4.24.15  Excise Fuel Compliance Inspection, Sampling, and Shipping

Manual Transmittal

June 18, 2013

Purpose

(1) Updated IRM 4.24.15, Excise Tax, Excise Fuel Compliance Inspection, Sampling, and Shipping.

Background

Updates to IRM 4.24.15 (revision date 3-29-2012) have been made to reflect updated IRM cites, inclusion of Interim Guidance Memos, and to add clarity. This section contains procedural guidance relating to inspection, fuel sampling, and shipping fuel samples.

Material Changes

(1) Updated 4.24.15 material changes are listed in the table below:

IRM Description
4.24.15.2 Terminal Inspections Added new paragraph regarding verification of the number and locations of all mechanical dye injector systems.
4.24.15.2.1(5) g) & h) Terminal Inspection Procedures New paragraphs added regarding verification of the location and number of dye injectors and the position at the loading rack that each dye injector is directly coupled with.
4.24.15.2.1(7) Terminal Inspection Procedures Deleted cites pertaining to mechanical dye injector system procedures until final regulations are finalized and renumbered remaining cites.
4.24.15.2.1(8) Terminal Inspection Procedures New paragraph added regarding securing samples from all loading racks that have a separate dye injector.
4.24.15.2.1(9) k) & l) Terminal Inspection Procedures New paragraphs added regarding documenting case file the location of the dye injectors that were used to dye the fuel sample secured and if samples appear to be under dyed to secure additional samples from same dye injector.
4.24.15.2.1(12) e) & p) Terminal Inspection Procedures New paragraph added regarding comments on number of dye injectors and which loading arms are associated with each dye injector. New note added under p) adding clarify on how to determine the total number of gallons involved based on the position of the dye injector.
4.24.15.2.1(13 & (14) Terminal Inspection Procedures New paragraphs regarding preparing Form 5346 for both FCOs and FCAs when dye results show the fuel was under dyed.
4.24.15.2.1(16) Terminal Inspection Procedures Changed Terminal Control Number (TCN) Coordinator to Facility Control Number (FCN) Coordinator. The term refinery has been added to this section.
4.24.15.2.2 Procedures for Addressing an Under-dyed Fuel Sample Obtained from a Terminal Moved up from 4.24.15.9.2 to 4.24.15.2, Terminal Procedures.
4.24.15.2.3 Procedures for Railroad Terminal Inspections Content moved to 4.24.15.2.3. Content from 4.24.15.9.3, Procedures for Addressing an Under-Dyed Fuel Sample Obtained From a Terminal, moved here for clarity.
4.24.15.3.1 Wholesale Inspection Procedures Added new (5) regarding photographs and renumbered remaining cites and statement regarding photographs at 4.24.15.3.1 (12)(h). New content regarding providing Notice 1420.
4.24.15.4.1 Retailer Inspection Procedures Added new paragraph (4) and (8) (i) regarding photographs and renumbered remaining cites. Added a reference to a blocked pump check sheet exhibit and clarified procedures for completion. New content regarding providing Notice 1420.
4.24.15.5 Designated Inspection Site Inspections Revised content to improve clarity. Providing Pub 4941 has been added.
4.24.15.5.1 Designated Inspection Site Procedures Revised content to improve clarity.
4.24.15.6.1 End User Inspection Procedures Added new (4) regarding photographs and renumbered remaining cites. Added new content at renumbered (13)(g) regarding photographs.
4.24.15.7 Blitz Inspection Procedures Edited for clarity and statement added regarding the EFL providing updated Blitz sample data sheets.
4.24.15.7.5 Packing and Shipping Blitz Samples Edited content to improve clarity.
4.24.15.7.6 Input of Blitz Inspections on IMS Edited content to improve clarity.
4.24.15.9 Procedures for Developing an IRC 6720A Sulfur Content Penalty New content added to incorporate IGM SBSE-04-0612-058 entitled "Enforcement of IRC 6720A Penalty Associated with Certain Adulterated Fuels" . A new table was added to this section.
4.24.15.11 Sampling Methods Moved to 4.24.12. Moved content from 4.24.15.12, Pipette Screening Method, here.
4.24.15.12(3)(c) Sampling Methods Added new content at 4.24.15.12(3)(c) for bonding with pump and renumbered remaining cites.
4.24.15.12.1 Approved Sample Bottles Deleted cite referencing biodiesel samples. Edited content to improve clarity.
4.24.15.13.2 Investigative Sample Procedure Content updated to reflect use of new Form 14403, Investigative Sample Information. .
4.24.15.13.3 Shipping of Investigative Samples Edited content to improve clarity.
4.24.15.14 Sample Bottle Labeling Procedures Added new paragraph (4) regarding using a clean and dry sample bottle.
4.24.15.14.2 Sample Labeling Matrix Updated column 4 of table for clarity.
4.24.15.16 Packing and Shipping Samples Edited content to improve clarity.
4.24.15.16.2 Shipping Instructions Added content at (2) regarding electronic air bills and renumbered remaining cites.
Exhibit 4.24.15-1 Investigative Sample Form Deleted as it is replaced with Form 14403.
Exhibit 4.24.15 -1 Blocked Pump Check Sheet New Exhibit added.

Effect on Other Documents

This IRM section includes procedural guidance found in the following Interim Guidance Memo: SBSE 04-0612-058, Interim Guidance for Penalties Associated with certain Adulterated Fuels, dated 6-12-2012.

Audience

This section is primarily to provide direction to Supervisory Fuel Compliance Officers, Fuel Group Managers, Fuel Compliance Officers (FCO) and Fuel Compliance Agents (FCA). Information in this section may also support coordination with SBSE excise groups.

Effective Date

(06-18-2013)


/s/John Imhoff
Director, Specialty Programs
Small Business/Self Employed

4.24.15.1  (06-18-2013)
Overview of Fuel Tax Inspection

  1. There are a number of inspection types including, but not limited to, the following:

    1. terminals,

    2. wholesalers,

    3. retailers,

    4. designated inspection sites,

    5. end users

    6. Blitzes, and

    7. special projects.

  2. Specific procedures for each type of inspection are listed below.

  3. If during the course of an inspection a FCA or FCO determines an examination of the taxpayer's return is warranted, the field employee will complete a Form 5346, Information Report, and forward to the Excise Operations Support (EOS) Program for Expedite lead development. See IRM 4.24.18.4 for procedural guidance.

  4. All inspections must be input into the Issue Management System (IMS) within 4 business days of the inspection. See IRM 4.24.13.5 for IMS guidance.

4.24.15.1.1  (06-18-2013)
Authority to Inspect

  1. IRC Section 4083(d) and Treasury Regs Section 48.4083-1, authorize employees to conduct warrantless searches.

  2. Employees must present credentials and provide Notice 916 (EN/SP), Taxable Fuel Inspection Notice, to each taxpayer prior to an inspection. The Notice 916 explains the IRS "authority to inspect" .

  3. Publication 1, Your Rights as a Taxpayer, must be provided to every taxpayer, except at designated inspection sites unless a fuel sample is secured.

  4. This authority is divided into three broad categories:

    1. designated inspection site inspections, see IRM 4.24.15.1.1.1,

    2. pervasively regulated industry inspections, where fuel is stored or may be stored, see IRM 4.24.15.1.1.2 and

    3. other inspections where consent is granted by the taxpayer, see IRM 4.24.15.1.1.3.

4.24.15.1.1.1  (06-18-2013)
Designated Inspection Sites

  1. Designated inspection sites are any State highway inspection station, weigh station, agricultural inspection station, mobile station, construction sites, parks, rest areas, any point on a public highway or any other location as designated by the Commissioner to be used as a fuel inspection site.

  2. A designated inspection site is identified as a fuel inspection site by displaying a free standing and/or magnetized vehicle sign displaying "IRS FUEL INSPECTION SITE" .

  3. A designated inspection site is typically controlled by one agency and has vehicles from multiple entities entering and departing.

4.24.15.1.1.2  (06-18-2013)
Pervasively Regulated Industry Inspections

  1. Pervasively regulated industry sites include refineries, terminals, wholesalers, retailers, certain end users, and any other location where fuel is or may be produced or stored. The presence of fuel production or storage authorizes employees to conduct inspections. Fuel in the propulsion tank of a vehicle is not considered "fuel storage" for purposes of IRC 4083(d).

  2. Employees will first seek consent from the owner of the property or an employee empowered to grant consent to conduct the inspection.

  3. If permission is granted, employees may proceed with the inspection.

  4. If permission to inspect is refused or revoked:

    1. immediately stop the inspection,

    2. advise the taxpayer that a refusal penalty will be asserted and that a writ of entry may be obtained, and

    3. if the taxpayer still refuses, assert the refusal penalty under IRC 6717 and consult with the group manager about obtaining a writ of entry.

  5. The IRS may impose more than one penalty under IRC 6717 on a taxpayer who refuses to admit entry or refuses to permit another action authorized by IRC 4083(d)(1). The number of violations is determined by the number of actions allowable under IRC 4083(d)(1) that the taxpayer refused to allow the field person to perform. The facts and circumstances of each situation must be considered.

4.24.15.1.1.3  (06-18-2013)
Other Inspections Where Consent is Sought

  1. This category pertains to end user sites where fuel is neither produced nor stored and consent has been sought.

  2. Employees will first seek consent from the owner of the property or an employee empowered to grant consent to conduct the inspection.

  3. If permission is granted, employees may proceed with the inspection.

  4. If permission to inspect is refused or revoked:

    1. immediately stop the inspection,

    2. advise the taxpayer that a writ of entry may be obtained, and

    3. if the taxpayer still refuses, discuss obtaining a writ of entry with the group manager.

  5. The refusal penalty does not apply at these sites.

4.24.15.1.1.4  (06-18-2013)
Obtaining a Writ of Entry

  1. Employees must discuss with their group manager whether to obtain a Writ of Entry to complete an inspection any time consent is denied or revoked, regardless of whether a refusal penalty was applied.

