290 and CRN 365. A TC 766 will generate for CRN 365. To reverse the credit, input TC 290 and CRN 365 (with a minus). The reversal will generate a TC 767.

  2. Taxpayers may use line 5 of the Form 2290 to claim a credit for tax paid in the three following circumstances:

    • Vehicle is destroyed or stolen before June 1 of the taxable period and is not used during the remainder of the taxable period

    • Vehicle was used 5,000 miles or less (7,500 for agricultural vehicles) during the prior taxable period

    • Vehicle was sold

  3. The amount of the line 5 credit cannot exceed tax liability reported on the return. Any excess credit must be claimed as a refund using Form 8849, Schedule 6.

    Note:

    A module credit balance of $10.00 or more will generate an L- Freeze Code. The module is frozen from refund or offset. The credit must be addressed to avoid future transcript generation. See IRM 21.5.6.4.23, L- Freeze, and Document 6209, Master File Freeze Codes, Section 8A.4, for freeze condition release information.

  4. Alternatively, the taxpayer can make a claim on Form 8849, Schedule 6, versus taking a line 5 (credit) on Form 2290. See IRM 21.7.8.4.5.7.11, Form 8849, Schedule 6, Form 2290, Claims Relating to Taxes Reported on Form 2290.

21.7.8.4.2.15.1  (09-17-2013)
Form 2290, Vehicle Destroyed, Stolen, or Sold

  1. A vehicle is destroyed when it is damaged by accident or other casualty to such an extent that it is not economical to rebuild.

  2. Taxpayer must attach an explanation of the damage by accident or theft.

    Note:

    A repossessed vehicle is not a sold vehicle. Any refund claim based on a repossessed vehicle must be disallowed with the appropriate disallowance letter.

  3. If one vehicle is traded for a new vehicle, IRS treats it as a sale for purposes of the tax imposed by IRC section 4481, and the credit for vehicles sold, destroyed, or stolen. The seller, in whose name the vehicle was registered, can claim a prorated credit of the tax paid. The buyer must file a Form 2290 and pay a prorated tax on the vehicle. The 60 day proof of payment rule applies to the buyer for purposes of registering the vehicle with the state. IRM 21.7.8.4.2.3, Required Proof of Payment, provides proof of payment details.

  4. The taxpayer is required to provide an explanation detailing the facts for each credit. For vehicles destroyed, stolen or sold, the taxpayer must include the VIN, taxable gross weight category, the date of the accident, theft, or sale and the computation of the amount claimed on Form 2290, line 5. The form instructions provide a worksheet for the line 5 credit computation.

    Note:

    The claimant may submit a police report or insurance claim as supporting documentation, but it is not required to process the claim.

  5. Input adjustment using TC 290 and CRN 365 to adjust credit.

    Note:

    A module credit balance of $10.00 or more will generate an L- Freeze Code. The module is frozen from refund or offset. The credit must be addressed to avoid future transcript generation. See IRM 21.5.6.4.23, L- Freeze, and Document 6209, Master File Freeze Codes, Section 8A.4, for freeze condition release information.

21.7.8.4.2.15.2  (10-01-2010)
Form 2290, Vehicles Used 5,000 Miles or Less

  1. The person who paid the tax may claim the credit on the first Form 2290 for the next taxable period. Reject any Form 2290 claiming the credit that is filed during the tax period to which the claim relates.

  2. Claim for refund may be filed on Form 8849, after tax period has ended. See IRM 21.7.8.4.5.7.11 and the Form 8849, Schedule 6 instructions. Reject any Form 8849 claiming a refund that is filed during the tax period to which the refund relates.

21.7.8.4.2.16  (01-01-2007)
Form 2290, Conversion to Exempt Use

  1. There are no provisions in the law to allow for a credit, exemption, or refund for:

    • An occasional light or decreased load

    • A discontinued or changed use of vehicle

  2. Reject claim using appropriate disallowance letter.

21.7.8.4.2.17  (10-01-2008)
Form 2290, Reduction in Weight Of Vehicle

  1. There is no provision in the law for a credit or refund if weight of vehicle decreases during a taxable period.

  2. Refund can be given only if change is due to a reporting error.

  3. If taxpayer is claiming weight that is less than reported, proof is needed. The vehicle registration will show weight at which vehicle is registered.

  4. Taxpayer must file Form 8849, Schedule 6, to claim a refund based on a reporting error.

21.7.8.4.2.18  (10-19-2011)
Form 2290, VIN Correction

  1. If the taxpayer must correct a VIN previously reported on a filed Schedule 1, a corrected tax return must be filed with the IRS. The taxpayer must check the "VIN Correction" box located on page 1 of the Form 2290.

  2. If the correction on Schedule 1 is a typographical error (transposed or incorrectly entered characters within an otherwise correct VIN), stamp the Schedule 1 and return one copy to the taxpayer. The second copy, including the corrected return, must be associated with the original tax return by adjustment action or an appropriate DLN association form (i.e., Form 10023-B).

