Td 8659

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 6011.—General Requirement
of Return, Statement, or List
26 CFR 40.6011(a)–1: Returns

T.D. 8659
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 40, 42, 48, and 602
Gasoline and Diesel Fuel Excise Tax;
Registration Requirements
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains
final regulations relating to the taxes on
gasoline and diesel fuel. This document
also removes obsolete excise tax regulations. The regulations reflect and
implement certain changes made by the
Omnibus Budget Reconciliation Act of
1990 and the Omnibus Budget Reconciliation Act of 1993 (the 1993 Act).
The regulations affect certain blenders,
enterers, industrial users, refiners, terminal operators, and throughputters.
The regulations also affect certain
persons that sell, buy, or use diesel fuel
for a nontaxable use.
EFFECTIVE DATE: These regulations
are effective March 14, 1996.
FOR FURTHER INFORMATION
CONTACT: Frank Boland (202)
622-3130 (not a toll-free call).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collections of information contained in these final regulations have
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 1545–1418. Responses
to this collection of information are
mandatory and are required to obtain
certain credits or payments.
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 control number.
The estimated average annual reporting burden per respondent is .1 hour.
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, PC:FP,
Washington, DC 20224, and to 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 and 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
The diesel fuel regulations. Before
1994, the diesel fuel tax applied to
sales of diesel fuel by importers or
producers (including registered wholesale distributors). Because of concerns
that this system fostered considerable
tax evasion, Congress made significant
changes to the tax in the 1993 Act.
Effective January 1, 1994, tax is
imposed on diesel fuel when it is
removed at the terminal rack, and
diesel fuel may be removed tax free
only if the fuel contains a prescribed
type and amount of dye. These changes
made the taxing point readily identifiable, required untaxed fuel to be physically identified (that is, dyed), and
reduced the number of taxpayers.
Temporary regulations (TD 8496
[1993–2 C.B. 281]) relating to these
changes (the diesel fuel regulations)
were published in the Federal Register
on November 30, 1993 (58 FR 63069),
along with a notice of proposed
rulemaking (PS–52–93 [1993–2 C.B.
639]) cross-referencing the temporary
regulations (58 FR 63131). Amendments to these temporary regulations
(TD 8512 [1994–1 C.B. 273]) relating
to dye color and concentration were
published in the Federal Register on
December 27, 1993 (58 FR 68304),
along with a notice of proposed
rulemaking (PS–76–93 [1994–1 C.B.

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832]) cross-referencing those amendments (58 FR 68338). Written comments responding to the proposed
diesel fuel regulations were received
and a public hearing was held on
March 22, 1994. Final regulations (TD
8550 [1994–2 C.B. 243]) relating to
dye color and concentration were published in the Federal Register on June
30, 1994 (59 FR 33656).
The conforming regulations. On October 19, 1994, the IRS published in
the Federal Register (59 FR 52735)
proposed regulations (PS–66–93 [1994–
2 C.B. 907]) that generally consolidate
the rules relating to the gasoline tax
and the diesel fuel tax into a single set
of rules applicable to both fuels (the
conforming regulations). The conforming regulations also proposed rules
relating to gasohol and compressed
natural gas.
Written comments regarding the proposed conforming regulations were received and a public hearing was held
on January 11, 1995.
Final regulations (TD 8609 [1995–37
I.R.B. 5]) relating to gasohol and
compressed natural gas were published
in the Federal Register on August 7,
1995 (60 FR 40079).
The final regulations. After consideration of written comments and comments made at the public hearings, the
proposed diesel fuel regulations and the
proposed conforming regulations are
adopted as revised by this Treasury
decision. Comments and revisions are
discussed below.
Significant Issues Raised in
Comments and Changes Made in the
Final Regulations
Treatment of kerosene
The temporary diesel fuel regulations
provide that kerosene would not be
treated as diesel fuel before July 1,
1994, and invited comments on the
treatment of kerosene after June 30,
1994. Notice 94–72 (1994–2 C.B. 553)
informed taxpayers that the IRS was
reviewing this issue and would not
change the treatment of kerosene until
the issuance of further guidance. The
IRS is continuing its review of this
issue. Accordingly, the final regulations
do not treat kerosene as diesel fuel.
Because kerosene is not treated as
diesel fuel, a person that adds kerosene

to diesel fuel outside of the bulk
transfer/terminal system generally must
pay tax on the added kerosene and
must be registered by the IRS.

readily determine whether the fuel may
be used for a taxable use.

Removal from certain refineries

A tax is imposed on the delivery of
dyed diesel fuel into the fuel supply
tank of a diesel-powered train. Under
the temporary diesel fuel regulations,
the operator of the train into which
dyed fuel is delivered is liable for the
tax.
Several commentators noted that a
prevalent practice in the railroad industry is for one railroad’s locomotives to
be used to pull freight on another’s
track and to be fueled by the railroad
that owns the track. In these situations,
the identity of the operator is unclear.
In response to these comments, the
final regulations provide that the person
that delivers dyed diesel fuel into the
fuel supply tank of a train is liable
for the tax under certain prescribed
conditions.

The temporary diesel fuel regulations
provide that tax is not imposed on the
removal of undyed diesel fuel from an
approved refinery for delivery to an
approved terminal if the fuel is removed by rail car, the refinery and the
terminal are operated by the same
taxable fuel registrant, and the refinery
is not served by pipeline or vessel.
One commentator noted that one of
its refineries is not serviced by
pipeline, vessel, or rail. In response to
this comment, the final regulations
expand this rule so that diesel fuel also
may be removed tax free from an approved refinery that is not served by
pipeline, vessel, or rail if the removal
is by a trailer or semi-trailer and additional prescribed conditions are met.

Back-up tax; trains

Credits and payments
Notice relating to sales and removals
of dyed diesel fuel
The temporary diesel fuel regulations
provide that terminal operators and
others who sell dyed diesel fuel are
responsible for informing their
customers that the dyed fuel cannot be
used for a taxable purpose and that a
penalty may be imposed for taxable use
(the notice requirement). Any person
that fails to comply with the notice
requirement is, for purposes of the
penalty for misuse of dyed fuel imposed by section 6714, presumed to
know that the dyed diesel fuel will not
be used for a nontaxable use.
Under the final regulations, only
terminal operators and certain retail
sellers will be subject to the notice
requirement. A terminal operator must
comply with the notice requirement as
one of the terms and conditions of its
registration.
Visual inspection devices
The temporary diesel fuel regulations
do not require the use of visual inspection devices and the final regulations continue this policy. The IRS will
continue to evaluate the need for
regulations addressing this issue. However, the use of visual inspection
devices is encouraged so that the
buyers and sellers of diesel fuel may

Information to be submitted with
claims. If undyed diesel fuel is used in
a nontaxable use, a credit or payment is
allowable to either (1) the ultimate
purchaser or (2) in the case of diesel
fuel used on a farm for farming
purposes or by a State or local
government, the registered ultimate
vendor of the fuel. The temporary
diesel fuel regulations prescribe the
information that must be submitted to
the IRS to support claims for these
credits or payments.
Several commentators asserted that
the information requirements in the
diesel fuel temporary regulations are
too burdensome. In response to these
comments, the final regulations reduce
the paperwork requirements for claimants by eliminating certain items from
the list of required submissions. However, the paperwork requirements may
be changed in the future if the IRS
determines that additional information
is necessary for effective enforcement
of the tax.
Notice 94–61. Notice 94–61 (1994–1
C.B. 371) announced that the temporary diesel fuel regulations would be
revised to clarify that (1) a registered
ultimate vendor is the only person allowed a credit or payment with respect
to diesel fuel used on a farm for
farming purposes or by State or local
governments, and (2) a credit or

