- 21.7.8.1 Excise Taxes
- 21.7.8.2 Excise Tax Forms
- 21.7.8.3 Excise Tax Centralization
- 21.7.8.4 Excise Tax Procedures
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This section contains information on excise tax returns and claims centralized at the Cincinnati Campus and contains referral information on Form 5630.5, Form 5630.7, Form 5000.24, and Form 5300.26.5.
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These excise tax returns and claims are filed using the following forms:
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Form 11-C, Occupational Tax and Registration Return for Wagering
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Form 637
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Form 720, Quarterly Federal Excise Tax Return
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Form 720X, Amended Quarterly Federal Excise Tax Return
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Form 720-TO, Terminal Operator Report
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Form 720-CS, Carrier Summary Report
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Form 730, Monthly Tax Return for Wagers
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Form 2290, Heavy Highway Vehicle Use Tax Return
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Form 2290-SP (Spanish)
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Form 2290-FR (French)
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Form 8849, Claim for Refund of Excise Taxes (Seven Schedules)
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Form 6627, Environmental Taxes
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Form 6197, Gas Guzzler Tax
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Form 8725, Excise Tax on Greenmail
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Forward all excise claims, returns, or requests for adjustments to the Cincinnati Campus for centralized processing.
Exception:
Form 4136, Credit for Federal Tax Paid on Fuels, Form 8864, Biodiesel and Renewable Diesel Fuels Credit and Form 6478, Credit for Alcohol Used as Fuel, which together with the income tax return to which they are attached, are processed at the Submission Processing Center where taxpayer files the related income tax return.
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See IRM 21.6.3.4.2.6.1(IMF), or IRM 21.7.4.4.9.1.1 (BMF), for Form 4136 procedures.
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See IRM 21.6.3.4.1.11(IMF), or IRM 21.7.4.4.8.3.3 (BMF), for Form 6478 procedures.
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At sites other than the Centralized Excise Unit in Cincinnati, CSR's working live calls may prepare an e-4442 or transfer the call as follows:
Note:
Before the call is transferred to #90284 (Excise Operations ), advise the customer that you are going to attempt to transfer their call to the Excise toll-free number, 1-866-699-4096. Advise the customer that if the call does not go through, they can dial that number directly. (See hours of operation in (6) below.)
If ... Then ... Tax Law issues relating to Excise taxes Transfer #92135 (New number beginning 07/01/2009 - application 135.) Installment Agreement/Reinstatement Transfer #92030 (New number beginning 07/01/2009 - application 30, BMF.) Account issues related to Excise taxes Transfer #90284 Caution: If you misroute a call to Excise, they cannot transfer the caller to another number. They must instruct the taxpayer to hang up and dial the correct area. Excise cannot transfer calls. -
Centralized Excise Operations at the Cincinnati Campus cannot answer calls or set up requests for installment agreements (Status 60 accounts). Route installment agreement calls to A-92030 (new number beginning July 1, 2009).
Note:
Do not send the Form 2290 filer a stamped Schedule 1 with their first installment agreement payment. The tax must be paid in full before a stamped Schedule 1 can be sent to the taxpayer to register their vehicles. See IRM 21.7.8.4.2.5, Taxpayer Payment, and Form 2290 instructions for more information.
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The option to pay the tax in installments (installment privilege, status 20), was eliminated beginning tax year July 1, 2005. The tax must be paid in full with Form 2290 or the taxpayer will receive a balance due notice which will include penalties and interest, when applicable.
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If you need to send correspondence to Centralized Excise, the mailing address is:
Internal Revenue Service
Mail Stop 5701 G
Cincinnati, OH 45999 -
Before disclosing any tax information, you must be sure you are speaking with the taxpayer or authorized representative. See the Taxpayer Authentication guidelines in IRM 21.1.3.2, General Disclosure Guidelines. Also, before leaving any messages on a taxpayer's answering machine, review IRM 11.3.2.6, Methods for Communications of Taxpayer's Information. Fax procedures contained in IRM 11.3.1.10, Facsimile Transmission of Tax Information, must be reviewed prior to faxing confidential information to the taxpayer.
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Excise Tax Function phone numbers, see chart below:
Note:
Hours of operation for the telephone numbers listed below are Monday - Friday, 8:00 a.m. to 6:00 p.m. EST. Calls cannot be transferred to Centralized Excise at any other time. Customers cannot leave a message.
If taxpayer is calling from: Then they may call this number: The United States 1-866-699-4096 (toll-free) Canada or Mexico 1-859-669-5733 (not toll-free) -
If you can help the customer with general issues, then you may answer the customer's question and do not have to transfer the call to Excise Operations. Examples of general issues include, but are not limited to:
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Credit transfers
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Where to send Excise forms
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Payment inquiry
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Balance due, etc.
Note:
Beginning July 1, 2005, the installment privilege was repealed for the Form 2290, Heavy Highway Vehicle Use Tax Return, taxpayer. CSR's, if you prefer, can transfer a misapplied payment to the Form 2290, account (MFT 60), and do not have to transfer the call to Excise. If you transfer a misapplied payment, you must check the filing requirements on CC ENMOD. If it is determined that the misapplied payment opened the Form 2290 filing requirement, remove the filing requirement. If you are unable to determine if the filing requirement should be removed, research BMFOL to check for liability, contact the taxpayer, or route the call to Excise.
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Use the following procedures to conduct research.
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Note:
There are various issues on certain forms throughout IRM 21.7.8 that have CATA criteria. Always check for CATA criteria before adjusting an account.
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See IRM 21.5.3, Exhibit 21.5.3-2, Examination Criteria (CAT-A) - General, for additional information on CATA criteria.
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Always contact the Large Corp Technical Unit before making an adjustment on a "Large Corp" case or notice. See IRM 21.7.1.4.11.4, Campus Contacts for Large Corp Cases, for additional information.
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Always check the statute of limitation expiration dates. The statute of limitations is three years from the due date of the return, the date the return was actually filed, or two years from the date of payment, whichever is later. If tax is assessed on an account where the statute has expired, the adjustment will go unpostable. Decreasing the tax on an account where the statute has expired, causes an erroneous abatement. If less than 90 days remain in the statutory period, hand carry case to the Statute Function.
Note:
A tax decrease does not go unpostable on an account where the statute has expired. You must use extreme caution when decreasing the tax on an account where the statute has expired.