  2. Employees shall prepare a request for a Writ of Entry and an affidavit that details why the government needs to inspect and, if applicable, why a consent to enter and inspect was refused.

  3. The affidavit must be fully detailed and factual. The format can be extrapolated from IRM Exhibit 5.10.3-2. The affidavit should include statements that:

    1. identify the Service's employee with the duty and authority to conduct inspections under IRC 4083(d),

    2. identify the location and the business at which the taxable fuel to be inspected is produced or stored (or may be stored) or the records pertaining to the fuel are kept,

    3. describe the purposes of the inspection,

    4. describe the procedures the Service's employee followed to carry out the inspection, and

    5. describe fully the circumstances under which entry was denied (when, where, why, and by whom).

  4. The request for Writ of Entry and the related affidavit must be submitted to the local IRS Area Counsel for review.

  5. Local IRS Area Counsel will make any necessary changes and prepare a package for presentation to the Assistant U.S. Attorney (AUSA) having jurisdiction.

  6. If the package is approved, the U.S. Magistrate or District Court Judge will issue a Writ of Entry specific to the circumstances presented in the application package.

  7. The Writ of Entry is served on the taxpayer by field personnel.

  8. If the taxpayer still refuses to allow the inspection under the Writ of Entry, it is a refusal of a court order which may lead to a contempt of court citation and enforcement by the U.S. Marshall Service.

  9. See IRM 5.10.3.4 and Exhibit 5.10.3-1 and 5.10.3-2 for an example of a Writ of Entry to effect a levy and the associated affidavit.

4.24.15.2  (06-18-2013)
Terminal Inspections

  1. Terminal inspections are conducted per the authority granted in IRC 4083(d) .

  2. Terminal inspections are conducted to:

    1. verify the terminal is still operating and has not changed ownership,

    2. determine if taxable products are stored at the facility,

    3. verify that dyed fuel crossing the rack is dyed to the specifications in Treas. Regs. Section 48.4082-1(b),

    4. verify the number and locations of the mechanical dye injection systems that are used to dye the fuel crossing the rack,

    5. determine if the mechanical dye injection system has been tampered with and if the security requirements have been met,

    6. verify that required records are maintained on site for one year, see Treas. Regs Section 48.4101-1(h)(3),

    7. ensure that the appropriate dyed fuel notice "DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE" , is on the bill of lading, see Treas. Regs. Section 48.4101-1(h)(3)(ii),

    8. provide samples for certain Blitz projects/activities,

    9. verify that the sulfur content for highway fuel is within prescribed ranges, and

    10. educate taxpayers concerning fuel tax laws.

    Note:

    The facts and circumstances discovered while conducting the inspection, as well as management instruction, will dictate what actions are taken during the inspection.

  3. Employees must timely record the inspection in IMS.

4.24.15.2.1  (06-18-2013)
Terminal Inspection Procedures

  1. Inspections for the purpose of determining a terminal’s compliance with the laws and regulations are conducted per the frequency schedule provided by Excise Policy.

  2. The procedures to be followed at each terminal facility will differ depending on:

    1. the terminal's safety procedures,

    2. the products stored and sold, or

    3. the fuel dyeing method.

  3. Employees must present credentials and provide the terminal operator or other responsible party with a Notice 916 (EN/SP) and Publication 1 prior to conducting the inspection and explain what fuel samples are needed.

    Note:

    The terminal is not permitted to make a copy of the credentials.

  4. Employees should tour the facility.

  5. Employees should obtain information regarding the operation of the terminal including, but not limited to, the terminal's:

    1. emergency plan,

    2. hours of operation,

    3. layout including location of tanks and racks,

    4. modes of fuel delivery and disbursement,

    5. types of fuel stored and/or sold at this location,

    6. dyeing method,

    7. location and number of dye injectors,

    8. position at the loading rack (loading arm) that each dye injector is directly coupled with,

    9. fuel supplier, and

    10. types of records maintained at the terminal.

  6. Employees must inspect the shipping documents to:

    1. ensure bills of lading contain the required notice, see Treas. Regs. Section 48-4101-1(h)(3)(ii)(A),

    2. ensure that the 12 month record retention requirements are met, and

    3. identify unusual sales of dyed fuel, which may indicate improper use of dyed fuel downstream.

    Note:

    The bills of lading may be paper documents or maintained electronically by the terminal.

  7. To ensure the dye concentration requirement under Treas. Regs. Section 48.4082-1(b) is met, employees will obtain a sample of dyed fuel from the transport compartment.

  8. If the terminal has more than one (1) dye injector at the loading rack, employees should attempt to secure samples from transport compartments for each loading arm that has a separate dye injector.

  9. Transport compartment samples will be secured utilizing the following procedures:

    1. driver introduction and present credentials, a Notice 916 (EN/SP), and a Publication 1,

    2. explain the purpose and the method of securing a sample,

    3. if necessary, ask the driver to relocate the vehicle out of the normal traffic flow before obtaining the sample,

    4. record the name of the trucking company and license number,

    5. ask the driver which compartments contain dyed fuel,

    6. ask the driver about prior cargo,

    7. wait at least 15 minutes for fuel to settle and dye to mix,

    8. use the sampling pump method described in IRM 4.24.15.12 to obtain the sample,

    9. secure a copy of the bill of lading for the load from which each sample is taken,

    10. if more than one dye injector exists, indicate in the case file which dye injectors were used to dye the fuel for each sample secured, and

    11. if any of the samples appear to be under dyed, secure additional samples from subsequent transports that used the same dye injector.

  10. Some terminal owners require terminal employees to draw the samples. In that instance, employees must observe the sampling process to ensure a sample is properly obtained.

  11. If after two hours a sample can not be obtained and the other inspection duties are complete, the employee will identify the most recent recipients of dyed fuel and travel to those locations to obtain field concentration samples. If the lab results indicate the fuel is not dyed to the required concentration, the employee will determine who is responsible for the under-dyed fuel.

    Note:

    The employee should contact the group manager if the most recent recipients of fuel are not close to the terminal.

  12. At a minimum, the case history must document the following:

    1. identification of individual that authorized the inspection,

    2. delivery of Publication 1 and Notice 916 (EN/SP),

    3. change in ownership of the terminal,

    4. fuel products sold and/or stored at the facility,

    5. comments on the number of dye injectors and which loading arms are associated with each dye injector,

    6. comments of fuel storage,

    7. method of fuel receipt and delivery (pipeline, barge or transport),

    8. comments on the distribution of transmix,

    9. comments on the review of records and sales of dyed products,

    10. review of BOLs for notice requirement,

    11. statement that required records are maintained on site for one year,

    12. comments on the mechanical dye injection system and security measures the facility takes to secure the injection system,

    13. comments on necessary corrective actions discussed with taxpayer,

    14. results of the screening of company vehicles (if applicable) and fueling practices,

    15. samples taken and sampling procedures,

      Note:

      If a sample was not obtained at the terminal, explain why and what steps were taken to follow the fuel.

    16. statement as to whether samples met the dye concentration minimum requirement, and

      Note:

      If there is more than one dye injector, the number of gallons involved will only apply to the specific dye injector whereas results indicated that the dye concentration did not meet the minimum requirement. The total number of gallons involved would only include those gallons indicated on the BOL for the transport that the sample was secured (crossed the rack). If more than one sample from the same injector has been secured at different time intervals (i.e. follow-up inspection, subsequent transports), the total gallons involved would be all gallons dispensed from the identified dye injector/loading arm from the time the first under dyed sample was secured through the period of time that the second under dyed sample was secured.

    17. date the sample results were received and the closing letter was issued.

  13. If the dye results show the fuel was under dyed, the FCO will prepare Form 5346, Information Report, and forward to the Excise Operations Support (EOS) Program for expedite lead development.

  14. If the dye results show the fuel was under dyed or the FCA determines an examination of the taxpayer's return is warranted, the FCA will complete Form 5346, Information Report, and forward to the EOS Program for expedite lead development. See IRM 4.24.18.4 for procedural guidance.

  15. Follow the procedures in IRM 4.24.16 to close the inspection.

  16. Employees should inform the Facility Control Number (FCN) coordinator if the terminal or refinery (some terminals may also be refineries) has closed, no longer sells taxable products, or has changed ownership. See IRM 4.24.17 for FCN Coordinator notification procedures.

  17. Refer to the applicable IRM sections below if the terminal also engages in business activities that would classify it as a fuel wholesaler, retailer, and/or an end-user.

4.24.15.2.2  (06-18-2013)
Procedures for Addressing an Under-Dyed Fuel Sample Obtained From a Terminal

  1. If the dye concentration test results from the Excise Fuel Laboratory (EFL) indicate a possible infraction, the group manager will ensure that employees follow the procedures below within 5 business days:

    Note:

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    1. Provide the sample results and a copy of Letter 4227, Terminal Samples Below Concentration, to the terminal operator informing them that the fuel is taxable and instruct the terminal to include the fuel on the Form 720, Quarterly Federal Excise Return and Form 720-TO, Terminal Operator Report. The inspection will remain open on IMS until the fuel is dyed to the required concentration.

    2. Obtain from the terminal the position holder's name, EIN and Form 637 registration number.

    3. Conduct a follow-up inspection at the terminal.

    4. Collect a second sample of dyed fuel from the same source where the original under-dyed sample was taken, e.g., loading rack arm, etc.

    5. Mark the samples distinctively so the EFL can identify them for priority handling. The labels should be marked as usual for terminal concentration samples except enter the words "SECOND" or "THIRD" (as appropriate) in the blank to the right of "Other" on the sample bottle label.

      Note:

      Use words and not numerals to reduce confusion over fuel types, etc.

    6. After entering the Terminal Control Number "TCN" , enter the original sample number from the under-dyed sample.

    7. The FCO will generate a referral, see IRM 4.24.18.4 for guidance on how to make a referral. Include a copy of the BOL or the BOL number with the referral. The BOL information is required for the revenue agent to verify that the under-dyed load was included on the Form 720-TO and to determine if it was included on a Form 720.