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payment generally is allowed to a
registered ultimate vendor who sells
undyed diesel fuel to a custom harvester for use on a farm for farming purposes. The final regulations contain
these revisions.
Undyed diesel fuel mixed with dyed
diesel fuel. One condition for the
allowance of a credit or payment under
section 6427 is that tax must have been
imposed on the diesel fuel to which the
claim relates. Because untaxed diesel
fuel is dyed, the temporary diesel fuel
regulations require each claim to be
accompanied by a statement that the
diesel fuel covered by a claim did not
contain visible evidence of dye.
On rare occasions, however, an
amount of taxed diesel fuel may
contain visible evidence of dye. This
may occur, for example, when dyed
diesel fuel and undyed diesel fuel are
mixed together by a fuel marketer or
user who accidentally delivers one type
of fuel into a storage tank that already
contains the other type of fuel.
The final regulations provide that
each claim must be accompanied by a
statement that tax has been imposed on
the diesel fuel covered by a claim.
Generally, this requirement will be met
by a claimant’s statement that the
diesel fuel did not contain visible
evidence of dye. However, for claims
involving taxed fuel that has been
mixed with dyed fuel, the claimant
(that is, the ultimate purchaser or the
registered ultimate vendor) cannot
make such a statement. For these
claims, the claimant must submit other
evidence showing that the diesel fuel
covered by the claim has been subject
to tax. This evidence might include a
statement from the person that produced the undyed/dyed fuel mixture
explaining how the mixing occurred or
a statement from the claimant (if the
claimant did not produce the mixture)
that explains when and from whom the
claimant acquired the mixture. As with
all claims, these claims are subject to
review by the IRS before they are
allowed.
Section 6714 penalty
Section 6714(a)(3) provides that if
any person willfully alters, or attempts
to alter, the strength or composition of
any dye or marking done pursuant to
section 4082 in any dyed fuel, then
such person shall pay a penalty in
addition to the tax (if any).

Notice 94–21 (1994–1 C.B. 339) describes three situations in which the
section 6714(a)(3) penalty does not
apply. The final regulations incorporate
the substance of the Notice. In addition, the final regulations provide that
the section 6714(a)(3) penalty does not
apply if dyed diesel fuel is blended
with undyed diesel fuel and the blending occurs as part of an exempt or
partially exempt (that is, bus or train)
use. Thus, for example, the section
6714(a)(3) penalty does not apply if
dyed and undyed diesel fuel are
blended together in the fuel supply tank
of a nonhighway vehicle such as a
bulldozer or farm tractor.
Dye injection systems and markers
The final regulations do not require
the use of dye injection systems or
markers. These topics will be addressed
in a future notice of proposed rulemaking.
Effect on other documents
The following publications are obsolete as of March 14, 1996:
Rev. Rul. 72–213, 1972–1 C.B. 328.
Rev. Proc. 73–21, 1973–2 C.B. 471.
Notice 88–26, 1988–1 C.B. 495.
Notice 89–17, 1989–1 C.B. 647.
Notice 94–18, 1994–1 C.B. 338.
Notice 94–21, 1994–1 C.B. 339.
Notice 94–61, 1994–1 C.B. 371.
Notice 94–72, 1994–2 C.B. 553.
Special Analyses

Drafting Information
The principal author of these regulations is Frank Boland, Office of Assistant Chief Counsel (Passthroughs and
Special Industries). However, other
personnel from the IRS and Treasury
Department participated in their development.
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Adoption of Amendments to the
Regulations
Accordingly, under the authority of
26 U.S.C. 7805, chapter 1 is amended
as follows:
PART 40—EXCISE TAX
PROCEDURAL REGULATIONS
Paragraph 1. The authority citation
for part 40 is amended by removing the
entry for sections 40.6011(a)–1,
40.6011(a)–2, and 40.6011(a)–3T and
adding entries in numerical order to
read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 40.6011(a)–1 also issued under 26 U.S.C. 6011(a).
Section 40.6011(a)–2 also issued under 26 U.S.C. 6011(a). * * *
Par. 2. Section 40.6011(a)–1(b) is
amended by:
1. Redesignating the text of paragraph (b) following the heading as
paragraph (b)(1) and adding a heading
for newly designated paragraph (b)(1).
2. Adding paragraph (b)(2).
The additions read as follows:
§40.6011(a)–1 Returns.
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It has been determined that this
Treasury decision is not a significant
regulatory action as defined in EO
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) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not
apply to these regulations, and, therefore, a Regulatory Flexibility Analysis
is not required. Pursuant to section
7805(f) of the Internal Revenue Code,
the notices of proposed rulemaking
preceding these regulations were submitted to the Small Business Administration for comment on their impact
on small business.

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(b) * * * (1) In general. * * *
(2) Certain persons liable for tax on
taxable fuel. Effective January 1, 1994,
the district director may require a
person to make a return of tax for a
monthly or semimonthly period in the
manner prescribed in paragraph (b)(1)
of this section if the person—
(i) Is a bonded registrant (as defined
in §48.4101–1(b) of this chapter) at any
time during the period;
(ii) Has been registered under section 4101 for less than one year at the
beginning of the period;
(iii) Meets the acceptable risk test of
§48.4101–1(f)(3) of this chapter by
reason of §48.4101–1(f)(3)(i)(B) of this
chapter at any time during the period;

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(iv) Has failed to comply with the
applicable provisions of §48.4101–1(h)
of this chapter (relating to the terms
and conditions of registration);
(v) Is liable for tax under §48.4082–
4(a) of this chapter (relating to the
back-up tax on diesel fuel) at any time
during the period; or
(vi) Is liable for tax under section
4081 (relating to the tax on taxable
fuel) at any time during the period and
is not a taxable fuel registrant at that
time.
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§40.6011(a)–3T [Removed]
Par. 3. Section 40.6011(a)–3T is
removed.
PART 42—[REMOVED]
Par. 4. Part 42 is removed.
PART 48—MANUFACTURERS
AND RETAILERS EXCISE TAXES
Par. 5. The authority citation for part
48 is amended by removing the entries
for sections 48.4081–4, 48.4082–1 and
48.4082–2T, 48.4101–3T, 48.4101–4T,
48.6427–8T and 48.6427–9T, and
adding entries in numerical order to
read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 48.4081–4 also issued under
26 U.S.C. 4083(a)(2). * * *
Section 48.4082–1 also issued under
26 U.S.C. 4082.
Section 48.4082–2 also issued under
26 U.S.C. 4082.
Section 48.4101–1 also issued under
26 U.S.C. 4101(a).
Section 48.4101–2 also issued under
26 U.S.C. 4101(d). * * *
Section 48.6427–8 also issued under
26 U.S.C. 6427(n).
Section 48.6427–9 also issued under
26 U.S.C. 6427(n).
Par. 6. Section 48.0–1 is amended by
removing from the fourth sentence the
language ‘‘gasoline, diesel and aviation
fuel,’’ and adding ‘‘taxable fuel, aviation fuel,’’ in its place.
§48.4041–0T [Removed]
Par. 7.
removed.