  3. If the new VIN is completely different from the original VIN, the taxpayer must provide an explanation. When an explanation is not available, attempt to contact the taxpayer and process the VIN Correction based upon the taxpayer's response. The VIN could be completely different for the following reasons:

    • The vehicle first reported was sold prior to the beginning of the tax period and the vehicle was erroneously added to the current tax return. The taxpayer may provide a copy of the sales receipt showing the date of sale.

    • The vehicle first reported was wrecked prior to the beginning of the tax period and was erroneously added to the current tax return. The taxpayer may provide a copy of the insurance claim showing the date of loss.

  4. If the explanation is sufficient, stamp the Schedule 1 and return one copy to the taxpayer. The second copy, including the corrected return, must be associated with the original tax return by refile adjustment action or an appropriate DLN association form (i.e., Form 10023-B). The explanation must remain with the case file. If the explanation is received by phone (oral statement), document the phone call and include the statement with the case file.

  5. If the explanation is insufficient or the taxpayer does not respond to IRS contact within the requested time frame, assess additional tax for the new VIN and advise the taxpayer of the assessment with an appropriate C letter.

    Note:

    A credit or refund cannot be given, unless the tax has been paid on both VINs. If tax is paid on both vehicles and the taxable year has ended, the taxpayer may file a claim for refund on Form 8849, Schedule 6, with the appropriate documentation.

21.7.8.4.2.19  (01-25-2012)
Form 2290, Loose Schedule 1

  1. During the Form 2290 paper (pipeline) process, the Schedule 1 can be erroneously detached from the original tax return or misrouted to a campus function. In some cases, the Schedule 1 is mailed to the IRS without a tax return or returned to the campus as undeliverable. A separated schedule is called a Loose Schedule 1 and is routed to the Excise Operations for resolution.

  2. The July 2011 revision of Schedule 1 was expanded to a full page to allow the entry of 24 vehicles. Taxpayers are instructed to complete and file two copies of the Schedule 1. Prior to July 2011, the Schedule 1 contained two sections. The top section was retained with the original return and the bottom section was stamped and returned to the taxpayer as proof of payment.

  3. The Excise Operations will research IDRS with the information available on the Schedule 1 and take the following action:

    If And Then
    Undeliverable   Research for a correct address.
    No address found   Associate loose Schedule with return.
    A different address is found   Re-mail to taxpayer.
    Account is not full paid There is a discrepancy between what was reported on original return and vehicles listed on Schedule 1 Contact the taxpayer by phone to resolve discrepancy. If necessary, correspond with taxpayer.
    Only the bottom section of Schedule 1 is received (revision prior to July 2011) Payment received (TC 610, no TC 150) is equal to the number of vehicles shown on Schedule 1 Return the stamped Schedule 1 to the taxpayer's address of record as shown on ENMOD.
    If a completed Schedule 1 is received or both sections (top and bottom) of a revision prior to July 2011 are received Payment received (TC 610, no TC 150) is equal to the number of vehicles shown on Schedule 1 Contact the taxpayer by phone and request a completed copy of the tax return by fax. If necessary, send a 418C letter to request a completed copy of the tax return.
    No reply to 418C letter Payment received (TC 610, no TC 150) is equal to the number of vehicles shown on Schedule 1 Prepare a return for amount of tax applicable to number of vehicles on Schedule 1 and send to Batching. Notate on the return: 418C sent on (date) - "no reply."
    No reply to 418C letter No payments or partial payments received Close base and destroy Schedule 1.

21.7.8.4.2.20  (01-08-2013)
Form 2290, Duplicate Filing Condition (TRNS 193)

  1. The procedures in IRM 21.7.9, BMF Duplicate Filing Condition (TRNS 193), will be used to resolve Excise Tax duplicate filing conditions. IRM 21.7.8.4.1.12, Form 720, Excise Tax Reported on Duplicate, Amended Returns, or Supplemental Returns, provides additional information regarding Excise Tax duplicate filing conditions.

    Note:

    Edit (circle) any incorrect tax period when reprocessing a Form 2290. Enter the correct tax period using the YYYYMM format in the right corner of the tax return.

  2. A Form 2290 duplicate filing condition occurs when a return (TC 976) posts to a module already containing a return (TC 150). IDRS generates a -A freeze which prevents any refund or offset from the module until an adjustment (TC 29X) is made. IDRS also generates a TRNS 193 or TRNS 293 (open TC 420) which is associated with the TC 976 return and forwarded to the Excise Operation for resolution.

  3. Determine and resolve duplicate filing conditions by examining and comparing information. The tax technician will use the TRNS 193, duplicate return, original return, and CFOL command codes to resolve the case. While reviewing a duplicate Form 2290 case, it is important to compare the VIN data between the TC 150 and TC 976 (secure additional returns only if absolutely necessary).

  4. If the reason for the second Form 2290 is not clear, attempt to contact the taxpayer by phone. Call attempts and any taxpayer conversation must be documented on the case file.

  5. If the taxpayer does not provide a reason (no reply), assess additional tax or reprocess the return based on the information available. Issue a letter of explanation to the taxpayer.