    8. The FCA will contact the group manager to discuss pursuing the tax matter.

  2. If the lab result from the follow-up sample indicates the concentration of dye in the fuel is still not in compliance, employees will repeat the procedure outlined above. The second referral should reference the previous referral to ensure the revenue agent is aware of the extent of the issue.

4.24.15.2.3  (06-18-2013)
Procedures for Railroad Terminal Inspections

  1. Railroad terminals have an exception to Excise Summary Terminal Activity Reporting System (ExSTARS) reporting requirements which permits them to make daily summary disbursement reports instead of reporting the individual disbursements. Employees must be aware of this exception when conducting an inspection or, for the FCA, an examination of the Form 720-TO. The meter tickets must contain the dyed fuel notice as required by Treas. Regs. Section 48.4101-1(h)(3).

  2. The purpose of an inspection of a railroad terminal is the same as for other types of terminals.

  3. To address safety concerns and the unique nature of railroad terminals, specific procedures have been developed for railroad terminal inspections. The procedures apply only to fuel inspections, not to the examinations conducted by the FCA or excise revenue agents. Unless specifically contradicted in the procedures below, the procedures for inspections of railroad terminals are the same as for other terminals.

  4. To address the safety concerns while maintaining the IRS authority to conduct unannounced inspections the following arrangement has been agreed to:

    1. The IRS will provide the railroad terminals a list of the employees authorized to conduct inspections. The list will include name, title and a unique identifying number.

    2. Each railroad company will provide contact names and telephone numbers for each terminal.

    3. Upon arrival at the terminal but prior to entering the property, the employees will call one of the contact persons identified by the railroad company. The terminal employee will provide instructions to the employee or an escort.

    4. The employee will provide the terminal with their full name and unique number. The terminal will validate the name and number with the information provided by the IRS.

      Note:

      The railroad terminal is not permitted to make a copy of the credentials.

    5. After the information is validated, the inspection will proceed.

  5. Typically, railroad terminals do not retain the records required in Treas. Regs. Section 48.4101-1(h)(3)(ii) at the terminal site. Also, the disbursement records do not detail the disbursements into each locomotive.

  6. To address the ability of the railroad terminal companies to comply with the record requirements, railroad terminals must provide the following:

    1. The summary reports covering the last twelve months. Summary reports detail each removal of fuel. The summary reports are prepared on a thirty day cycle. Therefore records of the most recent disbursements (disbursed since the last summary report was filed) will not be available. For example, if an inspection was conducted in January, the summary report for December would not be available. The railroad terminal would be required to provide the summary reports through November.

    2. Meter tickets with the language required in the dyed fuel notice to specify the product is dyed in compliance with Treas. Regs. Section 48.4082-1, the name of the common carrier who removed the fuel, and the name of the entity which delivered the fuel into the supply tank of the train. If meter tickets for the last twelve months are not maintained at the terminal, the railroad company will provide the records by facsimile upon request by the employee.

4.24.15.3  (06-18-2013)
Wholesaler Inspections

  1. Fuel Wholesalers:

    1. sell fuel to other wholesalers, retailers, and end users,

    2. may have storage tanks or may pick up fuel for delivery at terminals or other wholesalers,

    3. may blend and sell biodiesel,

    4. may operate a retail fuel outlet at the location, or

    5. may operate diesel powered trucks (thus are also end users of diesel fuel).

  2. Wholesaler inspections are conducted to:

    1. ensure the strength or composition of dye has not been altered,

    2. review the wholesaler's records of dyed fuel sales,

    3. ensure biodiesel blended at the wholesaler meets the requirements of Notice 2005-80 or the governing Treasury regulation,

    4. ensure diesel trucks operated by the wholesaler do not have dyed fuel in the propulsion tanks,

    5. inspect retail pumps operated by the wholesaler for the notice requirement,

    6. determine the sulfur concentration of diesel fuel intended for use in a diesel powered train or highway vehicle,

    7. determine if gasoline has been adulterated (upon direction by management or during special projects), and

    8. educate taxpayers concerning fuel tax laws.

    Note:

    The facts and circumstances discovered while conducting the inspection, as well as management instruction, will dictate what actions are taken during the inspection.

4.24.15.3.1  (06-18-2013)
Wholesaler Inspection Procedures

  1. Employee must present his/her credentials as well as provide the wholesaler with a Notice 916 (EN/SP) and Publication 1 prior to conducting the inspection.

  2. Employees should tour the facility and obtain information from the wholesaler that will help understand the operation of the business, including but not limited to the following information:

    1. emergency plan, if any,

    2. hours of operation,

    3. location of tanks and racks,

    4. types of fuel stored and/or sold at this location,

    5. identity of the fuel supplier,

    6. types of records kept of sales and deliveries,

    7. sales of dyed product to end users,

    8. presence of retail pumps,

    9. source of the fuel in the propulsion tanks of the wholesaler's trucks, and

    10. verification of correct Form 637 registrations related to the known and observed business operations.

  3. Employees will use the appropriate method described in IRM 4.24.15.12 to sample fuel. Employees will sample fuel to:

    1. obtain a field concentration sample to determine whether the strength or composition of the dye has been altered, and/or

    2. obtain a sample of clear distillates for sulfur analysis.

    Note:

    If employees cannot obtain a sample independently using approved sampling methods, they may observe an employee obtaining a sample from the storage tank by valve or fuel thief.

  4. Gasoline samples are only secured as part of a project or at the instruction of management. If EFL results show adulterants, the FCO will generate a referral and the FCA will discuss how to proceed with the group manager.

  5. Employees shall take photographs to support any penalty determinations.

  6. See IRM 4.24.15.14 for labeling instructions if a field concentration sample is obtained.

  7. Refer to the applicable IRM section if the wholesaler also engages in business activity that would classify it as a retailer and/or an end-user.

  8. Refer to IRM 4.24.15.9 for procedures on documenting and developing samples taken for sulfur concentration testing.

  9. Refer to Notice 2005-80, or the governing regulation when published, for the requirements of a blender of biodiesel at a site other than a terminal.

  10. The wholesaler may be subject to penalties if any of the following is found:

    If the Lab Confirms Then
    The dye concentration of the sample has been altered- A violation under IRC section 6715(a)(3) or 6715(a)(4) may be applicable. See IRM 20.1.11.5.1.3 for information regarding when a dye alteration penalty is applicable.
    The presence of dye in a sample from a retail pump not labeled with the required notice- A notice violation under IRC section 6715(a)(1) may be applicable.
    The presence of dye in a sample from the propulsion tank of the transport truck- A violation under IRC section 6715(a)(2) is applicable.
    The sulfur content of diesel fuel transferred for resale, sold for resale, or held out for resale for use in a diesel-powered train or highway vehicle exceeds the allowable level established by the EPA regulations- An IRC section 6720A penalty may be applicable. See IRM 4.24.15.9 for guidance.

  11. Employees are expected to "follow the fuel" back to its source or to its destination.

  12. At a minimum, case history documentation must include:

    1. identification of individual that authorized the inspection,

    2. verification of delivery of Publication 1 and Notice 916 (EN/SP) ,

    3. comments on fuel storage,

    4. identity of fuel supplier(s),

    5. comments on review of records and sales of dyed products to end users,

    6. comments on presence of retail pumps and required notice,

    7. in situations where the required notice was not present, comments on required actions taken to ensure the notice decal was properly affixed prior to the completion of the inspection and appropriate educational/outreach procedures were followed by providing Notice 1420, Sales of Dyed Diesel and Kerosene, (in these situations, a penalty is still appropriate),

    8. photographs, if taken to support a penalty determination,

    9. results of the screening of company vehicles and fueling practices,

    10. samples taken and sampling procedures,

    11. comments on Form 637 registration verification,

    12. comment on necessary corrective actions discussed with taxpayer,

    13. sample results and date sample results received, and

    14. date closing letter issued.

  13. Follow the procedures found in IRM 4.24.15.7 related to a Blitz inspection.

4.24.15.4  (06-18-2013)
Retailer Inspections

  1. Fuel retailers:

    1. obtain fuel from terminals or wholesalers,

    2. sell dyed and/or undyed fuel to end users, or

    3. may operate diesel operated delivery trucks (these are also end users of diesel fuel).

  2. Retailer inspections, including truck stops, are conducted to:

    1. verify dyed fuel dispensers contain the required notice,

    2. verify that the strength or composition of dyed fuel has not been altered,

    3. verify fuel dispensed from undyed diesel and kerosene pumps do not show visible evidence of dye,

    4. determine the concentration of sulfur in samples obtained from diesel fuel pumps,

    5. verify registered Form 637 Activity Letter UP pumps meet the blocked pump criteria. See IRM 4.24.13.13 for a definition of a blocked pump,

    6. obtain Blitz samples,

    7. determine if gasoline has been adulterated (upon direction by management or during special projects), and

    8. educate taxpayers concerning fuel tax laws.

    Note:

    The facts and circumstances discovered while conducting the inspection, as well as management instruction, will dictate what actions are taken during the inspection.

4.24.15.4.1  (06-18-2013)
Retailer Inspection Procedures

  1. Employee must present his/her credentials as well as provide the retailer with a Notice 916 (EN/SP) and Publication 1 prior to conducting the inspection.

  2. Employees will tour the facility and obtain information from the retailer that will help understand the operation of the business, including but not limited to the following:

    1. hours of operation,

    2. location of all pumps and tanks,

    3. types of fuel stored and/or sold at this location,

    4. identity of the fuel supplier,

    5. types of records kept for sales and deliveries,

    6. sales of dyed products to end users,

    7. source of the fuel in the propulsion tanks of the retailer's trucks, and

    8. Form 637 registration information.

  3. Employees will obtain a nozzle sample from each tank holding diesel or kerosene, whether dyed or not.

  4. Employees shall take photographs to support any penalty determinations.

  5. Gasoline samples are only secured as part of a project or at the instruction of management. If EFL results show adulterants, the FCO will generate a referral and the FCA will discuss how to proceed with the group manager.