Section

48.4041–0T

is

Par. 8. Section 48.4041–0 is added to
read as follows:
§48.4041–0 Applicability of
regulations relating to diesel fuel
after December 31, 1993.
Sections 48.4041–3 through
48.4041–17 do not apply to sales or
uses of diesel fuel after December 31,
1993. For rules relating to the diesel
fuel tax imposed by section 4041 after
that date, see §48.4082–4.
§§48.4041–1 and 48.4041–2
[Removed]
Par. 9. Sections 48.4041–1 and
48.4041–2 are removed.

(b) Amount of tax. For the amount of
tax, see section 4042(b).
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(e) Liquid fuel. For purposes of the
tax imposed under this section, liquid
fuel means any liquid fuel including
gasoline, diesel fuel, special motor fuel,
or Bunker C residual fuel oil.
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(g) * * *
(25) Tennessee-Tombigbee Waterway: From its confluence with the
Tennessee River to the Warrior River
at Demopolis, Alabama.
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Par. 15. The heading for subpart H is
revised to read as follows:

§48.4041–2T [Removed]
Par. 10. Section 48.4041–2T is
removed.

Subpart H—Motor Vehicles, Tires,
Tubes, Tread Rubber, and Taxable
Fuel

§48.4041–21 [Amended]
§§48.4041–15 through 48.4041–21
[Transferred]
Par. 11. Sections 48.4041–15 through
48.4041–21 are transferred from subpart G to subpart F.
Par. 12. In the first sentence of
§48.4041–21(c)(1), the language
‘‘§48.4082–4T(c)(1) through (5)(A) or
(c)(6) through (11)’’ is removed and
‘‘§48.4082–4(c)(1) through (c)(4)(i) or
(c)(5) through (c)(10)’’ is added in its
place.
Par. 13. The heading for subpart G is
revised to read as follows:
Subpart G—Fuel Used on Inland
Waterways
Par. 14. Section 48.4042–1 is
amended as follows:
1. Paragraphs (b) and (e) are revised.
2. In the introductory text of paragraph (f)(1), the language ‘‘(26)’’ is
removed and ‘‘(27)’’ is added in its
place.
3. Paragraphs (g)(25) and (g)(26) are
redesignated as paragraphs (g)(26) and
(g)(27), respectively, and a new paragraph (g)(25) is added.
The revisions and additions read as
follows:
§48.4042–1 Tax on fuel used in
commercial waterway transportation.
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Par. 16. Section 48.4064–1(e)(2) is
amended by removing the language
‘‘Form 843’’ and adding ‘‘Form 8849
(or on such other form as the Commissioner may designate)’’ in its place.
Par. 17. The undesignated center
heading preceding §48.4081–1 is revised to read as follows:
TAXABLE FUEL
Par. 18. Sections 48.4081–1,
48.4081–2 and 48.4081–3 are revised
to read as follows:
§48.4081–1 Taxable fuel; definitions.
(a) Overview. This section provides
definitions for purposes of the tax on
taxable fuel imposed by section 4081.
(b) Definitions.
Approved terminal or refinery means
a terminal or refinery that is operated,
respectively, by a taxable fuel registrant that is a terminal operator, or by a
taxable fuel registrant that is a refiner.
Blender means any person that produces blended taxable fuel.
Bulk transfer means any transfer of
taxable fuel by pipeline or vessel.
Bulk transfer/terminal system means
the taxable fuel distribution system
consisting of refineries, pipelines, vessels, and terminals. Thus, taxable fuel
in a refinery, pipeline, vessel, or
terminal is in the bulk transfer/terminal

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system. Taxable fuel in the fuel supply
tank of any engine, or in any tank car,
rail car, trailer, truck, or other equipment suitable for ground transportation
is not in the bulk transfer/terminal
system.
Bus means automobile bus.
Diesel-powered boat means any waterborne vessel of any size or configuration that is propelled, in whole or in
part, by a diesel-powered engine.
Diesel-powered bus means any bus
that is propelled by a diesel-powered
engine.
Diesel-powered highway vehicle
means a highway vehicle, as defined in
§48.4041–8(b), that is propelled by a
diesel-powered engine.
Diesel-powered train means any
diesel-powered equipment or machinery
that rides on rails. Thus, for example,
the term includes a locomotive, work
train, switching engine, and track maintenance machine.
Enterer generally means the importer
of record (under customs law) with
respect to the taxable fuel. However, if
the importer of record is acting as an
agent (for example, the importer of
record is a customs broker engaged by
the owner of the taxable fuel), the
person for whom the agent is acting is
the enterer. 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.
Entry of taxable fuel into the United
States occurs when—
(1) The taxable fuel is brought into
the United States and applicable
customs law requires that the taxable
fuel be entered into the United States
for consumption, use, or warehousing;
or
(2) The taxable fuel is brought into
the United States from Puerto Rico and
applicable customs law would require
that the taxable fuel be entered into the
United States for consumption, use, or
warehousing if the taxable fuel were
brought into the United States from
somewhere other than Puerto Rico.
Finished gasoline means all products
(including gasohol (as defined in
§48.4081–6(b)(2))) that are commonly
or commercially known or sold as
gasoline and are suitable for use as a
motor fuel, other than products that
have an ASTM octane number of less
than 75 as determined by the motor
method.

Gasoline means finished gasoline
and gasoline blendstocks.
Industrial user means any person
that receives gasoline blendstocks by
bulk transfer for its own use in the
manufacture of any product other than
finished gasoline.
Position holder means, with respect
to taxable fuel in a terminal, the person
that holds the inventory position in the
taxable fuel, as reflected on the records
of the terminal operator. A person
holds the inventory position in taxable
fuel when that person has a contractual
agreement with the terminal operator
for the use of storage facilities and
terminaling services at a terminal with
respect to the taxable fuel. The term
also includes a terminal operator that
owns taxable fuel in its terminal.
Rack means a mechanism for delivering taxable fuel from a refinery or
terminal into a truck, trailer, railroad
car, or other means of nonbulk transfer.
Refiner means any person that owns,
operates, or otherwise controls a
refinery.
Refinery means a facility used to
produce taxable fuel from crude oil,
unfinished oils, natural gas liquids, or
other hydrocarbons and from which
taxable fuel may be removed by pipeline, by vessel, or at a rack. However,
the term does not include a facility
where only blended fuel or gasohol (as
defined in §48.4081–6(b)(2)), and no
other type of taxable fuel, is produced.
For this purpose blended fuel is any
mixture that, if produced outside the
bulk transfer/terminal system, would be
blended taxable fuel.
Removal means any physical transfer
of taxable fuel, and any use of taxable
fuel other than as a material in the
production of taxable fuel or special
fuels (as defined in §48.4041–8(f)).
However, taxable fuel is not removed
when it evaporates or is otherwise lost
or destroyed.
Sale means—
(1) The transfer of title to, or substantial incidents of ownership in,
taxable fuel (other than taxable fuel in
a terminal) to the buyer for a consideration, which may consist of money,
services, or other property; or
(2) The transfer of the inventory
position in the taxable fuel in a
terminal if the transferee becomes the
position holder with respect to the
taxable fuel.
State includes any State, any political
subdivision of a State, the District of

