Entry of Taxable Fue

(whether or not includible in the transferor’s gross estate), see §26.2642–6.

PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT

Par. 8. In §602.101, paragraph (b) is
amended by adding entries in numerical
order to the table to read as follows:

Par. 7. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.

§602.101 OMB Control numbers.
*****
(b) * * *

CFR part or section where
identified and described
*****
1.1001–1
*****
26.2642–6
*****
26.2654–1
*****

Current OMB
control No.
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1545–1902

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1545–1902

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1545–1902

Linda E. Stiff,
Acting Deputy Commissioner for
Services and Enforcement.
Approved July 24, 2007.
Eric Solomon,
Assistant Secretary of
the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on August 1,
2007, 8:45 a.m., and published in the issue of the Federal
Register for August 2, 2007, 72 F.R. 42291)

Section 4081.—Imposition
of Tax
26 CFR 48.4081–1: Taxable fuel; definitions.

T.D. 9346
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Parts 48 and 602
Entry of Taxable Fuel
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains final
regulations relating to the tax on the entry
of taxable fuel into the United States. The
final regulations affect enterers of taxable

2007–37 I.R.B.

fuel, other importers of record, and certain
sureties.
DATES: Effective Date: These regulations
are effective July 27, 2007.
Applicability Dates: For dates of
applicability, see §§48.4081–1(f) and
48.4081–3(j).
FOR
FURTHER
INFORMATION
CONTACT: Celia Gabrysh at (202)
622–3130 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in these final regulations has been
reviewed and approved by the Office
of Management and Budget in accordance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number 1545–1897. The collection of information in these final regulations is
in §48.4081–3(c)(2)(iii) and (iv). This
collection of information allows certain
importers of record and sureties to avoid
liability for the tax on the entry of taxable
fuel into the United States.
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number assigned by the Office of Management and Budget.
The estimated annual burden per respondent and/or recordkeeper varies from
15 minutes to 2.25 hours, depending on in-

570

dividual circumstances, with an estimated
average of 1.25 hours.
Comments concerning the accuracy
of this burden estimate and suggestions for reducing this burden should
be sent to the Internal Revenue Service,
Attn: IRS Reports Clearance Officer,
SE:W:CAR:MP:T:T:SP, Washington, DC
20224, and the Office of Management
and Budget, Attn: Desk Officer for the
Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503.
Books or records relating to this collection of information must be retained as
long as their contents may become material in the administration of any internal
revenue law. Generally, tax returns and tax
return information are confidential, as required by 26 U.S.C. 6103.
Background
This document amends the Manufacturers and Retailers Excise Tax Regulations (26 CFR part 48) to provide rules
relating to the tax that section 4081 of
the Internal Revenue Code (Code) imposes on the entry of taxable fuel into
the United States. On July 30, 2004, a
temporary regulation (T.D. 9145, 2004–2
C.B. 464 [69 FR 45587]) relating to this
topic was published in the Federal Register. A notice of proposed rulemaking
(REG–120616–03, 2004–2 C.B. 474 [69
FR 45631]) cross-referencing the temporary regulations was published in the Federal Register on the same day. Written

September 10, 2007

and electronic comments were received
and a public hearing was held on January
12, 2005. After considering the written
comments and the comments made at the
public hearing, the proposed regulations
are adopted as revised by this Treasury decision, and the corresponding temporary
regulations are removed.
The temporary and proposed regulations. Effective September 28, 2004, the
temporary regulations provide that the importer of record (under Customs law) of
taxable fuel is jointly and severally liable
with the enterer for the tax imposed on
the entry of taxable fuel if the importer of
record is not the enterer (that is, the importer of record is a customs broker engaged by the enterer) and the enterer is not
a taxable fuel registrant. Under the law
in effect before September 28, 2004, an
importer of record’s Customs bond could
have been charged for any unpaid tax imposed on the entry of fuel imported under
the bond. The preamble of the temporary
regulations stated, however, that the IRS
would not charge the Customs bond for the
tax imposed on an entry of fuel occurring
before September 28, 2004. In addition,
the temporary regulations provide that the
Customs bond posted with respect to the
importation of fuel will not be charged for
the tax imposed on an entry of fuel occurring after September 27, 2004, if the
enterer is a taxable fuel registrant or the
surety believes, based on the enterer’s certification, that the enterer is a taxable fuel
registrant.
Public comments. One commentator that represents an association of road
builders supported the proposed and temporary regulations, calling them one of a
series of important initiatives necessary to
combat fuel tax evasion and finance the
Highway Trust Fund.
Several commentators that represent
tribal interests in the state of New York
opposed the regulations. They maintained
that the regulations will cause fuel prices
to increase at service stations located on
tribal reservations. These higher fuel
prices will reduce sales and result in the
loss of several hundred tribal jobs. In
addition, a reduction in sales at these stations would cause a decrease in receipts
from the tribal tax on fuel sold on the
reservations. This tax funds general tribal