  6. Refer to the applicable IRM section below if the retailer also engages in business activity that would classify it as an end-user.

  7. The retailer may be subject to penalties if any of the following is found:

    If the Lab Confirms Then
    The dye concentration of the pump sample has been altered- A violation under IRC section 6715(a)(3) or 6715(a)(4) may be applicable. See IRM 20.1.11.5.1.3 for information regarding when a dye alteration penalty is applicable.
    The presence of dye in a sample from a retail pump not labeled with the required notice- A notice violation under IRC section 6715(a)(1) may be applicable.
    The presence of dye in a sample from the propulsion tank of the company controlled vehicle- A violation under IRC section 6715(a)(2) is applicable.
    The sulfur content of the diesel fuel transferred for resale, sold for resale or held out for resale for use in a diesel-powered train or highway vehicle exceeds the allowable level established by the EPA regulations- An IRC section 6720A penalty may be applicable.

  8. At a minimum, the case history documentation must include the following:

    1. identification of individual that authorized the inspection,

    2. delivery of Publication 1 and Notice 916 (EN/SP),

    3. comments on fuel storage,

    4. identity of fuel supplier(s),

    5. comments on types and number of retail pumps,

    6. results of the screening of company vehicles,

    7. samples taken and sampling procedures,

    8. comments indicating dyed fuel retail pumps were labeled properly with the required notice,

    9. in situations where the required notice was not present, comments on required actions taken to ensure the notice decal was properly affixed prior to the completion of the inspection and appropriate educational/outreach procedures were followed by providing Notice 1420, Sales of Dyed Diesel and Kerosene, (in these situations, a penalty is still appropriate),

    10. photographs of the retail pump (before and after notice decal was affixed), if a notice violation is proposed,

    11. comments on Form 637 registration verification,

    12. comments on necessary corrective actions discussed with taxpayer,

    13. comments on sample results and date received, and

    14. comments on date closing letter issued.

  9. Complete the Blocked Pump Check sheet found in Exhibit 4.24.15-1, if the retailer is a Form 637 UP registrant. Employees are responsible for sending the completed Blocked Pump Check sheet via secure e-mail to their group manager and to the 637 Registration Group Manager.. See IRM 1.10.3.2.1 for information on sending secured e-mail messages.

  10. For procedures related to a Blitz project, see IRM 4.24.15.7.

  11. For procedures relating to sulfur, see IRM 4.24.15.9.

4.24.15.5  (06-18-2013)
Designated Inspection Site Inspections

  1. Designated inspection site inspections are conducted to:

    1. ensure on road diesel vehicles do not have dyed, untaxed fuel in the propulsion tanks,

    2. ensure fuel carried by fuel transport trucks match the shipping papers, and

    3. educate drivers of diesel vehicles about dyed fuel laws including providing Pub 4941, Trucker Bulletin, as warranted.

  2. The designated inspection site should be identified as a fuel inspection site by displaying a free standing and/or magnetized vehicle sign showing "IRS FUEL INSPECTION SITE" .

  3. When working a site such as a state highway inspection station, weigh station, agricultural inspection station, mobile station or any point along a public highway, employees must coordinate with state/local law enforcement personnel. The law enforcement personnel must be present and control traffic flow.

  4. When working at other locations as designated by the Commissioner to be used as a fuel inspection site (i.e. construction sites, quarries), from which vehicles from multiple entities enter and depart, employees must first coordinate and obtain permission from the agency/official which controls the site.

  5. The actual number of vehicles screened during each inspection must be timely recorded in IMS. See IRM 4.24.13.5 for IMS procedures.

4.24.15.5.1  (06-18-2013)
Designated Inspection Site Procedures

  1. Secure permission from the person or agency that controls the site to establish an IRS fuel inspection site.

  2. Defer to the person in control on traffic flow and safety issues.

  3. Employee must identify the site as an IRS fuel inspection site with the official sign provided.

  4. The employee must convey his/her identity and contact information, and provide a Notice 916 (EN/SP) to every driver prior to conducting the inspection.

  5. If the driver refuses the inspection, see IRM 4.24.15.1.1.3 for procedures.

  6. If the vehicle is a fuel transport, review the Bill of Lading (BOL) to determine:

    1. if the BOL indicates dyed middle distillate fuel, obtain a fuel sample to confirm,

    2. if the sample does not match the BOL, if possible secure a copy of the BOL. If a copy is not possible, document the BOL number and source of fuel. FCO will make a referral for the appropriate RA/FCA fuel group. FCAs should consult with the group manager on how to proceed.

  7. For all other vehicle types, screen the fuel in the propulsion tank.

  8. If no dyed fuel is present, employees will secure only the tag and state information and release the driver.

  9. If dyed fuel is present or the contents of the fuel are suspicious (e.g. the fuel is dark), the employee will inform the driver, issue a Publication 1, and secure a sample. In these situations, the employee will obtain the following information:

    1. name of driver,

    2. name of company/owner,

    3. address of driver and company,

    4. phone number of driver and company,

    5. position of the driver with the company,

    6. driver's license number,

    7. social security number and/or Federal Employer Identification Number (EIN),

    8. description of vehicle,

    9. size of propulsion tank(s),

    10. estimated amount of fuel in the propulsion tank(s)

    11. location of any fuel storage tanks on the vehicle,

      Note:

      If the vehicle is transporting dyed fuel, obtain a sample from the transport compartment(s) holding dyed fuel and obtain information on the amount of fuel in the compartments.

    12. vehicle identification number (VIN),

    13. license plate number, and

    14. date of registration.

  10. Employees should obtain the following information to establish who is responsible for the presence of dyed fuel in the on road vehicle:

    1. who fueled the vehicle,

    2. when the truck was fueled last,

    3. where the fuel was obtained,

    4. whether the company has fuel storage tanks at the yard,

    5. the location of the company's yard,

    6. how many trucks the company operates, and

    7. other information that would establish culpability.

  11. Employees will "follow the fuel" and conduct follow up inspections as required to determine the extent of the non-compliance. If geographically necessary, employees will notify their manager to have the information referred to other employees in the appropriate area for follow up.

  12. At a minimum, the case history must document the following:

    1. delivery of Publication 1 and Notice 916 (EN/SP), and

    2. contain all the necessary facts as outlined above.

  13. For case processing procedures, see IRM 4.24.16.1.

4.24.15.6  (06-18-2013)
End-User Inspections

  1. End-user inspections are conducted to:

    1. ensure dyed fuel is not being used or held for use in a taxable manner,

    2. verify that the strength or composition of dyed fuel has not been altered,

    3. determine if the gasoline or diesel fuel has been adulterated, and

    4. educate taxpayers concerning fuel tax laws.

    Note:

    Other than ensuring dyed fuel is not being used or held for use in a taxable manner, the facts and circumstances discovered while conducting the inspection, as well as management instruction, will dictate what actions are taken during the inspection.

  2. End-user inspections may be conducted at the permanent place of business for a company, such as the company yard, or may be conducted at sites such as construction sites.

4.24.15.6.1  (06-18-2013)
End User Inspection Procedures

  1. Employees must present his/her credentials as well as provide the end-user with a Notice 916 (EN/SP) and Publication 1 prior to conducting the inspection.

  2. Employees will tour the facility and obtain information from the end-user that would help them understand the operation of the business, including but not limited to the:

    1. type of business activity,

    2. types of fuel used in vehicles,

    3. types of fuel stored at this location,

    4. the number of diesel trucks owned or operated,

    5. location and capacity of fuel storage tanks, identity of the fuel supplier,

    6. records of deliveries,

    7. truck fueling procedure,

    8. records for the fueling of the trucks,

    9. types and number of pieces of off road diesel equipment,

    10. portable diesel tanks used by the company, and

    11. safeguards in place to ensure dyed fuel is not used in a taxable manner.

  3. Employees will screen the fuel in the on road diesel vehicles and mobile machinery. If the fuel in a vehicle or mobile machinery appears to be dyed or suspicious in nature then a sample is obtained from each propulsion tank and from the storage tank that is the source of the dyed fuel in the vehicle and mobile machinery.

  4. Employees shall take photographs to support any penalty determinations.

  5. All or some of the dyed fuel in the storage tank that is the source of the fuel in the propulsion tank may be considered held for a use other than a nontaxable use and thus subject to a penalty under IRC 6715(a)(2). The number of gallons involved in the violation is determined by the evidence the taxpayer provides regarding the past and current use of dyed fuel.

  6. The Service will consider any credible and convincing evidence when calculating the amount of dyed fuel a person held for a use other than a nontaxable use. In accordance with Needsome Farms v. U.S , No. 97-1375-MLB, 1999 WL 131697 (D. Kan. July 16, 1999), in the absence of credible evidence to the contrary, all dyed fuel held in the storage tank may be presumed to be involved in the violation.

  7. The employee should obtain information from the taxpayer on its past and current use of dyed fuel and determine the number of gallons of stored dyed fuel subject to a penalty. The amount of dyed fuel determined to be held for use in a taxable manner should be based solely on the evidence of past and current use by the taxpayer.

  8. The employee should obtain information to determine the culpable parties. Joint and several liability may apply.

  9. Employees should "follow the fuel" to determine the extent of the non-compliance. If geographically necessary, employee should notify their manager to have the information referred to another employee in the appropriate area for follow up.

  10. Follow up inspections will be conducted to ensure the taxpayer is compliant.

    Note:

    Follow-up inspections to re-check previously penalized propulsion and bulk tanks are considered a separate inspection for the purposes of correctly calculating multiple violations and should be entered into IMS separately.

  11. If directed by management or the circumstances warrant, the employee may obtain samples of undyed diesel and gasoline to be tested for adulterants.

  12. If directed by management or the circumstances warrant, the employee may obtain samples of dyed fuel to ensure the dye concentration has not been altered. An IRC 6715(a)(3) or (4) penalty may apply. See IRM 20.1.11.5.1.3. The following apply in this situation:

    1. employees must identify the supplier(s) of the fuel and

    2. the sample is considered a field concentration sample.