Columbia, the American Red Cross,
and, subject to the limitations of
section 7871, any Indian tribal
government.
Taxable fuel means gasoline and
diesel fuel.
Taxable fuel registrant means an
enterer, industrial user, refiner, terminal
operator, or throughputter that is registered under section 4101.
Terminal means a taxable fuel storage and distribution facility that is
supplied by pipeline or vessel, and
from which taxable fuel may be removed at a rack. However, the term
does not include any facility at which
gasoline blendstocks are used in the
manufacture of products other than
finished gasoline and from which no
gasoline is removed.
Terminal operator means any person
that owns, operates, or otherwise controls a terminal.
Throughputter means any person
that—
(1) Owns taxable fuel within the
bulk transfer/terminal system (other
than in a terminal); or
(2) Is a position holder.
Vessel means a waterborne taxable
fuel transporting vessel.
(c) Blended taxable fuel, diesel fuel,
and gasoline blendstocks; definitions—
(1) Blended taxable fuel—(i) In general. Except as provided in paragraphs
(c)(1)(ii) and (c)(iii) of this section,
blended taxable fuel means any mixture
that is produced outside the bulk
transfer/terminal system and that consists of—
(A) Taxable fuel with respect to
which tax has been imposed under
section 4041(a)(1) or 4081(a); and
(B) Any other liquid on which tax
has not been imposed under section
4081.
(ii) Exclusion; minor blending. A
mixture described in paragraph (c)(1)(i)
of this section is not blended taxable
fuel if, during the calendar quarter in
which the blender removes or sells the
mixture, all such mixtures removed or
sold by the blender contain, in the
aggregate, less than 400 gallons of
liquid described in paragraph (c)(1)(i)(B) of this section.
(iii) Exclusion; gasohol. Blended
taxable fuel does not include any
gasohol (as defined in §48.4081–6(b)(2)) if, disregarding the alcohol, the
gasohol is not blended taxable fuel and
contains, in addition to permitted

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amounts of liquids described in paragraph (c)(1)(i)(B) of this section, only
gasoline with respect to which—
(A) Tax was imposed under section
4081(a) at a rate described in
§48.4081–6(e) (relating to the gasohol
production tax rate and the gasohol tax
rate); or
(B) A valid claim is made under
section 6427(f).
(2) Diesel fuel. (i) Effective April 1,
1996, diesel fuel means any liquid
(other than gasoline) that, without
further processing or blending, is suitable for use as a fuel in a dieselpowered highway vehicle, dieselpowered train, or diesel-powered boat.
However, diesel fuel does not include
kerosene, No. 5 and No. 6 fuel oils (as
described in ASTM Specification D
396, which may be obtained from the
American Society for Testing and
Materials, 100 Barr Harbor Drive, West
Conshohocken, PA 19428), or F–76
(Fuel Naval Distillate MIL–F–16884,
which may be obtained from Standardization Document Order Desk, Building
4, Section D, 700 Robbins Avenue,
Philadelphia, PA 19111).
(ii) Before April 1, 1996, diesel fuel
means any liquid (other than kerosene)
that is commonly or commercially
known or sold as a fuel that is suitable
for use in a diesel-powered highway
vehicle, diesel-powered train, or dieselpowered boat. A liquid meets this requirement if, without further processing
or blending, the liquid has practical and
commercial fitness for use in the
propulsion engine of the highway vehicle, train, or boat. A liquid may possess
this practical and commercial fitness
even though the specified use is not the
liquid’s predominant use. However, a
liquid does not possess this practical
and commercial fitness solely by reason of its possible or rare use as a fuel
in the propulsion engine of a highway
vehicle, train, or boat.
(iii) Cross reference. For the tax on
blended taxable fuel, see §48.4081–
3(g). For the back-up tax on certain
uses of liquids other than diesel fuel,
see §48.4082–4.
(3) Gasoline blendstocks—(i) In
general. Except as provided in paragraph (c)(3)(ii) of this section, gasoline
blendstocks means—
(A) Alkylate;
(B) Butane;
(C) Butene;
(D) Catalytically cracked gasoline;

(E) Coker gasoline;
(F) Ethyl tertiary butyl ether
(ETBE);
(G) Hexane;
(H) Hydrocrackate;
(I) Isomerate;
(J) Methyl tertiary butyl ether
(MTBE);
(K) Mixed xylene (not including any
separated isomer of xylene);
(L) Natural gasoline;
(M) Pentane;
(N) Pentane mixture;
(O) Polymer gasoline;
(P) Raffinate;
(Q) Reformate;
(R) Straight-run gasoline;
(S) Straight-run naphtha;
(T) Tertiary amyl methyl ether
(TAME);
(U) Tertiary butyl alcohol (gasoline
grade) (TBA);
(V) Thermally cracked gasoline;
(W) Toluene; and
(X) Transmix containing gasoline.
(ii) Exclusion. Gasoline blendstocks
does not include any product that cannot, without further processing, be used
in the production of finished gasoline.
For example, a mixed hydrocarbon
stream that is produced in a natural gas
processing plant is not a gasoline
blendstock if the stream cannot be used
to produce finished gasoline without
further processing.
(d) Effective date. This section is
effective January 1, 1994.
§48.4081–2 Taxable fuel; tax on
removal at a terminal rack.

(2) Joint and several liability of
terminal operator; unregistered position holder—(i) In general. The terminal operator is jointly and severally
liable for the tax imposed under
paragraph (b) of this section if—
(A) The position holder with respect
to the taxable fuel is a person other
than the terminal operator and is not a
taxable fuel registrant; and
(B) The terminal operator has not
met the conditions of paragraph
(c)(2)(ii) of this section.
(ii) Conditions for avoidance of liability. A terminal operator is not liable
for tax under this paragraph (c)(2) if, at
the time of the removal, the terminal
operator—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification
certificate (as described in §48.4081–5)
from the position holder; and
(C) Has no reason to believe that
any information in the notification
certificate is false.
(3) Joint and several liability of
terminal operator; incorrect information provided. The terminal operator is
jointly and severally liable for the tax
imposed under paragraph (b) of this
section if, in connection with the
removal of diesel fuel that is not dyed
and marked in accordance with
§48.4082–1, the terminal operator
provides any person (including the
position holder with respect to the fuel)
with any bill of lading, shipping paper,
record, or similar document indicating
that the diesel fuel is dyed and marked
in accordance with §48.4082–1.
(4) Example. The following example
illustrates this paragraph (c) and
§48.4082–1:

(a) Overview. This section provides
the general rule that all removals of
taxable fuel at a terminal rack are
subject to tax and the position holder
with respect to the fuel is liable for the
tax.
(b) Imposition of tax. Except as
provided in §48.4081–4 (relating to
gasoline blendstocks) and §48.4082–1
(relating to dyed diesel fuel), tax is
imposed on the removal of taxable fuel
from a terminal if the taxable fuel is
removed at the rack.
(c) Liability for tax—(1) In general.
The position holder with respect to the
taxable fuel is liable for the tax
imposed under paragraph (b) of this
section.

