Notice 2005-4, Fuel Tax Guidance

der § 3401(a). However, § 6041(g)(2) does
not require the reporting of amounts includible in gross income under § 409A that
are treated as having been paid to a person
with respect to whom a Form 1099–MISC
is not required to be filed.
Q–35 How should a payer report
to a nonemployee amounts includible
in gross income under § 409A and not
treated as wages under § 3401(a) as required by § 6041(g)(2)?
A–35 A payer should report the
amounts includible in gross income under
§ 409A and not treated as wages under
§ 3401(a) in box 7 (nonemployee compensation) of Form 1099–MISC. Additionally,
a payer should report such amounts in box
15b of Form 1099–MISC. The amount reported in box 15b should include only the
amounts includible in gross income under
§ 409A and not included in wages under § 3401(a). The instructions for Form
1099–MISC provide additional information relating to this reporting requirement.
Q–36 What are the SECA tax consequences of a failure to satisfy the requirements of § 409A?
A–36 Gross income of a self-employed
individual (for example, a nonemployee
director, partner, or independent contractor) derived by the individual from any
trade or business is generally subject to tax
in accordance with the Self-Employment
Contributions Act (SECA) when includible in gross income. See §§ 1401, 1402(a).
Accordingly, an amount derived from an
individual’s trade or business that is includible in the self-employed individual’s
gross income under § 409A is generally
subject to the application of SECA taxes at
the time such amount is includible in gross
income.
Q–37 Does § 885 of the Act affect the
imposition of the employee tax and the
employer tax under the Federal Insurance Contributions Act (FICA) with respect to wages paid and received for employment under a nonqualified deferred
compensation plan within the meaning
of § 409A(d)?
A–37 No. Section 885 of the Act does
not affect the imposition of the employee
tax and the employer tax under FICA with
respect to wages paid and received for employment under a nonqualified deferred

January 10, 2005

compensation plan within the meaning
of § 409A(d). Thus, remuneration for
employment constituting wages within
the meaning of § 3121(a) is taken into
account for FICA tax purposes in accordance with the rules for wage inclusion
under §§ 3121(a) and 3121(v)(2).
H. Interim Reporting for Expedited
Form W–2
Q–38 What are an employer’s withholding and reporting obligations where
an employee is terminated or a business files a final Form 941 prior to the
issuance of further guidance providing
methods for calculating the amount of
deferrals for the year and the amounts
includible in gross income under § 409A
and in wages under § 3401(a)?
A–38 An employer is generally required to issue a Form W–2 reporting
compensation paid during a calendar year
no later than January 31 of the succeeding
calendar year. However, if an employee’s
employment is terminated before the close
of the calendar year, an employer must furnish an expedited Form W–2 if requested
to do so by the employee. Additionally,
an employer may, at its option, furnish a
Form W–2 to such an employee at any
time after the termination but no later than
January 31 of the succeeding calendar
year. See § 31.6051–1(d)(i). In addition, if
an employer makes a final return on Form
941, the employer must furnish expedited
Form W–2s to employees and file expedited Form W–2s with the Social Security
Administration. See §§ 31.6051–1(d)(ii),
31.6071(a)–1. If an employer furnishes an
expedited Form W–2 before the issuance
of additional guidance providing methods
for determining the amount of deferrals
for the year or the amounts includible in
gross income under § 409A and in wages
under § 3401(a), the employer need not
report an amount described in Q&A–25
(deferrals for the year) or in Q&A–31
(amounts includible in gross income and
wages) on the Form W–2. However, if
an employer furnishes an expedited Form
W–2 prior to the issuance of additional
guidance that requires the employer to
report a deferral for the year or an amount
includible in gross income and wages, then
the employer must subsequently furnish a
corrected Form W–2. See § 31.6051(c).

289

V. Drafting Information
The principal author of this notice is
Stephen Tackney of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) and, regarding the employment tax
and information reporting requirements,
Neil D. Shepherd of the Office of Division Counsel/Associate Chief Counsel
(Tax Exempt and Government Entities).
However, other personnel from the Treasury Department and the Service participated in its development. For further
information regarding this notice, contact Stephen Tackney (202) 927–9639;
or for further information regarding the
employment tax and information reporting requirements, Neil D. Shepherd (202)
622–6040; or regarding the submission
of comments, contact LaNita Van Dyke
(202) 622–7180 (not toll-free calls).

Fuel Tax Guidance; Request
for Public Comments
Notice 2005–4
Section 1. PURPOSE
This notice provides guidance on certain excise tax provisions in the Internal
Revenue Code that were added or affected
by the American Jobs Creation Act of 2004
(Pub. L. 108–357) (Act). These provisions relate to: alcohol and biodiesel fuels; the definition of off-highway vehicles; aviation-grade kerosene; claims related to diesel fuel used in certain buses;
the display of registration on certain vessels; claims related to sales of gasoline to
state and local governments and nonprofit
educational organizations; two party exchanges of taxable fuel; and the classification of transmix and certain diesel fuel
blendstocks as diesel fuel. Also, this notice requests comments from the public on
these provisions as well as other excise tax
provisions that were added or affected by
the Act.
The provisions in this notice will be the
subject of a notice of proposed rulemaking (NPRM) that Treasury and the Internal Revenue Service plan to issue in 2005.
Also, excise tax provisions of the Act on
which guidance is not provided by this no-

2005–2 I.R.B.

tice may be the subject of future guidance
or addressed in the NPRM.
Unless otherwise specified, references
to Code provisions in this notice are to
the Code as in effect on January 1, 2005.
Unless otherwise specified, references to
regulations are to the Manufacturers and
Retailers Excise Tax Regulations.
Section 2. ALCOHOL AND BIODIESEL
FUELS
(a) Overview. Effective January 1,
2005, the Act generally eliminates the
reduced rate of excise tax for most alcohol-blended fuels. In place of a reduced
rate, the Act allows certain credits or payments related to alcohol and biodiesel fuels
under §§ 40, 40A, 6426, and 6427(e). If
the alcohol is ethanol with a proof of 190
or greater, the credit or payment amount
is $0.51 per gallon. For agri-biodiesel, the
credit or payment amount is $1.00 per gallon; for biodiesel other than agri-biodiesel,
the credit or payment amount is $0.50 per
gallon. Under the Code’s coordination
rules, a claim may be taken only once with
respect to any particular gallon of alcohol
or biodiesel.
(b) Definitions.
Alcohol has the meaning given to the
term in § 48.4081–6(b)(1) except that, for
purposes of the credit allowed by § 40,
alcohol also includes alcohol with a proof
of at least 150.
Alcohol fuel mixture and biodiesel mixture have the meaning given to the terms
by § 6426(b)(3) and 6426(c)(3), respectively.
Biodiesel and agri-biodiesel have
the meanings given to the terms by
§ 40A(d)(1) and 40A(d)(2), respectively.
(c) Excise tax credit for alcohol fuel
and biodiesel mixtures; § 6426. Section
6426 allows a credit against the tax imposed by § 4081 on taxable fuel. The credit
is equal to the sum of the alcohol fuel mixture credit and the biodiesel mixture credit.
The credit is allowable to the person that
produces the mixture for sale or use in the
producer’s trade or business. The credit is
claimed on Form 720, Quarterly Federal
Excise Tax Return, in accordance with the
instructions for that form. For the requirement that the claimant obtain a certificate
from a producer of biodiesel, see section
2(h) of this notice.

2005–2 I.R.B.