  13. At a minimum, the case history documentation must include the following:

    1. identification of individual that authorized the inspection,

    2. delivery of Publication 1 and Notice 916 (EN/SP),

    3. comments on fuel storage,

    4. identity of fuel supplier(s),

    5. results of the screening of company vehicles and fueling practices,

    6. samples taken and sampling procedures,

    7. photographs, if taken to support a penalty determination,

    8. lab results and date sample results received,

    9. date closing letter issued, and

    10. information obtained from the tour and interview.

4.24.15.7  (06-18-2013)
Blitz Inspection Procedures

  1. Blitz is a streamlined inspection process which allows a high volume of samples to be collected within a specified geographic area in a relatively short period of time. The following instructions establish a standard method for working Blitz compliance activities:

    1. A Blitz activity is a one week project involving employees from more than one group.

    2. Blitzes are part of the Excise Tax Program fiscal year work plan.

    3. Each employee generally works within their metropolitan area, though some overnight travel may be required.

    4. There are two types of Blitzes; retail and end user. A retail Blitz will involve inspections at retailers, wholesalers and some terminals. An end user Blitz will involve inspections of end users at their permanent places of business and construction sites.

    5. The employee will complete the Blitz sample data input sheets. The EFL will provide updated Blitz sample data input sheets and instructions prior to any Blitz activities, if warranted.

    6. Completed Blitz sample data input sheets will accompany the samples. The EFL will extract the data from the input sheets and e-mail an electronic version back to the field personnel within five (5) business days of receipt of the samples at the lab. The electronic version will not include notes written in the margins.

    7. The EFL processes Blitz samples and associated data input sheets with the goal to get all abnormal results or requests for additional information to the appropriate group manager within five (5) business days from the date the sample is received at the lab.

    8. Abnormal results will be assigned to either revenue agents or FCAs to develop and determine any tax consequence. See IRM 4.24.4. for more information regarding abnormal fuel referrals.

4.24.15.7.1  (06-18-2013)
Blitz Inspection Group Manager Responsibilities

  1. The group manager will ensure all necessary supplies are available prior to the beginning of a Blitz activity. These supplies include but are not limited to:

    1. Blitz data input sheets,

    2. Form 9667, Sample Bottle Seals and Identification Labels,

    3. pre-printed "To/From" labels,

    4. pre-printed "To be Opened by Addressee Only" labels,

    5. prepared Form 4564, Information Document Request (IDR),

    6. pre-printed shipping forms,

    7. copies of Letter 3918, Fuel Inspection Letter,

    8. copies of Publication 1, and

    9. copies of Notice 916 (EN/SP), .

  2. A list of terminals and terminal control numbers (TCNs) will be provided at the beginning of the retail Blitz activity.

  3. The group manager will appoint a contact person for the Blitz activity. The contact person will:

    1. provide support to the employees,

    2. provide information to the group manager, as requested, and

    3. be the contact point for taxpayers responding to an IDR left by the employees.

  4. The group manager will evaluate the EFL reports and assign any abnormal sample results to a FCA or refer the abnormal sample results to a FCA group manager, if warranted.

    Note:

    Group managers will only be informed by the EFL if a sample is deemed abnormal or if more information or another sample is needed.

4.24.15.7.2  (06-18-2013)
Collecting Retail Blitz Samples

  1. Samples of undyed diesel and jet fuel are collected from storage tanks at retailers, wholesalers, and selected terminals. Kerosene and gasoline samples may be collected if the fuel is suspicious.

  2. The taxpayer is provided with a Letter 3918, along with the Notice 916 (EN/SP) and Publication 1.

  3. Only one sample per storage tank is collected. All storage tanks must be sampled.

  4. The group manager will identify terminals to be inspected. A terminal sample must be obtained from each storage tank containing undyed diesel or jet fuel. Samples of other middle distillate products are collected, if warranted. If pulling samples from a terminal:

    1. the TCN is recorded,

    2. do not obtain samples from transport compartments, and

    3. do not use "retained" samples (i.e. samples previously pulled by the terminal). Ask the terminal to obtain a fresh sample from the storage tank.

4.24.15.7.3  (06-18-2013)
Collecting End User Blitz Samples

  1. Samples of undyed and dyed diesel fuel are collected from storage tanks of end users.

  2. Screen all available on-road registered diesel vehicles.

  3. Obtain a sample from at least one on-road registered diesel vehicle.

  4. On the Form 9667, Sample Bottle Seals and Identification Labels, record "V" for a sample from a vehicle and "S" for a sample from a storage tank. The notation should be recorded to the right of the "Blitz" space within the "Type of Test" section.

4.24.15.7.4  (06-18-2013)
Completing the Blitz Data Sheets

  1. Complete one Blitz data sheet for each sample. The Blitz data sheets should be completed as follows:

    1. the handwritten data sheets must be legible (block printing is preferred), accurate and timely submitted,

    2. use abbreviations only for state names, and

    3. submit only the information requested on the sheets.

  2. Do not record deliveries of fuel that occurred more than 60 days prior to the date of inspection.

  3. Form 4564 IDR should be completed if the taxpayer is not able to provide the required information at the time of the inspection. The employees must inform the designated Blitz contact person of the issuance of any IDR(s). The form shall be completed, as follows:

    1. The form should be prepared in duplicate. One copy is given to the person representing the taxpayer during the inspection and the other is sent to the designated Blitz contact person.

    2. The form should be directed to the person responsible for providing the information.

    3. The taxpayer should be asked to provide the information within 24 hours to the designated contact person.

    4. The designated contact person will fax information received from the taxpayer to the EFL within 24 hours of receipt.

    5. The employee should notate in the notes section of the Blitz data sheet that a Form 4564 was issued.

    6. The designated contact person should follow up with the taxpayer if the information is not received from the taxpayer within 24 hours.

4.24.15.7.5  (06-18-2013)
Packing and Shipping Blitz Samples

  1. See IRM 4.24.15.16 for general guidance on packing and shipping samples.

  2. Verify that the sample numbers on the Blitz data sheets match the Form 9667 sample numbers on the bottles.

  3. Place the original Blitz data sheets in a sealed envelope marked "To be opened by addressee only" and include it in the box with the samples.

    Note:

    Do not put the chain of custody form in the sealed envelope.

  4. Handwrite "B" on one of the blank sides of the shipping box. .

  5. Place a "To be opened by addressee only" label on the shipping box on the same side as the "To/From" label.

  6. Samples shall be shipped on the last day of the Blitz activity.

  7. It is strongly recommended the field person make a copy or scan each Blitz data sheet into the laptop prior to enclosing the forms in the box.

4.24.15.7.6  (06-18-2013)
Input of Blitz Inspection on IMS

  1. All Blitz inspections must be input into IMS within five (5) business days following the end of the sample collection period. Employees are responsible for updating the IMS case file and issuing the appropriate closing letter, depending on the results of the inspection.

  2. See IRM 4.24.13.5 for IMS procedures..

  3. Each group is assigned a Blitz tracking code. The code must be entered into IMS under the ERCS Data Tab.

  4. For each Blitz inspection created on IMS, the SAIN number will reflect the type of inspection; i.e. 515, 516R, 516W, and 518.

    Note:

    Suffix "D" is no longer used to identify a Blitz inspection.

4.24.15.7.7  (06-18-2013)
Abnormal Lab Results from Blitz Inspections

  1. For samples determined to be abnormal, the group manager will send the test results to the employee who conducted the inspection and the FCA or revenue agent who will follow-up on the result. The manager must send the lab result to the employee within one business day of receiving notification from the lab.

  2. A request from the EFL for additional samples or information should be forwarded by the group manager to an employee. The person following up on the initial sample will not necessarily be the same person who sent the first sample. The manager must send the request for additional samples or information to the employee within one business day of receiving notification from the lab.

  3. Follow-up samples are considered Blitz samples. Instructions for labeling and shipping the samples must be followed. The Blitz data sheet must indicate the sample is a follow-up and identify the original sample number(s).

  4. If abnormal results are not received within 15 calendar days of shipping the samples, the Blitz cases may be moved to closing status in IMS. The Letter 3143, Non-violation IRC 6715 Inspection Letter, must be issued at this time. For certain Blitz projects the 15 day period may be extended. Employees will be notified by the group manager if the time period is extended.

4.24.15.8  (06-18-2013)
Farm Inspections

  1. Special rules apply to the assertion of IRC 6715 penalties during farm inspections.

  2. Farmers who own or operate registered diesel vehicles found with dyed fuel in the propulsion tanks may not be subject to penalties under IRC 6715(a)(2), if:

    1. the vehicle found with dyed fuel was located on a farm (See IRC 6420(c)(2) for the definition of a farm) at the time of the inspection, and

    2. the vehicle is used for farming purposes. See IRC 6420(c)(3) for the definition of farming purposes.

  3. Employees who find dyed fuel in a truck used for farm purposes on the farm may attempt to establish the vehicle was used on the highway. The burden of proof is on the government to establish the violation. Employees must fully develop the facts to support the government's position.

  4. A farm vehicle registered or required to be registered and using dyed fuel on the highway is subject to a penalty under IRC 6715(a)(2).

    Example:

    A registered flatbed truck being used on the farm is screened properly and dyed fuel is found. The truck is used to move hay from one area of the farm to another. No penalty may be applied. The same truck, carrying hay to another farm, is screened at a weigh station and is found to contain dyed fuel. A penalty would apply.

4.24.15.9  (06-18-2013)
Procedures for Developing an IRC 6720A Sulfur Content Penalty

  1. The burden of proof is on the government to establish that a wholesaler, reseller, or retailer knowingly sold or held out for sale a liquid for use in a diesel powered train or highway vehicle that violated the applicable EPA regulations pertaining to sulfur content.

  2. In order to propose an IRC 6720A penalty, the IRS must establish the person transferring, reselling, holding for sale, or selling the fuel had actual knowledge that the fuel:

    1. will be used in a diesel-powered vehicle or train, and

    2. exceeded the applicable EPA regulations for sulfur content.