Example. (i) TO is a terminal operator and PH
is the position holder with respect to, and owner
of, 8,000 gallons of diesel fuel stored in TO’s
terminal. TO and PH are taxable fuel registrants.
When the fuel is removed from the terminal at
the rack, the fuel is not dyed and marked in
accordance with §48.4082–1, and TO does not
provide any person with any paperwork indicating that the fuel is dyed and marked. After the
removal from the terminal, PH sells the fuel to
individuals for use as heating oil, a nontaxable
use.
(ii) Because PH is the position holder of the
fuel at the time of the removal from the terminal,
PH is liable for the tax imposed by section 4081.
The removal is subject to tax because the fuel is
not dyed and marked in accordance with
§48.4082–1, and later use of the fuel in a
nontaxable use does not make the removal from
the terminal exempt from tax.
(iii) Because PH is a taxable fuel registrant
and TO did not provide any person with any

9

paperwork indicating that the fuel is dyed and
marked, TO is not jointly and severally liable for
tax under paragraph (c)(2) or (3) of this section.

(d) Rate of tax. For the rate of tax
generally, see section 4081(a). For the
rate of tax on gasohol and on gasoline
removed for gasohol production, see
§48.4081–6.
(e) Effective date. This section is
effective January 1, 1994.
§48.4081–3 Taxable fuel; taxable
events other than removal at the
terminal rack.
(a) Overview. Although tax is imposed when taxable fuel is removed
from the terminal at the rack, tax also
is imposed in certain other situations
described in this section. For the backup tax on the use of dyed diesel fuel,
see §48.4082–4.
(b) Tax on removal from a refinery—(1) Imposition of tax. Except as
provided in paragraph (b)(2) of this
section (relating to an exemption for
certain refineries), §48.4081–4 (relating
to gasoline blendstocks), and
§48.4082–1 (relating to dyed diesel
fuel), tax is imposed on the following
removals from a refinery:
(i) A removal by bulk transfer if the
refiner or the owner of the taxable fuel
immediately before the removal is not
a taxable fuel registrant.
(ii) A removal at the rack.
(iii) After September 30, 1995, a
removal of a batch of gasohol from an
approved refinery by bulk transfer if
the refiner treats itself with respect to
the removal as a person that is not
registered under section 4101. See
§48.4101–1(a). For the rule providing
that no deposit is required in the case
of the tax imposed under this paragraph
(b)(1)(iii), see §40.6302(c)–1(e)(4) of
this chapter. For the rule allowing
inspections of facilities where gasohol
is produced, see section 4083.
(2) Exception for certain refineries.
The tax imposed under paragraph (b)(1)(ii) of this section does not apply to
a removal of taxable fuel if—
(i) The taxable fuel is removed from
an approved refinery that is not served
by pipeline (other than a pipeline for
the receipt of crude oil) or vessel;
(ii) The taxable fuel is received at a
facility that is operated by a taxable
fuel registrant and is located within the
bulk transfer/terminal system;
(iii) The removal from the refinery
is by—

(A) Rail car; or
(B) In the case of diesel fuel, a
trailer or semi-trailer that is used
exclusively for the transport service
described in paragraphs (b)(2)(i) and
(b)(2)(ii) of this section;
(iv) In the case of taxable fuel
removed by rail car, the facility at
which the fuel is received is operated
by the same person that operates the
refinery from which the fuel was
removed; and
(v) In the case of diesel fuel removed by a trailer or semi-trailer, the
facility at which the fuel is received is
less than 20 miles from the refinery
from which the diesel fuel was
removed.
(3) Liability for tax. The refiner is
liable for the tax imposed under paragraph (b)(1) of this section.
(c) Tax on entry into the United
States—(1) Imposition of tax. Except as
provided in §48.4081–4 (relating to
gasoline blendstocks) and §48.4082–1
(relating to dyed diesel fuel), a tax is
imposed on the entry of taxable fuel
into the United States if—
(i) The entry is by bulk transfer and
the enterer is not a taxable fuel
registrant; or
(ii) The entry is not by bulk transfer.
(2) Liability for tax. The enterer is
liable for the tax imposed under paragraph (c)(1) of this section.
(d) Tax on bulk transfers from a
terminal by an unregistered position
holder—(1) Imposition of tax. A tax is
imposed on the removal by bulk transfer of taxable fuel from a terminal if
the position holder with respect to the
taxable fuel is not a taxable fuel
registrant.
(2) Liability for tax—(i) In general.
The position holder with respect to the
taxable fuel is liable for the tax
imposed under paragraph (d)(1) of this
section.
(ii) Joint and several liability of
terminal operator. The terminal operator is jointly and severally liable for the
tax imposed under paragraph (d)(1) of
this section if—
(A) The position holder with respect
to the taxable fuel is a person other
than the terminal operator; and
(B) The terminal operator has not
met the conditions of paragraph
(d)(2)(iii) of this section.
(iii) Conditions for avoidance of liability. A terminal operator is not liable
for tax under this paragraph (d)(2) if, at

the time of the bulk transfer, the
terminal operator—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification
certificate (described in §48.4081–5)
from the position holder; and
(C) Has no reason to believe that
any information in the notification
certificate is false.
(e) Tax on bulk transfers not received at an approved terminal or refinery—(1) Imposition of tax. Except as
provided in §48.4081–4 (relating to
gasoline blendstocks) and §48.4082–1
(relating to dyed diesel fuel), a tax on
taxable fuel is imposed if—
(i) Taxable fuel is removed by bulk
transfer from a refinery or terminal, or
entered by bulk transfer into the United
States;
(ii) No tax was imposed on such
removal or entry under paragraph (b),
(c), or (d) of this section; and
(iii) Upon removal from the pipeline
or vessel, the taxable fuel is not
received at an approved terminal or
refinery (or at another pipeline or
vessel).
(2) Liability for tax—(i) In general.
The owner of the taxable fuel when it
is removed from the pipeline or vessel
is liable for the tax imposed under
paragraph (e)(1) of this section if the
owner has not met the conditions of
paragraph (e)(2)(ii) of this section.
(ii) Conditions for avoidance of liability. An owner of taxable fuel is not
liable for tax under paragraph (e)(2)(i)
of this section if, at the time the
taxable fuel is removed from the pipeline or vessel, the owner of the taxable
fuel—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification
certificate (described in §48.4081–5)
from the operator of the terminal or
refinery where the taxable fuel is
received; and
(C) Has no reason to believe that
any information in the notification
certificate is false.
(iii) Liability of the operator of the
facility where the taxable fuel is
received. The operator of the facility
where the taxable fuel is received is
liable for the tax imposed under
paragraph (e)(1) of this section if the
owner of the taxable fuel has met the
conditions of paragraph (e)(2)(ii) of
this section and is jointly and severally
liable for the tax if the owner has not
met such conditions.

10

(f) Tax on sales within the bulk
transfer/terminal system—(1) Imposition of tax. Except as provided in
paragraph (f)(2) of this section and
§48.4082–1 (relating to dyed diesel
fuel), a tax is imposed on the sale of
taxable fuel located within the bulk
transfer/terminal system if the sale is to
a person that is not a taxable fuel
registrant and tax has not been imposed
on such taxable fuel under §48.4081–2,
or paragraph (b), (c), (d), or (e) of this
section.
(2) Exception for certain sales of
taxable fuel for export. The tax imposed under paragraph (f)(1) of this
section does not apply to a sale of
taxable fuel if—
(i) The buyer’s principal place of
business is not within the United
States;
(ii) The sale of the fuel occurs as the
fuel is delivered into a transport vessel;
(iii) The vessel has a capacity of at
least 20,000 barrels of fuel;
(iv) The seller is a taxable fuel
registrant and the exporter of record of
the fuel; and
(v) The fuel was exported in due
course.
(3) Liability for tax—(i) In general.
The seller of the taxable fuel is liable
for the tax imposed under paragraph
(f)(1) of this section if the seller has
not met the conditions of paragraph
(f)(3)(ii) of this section.
(ii) Conditions for avoidance of liability. A seller is not liable for tax
under paragraph (f)(3)(i) of this section
if, at the time of the sale, the seller—
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification
certificate (described in §48.4081–5)
from the buyer; and
(C) Has no reason to believe that
any information in the certificate is
false.
(iii) Liability of the buyer. The buyer
of the taxable fuel is liable for the tax
imposed under paragraph (f)(1) of this
section if the seller of the taxable fuel
has met the conditions of paragraph
(f)(3)(ii) of this section and is jointly
and severally liable for the tax if the
seller has not met such conditions.
(4) Example. The following example
illustrates this paragraph (f) and the
definition of the term sale in §48.4081–
1:
Example. PH owns one million gallons of untaxed gasoline that is stored in TO’s terminal.