    Note:

    A module credit balance of $10.00 or more will generate an L- Freeze Code. The module is frozen from refund or offset. The credit must be addressed to avoid future transcript generation. See IRM 21.5.6.4.23, L- Freeze, and Document 6209, Master File Freeze Codes, Section 8A.4, for freeze condition release information.

21.7.8.4.3  (10-01-2007)
Form 11-C, Occupational Tax and Registration Return for Wagering

  1. Form 11-C, Occupational Tax and Registration Return For Wagering, is used by persons who accept taxable wagers to register certain information and to pay the occupational tax. The MFT is 63 and the tax class is 4.

  2. Anyone engaged in the business of receiving taxable wagers is required to file Form 11-C. This may include organizations that are otherwise exempt from tax under IRC section 501 or IRC section 521.

  3. Taxable wagers include:

    • Those placed on a sports event or contest

    • Those placed in a wagering pool conducted for profit, with respect to a sports event or contest

    • Those placed in a lottery conducted for profit (other than a state-conducted lottery)

  4. The dual purpose Form 11-C allows the taxpayer to report and pay the occupational tax under IRC section 4411 and to register certain information with the IRS before accepting taxable wagers.

  5. The return is filed and the tax is paid by taxpayers who are principals or agents prior to conducting business.

    1. A principal is a person who is in the business of accepting taxable wagers on his or her own behalf. This person is at risk for the profit or loss depending on the outcome of the event or contest for which the wager was accepted. Principals are liable for the excise tax on wagers, which is reported on Form 730, Monthly Tax Return for Wagers.

    2. An agent is anyone who accepts taxable wagers on behalf of the principal.

  6. The occupational tax is:

    1. $50 per year if all taxable wagers received are authorized under the laws of the state in which accepted

    2. $500 per year for all other taxable wagers

21.7.8.4.3.1  (01-01-2005)
Form 11-C, Filing Requirements

  1. A first return must be filed and the occupational tax must be paid before a taxpayer begins accepting taxable wagers. The tax period begins each July 1 and ends the following June 30.

  2. If wagers are first accepted in any month other than July, the first return covers the tax period from the start of business until the following June 30 and the tax is prorated for the first year by multiplying the applicable monthly rate by the number of months remaining in the taxable year. The Form 11-C General Instructions provide a prorated tax table.

    Example:

    Taxpayer begins business on February 15, 2010. Tax is due for February 2010 through June 2010 (5 months).

  3. A first return is also due in certain situations in which there has been a change in ownership or control. The above rules apply. The return must be filed within 30 days of the following changes:

    1. New members are admitted to a firm or partnership

    2. A corporation is formed to continue the business of a partnership

    3. A stockholder continues the business of a dissolved corporation

  4. A supplemental registration return must be filed, but no additional tax is due when certain conditions are met. See IRM 21.7.8.4.3.3, Form 11-C, Supplemental Registration Returns.

  5. A renewal return must be filed by July 1 for each year in which a principal or agent accepts taxable wagers.

21.7.8.4.3.2  (01-01-2005)
Form 11-C, Return Due Dates

  1. A first return must be filed before wagers are accepted. Whether a first return is timely filed and whether penalties may be appropriate is determined by the Centralized Excise Operation at the Cincinnati Campus.

  2. A renewal return must be filed by July 1, when required.

  3. A supplemental registration return must be filed according to certain provisions. See IRM 21.7.8.4.3.3, Form 11-C, Supplemental Registration Returns, below.

21.7.8.4.3.3  (10-01-2007)
Form 11-C, Supplemental Registration Returns

  1. Although additional tax is not due, a supplemental registration return must be filed by principals:

    Within Of When
    End of thirty day period Change in address The business or home address is changed. Principal must register the change before accepting wagers at the new address or by the end of the 30 day period after the change of address, whichever occurs first.
    30 days Date of death Business is continued for the remainder of the taxable period only, by a surviving spouse or child, executor, administrator, or other legal representative of a deceased person who paid the occupational tax.
    30 days Bankruptcy The principal continues for the remainder of the period for the business as an assignee for creditors.
    30 days Change Business is continued for the remainder of the taxable period only, by an assignee of creditors.
    30 days Change One or more members withdraw from a firm or partnership.
    30 days Change Corporate name is changed.
    10 days Engagement A new agent is engaged to receive wagers. The supplemental registration return must report the name, address, and EIN of each new agent.

  2. Although additional tax is not due, a supplemental registration return must be filed by agents:

    Within Of When
    10 days Engagement A previously registered agent is engaged to receive taxable wagers on behalf of a different or additional principal. The supplemental registration return must report the name, address, and EIN of each principal.

    Caution:

    If a supplemental registration return is received from an agent who has not previously registered, a first return is required and tax is due.

21.7.8.4.3.4  (01-01-2005)
Form 11-C, Tax Decreases

  1. Refer all tax decreases to Cincinnati IRS Campus (CIRSC) Centralized Excise Operation. There is no provision in the law to allow a refund for a portion of a year during which the person receives no taxable wagers. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. If an original return is available, use Blocking Series (BS) 08 to adjust account.

  3. If only an amended return is available, use BS 15 to adjust account.


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