(d) Income tax credits or payments for
alcohol or biodiesel used to produce alcohol fuel and biodiesel mixtures; §§ 34 and
6427(e)—(1) In general. To the extent that
the sum of the alcohol fuel mixture credit
and biodiesel mixture credit described in
§ 6426 exceeds a person’s § 4081 liability for any particular quarter, an income
tax credit or a payment under § 6427(e) is
allowable to the producer of the mixture.
This credit or payment is claimed on Form
720, Quarterly Federal Excise Tax Return;
Form 4136, Credit for Federal Tax Paid on
Fuels; or Form 8849, Claim for Refund of
Excise Taxes; in accordance with the instructions for those forms. For the requirement that the claimant obtain a certificate
from a producer of biodiesel, see section
2(h) of this notice.
(2) Coordination with excise tax credit.
If a person receives a payment under
§ 6427(e) for an amount claimed on Form
8849 with respect to a mixture for which
the person is allowed a credit under § 6426,
the amount of the payment constitutes an
excessive amount for purposes of § 6206
and such amount, as well as the civil
penalty under § 6675, may be assessed as
if it were a tax imposed by § 4081. If an
erroneous refund is repaid to the government, with interest from the date of the
payment (§ 6602), on or before the due
date of the Form 720, Quarterly Federal
Excise Tax Return, on which the credit is
allowed with respect to the mixture, the
claim for the excessive amount will be
treated as due to reasonable cause and the
penalty under § 6675 will not be imposed
with respect to the claim. If, in lieu of a
payment under § 6427(e), a person claims
an income tax credit on Form 4136 with
respect to a mixture for which the person is
allowed a credit under § 6426, the income
tax rules related to assessing an underpayment of income tax liability apply. The
§ 6675 penalty for excessive claims with
respect to fuels does not apply in the case
of § 34 income tax credits.
(e) Biodiesel used as a fuel; § 40A. Section 40A allows a nonrefundable income
tax credit, included in the general business
credit, for biodiesel used as a fuel. (See
§ 38 for limit on the general business credit
based on the amount of tax.) The credit
is the sum of the biodiesel credit and the
biodiesel mixture credit. In the case of
biodiesel not in a mixture (100% biodiesel
or B100), the credit is allowable to the per-

290

son selling the biodiesel in a qualifying retail sale or, if the biodiesel has not been
sold in a qualifying retail sale, to the person using the biodiesel as a fuel in a trade
or business. A sale is a qualifying retail
sale for this purpose if it is at retail and
the biodiesel is placed in the fuel tank of
the purchaser’s vehicle at the time of the
sale. In the case of biodiesel in a mixture, the credit is allowable to the producer
of a mixture that is sold or used in the
producer’s trade or business. This credit
is claimed on Form 8864, Biodiesel Fuels
Credit, in accordance with the instructions
for that form. For the requirement that the
claimant obtain a certificate from a producer of biodiesel, see section 2(h) of this
notice.
(f) Registration—(1) Producers of alcohol and biodiesel; § 4101(a)(1)—(i) In
general. Under § 4101(a)(1) and this notice, every person producing or importing
alcohol (other than alcohol with a proof of
less than 190) or biodiesel must be registered by the Service by July 1, 2005. Application for registration is made on Form
637, Application for Registration (For Certain Excise Tax Activities), in accordance
with the instructions for that form. For
penalties for failure to register as required,
see § 6719 and § 48.4101–1(c)(3).
(ii) Requirements. The Service will register an applicant as an alcohol producer or
biodiesel producer only if the Service—
(A) Determines that the applicant is engaged as a producer or importer of alcohol
or biodiesel, or is likely to become so engaged within a reasonable time after being
registered under § 4101; and
(B) Is satisfied with the filing, deposit, payment, reporting, and claim history for all federal taxes of the applicant
and any related person (as defined in
§ 48.4101–1(b)(5)).
(2) Blender registration.
Section
48.4101–1(c) requires any person that produces blended taxable fuel to be registered
by the Service under § 4101. Application
for this registration is made on Form 637,
Application for Registration (For Certain
Excise Tax Activities), under Activity Letter “M” (Blender of taxable fuel outside
the bulk transfer/terminal system) in accordance with the instructions for that
form. A person that is registered under
Activity Letter “T” (Buyer of gasoline
for blending into gasohol outside the bulk
transfer/terminal system) will be treated

January 10, 2005

as being registered under Activity Letter
“M” for production occurring before July
1, 2005.
(g) Conditions to allowance of credit
or payment for biodiesel; form of claim.
A general description of the conditions to
allowance and form of claim are included
in sections 2(c), (d), and (e) of this notice.
(h) Content of claim—(1) In general. Section 6426(c)(4) provides that
the biodiesel mixture credit of § 6426
is not allowed unless the producer of
the mixture obtains a certificate, in such
form and manner as may be prescribed
by the Secretary, from the producer of
the biodiesel that identifies the product
produced and the percentage of biodiesel
and agri-biodiesel in the product. Section 40A(b)(4) provides a similar rule for

the biodiesel mixture credit and biodiesel
credit allowed by § 40A. Under this notice, this rule will also apply to the credit
or payment allowed for biodiesel mixtures
by § 6427(e). Accordingly, each claim
for a credit or payment under §§ 6426,
6427, and 40A, with respect to a biodiesel
mixture must contain a statement that the
claimant has in its possession an unexpired
certificate (in the form described in section
2(h)(2) of this notice) from the producer
of the biodiesel in the mixture and has no
reason to believe any information in that
certificate is false.
(2) Certificate—(i) In general. The
certificate to be obtained by the claimant
claiming a credit or payment under
§§ 6426(c), 6427(e), and 40A consists of a
statement that is signed under penalties of

perjury by a person with authority to bind
the biodiesel producer, is substantially in
the same form as the model certificate in
paragraph (h)(2)(ii) of this section, and
contains all the information necessary
to complete such model certificate. The
claimant must have the certificate at the
time the credit or payment is claimed. The
certificate may be included as part of the
business records normally used to support
a claim.
(ii) Model certificate.

CERTIFICATE FOR BIODIESEL
(To support a claim under §§ 6426(c), 6427(e), and 40A of the Internal Revenue Code)

Name, address, and employer identification number of claimant.
The undersigned biodiesel producer (“Producer”) hereby certifies the following under penalties of perjury:
Producer certifies that the biodiesel to which this certificate relates is monoalkyl esters of long chain fatty acids derived
from plant or animal matter that meets the requirements of the American Society of Testing and Materials D6751 and the
registration requirements for fuels and fuel additives established by EPA under § 211 of the Clean Air Act (42 U.S.C.
§ 7545).
Producer certifies that the biodiesel to which this certificate relates is:
% Agri-biodiesel (derived solely from virgin oils, including esters derived from virgin vegetable oils from corn, soybeans,
sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, and mustard seeds and from animal fats).
% Biodiesel (other than agri-biodiesel)
This certificate applies to the following:
1.

Invoice or delivery ticket number

2.

Number of gallons

Producer understands that fraudulent use of this certificate may subject producer, claimant, and parties making such
fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
Printed or typed name of person signing
Title of person signing
Name of Producer
Employer identification number

January 10, 2005

291

2005–2 I.R.B.

Address of Producer
Signature and date signed
(i) Tax on alcohol and biodiesel
fuels.—(1) Alcohol fuels.
Section
48.4081–1(c)(1)(i) generally defines
blended taxable fuel as any taxable fuel
that is produced outside the bulk transfer/terminal system by mixing taxable
fuel on which tax has been imposed by
§ 4081 and any other liquid on which tax
has not been imposed by § 4081. Section
48.4081–1(c)(1)(iii), however, excludes
certain gasohol from the definition of
blended taxable fuel. The regulations will
be revised so that § 48.4081–1(c)(1)(iii)
and the last sentence of § 48.4081–3(g)(1)
(treating the alcohol in gasohol as previously taxed fuel) generally will not apply
to the removal or sale of gasohol after
December 31, 2004. As a result, gasohol
produced outside the bulk transfer/terminal system after that date will be taxed
as blended taxable fuel taxed under the
revised rules of § 48.4081–3(g). However, in the case of gasoline removed or
entered before January 1, 2005, if tax is
imposed at a reduced rate for the production of gasohol and the gasoline is used
to produce gasohol on or after such date,
§ 48.4081–1(c)(1)(iii) and the last sentence of § 48.4081–3(g)(1) will apply and
the benefit allowed by §§ 40, 6426, and
6427(e) will be reduced by the amount of
benefit received under former § 4081(c).
(2) Biodiesel. For rules relating to the
taxation of biodiesel and blended taxable
fuel containing biodiesel, see Rev. Rul.
2002–76, 2002–2 C.B. 840.
(j) Information reporting for persons
claiming certain tax benefits. Section 4104
requires persons claiming tax benefits under §§ 34, 40, 40A, 4041(b)(2), 6426, and
6427(e) to file certain returns in such manner as may be prescribed by the Secretary.
In the case of tax benefits claimed under
§§ 34 and 40 for taxable years ending before January 1, 2005, this requirement is
satisfied by filing the income tax return for
the taxable year. The manner of reporting
for other claims to which § 4104 applies is
not prescribed in this notice. The reporting
requirements for these claims will be prescribed in subsequent guidance.

2005–2 I.R.B.