PH also is the position holder with respect to the
gasoline. While the gasoline remains stored in
the terminal, PH transfers title to 200,000 gallons
of the gasoline to A, a person that is not a taxable fuel registrant. PH continues to hold the
inventory position on TO’s records with respect
to the one million gallons. Because PH continues
as the position holder with respect to the gasoline, the transfer of title to the gasoline from PH
to A is not a sale of gasoline. Because this
transfer of title from PH to A is not a sale of
gasoline, the tax imposed under paragraph (f) of
this section does not apply to the transfer.

(g) Tax on removal or sale of
blended taxable fuel by the blender—
(1) Imposition of tax. A tax is imposed
on the removal or sale of blended
taxable fuel by the blender thereof. Tax
is computed on the difference between
the total number of gallons of blended
taxable fuel removed or sold and the
number of gallons of previously taxed
taxable fuel used to produce the
blended taxable fuel. For this purpose,
the alcohol in gasohol is treated as
previously taxed taxable fuel.
(2) Liability for tax. The blender is
liable for the tax imposed under
paragraph (g)(1) of this section.
(3) Example. The following example
illustrates the provisions of this paragraph (g) and the definition of the term
blended taxable fuel in §48.4081–1(c):
Example. (i) X, a gasoline wholesale distributor, buys 9,500 gallons of gasoline at a terminal
rack. The gasoline is delivered into a tank trailer.
The position holder is liable for tax under
§48.4081–2 when the gasoline is removed at the
rack. X then goes to another location where 500
gallons of alcohol (a substance not subject to tax
under section 4081) are delivered into the tank
trailer already containing the 9,500 gallons of
gasoline. The gasoline and alcohol are splash
blended as X drives to X’s retail service station
where X pumps the blended gasoline into a
storage tank for sale to consumers.
(ii) X is a blender within the meaning of
§48.4081–1 because X has produced blended
taxable fuel, as defined in §48.4081–1, by
mixing the 9,500 gallons of gasoline on which
tax has been imposed under §48.4081–2(b) with
500 gallons of alcohol, a substance not subject to
tax under section 4081. The 10,000 gallon mixture is not gasohol because it does not satisfy the
alcohol-content requirement described in
§48.4081–6(b)(2). X, the blender, is liable for the
tax imposed under this paragraph (g) on the
blended gasoline. The tax is imposed when the
blended gasoline is removed from the tank trailer
at the retail station. Tax on the blended mixture
is computed on 500 gallons, the number of
gallons not previously subject to tax under
section 4081.

(h) Rate of tax. For the rate of tax
generally imposed under this section,
see section 4081(a). For the rate of tax
on gasohol and on gasoline removed or
entered for gasohol production, see
§48.4081–6.

(i) Effective date. This section is
effective January 1, 1994.
Par. 19. Section 48.4081–4 is
amended as follows:
1. The heading for §48.4081–4 is
revised.
2. In paragraph (a), the language ‘‘to
produce gasoline’’ is removed and ‘‘to
produce finished gasoline’’ is added in
its place.
3. In paragraph (b)(1)(i), the language ‘‘gasoline registrant’’ is removed
and ‘‘taxable fuel registrant’’ is added
in its place.
4. In paragraph (b)(1)(ii), the language ‘‘gasoline (as defined in
§48.4081–1(i)(1))’’ is removed and
‘‘finished gasoline’’ is added in its
place.
5. In paragraphs (b)(2)(i) and (c)(1),
the language ‘‘gasoline registrant’’ is
removed each place it appears and
‘‘taxable fuel registrant’’ is added in its
place.
6. The language ‘‘and’’ is added
following the semicolon at the end of
paragraph (c)(2).
7. Paragraph (c)(3) is revised.
8. Paragraph (c)(4) is removed.
9. In paragraph (d), the language
‘‘gasoline registrant’’ is removed and
‘‘taxable fuel registrant’’ is added in its
place.
10. In paragraphs (e)(2) and (e)(3),
the language ‘‘production of gasoline’’
is removed each place it appears and
‘‘production of finished gasoline’’ is
added in its place.
11. In paragraph (e)(3), the language
‘‘to produce gasoline’’ is removed each
place it appears, and ‘‘to produce
finished gasoline’’ is added in its place.
12. In paragraph (f), the language
‘‘1993’’ is removed and ‘‘1994’’ is
added in its place.
The revisions read as follows:
§48.4081–4 Gasoline; special rules
for gasoline blendstocks.
*

*

*

*

*

*

(c) * * *
(3) Has no reason to believe that
any information in the certificate is
false.
*

*

*

*

*

*

Par. 20. Section 48.4081–5 is
amended as follows:

11

1. The heading for §48.4081–5 is
revised to read as follows:
§48.4081–5 Taxable fuel; notification
certificate of taxable fuel registrant.
2. In paragraph (a), the first sentence
in paragraph (b)(1) introductory text,
and paragraph (b)(2), the language
‘‘gasoline’’ is removed each place it
appears and ‘‘taxable fuel’’ is added in
its place.
3. In paragraph (b)(3), the language
‘‘or letter of registration’’ is added
after ‘‘Form 637’’ in the heading and
after ‘‘(Form 637)’’ in the text.
4. In paragraph (c), the language
‘‘1993’’ is removed and ‘‘1994’’ is
added in its place.
Par. 21. The heading for §48.4081–6
is revised to read as follows:
§48.4081–6 Gasoline; gasohol.
§40.4081–7 [Amended]
Par. 22. Section 48.4081–7 is
amended as follows:
1. In paragraph (c)(2), two new
listings are added at the end of the
listings in line 5 of the taxpayer’s
report:
Removal at the
‘‘
terminal rack
Removal or sale by
the blender’’
2. In paragraph (c)(4)(i)(A) and the
first sentence of paragraph (c)(4)(iii),
the language ‘‘§48.4081–1(r))’’ is removed and ‘‘§48.4081–1))’’ is added in
its place.
Par. 23. Section 48.4081–8 is revised
to read as follows:
§48.4081–8 Taxable fuel;
measurement.
(a) In general. For purposes of the
tax imposed by section 4081, gallons of
taxable fuel may be measured on the
basis of—
(1) Actual volumetric gallons;
(2) Gallons adjusted to 60 degrees
Fahrenheit; or
(3) Any other temperature adjustment method approved by the
Commissioner.
(b) Effective date. This section is
effective January 1, 1994.