September 10, 2007

government services, including police,
health, and welfare programs.
Many of these commentators also suggested that the Treasury Department and
the IRS failed to comply with section 5 of
Executive Order 13175 (65 FR 6724) and
Executive Order 12866 (58 FR 51735),
which generally requires each Federal
agency to consult with tribal officials before the promulgation of any regulation
that “has tribal implications” or that “imposes substantial direct compliance costs
on Indian tribal governments.”
The final regulations. This Treasury
decision adopts the proposed rules as final
regulations without substantive change.
Because the cross-reference notice of
proposed rulemaking referred to the text
of temporary rules, the Treasury decision includes the nonsubstantive, clerical
changes needed to incorporate the temporary rule text into the final regulations.
The rules in these regulations address
the nonpayment of tax on fuel that is entered into the United States. An enterer’s
failure to pay this tax not only gives it a
competitive price advantage over its compliant competitors, but it also deprives
the United States Treasury of revenue intended for the Highway Trust Fund. The
final regulations do not impose a new tax
burden on enterers of taxable fuel. Instead, the regulations simply provide the
IRS with an additional enforcement tool to
collect the tax that is owed under existing
law and give an additional incentive for
enterers to be registered.
The imposition of tax on the entry of
fuel sold on reservations results not from
these regulations but from the statute,
which does not provide an exemption
from the tax for fuel sold on reservations.
The only effect of these regulations is to
improve the ability of the IRS to apply the
tax consistently and fairly with respect to
all taxpayers subject to the tax, without
regard to whether or not the fuel is ultimately sold on tribal reservations.
The Treasury Department and IRS determined that these regulations are not
subject to Executive Order 13175 (65 FR
67249) which obligates an agency to consult with tribal officials when developing
“policies that have tribal implications.”
This executive order defines “policies that
have tribal implications,” in part, as regulations that have substantial direct effects

571

on one or more Indian tribes. The regulations do not have tribal implications, as
specified in Executive Order 13175, because they do not significantly or uniquely
affect the communities of Indian tribal
governments, nor do they impose direct
compliance costs on them. Any economic
effect of the fuel tax on tribal economies is
a consequence of the statutory imposition
of the tax, not the manner in which the regulations operate to implement the statute.
Thus, Executive Order 13175 does not apply to the final or temporary regulations.
Special Analyses
It has been determined that these regulations are not a significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not
required. It also has been determined that
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not
apply to these regulations. It is hereby
certified that the collection of information
in these regulations will not have a significant economic impact on a substantial
number of small entities. This certification is based upon the fact that any burden
on taxpayers is minimal. Accordingly, a
Regulatory Flexibility Analysis under the
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section
7805(f) of the Code, the notice of proposed
rulemaking preceding these final regulations was submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on the impact of
the regulations on small business.
Drafting Information
The principal author of these regulations is Celia Gabrysh, Office of Associate
Chief Counsel (Passthroughs and Special
Industries). However, other personnel
from the IRS, the Treasury Department,
and the Bureau of Customs and Border
Protection, Department of Homeland Security, participated in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 48 and 602
are amended as follows:

2007–37 I.R.B.