      Note:

      Both a) and b) must be met.

  3. Actual knowledge of the sulfur content will be determined by source documents such as a delivery ticket or bill of lading informing the seller about the sulfur content of the fuel. Actual knowledge could also be established if the seller adulterated the fuel with a product known to the seller as possessing a concentration of sulfur greater than 15 ppm.

  4. Actual knowledge as it relates to undyed fuel occurs when a person who includes the federal highway tax on the fuel upon sale has actual knowledge that the fuel will be used in a highway vehicle. As such, the focus of the questions, fuel screenings, and review of records will look for indicators that the fuel exceeds the maximum sulfur level. Undyed kerosene dispensed through a blocked pump is the exception to the rule that sellers know the undyed fuel will be sold for use in a highway vehicle.

  5. For dyed fuel:

    1. If there is no indication that the dyed fuel was sold or held for sale for use in a highway vehicle, then an IRC 6720A penalty does not apply.

    2. If there is an indication that the seller knowingly sold or held for sale the fuel for use in a highway vehicle, then the investigation will focus on establishing knowledge about the sulfur content of the fuel and confirming actual knowledge about the use of the fuel. The knowledge regarding the use of the fuel must be actual knowledge, not presumed. For example, the absence of the dyed fuel notice on a retail pump is not actual knowledge that the fuel will be used in a highway vehicle. Treasury Regulation 48.4082-2, applies to IRC 6715, not to IRC 6720A.

  6. If the EFL result indicates the fuel does not exceed 15 ppm, then IRC 6720A does not apply.

  7. If the EFL result indicates the fuel does exceed 15 ppm then the IRC 6720A penalty will apply if the seller knew the fuel exceeded the sulfur limit and knew the dyed fuel was to be used in a highway vehicle. The seller, in this instance, is also subject to an IRC 6715(a)1 penalty.

  8. The table below identifies when samples for sulfur testing will be obtained.

    When a... Sulfur sample will be obtained and Reasons for obtaining a sample.
    Terminal
    • During every annual visit a sample of undyed diesel and kerosene will be obtained, or

    • If a sample of undyed fuel with a sulfur concentration greater than 15 ppm is found below the terminal rack and you are following the fuel to its source

      Note:

      Dyed samples are not obtained specifically for sulfur testing but will be tested for both sulfur and dye concentration.

    Undyed diesel and kerosene leaving the terminal is taxed and therefore is for use in diesel-powered vehicles and trains.

    Note:

    Terminals may have sulfur test results for the fuel involved. Their records could be important when establishing actual knowledge.

    Wholesaler
    • If the FCO/FCA has reason to suspect the undyed fuel has been adulterated, or

    • If the wholesaler knowingly sold dyed diesel for use in a highway vehicle and knew the fuel exceeded 15 ppm sulfur. The knowledge can not be presumed, but must be actual knowledge of its use (e.g. wholesaler fueled the highway vehicles) and its sulfur content, or

    • As directed by management.

    • Determine whether a product was added resulting in a sulfur concentration >15 ppm. The adulterated fuel may also have tax implications.

    • Wholesaler knowingly selling dyed fuel for use in highway vehicles is subject to an IRC 6720A penalty if they also knew the fuel had >15 ppm sulfur.

    Retailer
    • If the FCO/FCA has reason to suspect the undyed fuel has been adulterated, or

    • If the retailer knowingly sold dyed diesel for use in a highway vehicle and knew the fuel exceeded 15 ppm sulfur. The knowledge can not be presumed (i.e. lack of a dyed notice on the pump), but must be actual knowledge of its use and sulfur content, or

    • As directed by management.

    • Determine whether a product was added resulting in a sulfur concentration >15 ppm. The adulterated fuel may also have tax implications.

    • Retailer knowingly selling or holding for sale dyed fuel for use in highway vehicles is subject to an IRC 6720A penalty if they also knew the fuel had >15 ppm sulfur.

    Directed by Manager
    • Project (e.g. Blitz project), or

    • Specific inspection type or site.

    See specific site type above.

  9. Because there are no visual indicators of sulfur content, at the time of the inspection the field employee should document and/or copy any taxpayer records that clearly indicate evidence of sulfur content, such as bills of lading, or delivery tickets.

  10. If EFL results indicate a potential violation, employees must conduct an inspection of each taxpayer identified as a source of the fuel. For each inspection, employees will obtain diesel samples and record the following:

    1. the source(s) of the fuel,

    2. the statement on the shipping documents that indicate the sulfur content, and

    3. whether the location has additional products on site that would account for the increased sulfur content. A sample of the additional product(s) should also be obtained.

  11. If additional sources of fuel are identified, employees will obtain samples and continue to develop the issue to determine who knowingly transferred for resale, held for resale, or sold for resale the liquid in question.

  12. EFL results indicating a possible IRC 6720A violation are reported to the group manager by e-mail. If a lab result is not received within 15 days from the date the sample was shipped, employees may assume the sulfur concentration was within the allowable level.

4.24.15.9.1  (06-18-2013)
Documentation Procedures for Samples Obtained for Sulfur Content Testing

  1. Employees will record the content of the sulfur notice label on the pump in the IMS case history.

  2. Employees will review bills of lading and delivery tickets and obtain the following information pertaining to each of the last three shipments of diesel fuel:

    1. name and address of the supplier,

    2. date of shipment,

    3. the gallons received,

    4. the amount of fuel in the tank at the time of delivery,

    5. identification of previous fuel type stored in the tank, if different from the current type,

    6. name of person who placed the orders for the fuel,

    7. other possible sources of the product in the storage tank (consider possible upstream and downstream sources),

    8. additives placed in the fuel, and

    9. the sulfur statement and, if applicable, the biodiesel blend percentage.

  3. Only lab results that indicate possible sulfur concentration violations are forwarded. If a lab result is not received within fifteen (15) days from the date the sample was shipped, employees may assume the sulfur concentration was within the allowable level.

4.24.15.10  (06-18-2013)
Enforcement Activities Conducted by FCAs

  1. To protect the rights of the taxpayer and to reduce confusion, FCA will clearly explain to the taxpayer whether the purpose of the contact is to conduct an inspection or an examination.

  2. FCAs will follow the standard procedures for initiating examinations and compliance reviews. This includes, but is not limited to, contacting the taxpayer to set an appointment.

  3. FCAs will not set an appointment to conduct an inspection.

  4. If during the course of an inspection the FCA determines an examination of the taxpayer's return is warranted, the FCA will obtain group manager approval prior to initiating the audit. The inspection will proceed to its conclusion if it will not affect the examination.

  5. If during the course of an examination the FCA determines an inspection is warranted, the FCA may proceed without group manager approval. The inspection will proceed to its conclusion if it will not affect the examination.

4.24.15.11  (06-18-2013)
Pipette Screening Method

  1. The Pipette Screening Method is the only approved screening technique used during an inspection. The employee will:

    1. Unseal a new pipette. A new pipette is used for each screening.

    2. Bond with the propulsion tank. See IRM 4.24.14.5.

    3. Open the fuel tank.

    4. Insert the pipette into the tank as far as it will reach.

    5. Place a thumb firmly over the upper end of the pipette, forming a seal to hold the fuel in the pipette.

    6. Pull the pipette up until the fuel inside the pipette can be observed.

    7. If no dye is detected, remove the thumb from the end of the pipette, releasing the fuel back into the tank.

    8. If dye is detected, call the driver's attention to it then fold the pipette so both ends are facing up, then release the fuel into an absorbent pad or container.

    9. Properly dispose of the used pipette.

    10. If dye was detected, obtain a sample using the Sampling Pump Method.

4.24.15.12  (06-18-2013)
Sampling Methods

  1. There are two approved methods of sampling fuel. The sample pump method and the nozzle method. These methods provide safety to employees and other persons and permit verifiable, evidentiary samples to be obtained.

  2. Sampling Pump Method:

    1. Cut a section of new flexible tubing of suitable length to reach the source of the fuel.

      Note:

      To reduce the possibility of cross-contamination, the tubing shall not be cleaned and reused. New tubing shall be used to obtain samples from each distinct source of fuel. For example, if one sample is obtained from each of the two propulsion tanks of a vehicle, a section of new tubing is used to obtain each sample. If two samples are obtained from one tank, the same tubing may be used to obtain both samples.

    2. Wear approved safety glasses with side shields and nitrile gloves. See IRM 4.24.14.6.

      Note:

      If the sample is to come from a compartment on a transport truck, put the nitrile gloves on after climbing the truck.

    3. Place the tubing in the sampling pump and attach a bottle.

    4. Bond with the truck. See IRM 4.24.14.5.

    5. Open the hatch or cap of the fuel tank.

    6. Lower the tubing into the tank.

    7. Draw fuel into the bottle using the sampling pump.

    8. Stop pumping when the bottle contains 30 ml (approximately 1 ounce) but keep the tubing in the fuel.

    9. Release the pressure by loosening the bottle (but do not remove) or pressing the release button on the pump, if so equipped.

    10. Allow the fuel in the tube to flow back into the tank.

    11. Remove the tubing from the tank and cradle the end of the tubing in an absorbent towel.

    12. Remove the bottle from the pump.

    13. Seal the bottle with a cap (ensure outside surface of the bottle is clean and dry) and a properly applied Form 9667. See IRM 4.24.15.14.

    14. Close and secure the hatch or cap of the tank.

    15. Dispose of liquid and absorbent material waste in accordance with local, state, and federal regulations.

  3. Nozzle Method:

    1. Wear safety glasses and nitrile gloves. See IRM 4.24.14.6.1.

    2. Place a clean two quart glass measuring cup or wide mouth jar into a bucket (to prevent spillage).

    3. Bond with the retail pump.

    4. Turn on the retail fuel pump.

    5. Dispense fuel through the nozzle into the cup or jar.

    6. Dispense enough fuel to obtain a 30 ml (approximately one ounce) sample.

    7. Use the sampling pump method to pump fuel from the cup or jar into a clean, unused sample bottle.

      Note:

      Alternatively, a disposable, single-use funnel may be placed in the mouth of the sample bottle and the fuel poured from the cup or jar into the sample bottle. The disposable funnels may be plastic or paper but may only be used once.