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A tax increase cannot be assessed after the statute has expired. However, if an IRS No. was not previously reported on Form 720, Quarterly Federal Excise Tax Return, the statute does not start to run for that unreported IRS No. (also known as abstract no.) until a return is filed reporting that IRS No. Manual assessments must be done anytime the Form 720 has an expired statute, or is within sixty days of expiration and tax is being assessed for a previously unreported IRS No. for that tax period. Hand carry manual assessments to the Statute Function. See IRM 21.7.8.4.1.16, Form 720, Excise Tax Reported on Duplicate or Amended Returns.
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If tax cannot be assessed, input a TC 290, using blocking series 05, 15, or 00 and advise the taxpayer that the time to assess the additional tax has expired.
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If a claim is filed for tax that was reported on a return and paid timely (is not an erroneous assessment), and the statute has expired, formally disallow the claim. Input a TC 290.00 using blocking series 98 or 99 and indicate in the remarks field "statute expired." Send a 105C letter and advise the taxpayer that the time for filing a claim has expired and give them appeal rights. See IRM 25.6, Statute Of Limitations, for additional information.
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Excise Taxes are levied on a wide variety of goods, services and activities. They may be imposed at the time of the sale by the manufacturer, the sale by the retailer, or use (on the consumer). Many of these taxes are set aside into trust funds earmarked for related capital projects, such as highway and airport improvements. Excise taxes are independent of income taxes.
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There are numerous changes to excise taxes as new tax laws are implemented for specific tax years, which result in tax rate changes, new IRS Nos., new credit reference numbers (CRN's) and procedures.
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Procedures in this IRM correlate with excise tax forms and publications.
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Form 720, Quarterly Federal Excise Tax Return, is the quarterly return for excise taxes. The Master File Tax (Code) (MFT) is 03 and the tax class is 4. Additional sources of information are:
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Publication 510, Excise Taxes, for additional information on Form 720
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Form 720, Quarterly Federal Excise Tax Return, for current tax rates
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Publication 3536, Motor Fuel Excise Tax EDI Guide, for electronically filed Form 720-TO and Form 720-CS
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Form 720, Quarterly Federal Excise Tax Return, has various sections.
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Part I consists of excise taxes generally required to be deposited. See IRM 20.1.4.8, Form 720 Reporting Requirements.
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Part II consists of excise taxes that are not required to be deposited.
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Part III consists of the lines for total tax. Taxpayers use this section to determine their balance due or overpayment.
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Schedule A, Excise Tax Liability, is used to record the net tax liability for each semimonthly period in a quarter. Schedule A must be completed if there is an entry in Part I.
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Schedule C, Claims, is used to make claims only if you are reporting a liability in Part I or Part II.
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Schedule T, Two Party Exchange Information Reporting
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Form 720,is filed quarterly as shown below.
Quarter covered All excise taxes due by January, February, March April 30 April, May, June July 31 July, August, September October 31 October, November, December January 31 Note:
Whenever due dates for filing return falls on a Saturday, Sunday, or a legal holiday, return is considered filed timely if filed the next business day after the due date.
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Generally, all taxes are deposited under the rules for regular method taxes.
Exception:
Communication and air transportation taxes can be deposited under the rules for alternative method taxes (IRS Nos. 22, 26, 27, and 28).
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All excise taxes that must be deposited are subject to the "September Rules" . See IRM 20.1.4.8.7, Special Rules for Deposits in September. Research CC BRTVU to determine if the penalty computation should include the "September Rules" .
Note:
Beginning September, 2007, if deposits are required for the "September Rule" , the due date for Electronic Federal Tax Payment System (EFTPS) deposits for the regular method (period beginning September 16) and alternative method (period beginning September 1) is September 29.
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The safe harbor rule applies separately to deposits under the regular method and the alternative method. See IRM 20.1.4.8.6, Safe Harbor Rules for Deposits.
Caution:
Form 720 filers, who incurred liability for the oil spill tax beginning April 1, 2006, cannot use the safe harbor method for deposits in the second and third calendar quarters of 2006. Deposits for the semimonthly periods in the second and third calendar quarters must not be less than 95% of the net tax liability for the semimonthly period.
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No deposits are required for taxes as follows:
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Taxes reported in Part II of Form 720 (Exception: The payment for floor stock tax on ozone-depleting chemicals is due by June 30.)
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Net tax liability of less than $2,500.00 for the quarter
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One time filings for gas guzzler tax
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Federal tax deposits are reported in Part III, line 5, of Form 720. See IRM 20.1.4.8.3, Deposits Form 720, for deposit requirements and IRM 20.1.4, Electronic Funds Transfer, for electronic deposit requirements.
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Taxes are identified by an "IRS No." (also known as "Abstract No." ) on Form 720 and in IRS records.
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When tax is adjusted on Form 720, the adjustment must include the IRS No. that identifies the type of tax being adjusted. Credits are made using credit reference numbers.
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Each IRS No. is a separate return for all purposes. If an original return is filed timely reporting one IRS No. and later a supplemental return ( Form 720X, Amended Quarterly Federal Excise Tax Return) is filed reporting an additional IRS No., the second return may be subject to a late filing penalty. This penalty is manually computed if module is restricted. See IRM 20.1.2, Failure to File/Failure to Pay Penalties.
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Excise taxes shown below are for Part I of Form 720, Quarterly Federal Excise Tax Return. These taxes generally have deposit requirements recorded on Form 720,Schedule A, Excise Tax Liability.
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Form 6627, Environmental Taxes, is used to figure the environmental taxes on:
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Domestic Petroleum oil spill tax, IRS No. 18
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Imported petroleum products oil spill tax, IRS No. 21
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Ozone-depleting chemicals (ODCs), IRS No. 98
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Imported products that used ODCs as materials in the manufacture or production of the product, IRS No. 19
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Floor Stocks of ODC's, IRS No. 20
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Oil spill liability taxes (IRS Nos. 18 and 21) were reinstated beginning April 1, 2006. Section 4611 Oil Spill Liability Tax is imposed on:
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Crude oil received at a domestic refinery
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Petroleum products entered in the United States for consumption use or warehousing
Note:
The tax rate is $.08 per barrel (42 gallons). The tax can be passed on to the customer. IRS will not provide guidance on how to do this because it is a business matter. No one (including state and local governments) is exempt from the tax.
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Form 6627, Environmental Taxes, is attached to Form 720, Quarterly Federal Excise Tax Return.
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The tax rates for all of the environmental taxes are on Form 6627, Environmental Taxes. Input adjustment on MFT 03 using TC 29X with the appropriate IRS No.