Section 3. DEFINITION OF
OFF-HIGHWAY VEHICLE
(a) In general. Section 7701(a)(48) provides that a vehicle with certain described
features for off-highway transportation is
not treated as a highway vehicle. This provision generally is effective on October 22,
2004; however, with respect to the taxes
on special fuels imposed by § 4041 and on
taxable fuels imposed by § 4081, the provision applies to taxable periods beginning
after October 22, 2004.
(b) Revision to regulations. Section
48.4061(a)–1(d)(2)(ii) provides that, for
purposes of §§ 4051 and 4481, a vehicle with certain described features for
off-highway transportation is not a highway vehicle. Section 48.4041–8(b)(2)(ii)
provides a similar exception for purposes of § 4041, § 4081, and the credits, refunds and payments related to
§ 4081.
Sections 48.4041–8(b)(2)(ii)
and 48.4061(a)–1(d)(2)(ii) will be revised
so that they will not apply with respect to
calendar quarters beginning after October
22, 2004.
Section 4. AVIATION-GRADE
KEROSENE
(a) Overview. Effective January 1,
2005, the tax imposed by § 4091 on
the sale of aviation fuel by the producer
thereof is repealed. In its place, § 4081
provides reduced rates and special rules
for aviation-grade kerosene, which is
taxed as taxable fuel. Also, § 4082(d)(1),
which allowed for the tax-free removal
of undyed aviation-grade kerosene if the
Secretary determined that such kerosene
was destined for use as a fuel in an aircraft,
is repealed effective January 1, 2005.
(b) Definitions.
Aviation-grade
kerosene
means
kerosene-type jet fuel covered by ASTM
specification D 1655 or military specification MIL-DTL–5624T (Grade JP–5) or
MIL-DTL–83133E (Grade JP–8).
Commercial aviation has the meaning
given to the term by § 4083(b).
Position holder includes a receiving
person that is liable for tax under § 4105

292

(relating to two-party exchanges) and section 8 of this notice.
(c) Imposition of tax; rate of tax; general rules—(1) In general. Aviation-grade
kerosene is taxable fuel and the provisions
of §§ 48.4081–2 (relating to imposition of
tax at the terminal rack) and 48.4081–3 (relating to other taxable events) apply unless the Code or this notice provides differently. The rate of tax on the removal,
entry, or sale of aviation-grade kerosene is
$0.219 per gallon unless a reduced rate of
tax applies as described in this section.
(2) Tax on each removal. Taxpayers are
reminded that, unless otherwise provided
by § 4082, tax is imposed on each removal
of aviation-grade kerosene from a terminal
at the terminal rack even if that kerosene
had previously been taxed on a removal
from another terminal. For the conditions
under which a refund (but not a credit) is
allowable to the person that paid a second
tax to the government, see § 48.4081–7.
(d) Commercial aviation; liability for
tax; rate of tax—(1) In general. Under
§ 48.4081–2(c), the position holder is liable for tax with respect to the removal
of taxable fuel from a terminal at a rack.
However, the position holder is not liable
for tax on the removal of aviation-grade
kerosene from a terminal at the terminal
rack if the kerosene is removed directly
into the fuel tank of an aircraft for use in
commercial aviation. In such a case, the
operator of the aircraft in commercial aviation is liable for the tax on the removal at
the rate of $0.044 per gallon. For purposes
of determining whether a position holder
is liable for tax under these rules, kerosene
that is removed directly into the fuel tank
of an aircraft will be treated as removed for
use in commercial aviation if the position
holder—
(i) Is a taxable fuel registrant,
(ii) Has an unexpired certificate (in the
form described in section 4(g) of this notice) from the operator of the aircraft, and
(iii) Has no reason to believe that any
information in the certificate is false.
(2) Certain refueler trucks, etc.—(i) In
general. For purposes of the tax imposed
on aviation-grade kerosene removed di-

January 10, 2005

rectly into the fuel tank of an aircraft for
use in commercial aviation, the Act provides that certain refueler trucks, tankers,
and tank wagons are treated as part of
a terminal if the conditions described in
§ 4081(a)(3)(A) and (B) are met. One
such condition is that, except in the case
of exigent circumstances identified by
the Secretary in regulations, no vehicle
registered for highway use is loaded with
aviation-grade kerosene at such terminal.
This notice does not describe any such exigent circumstances. Also, § 4081(a)(3)(C)
provides for reporting by terminal operators with respect to certain deliveries by
refueler trucks, etc. This notice does not
prescribe any such reporting. The reporting requirements under § 4081(a)(3)(C)
will be prescribed in subsequent guidance. Until the issuance of this guidance,
taxpayers are required to retain records
containing the information described in
§ 4081(a)(3)(C) but are not required to
report such information.
(ii) Terminals within secured areas of
airports. Another condition for treating
certain refueler trucks as part of a terminal is that the terminal must be located
within a secured area of an airport. Section 4081(a)(3)(A)(i). The conference report to the Act, H.R. Conf. Rep. No. 755,
108th Cong., 2d Sess. 692 n.718 (2004),
provides an initial list of qualifying terminals and the airports at which they are
located. The conference report also provides that this list is subject to the Secretary’s verification. This notice adopts
the list in the conference report except for
the following airport terminals, which the
Commissioner has determined are not located within a secure area of the airport
they serve: San Jose Municipal Airport,
T–77–CA–4650; John Wayne Airport/Orange County, T–33–CA–4772; and Eppley
Airfield, T–47–NE–3608. This list identifies airport fueling operations that are not
susceptible to avoidance of the federal excise tax on taxable fuel, and has nothing to
do with the general security of airports either included or not included on the list.
(e) Exceptions. Under the Act and
this notice, in the case of aviation-grade
kerosene that is exempt from the tax imposed by § 4041(c) (other than by reason
of a prior imposition of tax) and that is
removed from any refinery or terminal
directly into the fuel tank of an aircraft,
the rate of tax under § 4081 is zero. For

January 10, 2005

purposes of determining the tax liability of the position holder under this rule,
aviation-grade kerosene that is removed
directly into the fuel tank of an aircraft
will be treated as exempt from the tax imposed by § 4041(c) (other than by reason
of a prior imposition of tax) if the position
holder: (1) is a taxable fuel registrant; (2)
has an unexpired certificate (described in
section 4(g) of this notice) from the operator of the aircraft; and (3) has no reason
to believe that any information in the certificate is false. Exemptions from the tax
imposed by § 4041(c) include an exemption for aviation-grade kerosene sold for
use or used as supplies for vessels or aircraft (within the meaning of § 4221(d)(3)),
including fuel sold for use or used in aircraft actually engaged in foreign trade, and
an exemption for aviation-grade kerosene
sold for the exclusive use of a state or
political subdivision of a state.
(f) Registration—(1) Commercial aircraft operators; in general. Under this notice, effective July 1, 2005, each commercial aircraft operator (other than an operator engaged exclusively in foreign trade)
must be registered by the Service as a condition of providing the certificate that aviation-grade kerosene will be used in commercial aviation. Application for registration is made on Form 637, Application for
Registration (For Certain Excise Tax Activities), in accordance with the instructions for that form. A commercial aircraft
operator that is registered under Activity
Letter “Y” (Buyer of aviation fuel for its
use in commercial aviation (other than foreign trade)) will be treated as being registered for this purpose and will not have to
apply to be reregistered unless notified to
do so by the Service.
(2) Commercial aircraft operators; requirements. The Service will register an
applicant as a commercial aircraft operator only if the Service—
(i) Determines that the applicant is, in
the course of its trade or business, regularly
engaged as an operator of an aircraft in
commercial aviation, or is likely to become
so engaged within a reasonable time after
being registered under § 4101; and
(ii) Is satisfied with the filing, deposit, payment, reporting, and claim history for all federal taxes of the applicant
and any related person (as defined in
§ 48.4101–1(b)(5)).

293

(3) Full rate buyers; in general. Under this notice, effective July 1, 2005, each
person that buys aviation-grade kerosene
in connection with a removal from a terminal (other than a removal directly into
the fuel tank of an aircraft) (full rate buyer)
must be registered by the Service. Application for registration is made on Form
637, Application for Registration (For Certain Excise Tax Activities), in accordance
with the instructions for that form.
(4) Full rate buyers; requirements. The
Service will register an applicant as a full
rate buyer of aviation-grade kerosene only
if the Service—
(i) Determines that the applicant buys
aviation-grade kerosene in connection
with the removal from a terminal (other
than a removal directly into the fuel tank
of an aircraft), or is likely to become such
a buyer within a reasonable time after being registered under § 4101; and
(ii) Is satisfied with the filing, deposit, payment, reporting, and claim history for all federal taxes of the applicant
and any related person (as defined in
§ 48.4101–1(b)(5)).
(g) Certificate for commercial aviation
and exempt use—(1) In general. The certificate referred to in paragraphs (d)(1) and
(e) of this section is a statement that is
signed under penalties of perjury by a person with authority to bind the buyer, is in
substantially the same form as the model
certificate provided below, and contains
all information necessary to complete the
model certificate. A new certificate or notice that the current certificate is invalid
must be given if any information in the
current certificate changes. The certificate may be included as part of any business records normally used to document a
sale. The Service may withdraw the right
of a buyer of aviation-grade kerosene to
provide a certificate under this section if
the buyer uses the aviation-grade kerosene
to which a certificate relates other than
as stated in the certificate. The Service
may notify any seller to whom the buyer
has provided a certificate that the buyer’s
right to provide a certificate has been withdrawn. The certificate expires on the earliest of the following dates:
(i) The date one year after the effective
date of the certificate (which may be no
earlier than the date it is signed).