    8. Seal the bottle with a cap (ensure outside surface of the bottle is clean and dry) and properly apply the Form 9667, See IRM 4.24.15.14.

    9. Dispose of liquid and absorbent material waste in accordance with local, state, and federal regulations.

  4. Gasoline samples are secured to determine each sample is representative of the declared octane level. Gasoline samples are only secured as part of a project or at the instruction of management. The following sampling procedures involve fueling the field compliance vehicles with gasoline:

    1. Employees need to explain to the owner of the fuel that the pump’s hose must be flushed to ensure a representative sample is obtained.

    2. The explanation will inform the owner that a gallon of fuel will be dispensed.

  5. For samples of gasoline, follow the sampling procedures outlined below:

    1. Employees must inspect the fuel gauge of their assigned truck to determine whether the tank can hold an additional gallon of fuel.

    2. Select the octane needed for the sample.

    3. Dispense only one (1) gallon of fuel into the vehicle's fuel tank. The employee will purchase the fuel using the fleet card assigned to the truck.

    4. Follow the normal procedures for obtaining a nozzle sample.

      Note:

      For gasoline samples, the sample bottle should be cooled to the fuel temperature prior to obtaining the evidentiary sample. To do this, one ounce of fuel should be added to the sample bottle and carefully swished around, then disposed of properly (the fuel may be poured into the fuel tank of the assigned vehicle).

    5. If samples are needed for other octane levels, the same steps above should be followed.

    6. Dispose of liquid and absorbent material waste in accordance with local, state, and federal regulations.

    7. On the fuel receipt, the employee will record the date, if not already recorded on the receipt, and write ""Fuel Sampling Project"" . The receipt must be sent, along with the other receipts for fuel purchases, to the group manager. The employee will also record the purchase on the mileage log including an explanation for the purchase within the Comments field.

4.24.15.12.1  (06-18-2013)
Approved Sample Bottles

  1. All samples must be shipped in two ounce glass bottles with one ounce fill-lines. Fuel samples secured should be one ounce in volume. See IRM 4.24.15.14.2 for additional guidance pertaining to securing samples.

  2. Ensure there are no cracks or chips in the sample bottles used.

  3. Caps with a plastic, cone-shaped seal inside the cap must be used.

    Note:

    Verify the presence of the cone-shaped seal before each bottle is sealed.

4.24.15.13  (06-18-2013)
Investigative Samples

  1. Employees may encounter fuel held by taxpayers where the nature and composition of the fuel is questionable. Such fuel may raise suspicions because of what it looks like, smells like, what it is called, or where it is found. A sample collected of this fuel is called an "investigative sample" . Investigative samples are "fingerprinted," and subjected to other analytical procedures to determine unusual components and the percentage of each component in the total volume.

4.24.15.13.1  (06-18-2013)
Requests for Investigative Samples

  1. The request to collect investigative samples may come from a variety of sources such as:

    1. An employees comes upon an unusual and suspicious fuel product.

    2. IRS Criminal Investigation requests that certain fuel be collected and analyzed for content.

    3. State agencies, acting under a Memorandum Of Understanding (MOU).

    4. An excise manager requests that a taxpayer’s product be analyzed to see if it is what the taxpayer says it is, or what the agent and manager suspect it is.

  2. FCOs may work with FCAs and revenue agents in securing samples to determine whether biodiesel registrants and applicants meet the requirements of IRC 40A(d)(1) which defines biodiesel.

4.24.15.13.2  (06-18-2013)
Investigative Sample Procedure

  1. The samples must be obtained using one of the approved sampling methods discussed above.

  2. Four (4) one ounce samples are collected from each source of fuel for which investigative sample testing is requested.

  3. A completed Form 14403, Investigative Sample Information, must be included with the shipment to alert the EFL chemist of what is suspected and what should be done. This completed form gives the chemist a starting point for the investigation. Form 14403 includes the following information:

    1. employee's name,

    2. date sampled,

    3. IRS sample label number from Form 9667,

    4. type of sample source (i.e. storage tank, saddle tank, wholesaler, etc.),

    5. expected product (i.e. number 1 diesel, number 2 diesel, biodiesel, etc.),

    6. reason for sample analysis (why did you take this sample?),

      Note:

      An example of a statement explaining the reason for the sample would be: "Fuel may be mixed with used motor oil, PCBs and other waste products. Test for adulterants to verify. Provide the name of the adulterant(s) and the percentage of each."

    7. relationship between samples (if any),

    8. any other pertinent information, and

    9. name, address, secure e-mail address, fax number and phone number of the person(s) to whom the lab analysis will be sent. The results are normally sent to the employee or other individual who requested the investigative sample be obtained.

      Note:

      It is important the contact information for the employee needing the results be provided.

    10. The lab analysis is communicated to the individuals identified on the Form 14403 regardless of the results within five (5) business days of the receipt of the samples at the lab.

  4. See IRM 4.24.15.14 for the required label information on the Form 9667.

  5. See IRM 4.24.15.15 for information on the chain of custody.

4.24.15.13.3  (06-18-2013)
Shipping of Investigative Samples

  1. See IRM 4.24.15.16 for general instructions on packing and shipping samples.

  2. Place the completed written statement into the box.

  3. Legibly mark the three sides of the box that do not contain the "Excepted Quantity Marking" with the following: "Investigative Samples From (insert the state from which the samples were collected)" . .

    Example:

    Investigative Samples From Wisconsin.

4.24.15.13.4  (06-18-2013)
Referral of Investigative Sample Lab Results

  1. If the results from an IRS initiated sample indicate the need for further development, a referral should be completed within one day of the receipt of the EFL results.

  2. A revenue agent may request the assistance of an FCO or FCA if additional samples will be collected. The request is routed through the group manager who will assign an employee based on factors including, but not limited to, proximity to the site and availability.

  3. The revenue agent may request an FCO or FCA obtain samples from sources upstream. The FCO or FCA should discuss with his/her manager the need for reassignment if the upstream site is outside of their assigned territory.

4.24.15.14  (06-18-2013)
Sample Bottle Labeling Procedures

  1. Use only Form 9667, Sample Bottle Seals and Identification Labels, to label the bottles. The forms are pre-printed, sequentially numbered, bar coded, and tamper resistant adhesive labels. Ensure that all the required information is accurately recorded in the appropriate space on each part of the sample label.

  2. Information on sample bottle labels, including the sample number, has been deemed taxpayer information protected by IRC 6103.

  3. Record the required information on the label prior to affixing the label to the bottle.

  4. Ensure the outside of the bottle is clean and dry prior to placing label on bottle.

  5. The completed sample bottle label must be affixed before leaving the inspection site.

  6. The information required on the Form 9667 is determined by the type of test to be performed on the sample. See the Sample Labeling Matrix found at IRM 4.24.15.14.2 for the types of tests.

  7. Select "Sulfur" when completing the Type of Test section of the Form 9667 for undyed diesel and kerosene samples obtained at a terminal. The samples are tested for sulfur content and will also be used as reference samples for other field activities.

  8. Samples obtained from a state employee must include a "Z" on the right side of the sample label number. Also, the FCO or FCA ID number must be recorded on the Form 9667. If the state employee ID number is already on the form, the FCO or FCA number must be written above or next to the FCS ID field.

  9. The sample label has fourteen parts and may be used for up to four samples taken from the same tank. Each part contains the unique sample reference number and will be placed on the bottle as follows:

    1. three are placed on the bottle(s),

    2. one is used on the Form 13927, Chain of Custody and Shipping Record, or the Form 13926, Chain of Custody Control Document.

    3. one is available for use if a paper file is created, and

    4. nine remaining strips are used if additional fuel is collected from the same source. This will allow the samples to be associated with each other.

  10. Sample Bottle Labeling Procedures:

    1. Crisscross the top two narrow labeling strips over the top of the capped bottle so that four approximately equal lengths come down the outside of the bottle.

      Caution:

      Carefully press these strips against the side of the cap while one end of the strip is still not applied to the bottle. This will reduce the chance that the strips will tear and thus compromise the integrity of the sample.

    2. Wrap the third section, identified as "Bottle Label" on the Form 9667 around the bottle, covering the bottom ends of the two crisscrossed strips.

    3. If the remaining strips are needed for samples obtained from the same tank, follow steps 1 and 2 above. Instructions on the placement of the strips are included on each strip.

4.24.15.14.1  (06-18-2013)
Form 9667 Sample Bottle Seals and Identification Labels Required Information

  1. Unless otherwise notated, these instructions apply to any sample type.

  2. FCS I.D. - enter the assigned four or five digit FCO/FCA identification number.

  3. Date - enter the date the sample was collected.

  4. Type of Test (Check only one) - select the applicable test. See IRM 4.24.15.14.2 for the tests performed. Checking a single type of test on the label automatically triggers several tests to be performed. The following are required entries for this field:

    1. 637 registration is checked if the sample is collected at a producer seeking a 637 registration, and

    2. for Blitz samples obtained from an end user, record a "V" for a sample obtained from a vehicle or a "S" for a sample obtained from a storage tank.

  5. Declared Product - mark the space to the right of the declared fuel type. The declared fuel type is the product the paperwork or taxpayer indicates the product to be.

    1. If the product is unknown, indicate within the "Other" field what the fuel is alleged or suspected to be. This space may also be used to direct the EFL to an enclosed statement that provides more details regarding the sample.

    2. If the 637 registration test is selected within the "Type of Test" section, input the percentage of biodiesel within the "bio" space. For registration testing the percentage is normally 100%.

    3. If the biodiesel test is selected within the "Type of Test" section, input the percentage of biodiesel within the "bio" space. Also select the blending product, usually #1 Diesel or #2 Diesel.