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The person receiving the payment for communication services must collect and pay over the tax and file the return. The tax is assessed on the amount paid for service rather than provision of the service.
Caution:
Collectors must stop collecting and paying over the tax on nontaxable service that is billed after July 31, 2006. Nontaxable service is bundled service and long distance service.
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Bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed time for which the service is used. Bundled Service is provided by both land lines and wireless (cellular) service. If voice over internet protocol service provides both local and long distance service and the charges are not separately stated, such service is bundled service.
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Long distance service is telephonic quality communication with persons whose telephones are outside the local telephone system of the caller.
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The method for sending or receiving a call, such as land line, wireless (cellular), or some other method, does not affect whether a service is local-only or bundled.
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The tax is 3% of amounts paid for:
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Local telephone service
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Toll telephone service (for service billed before August 1, 2006)
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Teletypewriter exchange services
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Tax on toll telephone service billed before August 1, 2006, is reported using IRS No. 22 in Part I of Form 720. The taxpayer must certify that the tax reported does not include any tax for nontaxable service billed after July 31, 2006.
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Input adjustment on MFT 03 using TC 29X and IRS No. 22.
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Credits or refunds for nontaxable service that was billed after February 28, 2003, and before August 1, 2006, can be requested only on the 2006 federal income tax return. See IRM 21.7.4.4.23, Telephone Excise Tax Refund (TETR)Form 8913, Credit for Federal Telephone Excise Tax Paid - BMF.
Note:
See IRM 21.7.8.4.5.7.14 , Form 8849, Telephone Excise Tax Refund for Government Entities (TETR), for information on government entities.
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Air transportation taxes are collected and reported by travel agents or providers of air transportation of persons or property.
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There are three IRS Nos. for air transportation taxes:
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IRS No. 26 is for transportation of persons by air. The rate of tax is 7.5% of the amount paid for this air transportation plus a domestic segment tax of $3.60 per segment that begins in 2008.
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IRS No. 27, is for use of international air travel facilities. The rate is $16.10 per person for flights that begin or end in the United States. For a domestic segment that begins or ends in Alaska or Hawaii, a $8.00 tax per person applies only to departures.
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IRS No. 28, is for transportation of property by air. The rate of tax is 6.25% of the amount paid for this air transportation.
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An uncollected tax report is required by collecting agents if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. See Form 720 instructions.
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Input adjustments on MFT 03 using TC 29X with the appropriate IRS No.
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Excise taxes are imposed on the following fuels:
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Diesel fuel, tax on removal at terminal rack, IRS No. 60
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Diesel fuel, taxable events other than removal at rack, IRS No. 60
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Diesel fuel, tax on sale or removal of biodiesel mixture (other than removed at terminal rack), IRS No. 60
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Diesel water-fuel emulsion, IRS No. 104
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Dyed diesel fuel, Leaking Underground Storage Tank (LUST) tax, IRS No. 105
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Dyed kerosene, LUST tax, IRS No. 107
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LUST tax, other exempt removals, IRS No. 119
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Kerosene, tax on removal at terminal rack, IRS No. 35
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Kerosene, tax on taxable events other than removal at terminal rack, IRS No. 35
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Kerosene for use in aviation, IRS No. 69
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Kerosene for use in commercial aviation (other than foreign trade), IRS No. 77
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Kerosene for use in aviation, LUST tax on nontaxable uses, including foreign trade, IRS No. 111
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Other fuels, IRS No. 79 (See Form 720, Quarterly Federal Excise Tax Return, instructions.)
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Gasoline, tax on removal at terminal rack, IRS No. 62
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Gasoline, tax on sale or removal of alcohol fuel mixture other than removal at terminal rack, IRS No. 62
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Gasoline, tax on sale or removal of alcohol fuel mixture other than removal of alcohol fuel mixture other than removal at terminal rack, IRS No. 62
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Aviation gasoline, IRS No 14
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Liquefied petroleum gas (LPG) (such as propane or butane), IRS No. 112
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"P" series fuels, IRS No. 118
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Compressed natural gas (CNG), IRS No. 120
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Liquefied hydrogen, IRS No. 121
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Any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, IRS No. 122
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Liquid fuel derived from biomass, IRS No. 123
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Liquefied natural gas (LNG), IRS No. 124
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If the taxpayer is reporting gallons of fuel that may again be subject to tax, a "First Taxpayer's Report" must be filed with the Form 720, Quarterly Federal Tax Return. See Publication 510, Excise Taxes, Model Certificate B. The taxpayer that paid the first tax must:
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Give a copy of the first taxpayer's report to the buyer.
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File the first taxpayer's report with Form 720, Quarterly Federal Tax Return, for the quarter to which the report relates.
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Write "EXCISE-FIRST TAXPAYER'S REPORT" across the top of a separate copy of the report, and by the due date of Form 720, Quarterly Federal Tax Return, mail the copy to the Cincinnati Campus.
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A first taxpayer's report is not required for the tax imposed on:
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Removal at a terminal rack
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Non bulk entries into the United States
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Removals or sales by blenders
Note:
If the taxpayer liable for the tax expects that another tax will be imposed on the fuel listed above, then they should file (but is not required to file) a first taxpayer's report.
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If the first taxpayer's report relates to fuel sold to more than one buyer, copies of the report must be made when the fuel is divided. Each buyer must be given a copy of the report.
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Diesel fuel is any liquid that, without further processing or blending, is suitable for use as a fuel in a diesel-powered highway vehicle or train and/or a transmix.
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A diesel powered highway vehicle is any self-propelled vehicle designed to carry a load over public highways and propelled by a diesel engine.
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An excluded liquid is either of the following:
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A liquid that contains less than 4% normal paraffins; or
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A liquid with a distillation range of 125% Fahrenheit or less
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A sulfur content of 10 ppm or less; and
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A minimum color of +27 Saybolt
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A transmix is a by-product of refined products created by the mixing of different specification products during pipeline transportation. See Publication 510, Excise Taxes, for more information.
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Adjust the tax using IRS No. 60 and tax rate of $.244 per gallon.
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Effective January 1, 2006, the taxpayer is liable for the reduced rate of tax on a diesel-water fuel emulsion removal at the terminal rack or other taxable event if the following requirements are met:
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The diesel-water fuel emulsion must contain at least 14% water.
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The emulsion additive must be registered by a United States manufacturer under section 211 of the Clean Air Act with the Environmental Protection Agency (EPA).