2005–2 I.R.B.

(ii) The date the buyer provides the
seller a new certificate or notice that the
current certificate is invalid.

(iii) The date the Service or the buyer
notifies the seller that the buyer’s right to
provide a certificate has been withdrawn.

(2) Model certificate.

CERTIFICATE OF PERSON BUYING AVIATION-GRADE KEROSENE FOR
COMMERCIAL AVIATION OR NONTAXABLE USE
(To support operator liability for tax on removals of aviation-grade kerosene directly into the fuel tank of an aircraft in commercial
aviation pursuant to § 4081 of the Internal Revenue Code or to support a tax rate of zero pursuant to §§ 4041 and 4082.)

Name, address, and employer identification number of the position holder
The undersigned aircraft operator (“Buyer”) hereby certifies the following under the penalties of perjury:
The aviation-grade kerosene to which this certificate relates is purchased (check one):
for use on a farm for
farming purposes;
for export;
for use in foreign trade (reciprocal benefits required for foreign registered
airlines);
for use in certain helicopter and fixed-wing air ambulance uses;
for the exclusive use of a nonprofit
educational organization;
for the exclusive use of a state;
for use in an aircraft owned by an aircraft museum;
for use in military aircraft; or
for use in commercial aviation (other than foreign trade).
With respect to aviation-grade kerosene purchased after June 30, 2005, for use in commercial aviation (other than
foreign trade), Buyer’s registration number is
. Buyer’s registration has not been suspended or revoked
by the Internal Revenue Service.
This certificate applies to the following (complete as applicable):
This is a single purchase certificate:
1.

Invoice or delivery ticket number

2.

Number of gallons

This is a certificate covering all purchases under a specified account or order number:
1. Effective date
2. Expiration date

(period not to exceed 1 year after the effective date)

3. Buyer account number
Buyer agrees to provide the person liable for tax with a new certificate if any information in this certificate changes.
If the aviation-grade kerosene to which this certificate relates is being bought for use in commercial aviation (other than
foreign trade), Buyer is liable for tax on its use of the fuel and will pay that tax to the government.
If Buyer sells or uses the aviation-grade kerosene to which this certificate relates for a use other than the use stated
above, Buyer will be liable for tax.
Buyer understands that it must be prepared to establish by satisfactory evidence the purpose for which the fuel purchased
under this certificate was used.
Buyer has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn. If
Buyer violates the terms of this certificate, the Internal Revenue Service may withdraw Buyer’s right to provide a certificate.
The fraudulent use of this certificate may subject Buyer and all parties making any fraudulent use of this certificate to a fine
or imprisonment, or both, together with the costs of prosecution.
Printed or typed name of person signing
Title of person signing

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January 10, 2005

Name of Buyer
Employer identification number
Address of Buyer
Signature and date signed
(h) Claims by registered ultimate vendors (nontaxable uses)—(1) In general.
Section 6427(l)(4)(B) provides that if
an ultimate purchaser of aviation-grade
kerosene used for a nontaxable use waives
its right to an income tax credit or payment, in the form and manner prescribed
by the Secretary, and assigns such right
to the registered ultimate vendor, then the
ultimate vendor, and not the ultimate purchaser, may claim a payment or income
tax credit. Neither the Code nor this notice
requires any vendor to apply for registration or to file any claim.
(2) Definitions.
Nontaxable use means any use that is
exempt from the tax imposed by § 4041(c)
(other than by reason of a prior imposition
of tax) and any use in commercial aviation
within the meaning of § 4083(b).
Registered ultimate vendor is a person
that sells aviation-grade kerosene to the ultimate purchaser for a nontaxable use and
is registered as an ultimate vendor under
§ 4101.
(3) Conditions to allowance of credit
or payment. A claim for an income tax
credit or payment with respect to aviationgrade kerosene is allowable to an ultimate
vendor by § 6427(l)(4)(B) only if—
(i) Tax was imposed on the aviationgrade kerosene under § 4081;

(ii) The claimant sold the aviation-grade kerosene to the ultimate purchaser for use in a nontaxable use;
(iii) The claimant is a registered ultimate vendor;
(iv) The ultimate purchaser has waived
its right to a credit or payment as provided
in paragraph (h)(6) of this section; and
(v) The claimant has filed a timely
claim for a credit or payment and the
claim contains all of the information required in paragraph (h)(5) of this section.
(4) Form of claim. A claim under
§ 6427(l)(4)(B) for a payment is made on
Form 8849, Claim for Refund of Excise
Taxes, and a claim under § 6427(l)(4)(B)
for an income tax credit is made on Form
4136, Credit for Federal Tax Paid on Fuels.
(5) Content of claim. Each claim for a
credit or payment under § 6427(l)(4)(B)
must contain the following information
with respect to the aviation-grade kerosene
covered by the claim:
(i) The total number of gallons.
(ii) The claimant’s registration number.
(iii) A statement that the claimant—
(A) Has not included the amount of the
tax in its sales price of the aviation-grade
kerosene and has not collected the amount
of tax from its buyer;

(B) Has repaid the amount of the tax to
the ultimate purchaser of the fuel; or
(C) Has obtained the written consent of
its buyer to allowance of the claim.
(iv) A statement that the claimant has
in its possession an unexpired waiver described in paragraph (h)(6) of this section
and has no reason to believe any information in the waiver is false.
(6) Waiver—(i) In general. The ultimate purchaser waives its right to a credit
or payment for purposes of § 6427(l)(4)(B)
by providing a statement that is signed under penalties of perjury by a person with
authority to bind the ultimate purchaser, is
in substantially the same form as the model
waiver in paragraph (h)(6)(ii) of this section, and contains all of the information
necessary to complete such model waiver.
A new waiver must be given if any information in the current waiver changes.
The claimant must have the waiver at the
time the credit or payment is claimed under § 6427(l)(4)(B). The waiver may be
included as part of any business records
normally used to document a sale. The
waiver expires on the earlier of the following dates:
(A) The date one year after the effective
date of the waiver, or
(B) The date a new waiver is provided.
(ii) Model waiver.

WAIVER FOR USE BY ULTIMATE PURCHASERS OF
AVIATION-GRADE KEROSENE USED IN NONTAXABLE USES
(To support vendor’s claim for a credit or payment under § 6427 of the Internal Revenue Code.)

Name, address, and employer identification number of ultimate vendor
The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under the penalties of perjury:

January 10, 2005

295

2005–2 I.R.B.

The aviation-grade kerosene to which this certificate relates is purchased (check one):
for use on a farm for
farming purposes;
for export;
for use in foreign trade (reciprocal benefits required for foreign registered
airlines);
for use in certain helicopter and fixed-wing air ambulance uses;
for the exclusive use of a nonprofit
educational organization;
for the exclusive use of a state;
for use in an aircraft owned by an aircraft museum;
for use in military aircraft; or
for use in commercial aviation (other than foreign trade).
This waiver applies to the following (complete as applicable):
This is a single purchase waiver:
1.

Invoice or delivery ticket number

2.