    4. No entry is made in the bio field if no bio is present.

  6. TCN or City/State - For samples obtained from terminals record the TCN. For other samples, record the city and state information.

  7. Number of bottles associated with the sample (record the accurate number).

  8. All information entered in the Chain of Custody and Case File sections must match the corresponding information recorded in the Bottle Label section.

4.24.15.14.2  (06-18-2013)
Sample Labeling Matrix

  1. The matrix below identifies the tests performed, sample instructions, required paperwork and the reports generated. Review the "Tests Performed" section of this matrix to select the appropriate type of test on the Form 9667.

    If your sample is a: Then, the tests performed are: Then, the reports sent are: Then, sample instructions are:

    Note:

    All samples are to be obtained in 2 ounce bottles. Sample volume must never exceed one (1) ounce.

    Then, the paperwork needed is a:
    Sulfur Sample Sulfur, Fingerprinting, Dye, Biodiesel if >B95, Biodiesel if B6-B20, and others, as needed Sulfur analysis (if not compliant), lead sulfur report (fingerprinting problem or other problems), dye report, biodiesel report(s), if not compliant One two-ounce bottle Chain of Custody
    Blitz Sample Sulfur, Fingerprinting, Dye (if colored), Biodiesel if >B95,Biodiesel if B6-B20 Pendings, abnormals, sulfur report of analysis, dye report of analysis, no reports sent for compliant samples, biodiesel report(s) if not compliant One 2-ounce bottle, four 2-ounce bottles for gasoline samples Chain of Custody, and a BlitzSample Form
    Investigative Sample Everything possible depending on reasons submitted Long/short investigative report, dye report of analysis, sulfur report of analysis, any other reports, as needed Four 2-ounce bottles for multiple tests, four 2-ounce bottles needed for gasoline octane tests Chain of Custody, Completed, Form 14403, and a Blitz Sample Form
    Biodiesel Sample ASTM specs, Dye (if colored) Biodiesel report for specs Four 2-ounce bottles Chain of Custody
    637 Registration Sample ASTM specs for biodiesel, ASTM for renewable fuels Biodiesel report for specs, renewable fuels report Four 2-ounce bottles Chain of Custody
    Dye Usage, Dye Concentration or Dye Field Concentration Sample Dye Dye report of analysis, dye investigative report, if needed, 2 week summary spreadsheet One 2-ounce bottle Chain of Custody

4.24.15.15  (06-18-2013)
Chain of Custody Procedures

  1. Samples are evidence and must be documented by an unbroken chain-of-custody.

  2. There are two Chain of Custody forms used by field personnel:

    1. Form 13926, Chain of Custody Control Document, and

    2. Form 13927, Chain of Custody and Shipping Record.

4.24.15.15.1  (06-18-2013)
Form 13926 Chain of Custody Control Document

  1. When custody of a sample is relinquished to another party, Form 13926 is completed to record the sample number, the names of the parties involved, the date each party received the sample, and the date when custody was relinquished.

  2. One control document should be used for each sample and the document should be updated to reflect each transfer of custody. Examples of when this form must be used are:

    1. when a sample is transferred between fuel compliance employees, and

    2. when a sample is transferred from a state official to an FCO or FCA.

  3. The properly completed form must include the:

    1. sample number,

    2. name of individual with custody of the sample,

    3. agency of the individual with custody of the sample,

    4. signature of the individual with custody of the sample, and

    5. date the individual with custody of the sample received and relinquished control of the sample.

  4. This form must be placed in the shipping box with the fuel samples to which it pertains.

  5. In addition, Form 13927 must also be completed and accompany the relinquished samples.

4.24.15.15.2  (06-18-2013)
Form 13927 Chain of Custody and Shipping Record

  1. Form 13927 must be completed by employees for every box of samples relinquished to the shipping company and sent to the EFL.

  2. Employees must manually complete this form.

  3. The properly completed form must include the following:

    1. shipping company tracking number,

    2. name of the individual shipping the samples,

    3. position title and phone number of the individual shipping the samples,

    4. description of the sample (i.e. diesel, kerosene, dyed diesel),

    5. type (i.e. usage, concentration, biodiesel), and

    6. signature of shipper, shipping company and date shipped.

    Note:

    Employees are encouraged to use the chain of custody section of the sample label, Form 9667. When properly completed, this section will include the sample reference number, description of the sample, and type of test.

  4. The information on the Form 13927 must match the information on the Form 9667 for the corresponding sample.

  5. This form must be placed in the shipping box with the fuel samples to which it pertains.

4.24.15.16  (06-18-2013)
Packing and Shipping Samples

  1. 49 CFR 173.4 (a) and International Air Transport Association (IATA) regulations 2.6 cover the packing and shipping of excepted quantities of Hazard Class 3 liquids.

  2. All taxable fuels, including gasoline, are Hazard Class 3 liquids and are eligible for shipping under 49 CFR 173.4a, as well as IATA 2.6.

  3. The only documentation required on the outer box is the "excepted quantity" marking. The marking is pre-printed on the boxes provided.

  4. Shipments under 49 CFR 173.4 (a) and IATA 2.6 are accepted at shipping locations that ship dangerous goods

  5. Failure to follow procedures in 49 CFR 173.4 (a) and IATA 2.6 may result in an unsafe shipping situation and may subject employees to fines.

4.24.15.16.1  (06-18-2013)
Packing Instructions

  1. 49 CFR 173.4 (a) and IATA 2.6 allows a maximum of 30 ml (approximately one fluid ounce) per "inner packaging." An "inner packaging" is defined as one sample bottle.

  2. The approved shipping box has two layers and can hold up 12 bottles per layer for a total of 24 bottles. Only "approved " shipping boxes should be used to ship the two ounce bottles.

  3. The maximum number of samples permitted in each box is dependent on the fuel product(s) to be shipped:

    1. diesel fuel and kerosene - maximum of 24 samples,

    2. jet fuel with a flash point less than 73 degrees - maximum of 15 samples,

    3. jet fuel with a flash point greater than 73 degrees and less than 140 degrees - maximum of 24 samples, and

    4. gasoline - maximum of 15 samples.

      Note:

      Two or more products may be shipped in the same box. If gasoline is one of the products shipped, no more than 15 total samples may be shipped in the box.

  4. Packing procedures:

    1. construct an approved shipping box and tape the bottom,

    2. place the large plastic bag into the box,

    3. construct the bottom level tier by placing the assembled sample compartment divider into the bag,

    4. if you are placing sample bottles in the bottom tier, see (g) through (k) below for procedures regarding packing the sample bottles,

    5. place the flat cardboard tier divider on top of the bottom tier,

    6. construct the top level sample tier by placing the assembled sample compartment divider directly on top of the flat compartment divider,

    7. ensure the outside of the bottle is clean and dry,

    8. secure bottle cap firmly and check to ensure no leakage,

    9. wrap each 30 ml sample bottle with one piece of absorbent material prior to placing in the individual plastic bag,

    10. seal the individual sample bag (do not use tape to seal the bag),

    11. place each sample into the box, ensuring the sample is listed on the chain of custody document(s), and

      Note:

      Samples shall only be placed in the inner compartments of the box.

    12. seal the large plastic bag with tape or a twist tie supplied with the shipping box.

4.24.15.16.2  (06-18-2013)
Shipping Instructions

  1. All samples shall be shipped overnight using the current approved contract carrier and transportation mode.

  2. All air bills must be completed electronically.

  3. No Saturday or Sunday deliveries should be requested. Samples may be shipped on Friday, but do not indicate on the air bill for the package to be delivered during the weekend.

  4. Ship samples to:

    Sample Shipping Address
    IRS Excise Forensics Laboratory
    2400 Stevens Drive
    Richland WA 99354
    Attn: Bob Wright (509) 371-6647

  5. Samples must be shipped to the EFL within five business days of being taken. Extensions may be granted by the group manager, if warranted. The employees will follow the agreement in the Memorandum of Understanding (MOU) between the IRS and the state agency for samples obtained by a state employee as part of an MOU.

  6. Include in the box with the samples:

    1. Form 13927 for all shipments,

    2. Form 13926 if applicable.

      Note:

      Employees must record the shipping company tracking number in the box entitled "air bill number" on the Form 13927.

    3. See IRM 4.24.15.13.3 for more information on what should be included in the shipping box for Investigative samples.

  7. Prior to sealing the box, employees must ensure the samples in the box match the samples recorded on the chain of custody document(s).

  8. Seal the shipping box with packaging tape.

  9. The shipping box must contain the required excepted quantities marking in red or black. The marking must not be covered by any other labels or written on. The marking for excepted quantities is pre-printed on the box.

  10. The identified shipping account should not be used for any purposes other than to ship fuel.

  11. The shipping box must remain in the custody of the shipper until it is taken to a shipping company location that accepts dangerous goods. The box must not be left in the mail room, hotel front desk, or other location for pick-up. Doing so breaks the chain of custody.

Exhibit 4.24.15-1 
Blocked Pump Check Sheet

Data Fields BLOCKED PUMP CHECK SHEET
Taxpayer:  
EIN:  
Address  
City  
State and Zip Code  
Registration#:  
Pump Location:  
Contact:  
Title:  
Phone:  
Pass/Fail:  
Person conducting the inspection:  
Date of Inspection:  
Physical Inspection of Blocked Pump: (circle YES or NO) IRC 48.6427-10 requires that a Blocked Pump meet the following criteria:
YES or NO It is used to dispense undyed kerosene that is sold at retail for use by the buyer in any nontaxable use.
YES or NO It is at a fixed location.
YES or NO It is identified with a legible and conspicuous notice stating: "Undyed Untaxed Kerosene, Nontaxable Use Only" .
YES or NO It cannot reasonably be used to dispense fuel directly into the fuel supply tank of a diesel powered highway vehicle, OR
YES or NO is locked by the vendor after each sale and unlocked by the vendor only at the request of a buyer for use other than as a fuel in a diesel powered highway vehicle.
Reason for Pump Failure Comments
   
   
   
   

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