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The taxpayer must be registered by the IRS.
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If these requirements are not met, the tax must be reported on the sale, removal or use of diesel-water fuel emulsions as diesel.
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The rate of tax is $.198 per gallon.
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Input adjustment on MFT 03 using TC 29X and IRS No. 104.
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Kerosene includes any of the following liquids:
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One of the two kinds of kerosene (No. 1-K and No. 2-K) covered by American Society for Testing and Materials (ASTM) specification D3699
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Kerosene type jet fuel covered by ASTM specifications D1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8)
Note:
Kerosene does not include any of the excluded liquids listed above for diesel fuel.
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Adjust tax using the table below:
Use of Kerosene Fuel for: IRS No. Tax Rate Removal at terminal rack 35 $.244 Taxable events other than removal at terminal rack 35 $.244 Aviation 69 $.219 Commercial aviation (other than foreign trade) 77 $.044
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Diesel fuel and kerosene fuel are not subject to excise tax (other than the LUST tax) if all of the following tests are met:
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The person otherwise liable for tax (position holder, etc.) is a registrant.
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If removed from a terminal, the terminal is an approved terminal.
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The diesel or kerosene fuel satisfies the dyeing requirements (Solvent red 164 and no other dye, see Publication 510, Excise Tax, for more information).
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A penalty is imposed on a person if any of the following situations applies:
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Any dyed fuel is sold or held for sale by any person for any use which such person knows or has reason to know, is not a nontaxable use of such fuel.
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Any dyed fuel is held for use, or used by the person for a use other than a nontaxable use, and the person knows or has reason to know that the fuel was dyed.
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A person willfully alters, chemically or otherwise, or attempts to alter, the strength or composition of any dye in dyed fuel.
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The person has knowledge that a dyed fuel has been altered, 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.
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The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. If the penalty is imposed, each officer, employee, or agent of a business who willfully participated in any act giving rise to the penalty is jointly and separately liable with that entity for the penalty. The adjustment is input with a TC 240 and penalty reference number 656.
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Effective after September 30, 2005, LUST tax is imposed at $.001 per gallon on removals, entries, and sales of dyed diesel fuel and dyed kerosene, kerosene for use in aviation (nontaxable uses), certain gasoline blendstocks, kerosene used for a feedstock purpose, and diesel fuel or kerosene sold or used in Alaska. See chart below for appropriate IRS No. for input of adjustment on MFT 03.
IRS No. (Abstract No.) Type of Fuel (Tax rate $.001) 105 Dyed Diesel Fuel 107 Dyed kerosene 111 Kerosene for use in aviation (Kerosene removed directly from a terminal into the fuel tank of an aircraft for nontaxable uses) 119 Other exempt removals. (Gasoline blendstocks, kerosene used for a feedstock purpose, and diesel fuel or kerosene sold or used in Alaska) IRS No. 125 Inland Waterways. See IRM 21.7.8.4.1.14 (4), Inland WaterWays Fuel Use Tax, for tax per gallon on specific years. -
Input adjustment using TC 29X on MFT 03 using appropriate IRS No.
Note:
The LUST tax is not credited or refunded, except for exported taxable fuel and section 4081e claims. See IRM 21.7.8.4.6, Leaking Underground Storage Tank (LUST) Tax Refund on Aviation Fuels used in Foreign Trade, for the refund claims on the LUST tax for aviation fuel used in foreign trade.
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Persons liable for the gasoline tax on removal at the terminal rack, gasoline tax for events other than removal at the terminal rack, or the gasoline has been blended with alcohol outside of the bulk transfer/terminal system must report the tax as follows in the table below:
IF Gasoline Tax is Reported Report Tax on Form 720 IRS No. Tax Rate per Gallon For removal at the terminal rack Line 62(a) 62 $.184 For events other than removal at the terminal rack Line 62(b) 62 $.184 Because alcohol has been blended with taxed gasoline outside of the bulk transfer/terminal system Line 62(c) (If gallons are reported on line 62(c), then they must not be reported on line 62(b) 62 $.184 -
Aviation gasoline is taxed at $.194 and the IRS No. is 14.
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Adjust the tax on MFT 03, using the applicable IRS No. and tax rate.
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The taxpayer is liable for the tax on the fuels listed below when they are delivered into the fuel supply tank of a motor vehicle or motorboat (or trains for B-100).
Fuel Tax Rate Per Gallon Qualified: Ethanol produced from coal and; $.184 Methanol produced from coal $.184 Partially exempt: Ethanol produced from natural gas and; $.114 Methanol produced from natural gas $.0925 B-100 (100% biodiesel) and $.244 Liquefied gas derived from biomass $.184 Other fuels not shown $.184 -
Adjust tax on MFT 03 using IRS No. 79 and appropriate tax rate.
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Alternative fuel is any liquid other than gas oil, fuel oil, or any product taxable under IRC section 4081. The taxpayers are liable for tax on alternative fuel delivered into the fuel supply tank of a motor vehicle, motorboat, or on certain bulk sales, as listed below.
Alternative Fuel IRS Number Tax Rate Liquefied petroleum gas (LPG) 112 $.183 "P Series" fuels 118 $.184 Compressed natural gas (CNG) 120 $.183 Liquefied hydrogen 121 $.184 Any liquid fuel derived from coal (including) peat through the Fischer-Tropsch process 122 $.244 Liquid fuel derived from biomass 123 $.244 Liquefied natural gas (LNG) 124 $.243 Note:
LPG includes propane, butane, pentane, or mixtures of those gases.
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Adjust the tax on MFT 03 using the appropriate CRN and tax rate.
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The first retail sale of certain truck trailers, trailer, or related parts and accessories is subject to a 12 percent tax (IRS No. 33). This tax is imposed by IRC section 4051. The retail sales price applies to the total consideration paid (including the value of a trade-in), but it does not include insurance or delivery charges. The tax applies to:
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Truck chassis and bodies, except truck chassis and bodies suitable for use with a vehicle with a gross vehicle weight of 33,000 pounds or less
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Trailer and semitrailer chassis and bodies, except trailer and semitrailer chassis and bodies suitable for use with a vehicle with a gross vehicle weight of 26,000 pounds or less
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Tractors chiefly used for highway transportation in combination with a trailer or semitrailer, except tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less. Generally, gross combined weight is the weight of the tractor and the weight of its trailer(s).