§§48.4081–10T, 48.4081–11T, and
48.4081–12T [Removed]
Par. 24. Sections 48.4081–10T
through 48.4081–12T are removed.
Par. 25. Section 48.4082–1 is revised
to read as follows:
§48.4082–1 Diesel fuel tax;
exemption.
(a) Exemption. Tax is not imposed
by section 4081 on the removal, entry,
or sale of any diesel fuel if—
(1) The person otherwise liable for
tax is a taxable fuel registrant;
(2) In the case of a removal from a
terminal, the terminal is an approved
terminal; and
(3) The diesel fuel satisfies the
dyeing and marking requirements of
paragraphs (b), (c), and (d) of this
section.
(b) Dyeing requirements. Diesel fuel
satisfies the dyeing requirement of this
paragraph (b) only if it contains—
(1) The dye Solvent Red 164 (and
no other dye) at a concentration spectrally equivalent to at least 3.9 pounds
of the solid dye standard Solvent Red
26 per thousand barrels of diesel fuel;
or
(2) Any dye of a type and in a
concentration that has been approved
by the Commissioner.
(c) Marking requirements.
[Reserved]
(d) Time for adding the dye and
marker. [Reserved]
(e) Effective date. This section is
effective March 14, 1966.
§§48.4082–2T, 48.4082–3T, 48.4082–
4T and 48.4083 [Removed]
Par. 26. Sections 48.4082–2T,
48.4082–3T, 48.4082–4T, and 48.4083
are removed.
Par. 27. Sections 48.4082–2,
48.4082–3, 48.4082–4, and 48.4083–1
are added to read as follows:
§48.4082–2 Diesel fuel tax; notice
required with respect to dyed diesel
fuel.
(a) In general. A legible and conspicuous notice stating: DYED DIESEL
FUEL, NONTAXABLE USE ONLY,
PENALTY FOR TAXABLE USE must
be posted by a seller on any retail

pump or other delivery facility where it
sells dyed diesel fuel for use by its
buyer. Any seller that fails to post the
required notice on any retail pump or
other delivery facility where it sells
dyed diesel fuel is, for purposes of the
penalty imposed by section 6714, presumed to know that the fuel will not be
used for a nontaxable use.
(b) Cross reference; terminal operators. For the requirement that terminal
operators provide a notice with respect
to dyed diesel fuel, see §48.4101–
1(h)(3) (relating to terms and conditions of registration for terminal
operators).
(c) Effective date. This section is
effective January 1, 1994.
§48.4082–3 Diesel fuel; visual
inspection devices. [Reserved]
§48.4082–4 Diesel fuel; back-up tax.
(a) Imposition of tax—(1) In general. Tax is imposed by section 4041
on the delivery into the fuel supply
tank of the propulsion engine of a
diesel-powered highway vehicle (other
than a diesel-powered bus) or dieselpowered boat of—
(i) Any diesel fuel on which tax has
not been imposed by section 4081;
(ii) Any diesel fuel on which a
credit or payment has been allowed
under section 6427; or
(iii) Any liquid other than gasoline
or diesel fuel.
(2) Liability for tax—(i) In general.
The operator of the highway vehicle or
boat into which the fuel is delivered is
liable for the tax imposed under
paragraph (a)(1) of this section.
(ii) Joint and several liability of the
seller. The seller of the fuel is jointly
and severally liable for the tax imposed
under paragraph (a)(1) of this section if
the seller knows or has reason to know
that the fuel will not be used in a
nontaxable use.
(3) Rate of tax. The rate of tax is the
rate imposed on diesel fuel by section
4081(a).
(b) Tax on diesel fuel; buses and
trains—(1) In general. Tax is imposed
by section 4041 on the delivery into
the fuel supply tank of the propulsion
engine of a diesel-powered bus or a
diesel-powered train of—
(i) Any diesel fuel on which tax has
not been imposed by section 4081;
(ii) Any diesel fuel on which a
credit or payment has been allowed
under section 6427; or

12

(iii) Any liquid other than gasoline
or diesel fuel.
(2) Liability for tax—(i) In general.
Except as provided in paragraph (b)(2)(ii) of this section, the operator of the
bus or train into which the fuel is
delivered is liable for the tax imposed
under paragraph (b)(1) of this section.
(ii) Special rule for certain train
operators. The person that delivers the
fuel into the fuel supply tank of a train,
rather than the train operator, is liable
for the tax imposed under paragraph
(b)(1) of this section if, at the time of
the delivery—
(A) The deliverer of the fuel and the
operator of the train are both registered
as train operators under §48.4101–1;
and
(B) A written agreement between the
deliverer of the fuel and the operator
requires the deliverer to pay the tax
imposed under paragraph (b)(1) of this
section.
(3) Rate of tax—(i) Buses—(A) In
general. The rate of tax under paragraph (b)(1) of this section is the sum
of the rates described in sections
4041(a)(1)(C)(iii)(I) and 4041(d)(1)
(the bus rate) if the bus is used to
furnish (for compensation) passenger
land transportation available to the
general public and either such transportation is scheduled and along regular
routes or the seating capacity of the
bus is at least 20 adults (not including
the driver). A bus is available to the
general public if the bus is available
for hire to more than a limited number
of persons, groups, or organizations.
(B) Other uses. The rate of tax
under paragraph (b)(1) of this section is
the rate of tax imposed on diesel fuel
by section 4081(a) if the bus is used
for a purpose other than that described
in paragraph (b)(3)(i)(A) of this section.
(ii) Trains. The rate of tax under
paragraph (b)(1) of this section is the
rate prescribed in section 4041 for
diesel fuel sold for use in a train (the
train rate).
(4) Cross reference. For the registration requirement relating to certain bus
and train operators, see §48.4101–
1(c)(2).
(c) Exemptions. The taxes imposed
under paragraphs (a) and (b) of this
section do not apply to a delivery of
any liquid for—
(1) Use on a farm for farming purposes as that term and related terms are
defined in §48.6420–4(a) through (g);

(2) The exclusive use of a State;
(3) Use described in section 4041(h)
(relating to use in a vehicle owned by
an aircraft museum);
(4) Use in a boat employed in—
(i) The business of commercial
fishing;
(ii) The business of transporting persons or property for compensation or
hire; or
(iii) Any other trade or business,
unless the boat is used in any activity
of a type generally considered to
constitute entertainment, amusement, or
recreation (within the meaning of section 274(a)(1)(A) and the regulations
under that section);
(5) Use in a bus while the bus is
engaged in the transportation of students and employees of schools (as
defined in the last sentence of section
4221(d)(7)(C));
(6) Use in a qualified local bus (as
defined in section 6427(b)(2)(D)) while
the bus is engaged in furnishing (for
compensation) intracity passenger land
transportation that is available to the
general public and is scheduled and
along regular routes;
(7) Use in a highway vehicle that—
(i) Is not registered (and is not
required to be registered) for highway
use under the laws of any State or
foreign country; and
(ii) Is used in the operator’s trade or
business or in an activity of the
operator described in section 212 (relating to the production of income);
(8) The exclusive use of a nonprofit
educational organization, as defined in
§48.4221–6(b);
(9) Use in a highway vehicle that is
owned by the United States and is not
used on the highway; or
(10) Use in any boat operated by the
United States for the exclusive use of
the United States or any vessel of war
of any foreign nation, as described in
§48.4221–4(b)(5).
(d) Effective date. This section is
effective January 1, 1994.
§48.4083–1 Taxable fuel;
administrative authority.
(a) In general—(1) Authority to inspect. Officers or employees of the IRS
designated by the Commissioner, upon
presenting appropriate credentials and a
written notice to the owner, operator,
or agent in charge, are authorized to