PART 48—MANUFACTURERS AND
RETAILERS EXCISE TAXES
Paragraph 1. The authority citation for
part 48 continues to read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 48.4081–1 is amended
as follows:
1. Paragraph (b) is amended by revising
the definition of Enterer.
2. The first sentence of paragraph (f)(2)
is revised.
The revisions read as follows:
§48.4081–1 Taxable fuel; definitions.
*****
(b) * * *
Enterer generally means the importer of
record (under customs law) with respect to
the taxable fuel, except that—
(1) If the importer of record is a customs
broker engaged by the owner of the taxable
fuel, the person for whom the broker is
acting is the enterer; and
(2) If there is no importer of record for
taxable fuel entered into the United States,
the owner of the taxable fuel at the time
it is brought into the United States is the
enterer.
*****
(f) * * *
(2) In paragraph (b) of this section the
definition of aviation gasoline and the
third sentence in the definition of terminal
are applicable after January 1, 1998, the
definition of kerosene, excluded liquid,
and taxable fuel are applicable after June
30, 1998, and the definition of enterer is
applicable to entries of taxable fuel after
September 27, 2004. * * *
§48.4081–1T [Removed]
Par. 3. Section 48.4081–1T is removed.

Par. 4. Section 48.4081–3 is amended
by revising paragraphs (c)(2)(ii) through
(iv), and (j) to read as follows:
§48.4081–3 Taxable fuel; taxable events
other than removal at the terminal rack.
*****
(c) * * *
(2) * * *
(ii) Joint and several liability of the importer of record. The importer of record
with respect to the taxable fuel is jointly
and severally liable with the enterer for the
tax imposed under paragraph (c)(1) of this
section if—
(A) The importer of record is not the
enterer of the taxable fuel; and
(B) The enterer is not a taxable fuel
registrant.
(iii) Conditions for avoidance of liability. The importer of record is not liable
for the tax under paragraph (c)(2)(ii) of this
section if, at the time of the entry, the importer of record—
(A) Has an unexpired notification certificate (as described in §48.4081–5) from
the enterer; and
(B) Has no reason to believe that any
information in the notification certificate is
false.
(iv) Customs bond. The Customs bond
posted with respect to the importation of
the fuel will not be charged for the tax imposed on the entry of the fuel if the enterer is a taxable fuel registrant. A Customs bond will not be charged for the tax
imposed on the entry of the fuel covered
by the bond, if at the time of entry, the
surety—
(A) Has an unexpired notification certificate (as described in §48.4081–5) from
the enterer; and
(B) Has no reason to believe that any
information in the notification certificate is
false.

*****
(j) Effective/applicability date: This
section is applicable January 1, 1994, except that paragraphs (c)(2)(ii) through (iv)
of this section are applicable to entries of
taxable fuel after September 27, 2004.
§48.4081–3T [Removed]
Par. 5. Section 48.4081–3T is removed.
§48.4081–5 [Amended]
Par. 6. Section 48.4081–5 is amended
by revising paragraph (a) to read as follows:
(a) Overview. This section sets forth
requirements for the notification certificate under §§48.4081–2(c)(2)(ii),
48.4081–3(c)(2)(iii)
and
(iv),
48.4081–3(d)(2)(iii), 48.4081–3(e)(2)(iii),
48.4081–3(f)(2)(ii), and 48.4081–4(c) to
notify another person of the taxable fuel
registrant’s registration status.
*****
PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 7. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 8. In §602.101, paragraph (b)
is amended by removing the entry for
§48.4081–3T, and revising the entry for
§48.4081–3 in the table to read as follows:
§602.101 OMB Control numbers.
*****
(b) * * *

CFR part or section where
identified and described
*****
48.4081–3

Current OMB
control No.
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1545–1270
1545–1418
1545–1897

*****

2007–37 I.R.B.

572

September 10, 2007

Kevin M. Brown,
Deputy Commissioner for
Services and Enforcement.
Approved July 16, 2007.
Eric Solomon,
Assistant Secretary of
the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on July 26, 2007,
8:45 a.m., and published in the issue of the Federal Register
for July 27, 2007, 72 F.R. 41222)

Section 6402.—Authority to
Make Credits or Refunds
26 CFR 301.6402–1: Authority to make credits or
refunds.
(Also: Section 6411; 1.6411–3.)

Limitations on setoff under sections
6402 and 6411. This ruling holds that the
Service may credit an overpayment against
unassessed internal revenue tax liabilities
that have been determined in a statutory
notice of deficiency sent to the taxpayer.
It further holds that under section 6411(b)
of the Code, the Service may credit a decrease in tax resulting from a tentative carryback adjustment against unassessed liabilities determined in a statutory notice of
deficiency. Rev. Rul. 54–378 clarified.