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The taxable sales price includes the price for parts and accessories sold on, with or in connection with the sale of a taxable article, even if the parts are billed separately. The tax also applies to accessories purchased separately within the first six months after a vehicle is placed in service, unless the total cost of all accessories during that period does not exceed $1,000.
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If a vehicle is wrecked and extensive repairs are necessary to return it to operating condition, the tax must be paid on the restoration cost if the cost exceeds 75 percent of the cost of a new vehicle. When worn vehicles are restored to operating condition, with or without use of a glider kit, the tax does not apply to the upgrade unless the total expenditures exceed 75 percent of the cost of a comparable new vehicle.
Example:
An owner operator restored a 1996 tractor-trailer and purchased a glider-kit. The seller did not charge a federal tax on the glider-kit. The total restoration cost of the vehicle is $80,000. The cost of a new vehicle is $100,000. The restoration of the vehicle is more than 75 per cent of the cost of a new vehicle, so the owner owes the 12 percent excise tax.
-
Input adjustment on MFT 03 using TC 290 and the appropriate IRS No.
-
A tax is imposed by IRC section 4471 when a voyage of more than 24 hours by a commercial vessel with berths for more than 16 passengers begins or ends in the United States. It is paid by the operator of the ship. The tax is also imposed where passengers are engaged in gambling sponsored by the owner or operator of the vessel (or an agent) beyond the territorial waters of the United States.
-
The tax is $3.00 for each passenger on the ship, when that passenger first embarks or disembarks in the United States.
-
Input adjustment on MFT 03, using TC 29X and IRS No. 29.
-
A variety of unrelated items are subject to taxes imposed on the manufacturer, producer or importer. A manufacturer is any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles. The manufacturer furnishes and keeps title to the materials and/or the finished article. See the chart below:
Type of Manufacturer Tax IRS No. Tax Rate Coal - Underground Mined 36 If the sale price of the underground mined coal is $25 or more per ton, use the $1.10 per ton tax rate. Example: If a producer of coal sells 21,000 (10.5 tons) pounds of coal from an underground mine for $525, the price per ton is $50.00. The tax is $1.10 x 10.5 tons ($11.55). Coal - Underground Mined 37 If the sale price of the underground mined coal is less than $25 per ton, use the .044 of the selling price tax rate. Coal - Surface Mined 38 If the sale price of the surface mined coal is $12.50 or more per ton, use the .55 per ton tax rate. Coal - Surface Mined 39 If the sale price of the surface mined coal is less than $12.50 per ton, use the .044 of the selling price tax rate. Taxable tires other than biasply or super single tires 108 $.0945 (for each 10 pounds of the maximum rated load capacity over 3,500 pounds) Taxable tires, biasply or super single tires (other than super single tires designed for steering) 109 $.04725 (same as above) Taxable tires, super single tires designed for steering 113 $.0945 (same as above) Gas Guzzler Tax 40 To determine tax, see Form 6197, Gas Guzzler Tax. Vaccines taxes 97 See IRM 21.7.8.4.1.14, Vaccine Taxes, below. -
Input adjustment with TC 290 on MFT 03 using appropriate IRS No.
-
For Compliance research and studies similar to the tire tax study required by the Energy Policy Act of 2005, six new fields were added to the non-money fields on IDRS for decrease or increase to the tire counts on Form 720, Quarterly Federal Excise Tax Return, MFT 03.
-
The six new tire count fields correlate with IRS Nos. (also know as Abstract Nos.) 108, 109, and 113 and (CRN's) 396, 304, and 305. Each count displayed on IDRS is nine digits long. Example:
-
IRS No. 108 tire count - If tire count for 1 tire, the display is 000000001
-
IRS No. 109 tire count - If tire count for 12 tires, the display is 000000012, etc.
-
IRS No. 113 tire count -If tire count for 100 tires, the display is 000000100
-
CRN 396 tire count - If tire count for 2,250 tires, the display is 000002250
-
CRN 304 tire count - If tire count for 900,200 tires, the display is 000900200
-
CRN 305 tire count - If tire count is for 1,000,000 tires the display is 001000000
-
-
In addition, six new adjustment reference numbers are needed to adjust the tire count numbers in (2). The reference numbers are:
-
900 tire count will adjust the 108 Tire Count field
-
901 tire count will adjust the 109 Tire Count field
-
902 tire count will adjust the 113 Tire Count field
-
903 tire count will adjust the 396 Tire Count field
-
904 tire count will adjust the 304 Tire Count field
-
905 tire count will adjust the 305 Tire Count field
-
-
To input an adjustment to a tire count field, you must overlay the tire count field with the new number of tires (increase or decrease).
Example:
A Form 720, Quarterly Federal Excise Tax Return, is filed claiming an increase to the number of super single tires designed for steering (IRS No. 113). The Integrated Data Retrieval System (IDRS) shows that 200 tires were previously reported and Form 720X, Amended Quarterly Federal Excise Tax Return, shows an additional 4,000 tires. The adjustment is input with a Transaction Code (TC) 290 for $359.10, IRS No. 113 for $359.10 and overlay the tire count display for reference number 902 using 00004200.
Reminder:
When adjusting the tire counts, add the current number of tires to the new number of tires and overlay the tire count field with the new tire count.
-
If more than two tire counts need to be overlaid on one adjustment, then multiple adjustments must be input. Use Posting Delay Code (PDC)1 on the second adjustment to allow one posting per cycle.
-
The tire count adjustments are displayed on the Tax Module Display (TXMOD) and the Business Master File Online (BMFOL). See IRM 21.7.8.4.5.7.10, Schedule 6, Tire Tax for processing procedures for Form 8849, Schedule 6, claims. The adjustment for the count of tire tax must be input on MFT 03, no other MFT is programmed for this type of adjustment.
-
Form 6197, Gas Guzzler Tax, is used to figure the gas guzzler tax. The gas guzzler tax is imposed on the sale, use, or lease by the manufacturer or importer of an automobile of a model type that does not meet certain standards for fuel economy. Automobiles imported for business or personal use are subject to the tax.
-
The tax liability is figured each quarter and reported on Form 720, Quarterly Federal Excise Tax Return, Form 6197, is attached to Form 720.
Note:
If a gas guzzling automobile is imported, the taxpayer may be eligible to make a one-time filing of Form 720 and Form 6197 if the following conditions are met:
-
The vehicle is not used in the course of any trade or business.
-
The person importing the gas guzzling vehicle does not do so in the course of their trade or business.