Number of gallons

This is a waiver covering all purchases under a specified account or order number:
1. Effective date
2. Expiration date

(period not to exceed 1 year after the effective date)

3. Buyer account number
Buyer will provide a new waiver to the vendor if any information in this waiver changes.
If Buyer uses the aviation-grade kerosene to which this waiver relates for a use other than the use stated above, Buyer
will be liable for tax.
Buyer understands that by signing this waiver, Buyer gives up its right to claim any credit or payment for the aviation-grade
kerosene used in a nontaxable use.
Buyer acknowledges that it has not and will not claim any credit or payment for the aviation-grade kerosene to which
this waiver relates.
Buyer understands that the fraudulent use of this waiver may subject Buyer and all parties making such fraudulent use of
this waiver to a fine or imprisonment, or both, together with the costs of prosecution.
Printed or typed name of person signing
Title of person signing
Name of Buyer
Employer identification number
Address of Buyer
Signature and date signed
(7) Registration—(i) In general. Application for registration as a registered ultimate vendor of aviation-grade kerosene is
made on Form 637, Application for Registration (For Certain Excise Tax Activities), in accordance with the instructions
for that form. A person that is registered
under § 4101 under Activity Letter “UV”
(Ultimate vendor that sells undyed diesel
fuel or undyed kerosene to a state or local government for its exclusive use or for
use by the buyer on a farm for farming
purposes) is treated as registered for pur-

2005–2 I.R.B.

poses of claims filed with respect to aviation-grade kerosene before July 1, 2005.
(ii) Requirements. The Service will register an applicant as an ultimate vendor
of aviation-grade kerosene only if the Service—
(A) Determines that the applicant is, in
the course of its trade or business, regularly engaged as a seller of aviation-grade
kerosene to aircraft operators, or is likely
to become so engaged within a reasonable
time after being registered under § 4101;
and

296

(B) Is satisfied with the filing, deposit, payment, reporting, and claim history for all federal taxes of the applicant
and any related person (as defined in
§ 48.4101–1(b)(5)).
(i) Extension of time to file Form 720 for
the first quarter of 2005. Under this notice, a return of tax on Form 720, Quarterly Federal Excise Tax Return, for the
first quarter of 2005 is due May 31, 2005, if
the return reports tax for either IRS No. 69,
aviation-grade kerosene, or IRS No. 77,
aviation-grade kerosene for use in commercial aviation (other than foreign trade).

January 10, 2005

A person must file only one return for a
quarter. Thus, for example, a return of tax
on Form 720 for the first quarter that reports tax for IRS No. 69 and IRS No. 26,
transportation of persons by air, is due May
31, 2005. This rule does not extend the
time for making deposits or paying any excise tax.
(j) Deposits; application of the
safe harbor deposit rule.
Section
40.6302(c)–1(b)(2)(ii)(D) of the Excise
Tax Procedural Regulations provides that
the safe harbor deposit rule for regular
method taxes is applicable if, among other
conditions, the person’s liability does
not include any regular method tax that
was not imposed at all times during the
look-back quarter. For the first and second
quarters of 2005, the tax on aviation-grade
kerosene under § 4081 will be treated under this notice as having been imposed during the look-back quarter if: (1) the person
was a registered producer of aviation fuel
(Activity Letter “H” (Importer or producer
of aviation fuel) on Form 637, Application
For Registration (For Certain Excise Tax
Activities)) during the look-back quarter;
or, (2) the deposit for each semimonthly
period for the current quarter (determined
under § 40.6302(c)–1(b)(2)) is increased
by an amount equal to 95% of the person’s net tax liability for aviation-grade
kerosene under § 4081 incurred during the
semimonthly period.
(k) Floor stocks tax—(1) Imposition of
tax. A one-time floor stocks tax is imposed on aviation-grade kerosene if, on
the first moment of January 1, 2005, the
kerosene—
(i) Is outside of the bulk transfer/terminal system (as defined in § 48.4081–1(b)
after taking paragraph (d)(2) of this section into account) and is not held in the fuel
supply tank of an aircraft; and
(ii) Is held by a registered producer of
aviation fuel (Activity Letter “H” (Importer or producer of aviation fuel) on
Form 637, Application for Registration
(For Certain Excise Tax Activities)) other
than for use by the producer in a nontaxable use described in § 6427(l)(2)(B)(i).
(2) Liability for tax. The person holding
the kerosene on the first moment of January 1, 2005, is liable for tax. Kerosene is
considered held by a person if title thereto
has passed to such person (whether or not
delivery to the person has been made).

January 10, 2005

(3) Rate of tax. The rate of tax is $0.219
per gallon except that for aviation-grade
kerosene held for the taxpayer’s own use
in commercial aviation, the rate of tax is
$0.044 per gallon.
(4) Persons holding not more than
2,000 gallons—(i) A person is not liable
for the floor stocks tax on aviation-grade
kerosene if the amount of such aviation-grade kerosene held by the person on
January 1, 2005, does not exceed 2,000
gallons.
In determining whether this
threshold is crossed, the amount of aviation-grade kerosene a person holds exclusively for an exempt use and the amount
of aviation-grade kerosene a person holds
in an aircraft fuel tank are not taken into
account. If a person holds more than 2,000
gallons of aviation-grade kerosene, then
the floor stocks tax is imposed on all aviation-grade kerosene that is held by the
person and that is not otherwise exempt.
(ii) Members of controlled groups of
corporations (as defined in § 1563(a)) must
aggregate the aviation-grade kerosene held
by all members in determining whether
they hold no more than 2,000 gallons of
kerosene. If holdings of all members in aggregate exceed 2,000 gallons, then the exception described in paragraph (k)(4)(i) of
this section does not apply to any member
of the group. The aggregation rule for controlled groups does not affect the requirement that each separate person liable for
the floor stocks tax file a return.
(5) Payment and return. The floor
stocks tax must be paid with a return on
Form 720, Quarterly Federal Excise Tax
Return. The return is due May 31, 2005.
Persons that are required to report the floor
stocks tax and are also required to report
other excise taxes on Form 720 must report both the floor stocks tax and the other
excise taxes for the first calendar quarter
of 2005 on one Form 720 that is due May
31, 2005. This rule does not extend the
time for making deposits or payments of
the other excise taxes.
Section 5. DIESEL FUEL USED IN
CERTAIN INTERCITY BUSES
(a) Overview. Before January 1, 2005,
the penalty imposed by § 6715 on the misuse of dyed diesel fuel and dyed kerosene
did not apply to dyed fuel used in buses
while engaged in intercity bus transportation, as defined in paragraph (b) of this sec-

297

tion. The operator of the bus was liable for
a backup tax of $0.074 per gallon on dyed
fuel used for this purpose. However, effective January 1, 2005, the § 6715 penalty
applies to this use and the ability of these
bus operators to use dyed diesel fuel and
pay the $0.074-per-gallon backup tax is
eliminated. As under prior law, an income
tax credit or payment of $0.17 per gallon is
allowable if undyed diesel fuel or undyed
kerosene (which is taxed at $0.244 per gallon) is used for this purpose. In addition,
§ 6427(b)(4) provides that if the ultimate
purchaser of undyed diesel fuel or undyed
kerosene used in a bus for this purpose
waives its right to an income tax credit or
a payment, in the form and manner prescribed by the Secretary, and assigns such
right to the registered ultimate vendor, then
the ultimate vendor, and not the ultimate
purchaser, may claim a payment or income
tax credit. Neither the Code nor this notice
requires any vendor to apply for registration or to file a claim.
(b) Definitions—(1) Intercity bus transportation—(i) In general. An automobile bus is engaged in intercity bus transportation if it is engaged in the furnishing (for compensation) of passenger land
transportation available to the general public and the bus is engaged in(A) Scheduled transportation along regular routes; or
(B) Nonscheduled transportation if the
seating capacity of the bus is at least 20
adults (not including the driver).
(ii) Exceptions. A bus is not engaged in
intercity bus transportation if—
(A) The bus is engaged in transportation described in § 6427(b)(2)(B) (relating
to the transportation of students and employees of schools); or
(B) The bus is engaged in transportation
described in § 6427(b)(2)(C) (relating to
intracity transportation in a qualified local
bus).
(2) Registered ultimate vendor. A registered ultimate vendor is a person that sells
diesel fuel to the ultimate purchaser for use
in intercity bus transportation and is registered as an ultimate vendor under § 4101.
(c) Conditions to allowance of credit or
payment. A claim for an income tax credit
or payment with respect to diesel fuel or
kerosene used for intercity bus transportation is allowable under § 6427(b)(4) only
if—

2005–2 I.R.B.

(1) Tax was imposed on the diesel fuel
or kerosene under § 4081;
(2) The claimant sold the diesel fuel or
kerosene to the ultimate purchaser for use
in intercity bus transportation;
(3) The claimant is a registered ultimate
vendor;
(4) The ultimate purchaser has waived
the right to payment as provided in paragraph (f) of this section; and
(5) The claimant has filed a timely
claim for a credit or payment and the
claim contains all of the information required in paragraph (e) of this section.
(d) Form of claim. A claim under
§ 6427(b)(4) for a payment is made on
Form 8849, Claim for Refund of Excise
Taxes, and a claim under § 6427(b)(4)
for an income tax credit is made on Form
4136, Credit for Federal Tax Paid on Fuels.