Rev. Rul. 2007–51
ISSUES
(1) Does section 6402(a) of the Code allow the Service to credit an overpayment
against unassessed internal revenue tax liabilities determined in a notice of deficiency?
(2) Does section 6411(b) of the Code allow the Service to credit a decrease in tax
resulting from a tentative carryback adjustment against unassessed internal revenue
tax liabilities determined in a notice of deficiency?
SCOPE
This revenue ruling only applies to internal revenue tax liabilities that are subject to the deficiency procedures of Subchapter B of Chapter 63 of the Code. This
revenue ruling does not address the question of the Service’s crediting rights prior
to issuing a notice of deficiency, in the
context of a termination assessment under
section 6851 or otherwise. This revenue

September 10, 2007

ruling also does not address the Service’s
crediting rights when a taxpayer is in bankruptcy (or other insolvency) proceedings.
See Rev. Rul. 2007–52 (this Bulletin) for
the Service’s crediting rights when a taxpayer is in bankruptcy.
FACTS
Situation 1. On March 15, 2005, a corporate taxpayer filed its income tax return
for the tax year ending December 31, 2004,
claiming a refund of $500,000. On April
15, 2005, the Service sent a notice of deficiency to the taxpayer for tax year 2003
in the amount of $1,000,000. As of April
15, 2005, the Service had not refunded the
$500,000 overpayment for tax year 2004
or assessed the $1,000,000 deficiency for
tax year 2003.
Situation 2. On March 15, 2005, a corporate taxpayer filed a Form 1139, Corporation Application for Tentative Refund,
carrying back a net operating loss from tax
year 2004 to tax year 2002. The carryback
generated a $250,000 decrease in tax for
tax year 2002. On April 15, 2005, the Service sent a notice of deficiency to the taxpayer for tax year 2003 in the amount of
$1,000,000. As of April 15, 2005, the Service had not assessed the $1,000,000 deficiency for tax year 2003 or tentatively refunded the $250,000 decrease in tax for tax
year 2002.
LAW
Authority to Make Credits or Refunds
Section 6402(a) provides that within
the applicable period of limitations the
Secretary may credit the amount of any
overpayment, including interest allowed
thereon, against any liability in respect
of an internal revenue tax on the part of
the person who made the overpayment.
The Secretary shall refund any balance to
the person who made the overpayment,
subject to further credit against amounts
specified in sections 6402(c), (d), and
(e). Regulations under section 6402(a)
similarly provide that credit may be made
against “any outstanding liability.” See
section 301.6402–1 of the Regulations on
Procedure and Administration.

Tentative Carryback and Refund
Adjustments
Section 6411(a) provides that a taxpayer may file an application for tentative
carryback adjustment of the tax for the
prior taxable year affected by a net operating loss carryback, a business credit
carryback, or a capital loss carryback from
any taxable year. The application shall be
made on Form 1139 or, in the case of taxpayers other than corporations, on Form
1045, and shall set forth in detail the information required by sections 6411(a)(1)
through (a)(6) and by section 1.6411–1 of
the Income Tax Regulations.
Section 6411(b) provides, in general,
that within a period of 90 days from the
date of filing the application for tentative
carryback adjustment, the Secretary shall
make a limited examination of the application to discover omissions and errors
of computation, and shall determine the
amount of the decrease in tax attributable to the carryback. See also section
1.6411–3(b) of the Income Tax Regulations.
Pursuant to section 6411(b) and section
1.6411–3(d), the decrease in tax attributable to the carryback shall, in the following order:
1. be
applied
under
section
1.6411–3(d)(1) against any unpaid amount of the tax with respect to
which such decrease was determined
(i.e., unpaid tax for the carryback
year);
2. be
credited
under
section
1.6411–3(d)(2) against any unsatisfied amount of any tax for the
taxable year immediately preceding
the taxable year of the net operating loss carryback, business credit
carryback, or capital loss carryback,
the time for payment of which was
extended under section 6164; and
3. be
credited
under
section
1.6411–3(d)(3) against any tax
or installment thereof “then due”
from the taxpayer, and, if not so
credited, be refunded to the taxpayer.
ANALYSIS
Authority to Make Credits
Section 6402 permits the Service to
credit overpayments against “any liability
in respect of an internal revenue tax on

573

2007–37 I.R.B.