-
The person is not required to file Form 720 reporting excise taxes for the calendar year quarter, except for one-time filing.
-
There are no deposit requirements for one-time filers. All of the tax reported for a one-time filer may be paid with the return.
-
-
Input adjustment using TC 29X and IRS 40.
-
Tax is imposed on certain vaccines sold or used by the manufacturer in the United States.
Note:
Any trivalent vaccine against human papillomavirus or meningococcal was added to the list of taxable vaccines, the effective date is for sales or uses after January 31, 2007. For sales made on or before February 1, 2007, and delivered after February 1, 2007, the delivery date is considered the sale date.
-
A taxable vaccine means any of the following vaccines:
-
Any vaccine containing diphtheria toxoid
-
Any vaccine containing tetanus toxoid
-
Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens
-
Any vaccine containing polio virus
-
Any vaccine against measles
-
Any vaccine against mumps
-
Any vaccine against rubella
-
Any vaccine against hepatitis A (effective after November 30, 2004)
-
Any vaccine against hepatitis B
-
Any vaccine against chicken pox
-
Any vaccine against rotavirus gastroenteritis
-
Any vaccine against streptococcus pneumonia
-
Any HIB vaccine
-
Any trivalent vaccine against Influenza (effective after June 30, 2005)
-
Any vaccine against human papillomavirus
-
Any meningococcal vaccine
-
-
The tax is 75 cents per dose of each taxable vaccine. The tax per dose on a vaccine that contains more than one taxable vaccine is 75 cents times the number of taxable vaccines.
-
Use TC 29X and IRS No. 97 to adjust the tax.
-
Tax is imposed when U.S. residents buy insurance polices from nonresident alien individuals or businesses not licensed to sell insurance by a state or the District of Columbia. Form 720, Quarterly Federal Excise Tax Return, must be filed by the person making the premium payment to the foreign insurer or agent. Foreign insurance taxes include:
-
Casualty insurance and indemnity bonds at $.04 per premium
-
Life insurance, sickness and accident policies and annuity contracts at $.01 per premium
-
Reinsurance at $.01 per premium
-
-
Foreign insurers and reinsurers must file Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), and/or a disclosure statement attached to Form 720 who take the position that a treaty of the United States overrules, or otherwise modifies, an Internal Revenue law of the United States.
-
Foreign insurance does not apply to casualty insurance premiums paid to foreign insurers for coverage of export goods in transit to foreign destinations.
-
Input adjustment using TC 29X on MFT 03 using appropriate IRS No.
-
Excise taxes shown below are for Part II of Form 720. These excise taxes do not require federal tax deposits recorded on Schedule A, Excise Tax Liability of Form 720.
-
IRC section 4161imposes the following taxes on the manufacturer, producer, or importer:
Type of Tax IRS No. Tax Rate Sport fishing equipment (other than fishing rods and fishing poles) includes reels, fly fishing lines and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips. See Publication 510, Excise Tax, for a complete list. 41 Ten per cent (.10) of the sale price. Fishing Rods and fishing poles (and component parts) 110 Ten per cent (.10) of sales price with a maximum tax rate of $10 per article. Electric outboard motors 42 Three per cent (.03) of sales price. Fishing tackle boxes 114 Three per cent (.03) of the sale price. Bows, quivers, broadheads, and points 44 Tax on bows having a peak draw weight of 30 pounds or more is eleven per cent (.11). Tax is also imposed on the sale of any part or accessory suitable for inclusion in, or attachment to, a taxable bow and any quiver, broadhead, or point suitable for use with arrows. Arrow shafts 106 If arrow shaft measures 18 inches, or more in overall length or measures less than 18 inches in overall length but is suitable for use with a taxable bow, the rate of tax is $.45 per arrow shaft. Note:
After October 3, 2008, the tax does not apply to any shaft made of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) and used in the manufacture of any arrow which, after its assembly, meets both of the following conditions:
-
It measures 5/16 of an inch or less in diameter.
-
It is not suitable for use with a taxable bow, described in the table above.
-
-
Input adjustments with a TC 29X on MFT 03 using appropriate IRS No.
-
The Inland Waterway Fuel Use Tax is imposed by IRC section 4042. The Tax Technical Corrections Act of 2007, signed into law on December 29, 2007, amended section 1362 of the Energy Act of 2005. The amendment removed the double taxation of LUST tax on dyed diesel fuel used in trains and inland waterways.
Exception:
The LUST tax must be paid on any liquid fuel used on inland waterways that is not subject to LUST tax under IRC section 4041(d), or IRC section 4081, such as Bunker C residual fuel oil. Bunker C residual fuel must be reported under IRS Nos. 64 and 125. See the chart below for specific tax years and the tax rates:
From Tax Year Tax Per Gallon 01/01/2005 to 06/30/2005 $.234 07/01/2005 to 12/31/2006 $.224 01/01/2007 to 12/31/2008 $.201 01/01/2008 and later years $.200 01/01/2008 (LUST tax on Bunker C residual fuel) $.001 -
Fishing and passenger vessels are not subject to this tax. The return is filed by the operator of the vessel.
-
Input adjustment with TC 29X on MFT 03 and IRS No. 64 and IRS No. 125 (if applicable).
-
An excise tax is imposed if the alcohol fuel mixture credit, alcohol credit, or cellulosic biofuel producer credit was claimed and any person later:
-
Uses a mixture
-
Uses straight alcohol
-
Uses cellulosic biofuel for a purpose other than fuel
-
Separates the alcohol from the mixture or;
-
Mixes the straight alcohol
-
-
Use the following table to determine the tax for each gallon of alcohol:
IF the alcohol is: AND THEN the tax rate per gallon is: At least 190 proof is ethanol $.45 At least 190 proof is methanol $.60 At least 190 proof benefited from the small ethanol producer credit $.55 At least 150 proof but less than 190 proof is ethanol $.3333 At least 150 proof but less than 190 proof is methanol $.45 At least 150 proof but less than 190 proof benefited from the small ethanol $.4333 Note:
The tax rate for cellulosic biofuel that is not alcohol is $1.01 per gallon ($.46 per gallon if the cellulosic biofuel is ethanol and $.41 per gallon if the cellulosic biofuel is alcohol).
-
Input adjustment with TC 29X on MFT 03 using IRS No. 51.