(e) Content of claim. Each claim for a
credit or payment under § 6427(b)(4) must
contain the following information with respect to the diesel fuel or kerosene covered
by the claim:
(1) The total number of gallons.
(2) The claimant’s registration number.
(3) A statement that the claimant—
(i) Has not included the amount of the
tax in its sales price of the diesel fuel or
kerosene and has not collected the amount
of tax from its buyer;
(ii) Has repaid the amount of the tax to
the ultimate purchaser of the fuel; or
(iii) Has obtained the written consent of
its buyer to allowance of the claim.
(4) A certification that the claimant has
in its possession an unexpired waiver described in paragraph (f) of this section and
has no reason to believe any information in
the waiver is false.

(f) Waiver—(1) In general. The ultimate purchaser waives its right to credit
or payment for purposes of § 6427(b)(4)
by providing a statement that is signed under penalties of perjury by a person with
authority to bind the ultimate purchaser,
is in substantially the same form as the
model waiver in paragraph (f)(2) of this
section, and contains all of the information
necessary to complete such model waiver.
A new waiver must be given if any information in the current waiver changes.
The claimant must have the waiver at the
time the credit or payment is claimed under
§ 6427(b)(4). The waiver may be included
as part of any business records normally
used to document a sale. The waiver expires on the earlier of the following dates:
(i) The date one year after the effective
date of the waiver.
(ii) The date a new waiver is provided.
(2) Model waiver.

WAIVER FOR USE BY ULTIMATE PURCHASERS OF DIESEL FUEL OR
KEROSENE USED IN INTERCITY BUS TRANSPORTATION
(To support vendor’s claim for a credit or payment under § 6427 of the Internal Revenue Code.)

Name, address, and employer identification number of ultimate vendor
The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under the penalties of perjury:
The diesel fuel or kerosene to which this waiver relates is purchased for use in intercity bus transportation.
This waiver applies to the following (complete as applicable):
This is a single purchase waiver:
1.

Invoice or delivery ticket number

2.

Number of gallons

This is a waiver covering all purchases under a specified account or order number:
1. Effective date
2. Expiration date

(period not to exceed 1 year after the effective date)

3. Buyer account number
Buyer will provide a new waiver to the vendor if any information in this waiver changes.
If Buyer uses the diesel fuel or kerosene to which this waiver relates for a use other than in intercity bus transportation,
Buyer will be liable for tax.
Buyer understands that by signing this waiver, Buyer gives up its right to claim any credit or payment for diesel fuel or
kerosene used in intercity bus transportation during the period indicated.
Buyer acknowledges that it has not and will not claim any credit or payment for the diesel fuel or kerosene to which
this waiver relates.

2005–2 I.R.B.

298

January 10, 2005

Buyer understands that the fraudulent use of this waiver may subject Buyer and all parties making such fraudulent use of
this waiver to a fine or imprisonment, or both, together with the costs of prosecution.
Printed or typed name of person signing
Title of person signing
Name of Buyer
Employer identification number
Address of Buyer
Signature and date signed
(g) Registration—(1) In general. Application for registration as a registered
ultimate vendor of diesel fuel or kerosene
used in intercity bus transportation is made
on Form 637, Application for Registration
(For Certain Excise Tax Activities), in
accordance with the instructions for that
form. A person that is registered under § 4101 under Activity Letter “UV” is
treated as registered for purposes of claims
with respect to diesel fuel or kerosene used
in intercity bus transportation for claims
filed before July 1, 2005.
(2) Requirements. The Service will register an applicant as an ultimate vendor of
diesel fuel or kerosene used in intercity bus
transportation only if the Service—
(i) Determines that the applicant is, in
the course of its trade or business, regularly engaged as a seller of diesel fuel
or kerosene for use in intercity bus transportation or is likely to become so engaged
within a reasonable time after being registered under § 4101; and
(ii) Is satisfied with the filing, deposit, payment, reporting, and claim history for all federal taxes of the applicant
and any related person (as defined in
§ 48.4101–1(b)(5)).
Section 6. DISPLAY OF
REGISTRATION
Section 4101 provides that every operator of a vessel required to register must display proof of registration through an identification device prescribed by the Secretary on each vessel used by the operator to
transport any taxable fuel. Section 6718
imposes a penalty on vessel operators who

January 10, 2005

fail to display proof of registration. This
notice does not prescribe the identification
device that must be displayed. The identification device and the manner of its display will be prescribed in subsequent guidance. No penalty will be imposed on a registered operator under § 6718 with respect
to any failure to display proof of registration occurring before the effective date of
such guidance, and the effective date of the
guidance will be after the date it is issued.
Section 7. GASOLINE; CLAIMS BY
REGISTERED ULTIMATE VENDORS
(a) Overview—(1) Claims by the person
that paid the tax—(i) In general. Section
6416(b)(2) generally provides that the tax
paid on gasoline is deemed to be an overpayment if the gasoline was sold to a state
for its exclusive use or to a nonprofit educational organization for its exclusive use.
Section 6402(a) generally allows credits or
refunds of overpayments to the person that
made the overpayment (that is, the person
that paid the tax to the government). Section 6416(a)(4) provides that the ultimate
vendor of the gasoline is treated as the person (and the only person) that paid the tax,
but only if such ultimate vendor is registered under § 4101. Thus, if the ultimate
vendor is not registered as described in this
section, then the person that actually paid
the tax to the government may make the
claim allowed by § 6416(b)(2). Guidance
for claims by the person that actually paid
the tax is set forth in §§ 48.6416(a)–3(b)
and 48.6416(b)(2)–3. Guidance for claims
by the person that is treated as having paid
the tax (that is, the registered ultimate ven-

299

dor) is set forth in this section. As noted
in section 11 of this notice, Notice 89–29,
1989–1 C.B. 669, which provided guidance under former § 6416(a)(4), is obsolete.
(ii) Sales on oil company credit cards.
Under the rules in effect prior to 2005, a
sale charged on an oil company credit card
issued to an exempt person is not considered a direct sale by the person actually
selling the gasoline to the ultimate purchaser (i.e., the person selling the gasoline
is not the ultimate vendor) if the person
actually selling the gasoline receives a reimbursement from the oil company based
on a price that excludes the tax. Treasury
and the Service are considering whether
this rule has continuing applicability under new § 6416(a)(4) but, while considering the issue, will continue generally to
apply the rule with respect to sales before March 1, 2005. Therefore, in the
case of a sale of gasoline before March 1,
2005, on an oil company credit card issued to a state or nonprofit educational organization, the person that actually paid
the tax is treated as the only person eligible to make the claim under §§ 6402
and 6416. As noted in paragraph (a)(1)(i)
of this section, these claims must be in
accordance with §§ 48.6416(a)–3(b) and
48.6416(b)(2)–3. If Treasury and the Service determine that the oil company credit
card rule does not have continued application after February 28, 2005, commentators have suggested that persons paying
the tax on gasoline (position holders) will
find it difficult to determine whether they
or the ultimate vendors of the gasoline are
eligible for refunds. This, in turn, could re-

2005–2 I.R.B.

sult in multiple refund claims with respect
to the same transaction. Congress may
wish to address this issue prior to March
1, 2005, and Treasury and the Service will
assist Congress in designing an administrable alternative.
(2) Claims by the ultimate purchaser. A
claim for a credit or refund under § 6416
by the person that paid the tax (or that is
treated as having paid the tax) is an alternative to a claim for an income tax credit
or payment under § 6421(c) by the ultimate
purchaser (that is, the state or nonprofit educational organization). For any particular
transaction, a claim may not be made under
§ 6421(c) if the tax is credited or refunded
under § 6416 to either the ultimate vendor
or the person that actually paid the tax.
(b) Definitions.
Nonprofit educational organization
has the meaning given to the term in
§ 4221(d)(5).
Registered ultimate vendor is a person
that sells gasoline to a state for its exclusive use or to a nonprofit educational organization for its exclusive use and is registered as an ultimate vendor under § 4101.
State has the meaning given to the term
by § 48.4081–1(b).
(c) Conditions to allowance of a credit
or refund. A claim for credit or refund of
an overpayment of tax is allowable under
§ 6416(b)(2)(C) or (D) and § 6416(a)(4)
(relating to refunds of gasoline tax to registered ultimate vendors) if—

(1) The claimant sold the gasoline to a
state for its exclusive use or to a nonprofit
educational organization for its exclusive
use;
(2) The claimant is a registered ultimate
vendor; and
(3) The claim contains all of the information required in paragraph (e).
(d) Form of claim—(1) In general. A
claim under § 6416(b)(2)(C) or (D) and
§ 6416(a)(4) is made—
(i) In the case of a claim for a refund,
on Form 8849, Claim for Refund of Excise
Taxes; and
(ii) In the case of a claimant reporting
liability on Form 720, as a claim on Form
720 for an excise tax credit.
(2) Electronic claim certification to the
Secretary. Section 6416(a)(4)(B) provides
that electronic claims for refund under
§ 6416(a)(4) will be paid with interest if
the claim is not paid within 20 days of the
date it is filed and the claimant certifies
that all ultimate purchasers are certified
and entitled to a refund. This notice does
not provide guidance on these certification procedures. These procedures and the
procedures for filing an electronic claim
will be prescribed in subsequent guidance.
(e) Content of claim. Each claim under § 6416(b)(2)(C) or (D) or § 6416(a)(4)
for a credit or payment must contain the
following information with respect to the
gasoline covered by the claim:
(1) The total number of gallons.