-
An excise tax is imposed if the biodiesel or renewable diesel mixture credit, or biodiesel or renewable diesel credit was claimed and any person later:
-
Uses a mixture or straight biodiesel or renewable diesel for a purpose other than as fuel
-
Separates the biodiesel or renewable diesel from the mixture
-
Mixes the straight biodiesel or renewable diesel
-
-
The tax is:
-
$1.00 per gallon of biodiesel
-
$1.00 per gallon of agri-biodiesel
-
$1.00 per gallon of renewable diesel
Note:
An additional $.10 is added if the agri-biodiesel benefited from the small agri-biodiesel producer credit.
-
-
Input adjustment using TC 290 on MFT 03 with IRS No 117.
-
Tax is imposed on any ozone-depleting chemical (ODC) held (other than by the manufacturer or importer of the ODC) on January 1 for sale or use in further manufacturing. The person holding title (as determined under local law) to the ODC is liable for the tax, whether or not delivery has been made.
-
Form 6627, Environmental Taxes, is used to figure the tax liability and attached to the Form 720, Quarterly Federal Excise Tax Return, that is due by July 31 of each year.
-
The tax deposit is due by June 30 at an authorized financial institution.
-
Input adjustment using TC 29X on MFT 03 using IRS No. 20.
-
All excise duplicate filing conditions are systemically controlled on IDRS as DUPX. DUPX indicates TRNS 193 generating on Excise Tax, Form 720, Quarterly Federal Excise Tax Return, Form 2290, Heavy Highway Vehicle Use Tax Return, Form 11-C, Occupational Tax and Registration Return for Wagering, and Form 730, Monthly Tax Return for Wagers. All duplicate filing conditions age in 45 days and are not considered to be correspondence. If correspondence is attached to the duplicate return, the case must be re-controlled as "TPRQ" . See IRM 21.7.9.2, What Are BMF Duplicate Filing Conditions.
-
If the TRNS 193 is received with the duplicate return:
-
Research BMFOL Command Codes (CC's) and/or pull returns from Files to determine if the tax reported on the duplicate, amended or supplemental return should be considered as additional tax.
-
If it is determined an original return has been filed and proves to be a true duplicate, see IRM 21.7.9.4.1.3, True Duplicate.
-
-
If the TRNS 193 is received without the duplicate return attached:
-
Research the Business Return Transaction File View (CC BRTVU) to determine if it is a true duplicate and/or for another tax period.
-
If Files is unable to secure the return, attempt to call the taxpayer for a copy of the return(s).
-
If unable to contact the taxpayer by telephone, input another request as "Special Search" and send Letter 418C to request a copy of the return.
-
Suspend case for 40 days. See IRM 21.7.9.4.1.2, TRNS 193 received Without Duplicate Return.
-
-
When adjusting accounts:
-
Use NSI 1 if the adjustment is for the exact amount the taxpayer requested and the adjustment will result in a balance due of $4.99 or less, an even balance or a credit balance of $.99 or less. See IRM 21.7.1.4.2, Notice Suppression Indicator (NSI).
-
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).
-
-
Input TC 29X to adjust tax, use appropriate IRS No. to match tax adjustment. For credit adjustment, use appropriate CRN to match credit adjustment.
-
Schedule T is used to report certain exchanges of taxable fuel before, or in connection with, the removal from the terminal rack. 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. The two party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and the following occur:
-
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.
-
The exchange transaction occurs before, or at, the same time as completion of removal across the rack by the receiving person.
-
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, Terminal Operator Report.
-
The transaction is the subject of a written contract.
-
-
Schedule T is used to report gallons of taxable fuel:
-
Received in a two-party exchange within a terminal (must also be reported on page 1 of Form 720)
-
Delivered in a two-party exchange coexistent with a removal across the rack.
-
-
Generally, instead of claiming a refund on Form 8849, Claim for Refund of Excise Taxes, claims may be made on Form 720, as a credit against current excise tax liability by using Schedule C and line 4 of Part III, of Form 720. A taxpayer should not use Schedule C:
-
If a liability has not been reported on Form 720, in Part 1 or Part II
-
For an IRC section 4081(e) refund. The refund must be reported on Form 8849, Schedule 5, IRC Section 4081(e) Claims for Refund
-
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. 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.
-
If a collector of communications or air transportation taxes using the alternative method for filing returns and making deposits, a claim for credit or refund is not permissible.
Note:
If a claim for alcohol, biodiesel or renewable diesel, or alternative fuel used to produce a mixture, a claim for refund or credit on Form 8849,Form 4136, Credit for Federal Tax Paid on Fuels Form 6478, Credit for Alcohol Used as Fuel or Form 8864, Biodiesel and Renewable Diesel Fuels Credit, can only be made after the sum of the alcohol fuel mixture credit, biodiesel or renewable diesel mixture credit, and alternative fuel mixture credit, is first applied to reduce the taxable fuel liability reported on Form 720, for any particular credit
.
-
-
No claim may be made if the same claim was made, or will be made on Form 8849,Form 4136, or if the tax was adjusted for the same dollar amount per Form 720X.
-
Schedule C is used to make claims for refund other than those involving changes to tax liability reported on Form 720, Quarterly Federal Excise Tax Return, for prior quarters. See IRM 21.7.8.4.5 and subsequent for the list of allowable claims and the rules relating to those claims, including the rules on interest. The claims must meet the requirements described for Form 8849 claims.
-
See the table below for the nontaxable uses allowable on Form 720, Schedule C. The taxpayer must enter the number from the table in the "Type of Use" column on Schedule C.
No. 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 -
See the table below for the type of non-taxable fuel, type of use, CRN, and tax rate for each non-taxable fuel allowable on Schedule C.
Note:
Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation:
-
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
-
CRN's 411, 412, 413, 414, are used for the export tax in the chart below.
Type of Non-taxable Fuel Type of Use Credit Reference Number (CRN) Tax Rate per gallon Gasoline 2, 4, 5, 7, or 12 (must have been used during the period of the claim). Exported taxable fuel 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 of Schedule C, the aviation gasoline must have been used during the period of the claim; for line 2d, the aviation gasoline 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 of Schedule C, the diesel 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.) -
360
-
353
-
350
-
360
-
413
-
$.243
-
$.243
-
$.17
-
$.243
-
$.244
Undyed Kerosene (other than kerosene used in aviation) 2, 6, 7, 8, or 12 (for line 4a of Schedule C, the kerosene 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 kerosene must have been used during the period of the claim for type of use 2.) -
346
-
347
-
346
-
414
-
377
-
369
-
$.243
-
$.17
-
$.243
-
$.244
-
$.043
-
$.218
Kerosene used in Aviation 1, 9, 10, 11, 13, 15, or 16 (for lines 5a and 5b of Schedule C, the ultimate purchaser of kerosene used in commercial aviation (other than foreign trade) is eligible to make the claim; for lines 5c, 5d, and 5e, the ultimate purchaser of kerosene used in noncommercial aviation (except for nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) is eligible to make the claim.) For lines 5c and 5d the kerosene must have been used during the period of the claim for type of use 9. 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
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.-
$.183
-
$.183
-
$.183
-
$.183
-
$.283
-
$.243
-
$.243
-
$.183
-
-
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 IRC section 4051(d), are not allowable as Form 8849 refunds.