(2) The claimant’s registration number.
(3) A statement that the claimant—
(i) Has not included the amount of the
tax in its sales price of the gasoline and
has not collected the amount of tax from
its buyer;
(ii) Has repaid the amount of the tax to
the ultimate purchaser of the fuel; or
(iii) Has obtained the written consent of
its buyer to allowance of the claim.
(4) A statement that the claimant has in
its possession an unexpired certificate described in paragraph (f) of this section and
has no reason to believe any information in
the certificate is false.
(f) Certificate—(1) In general. The certificate to be provided to the ultimate vendor consists of a statement that is signed
under penalties of perjury by a person with
authority to bind the buyer, is in substantially the same form as the model certificate in paragraph (f)(2) of this section, and
contains all of the information necessary to
complete such model certificate. A new
certificate must be given if any information in the current certificate changes. The
certificate may be included as part of any
business records normally used to document a sale. The certificate expires on the
earlier of the following dates:
(i) The date one year after the effective
date of the certificate.
(ii) The date a new certificate is provided.
(2) Model certificate.

CERTIFICATE FOR STATE USE OR NONPROFIT EDUCATIONAL
ORGANIZATION USE
(To support ultimate vendor’s claim for a credit or refund under § 6416(a)(4) of the Internal Revenue Code.)

Name, address, and employer identification number of ultimate vendor
The undersigned ultimate purchaser (“Buyer”) hereby certifies the following under the penalties of perjury:
Buyer will use the gasoline to which this certificate relates (check one):
For the exclusive use of a state; or
For the exclusive use of a nonprofit educational organization.
This certificate applies to the following (complete as applicable):

2005–2 I.R.B.

300

January 10, 2005

This is a single purchase certificate:
1.

Invoice or delivery ticket number

2.

Number of gallons

This is a certificate covering all purchases under a specified account or order number:
1. Effective date
2. Expiration date

(period not to exceed 1 year after the effective date)

3. Buyer account number
Buyer will provide a new certificate to the vendor if any information in this certificate changes.
Buyer understands that by signing this certificate, Buyer gives up its right to claim a credit or payment for the gasoline to
which this certificate relates.
Buyer acknowledges that it has not and will not claim any credit or payment for the gasoline to which this certificate relates.
Buyer understands that the fraudulent use of this certificate may subject Buyer and all parties making such fraudulent use of
this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
Printed or typed name of person signing
Title of person signing
Name of Buyer
Employer identification number
Address of Buyer
Signature and date signed
(g) Registration—(1) In general. Application for registration as a registered ultimate vendor of gasoline is made on Form
637, Application for Registration (For Certain Excise Tax Activities), in accordance
with the instructions for that form. A person that is registered under § 4101 under
Activity Letter “UV” or “UP” (Ultimate
vendor that sells kerosene from a blocked
pump) is treated as registered for purposes
of claims under this section and will not
have to be reregistered unless notified to
do so by the Service.
(2) Requirements. The Service will register an applicant as an ultimate vendor of
gasoline only if the Service—
(i) Determines that the applicant is, in
the course of its trade or business, regularly
engaged as a seller of gasoline to states or
nonprofit educational organizations, or is
likely to become so engaged within a reasonable time after being registered under
§ 4101; and

January 10, 2005

(ii) Is satisfied with the filing, deposit, payment, reporting, and claim history for all federal taxes of the applicant
and any related person (as defined in
§ 48.4101–1(b)(5)).
Section 8. TWO-PARTY EXCHANGES
Section 4105(a) provides that in a twoparty exchange, as defined in § 4105(b),
the delivering person is not liable for the
tax imposed on the removal of taxable fuel
from the terminal at the terminal rack. Under this notice, in a two-party exchange
the receiving person is liable for the tax
imposed on the removal of taxable fuel
from the terminal at the terminal rack. For
purposes of § 48.4081–2(c)(2) (relating to
the joint and several liability of a terminal operator), the “position holder” will include the receiving person in a two-party
exchange. Also, a delivering person may
treat a receiving person as a taxable fuel
registrant for purposes of § 4105(b) if, at

301

the time of the exchange, the delivering
person has an unexpired notification certificate (described in § 48.4081–5) from
the receiving person and has no reason to
believe any information in the certificate is
false.
Section 9. GASOLINE BLENDS,
TRANSMIX, DIESEL FUEL
BLENDSTOCKS
(a) Gasoline blends. Section 4083(a)
(2) defines gasoline as including
gasoline blends other than qualified
methanol or ethanol fuel (as defined
in § 4041(b)(2)(B)), partially exempt
methanol or ethanol fuel (as defined in
§ 4041(m)(2)) or a denatured alcohol.
Thus, for example, gasoline includes any
gasoline/ethanol blend unless at least 85
percent of the blend consists of alcohol
made from coal, at least 85 percent of the
blend consists of alcohol made from nat-

2005–2 I.R.B.

ural gas, or the blend consists of alcohol
with gasoline added solely as a denaturant.
(b) Transmix. Section 4083(a)(3)(A)(ii)
defines diesel fuel as including any transmix as defined in § 4083(a)(3)(B). Effective January 1, 2005, § 48.4081–1(c)(3)(i)
will be amended to remove transmix containing gasoline from the definition of a
gasoline blendstock.
(c) Diesel fuel blendstocks. Section
4083(a)(3)(A)(iii) defines diesel fuel as including diesel fuel blendstocks identified
by the Secretary. This notice does not
identify any diesel fuel blendstocks.
Section 10. REQUEST FOR
COMMENTS
Treasury and the Service invite comments from the public on any issue that
should be addressed in regulations issued
under the excise tax provisions identified
in this notice and other excise tax provisions of the Act. Treasury and the Service are particularly interested in receiving
comments on the following matters:
1. Concerning the credit or payment
related to the taxes on fuel used in mobile machinery (§ 851 of the Act, § 6421
of the Code), the records and documentation required to substantiate that the vehicle was used on the public highways less
than 7,500 miles during the taxpayer’s taxable year.
2. Concerning whether a terminal is
located within a secured area of an airport
(§ 853 of the Act, § 4081 of the Code),
the standards to be used in making such
determination.
3. Concerning the requirement for
display of registration on certain vessels
(§ 861 of the Act, § 4101 of the Code), the
type of identification device that should
be used.
4. Concerning the definition of diesel
fuel (§ 870 of the Act, § 4083 of the Code),
the diesel fuel blendstocks that should be
classified as diesel fuel.
All materials submitted will be available for public inspection and copying.
Send submissions to: CC:PA:LPD:PR
(REG–153838–04), room 5203, Internal Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC 20044.
Submissions may be hand-delivered between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–153838–04),
Courier’s Desk, Internal Revenue Service,

2005–2 I.R.B.