-
The taxpayer must be registered ( Form 637, Application for Registration) to file an ultimate vendor claim on Schedule C. See IRM 21.7.8.4.5.3 , Form 8849, Schedule 2, Sales By Registered Ultimate Vendors, for adjustment procedures and claim requirements to use on Schedule C.
-
An alcohol fuel mixture credit must first be taken on Schedule C to reduce taxable fuel liability for gasoline, diesel fuel, and kerosene reported on Form 720, Quarterly Federal Excise Tax Return. Any excess credit may be taken on Form 720, Schedule C, Form 8849, Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit, Form 4136, Credit for Federal Tax Paid on Fuels, or Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit. The alcohol fuel mixture credit may not be claimed for alcohol produced outside the United States. The United States includes any possession 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 the claim. The credit is based on the gallons of alcohol in the mixture. The requirements for the claim are:
-
The claim must be for an alcohol fuel mixture sold or used during a period that is at least one week.
-
The amount of the claim must be at least $200.00. To meet this minimum, amounts from lines 12, 13, and 14 of Schedule C, may be combined.
-
If these requirements cannot be met, the taxpayer must file an annual claim Form 4136, Credit for Federal Tax Paid on Fuels.
-
-
Input adjustment for Alcohol Fuel Mixture Credit on MFT 03, as follows:
-
Use CRN 393 at $.45 per gallon of the alcohol fuel mixtures containing ethanol.
-
Use CRN 394 at $.60 per gallon of alcohol fuel mixtures containing alcohol (other than ethanol).
-
-
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 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. 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 requirements for the claim are:
-
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 12, 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 includes fuel derived from biomass that 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 incudes 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 Form 720 instructions for additional information.)
-
-
Input adjustment for biodiesel or renewable diesel mixture credit on MFT 03 as follows:
-
Use CRN 388 and tax rate $1.00 per gallon for biodiesel (other than agri-biodiesel) mixtures.
-
Use CRN 390 and tax rate $1.00 per gallon for agri-biodiesel mixtures.
-
Use CRN 307 and tax rate $1.00 per gallon for renewable diesel mixtures.
-
-
An alternative fuel credit and alternative fuel mixture credit must first be taken on Form 720, Schedule C. The requirements for filing a claim vary for each type of credit. For the alternative fuel credit, the person that can file the claim is the person who:
-
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, 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
-
-
An alternative fuel credit must first be taken on Schedule C to reduce the liability for alternative fuel and compressed natural gas (CNG) reported on Form 720.
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The only person eligible to make a claim for the alternative fuel mixture credit 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.
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The alternative fuel mixture credit must first be taken on Schedule C to reduce the taxable fuel liability for gasoline, diesel fuel and kerosene reported on Form 720. To claim the alternative mixture credit, the following requirements must be met if the credit exceeds the amount of taxable fuel liability reported:
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The claim must be for an alternative fuel mixture sold or used during a period that is least one week.
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The amount of the claim must be at least $200.00. (To meet the minimum amounts from lines 12, 13, and 14 of Schedule C 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.)
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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. To claim either credit, the taxpayer must be registered by the IRS.
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Input the adjustment on MFT 03 using the appropriate CRN and tax rate. See IRM 21.7.8.4.5.4 (2), Form 8849, Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit, for the type of fuel, correlating CRN, tax rate per gallon, and requirements allowable on Schedule C.
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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 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. See IRM 21.7.8.4.1.17(5) for requirements to file the claim.
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Input adjustment on MFT 03 using the appropriate CRN and tax rate of $.001 per gallon.
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The table below describes the type of fuel, the type of use, CRN, tax rate and where the claim can be filed (line number) for Diesel-Water-Fuel Emulsion on Schedule C:
Type of Fuel Type of Use (See Type of Use Table in IRM 21.7.8.4.1.17(4) above) CRN Tax Rate Claim Can be Filed On Diesel water fuel emulsion 1, 2, 3, 5, 6, 7, 8, 12 309 $.197 "Other Claims" , Schedule C, line 15(d) In certain intercity and local buses 5 CRN 309 $.124 "Other Claims" , Schedule C, line 15(d) Exported 3 CRN 306 $.198 "Other Claims" , Schedule C, line 15(d) Undyed diesel fuel Used to produce a diesel-water fuel emulsion CRN 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. -
Input adjustment on MFT 03 using the correct CRN and tax rate.
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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 -
Input adjustment on MFT 03, using applicable CRN and claim rate. See IRM 21.7.8.4.7, Form 8849, Schedule 8, Registered Credit Card Issuers, for the requirements to allow the claim.
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Tire credit claims 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:
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Exported
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Sold to a state or local government for its exclusive use
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Sold to a nonprofit educational organization for its exclusive use
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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
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Used or sold for use as supplies for vessels
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Sold in connection with qualified intercity, local, or school buses
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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.
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The person who paid the tax is eligible to make the claim and must include:
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A detailed description of the claim
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Any additional information required by the regulations
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How the claim amount was figured
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Any other information to support the claim
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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.
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See IRM 21.7.8.4.1.12, Excise Tire Tax, for adjustment procedures. See IRM 21.7.8.4.1.17 (6), for information on credit for tires under IRC section 4051(d).
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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:
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A detailed description of the claim
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Any additional information required by the regulations
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The amount of the claim
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How the claim amount was figured
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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% 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% of sales price) Fishing rods and fishing poles 308 110 (Tax is 3% of sales price) Fishing tackle boxes 387 114 (Tax is 3% of sales price) Electronic outboard motors 342 42 (Tax is 3% of sales price) Bows, quivers, broadheads, and points 344 44 (Tax is 11% of sales price) Arrow shafts 389 117 (Tax is $.45 per shaft) -