1111 Constitution Avenue, N.W., Washington, DC, or sent electronically, via the
IRS Internet site at www.irs.gov/regs or
via the Federal eRulemaking Portal at
www.regulations.gov (indicate IRS and
REG–153838–04).
Comments should be submitted by February 14, 2005.
Section 11. EFFECT ON OTHER
DOCUMENTS
The following notices are obsolete:
Notice 88–30, 1988–1 C.B. 497.
Notice 88–132, 1988–2 C.B. 552.
Notice 89–29, 1989–1 C.B. 669.
Notice 89–38, 1989–1 C.B. 679.
Section 12. EFFECTIVE DATE
This notice is effective January 1, 2005.
Section 13. PAPERWORK REDUCTION
ACT
The collection of information contained
in this notice has been reviewed and approved by the office of Management and
Budget (OMB) in accordance with the Paperwork Reduction Act (44 U.S.C. § 3507)
under control number 1545–1915.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in the following sections.
Section 2(h)(2) describes the certificate
that the producer of biodiesel must give to
the claimant of a biodiesel mixture credit
or biodiesel credit.
Section 4(d)(2) describes the recordkeeping requirements of certain terminal
operators.
Section 4(g) describes the certificate
that the buyer of aviation-grade kerosene
must give to the seller in order to support
removals of aviation-grade kerosene directly into the fuel tank of an aircraft in
commercial aviation pursuant to § 4081
or to support a tax rate of zero pursuant to
§§ 4041 and 4082.
Section 4(h)(6) describes the waiver
that the ultimate purchaser of aviation-grade kerosene must give to the
registered ultimate vendor in order to
waive its right to an income tax credit

302

or payment and assign such rights to the
registered ultimate vendor.
Section 5(f) describes the waiver that
the ultimate purchaser of diesel fuel or
kerosene for use in an intercity bus must
give to the registered ultimate vendor in
order to waive its rights to an income tax
credit or payment and assign such rights to
the registered ultimate vendor.
Section 7(f) describes the certificate
that the ultimate purchaser of gasoline
for the exclusive use of the state or the
exclusive use of a nonprofit educational
organization must give to the registered
ultimate vendor in order for the registered
ultimate vendor to be treated as the taxpayer.
Section 8 describes the certificate that
the delivering person may receive in order
to treat the receiving person as a taxable
fuel registrant.
The collections of information are required to obtain a tax benefit. This information will be used to substantiate claims
for the tax benefits. The likely respondents
are businesses, not-for-profit institutions,
farmers, the federal government, and state,
local or tribal governments.
The estimated total annual reporting
and or recordkeeping burden is 34,390
hours.
The estimated average annual burden
per respondent and/or recordkeeper is approximately .25 hours.
The estimated number of respondents
and recordkeepers is 20,263.
Books or records relating to a collection
of information must be retained as long
as their contents may become material to
the administration of the internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. § 6103.
Section 14. DRAFTING INFORMATION
The principal authors of this notice
are Susan Athy and Deborah Karet of
the Office of the Associate Chief Counsel (Passthroughs and Special Industries).
For further information regarding this
notice, please contact Ms. Karet (concerning off-highway vehicles, aviation-grade
kerosene, display of registration on certain vessels, and two-party exchanges) or
Ms. Athy (concerning all other issues) at
(202) 622–3130 (not a toll-free call).

January 10, 2005

26 CFR 601.204: Changes in accounting periods
and in methods of accounting.
(Also Part 1, §§ 162, 263, 446, 461, 481;
1.167(a)–3(b), 1.263(a)–4, 1.263(a)–5, 1.446–1,
1.461–4, 1.461–5, 1.481–1.)

Rev. Proc. 2005–9
SECTION 1. PURPOSE
This revenue procedure provides the
exclusive administrative procedures under
which a taxpayer described in section 4
of this revenue procedure may obtain automatic consent for the taxpayer’s second
taxable year ending on or after December 31, 2003, to change to a method of
accounting provided in §§ 1.263(a)–4,
1.263(a)–5, and 1.167(a)–3(b) of the Income Tax Regulations (the “final regulations”).
SECTION 2. BACKGROUND
.01 On January 5, 2004, the Internal
Revenue Service and Treasury Department
published final regulations in the Federal
Register (T.D. 9107, 2004–7 I.R.B. 447
[69 FR 436]). Section 1.263(a)–4 prescribes the extent to which taxpayers must
capitalize amounts paid or incurred to acquire or create (or to facilitate the acquisition or creation of) intangibles. Section
1.263(a)–5 prescribes the extent to which
taxpayers must capitalize amounts paid or
incurred to facilitate an acquisition of a
trade or business, a change in the capital
structure of a business entity, and certain
other transactions. Section 1.167(a)–3(b)
provides a safe harbor useful life for certain intangible assets. The final regulations under §§ 1.263(a)–4 and 1.263(a)–5
are effective for amounts paid or incurred
on or after December 31, 2003. The final
regulations under § 1.167(a)–3(b) are effective for intangible assets created on or
after December 31, 2003.
.02 Sections 1.263(a)–4(p) and
1.263(a)–5(n) provide that a taxpayer
seeking to change to a method of accounting provided in the final regulations must secure the consent of the
Commissioner in accordance with the
requirements of § 1.446–1(e). In addition, §§ 1.263(a)–4(p) and 1.263(a)–5(n)
provide that, for the taxpayer’s first taxable year ending on or after December
31, 2003, the taxpayer is granted the con-

January 10, 2005

sent of the Commissioner to change to a
method of accounting provided in the final
regulations, provided the taxpayer follows
the administrative procedures issued under § 1.446–1(e)(3)(ii) for obtaining the
Commissioner’s automatic consent to a
change in accounting method (for further
guidance, for example, see Rev. Proc.
2002–9, 2002–1 C.B. 327, as modified
and clarified by Announcement 2002–17,
2002–1 C.B. 561, modified and amplified
by Rev. Proc. 2002–19, 2002–1 C.B.
696, and amplified, clarified, and modified by Rev. Proc. 2002–54, 2002–2 C.B.
432). The final regulations further provide
that any applicable § 481(a) adjustment
for a change to a method of accounting
provided in the final regulations for a
taxpayer’s first taxable year ending on or
after December 31, 2003, is determined by
taking into account only amounts paid or
incurred in taxable years ending on or after
January 24, 2002. The preamble to the final regulations states that the Service may
issue additional guidance for utilizing the
automatic consent procedures to change
to a method of accounting provided in the
regulations.
.03 Section 1.446–1(e)(3)(ii) authorizes
the Commissioner to prescribe administrative procedures setting forth the limitations, terms, and conditions deemed necessary to permit a taxpayer to obtain consent
to change a method of accounting.
.04 Rev. Proc. 2002–9 provides procedures by which a taxpayer may obtain
automatic consent to change to a method
of accounting described in the Appendix of
Rev. Proc. 2002–9.
.05 Rev. Rul. 90–38, 1990–1 C.B.
57, provides that, if a taxpayer uses an erroneous method of accounting for two or
more consecutive taxable years, the taxpayer has adopted a method of accounting.
The ruling further provides that a taxpayer
may not, without the Commissioner’s consent, retroactively change from an erroneous to a permissible method of accounting by filing an amended return.
.06 Rev. Proc. 2004–23, 2004–16
I.R.B. 785, provides the exclusive administrative procedures under which a
taxpayer may obtain automatic consent
for the taxpayer’s first taxable year ending
on or after December 31, 2003, to change
to a method of accounting provided in the
final regulations and, if desired, to change
to a method of utilizing the 31/2 month

303

rule authorized by § 1.461–4(d)(6)(ii) or
the recurring item exception authorized by
§ 1.461–5 in conjunction with a change
to a method of accounting provided in
the final regulations. Under Rev. Proc.
2004–23, a term and condition of the
Commissioner’s consent with respect to
a change to a method of accounting provided in the final regulations is that any
applicable § 481(a) adjustment take into
account only amounts paid or incurred in
taxable years ending on or after January
24, 2002. In addition, Rev. Proc. 2004–23
states that for taxable years subsequent
to the first taxable year ending on or after December 31, 2003, a similar term
and condition will apply. (For further
background, see Section 2 of Rev. Proc.
2004–23.)
.07 This revenue procedure applies only
for a taxpayer’s second taxable year ending on or after December 31, 2003. As in
Rev. Proc. 2004–23, this revenue procedure grants taxpayers the Commissioner’s
consent to change to a method of utilizing
the 31/2 month rule or the recurring item
exception only for the item for which the
taxpayer is simultaneously changing to a
method of accounting provided in the final
regulations. In addition, a term and condition of obtaining the Commissioner’s consent, whether or not automatic, is that any
applicable § 481(a) adjustment take into
account only amounts paid or incurred in
taxable years ending on or after January
24, 2002. The Service intends to issue future guidance for changes in methods of
accounting made for subsequent taxable
years, including automatic consent procedures for some or all methods of accounting provided in the final regulations. Such
guidance will include as a term and condition of obtaining the Commissioner’s consent, whether or not automatic, that any applicable § 481(a) adjustment take into account only amounts paid or incurred in taxable years ending on or after January 24,
2002.
.08 This revenue procedure constitutes
the exclusive guidance for utilizing the automatic consent procedures to change to a
method of accounting provided in the final regulations for a taxpayer’s second taxable year ending on or after December 31,
2003. For any change in method of accounting to which this revenue procedure
applies, a taxpayer may not file an application for a change in method of accounting

2005–2 I.R.B.