enter any place and to conduct inspections in accordance with paragraphs (a)
through (c) of this section.
(2) Reasonableness. Inspections will
be performed in a reasonable manner
and at times that are reasonable under
the circumstances, taking into consideration the normal business hours of
the place to be entered.
(b) Place of inspection—(1) In general. Inspections may be at any place at
which taxable fuel is (or may be) produced or stored or at any inspection
site where evidence of activities described in section 6714(a) may be
discovered. These places may include,
but are not limited to—
(i) Any terminal;
(ii) Any fuel storage facility that is
not a terminal;
(iii) Any retail fuel facility; or
(iv) Any designated inspection site.
(2) Designated inspection sites. A
designated inspection site is any State
highway inspection station, weigh station, agricultural inspection station,
mobile station, or other location designated by the Commissioner to be used
as a fuel inspection site. A designated
inspection site will be identified as a
fuel inspection site.
(c) Scope of inspection—(1) Inspection. Officers or employees may physically inspect, examine or otherwise
search any tank, reservoir, or other
container that can or may be used for
the production, storage, or transportation of fuel, fuel dyes, or fuel markers.
Inspection may also be made of any
equipment used for, or in connection
with, production, storage, or transportation of fuel, fuel dyes, or fuel markers.
This includes any equipment used for
the dyeing or marking of fuel. This
also includes books and records, if any,
that are maintained at the place of
inspection and are kept to determine
excise tax liability under section 4081.
(2) Detainment. Officers or
employees may detain any vehicle,
train, or boat for the purpose of
inspecting its fuel tanks and storage
tanks. Detainment will be either on the
premises under inspection or at a
designated inspection site. Detainment
may continue for such reasonable
period of time as is necessary to
determine the amount and composition
of the fuel.
(3) Removal of samples. Officers or
employees may take and remove samples of fuel in such quantities as are

13

reasonably necessary to determine the
composition of the fuel.
(d) Refusal to submit to inspection—
(1) Imposition of penalty. Any person
that refuses to allow an inspection will
be fined $1,000 for each refusal. This
penalty is in addition to any other
penalty or tax that may be imposed
upon that person or any other person
liable for tax under section 4081 or
penalty under section 6714.
(2) Assessment of penalty. This
penalty is an assessable penalty and is
assessed in accordance with section
6671.
(e) Effective date. This section is
effective January 1, 1994.
Par. 28. The undesignated center
heading preceding §48.4101–1 is
removed.
Par. 29. Section 48.4101–1 is revised
to read as follows:
§48.4101–1 Registration.
(a) In general. (1) This section
provides rules relating to registration
under section 4101 for purposes of the
federal excise tax on taxable fuel
imposed by sections 4041(a)(1) and
4081 and the credit or payment allowed
to registered ultimate vendors of diesel
fuel under section 6427.
(2) A person is registered under
section 4101 only if the district director
has issued a registration letter to the
person and the registration has not been
revoked or suspended.
(3) A refiner that is registered under
section 4101 may, with respect to the
bulk removal of any batch of gasohol
from its refinery, treat itself as a person
that is not registered. See §48.4081–3(b)(1)(iii).
(4) Each business unit that has, or is
required to have, a separate employer
identification number is treated as a
separate person. Thus, two business
units (for example, a parent corporation
and a subsidiary corporation, or a
proprietorship and a related partnership), each of which has a different
employer identification number, are
two persons.
(5) A registration in effect on December 31, 1993, with respect to the
tax on gasoline or diesel fuel is subject
to the district director’s review, and to
revocation or suspension, under the
standards set forth in this section, but
remains in effect until the earlier of—
(i) The effective date of a registration issued under paragraph (g)(3) of
this section; or

(ii) The effective date of the revocation or suspension of the registration
under paragraph (i) of this section.
(b) Definitions—(1) Applicant. An
applicant is a person that has applied
for registration under paragraph (e) of
this section.
(2) Bonded registrant. A bonded
registrant is a person that has given a
bond to the district director under
paragraph (j) of this section as a
condition of registration.
(3) Gasohol bonding amount. The
gasohol bonding amount is the product
of—
(i) The rate of tax applicable to later
separation, as described in §48.4081–6(f)(1)(iii); and
(ii) The total number of gallons of
gasoline expected to be bought at the
gasohol production tax rate by the
gasohol blender during a representative
6-month period (as determined by the
district director).
(4) Penalized for a wrongful act. A
person has been penalized for a wrongful act if the person has—
(i) Been assessed any penalty under
chapter 68 of the Internal Revenue
Code (or similar provision of the law
of any State) for fraudulently failing to
file any return or pay any tax, and the
penalty has not been wholly abated,
refunded, or credited;
(ii) Been assessed any penalty under
chapter 68 of the Internal Revenue
Code, such penalty has not been wholly
abated, refunded, or credited, and the
district director determines that the
conduct resulting in the penalty is part
of a consistent pattern of failing to
deposit, pay, or pay over a substantial
amount of tax;
(iii) Been convicted of a crime under
chapter 75 of the Internal Revenue
Code (or similar provision of the law
of any State), or of conspiracy to
commit such a crime, and the conviction has not been wholly reversed by a
court of competent jurisdiction;
(iv) Been convicted, under the laws
of the United States or any State, of a
felony for which an element of the
offense is theft, fraud, or the making of
false statements, and the conviction has
not been wholly reversed by a court of
competent jurisdiction;
(v) Been assessed any tax under
section 4103 and the tax has not been
wholly abated, refunded, or credited; or
(vi) Had its registration under section 4101 or 4222 revoked.

(5) Related person. A related person
is a person that—
(i) Directly or indirectly exercises
control over an activity of the applicant
if the activity is described in paragraph
(c)(1) or (d) of this section;
(ii) Owns, directly or indirectly, five
percent or more of the applicant;
(iii) Is under a duty to assure the
payment of a tax for which the applicant is responsible;
(iv) Is a member, with the applicant,
of a group of organizations (as defined
in §1.52–1(b) of this chapter) that
would be treated as a group of trades
or businesses under common control
for purposes of §1.52–1 of this chapter;
or
(v) Distributed or transferred assets
to the applicant in a transaction in
which the applicant’s basis in the assets
is determined by reference to the basis
of the assets in the hands of the
distributor or transferor.
(6) Registrant. A registrant is a
person that the district director has, in
accordance with paragraph (g)(3) of
this section, registered under section
4101 and whose registration has not
been revoked or suspended.
(c) Persons required to be registered—(1) In general. A person is
required to be registered under section
4101 if the person is a—
(i) Blender;
(ii) Enterer;
(iii) Refiner;
(iv) Terminal operator; or
(v) Position holder.
(2) Bus and train operators. Every
operator of a bus or train is required to
be registered under section 4101 at any
time it incurs any liability for tax under
section 4041 at the bus rate (as described in §48.4082–4(b)(3)(i)) or the
train rate (as described in §48.4082–4(b)(3)(ii)).
(3) Consequences of failing to register. For the criminal penalty imposed
for failure to register, see section 7232.
For the civil penalty imposed for
failure to register, see section 7272.
(d) Persons that may, but are not
required to, be registered. A person
may, but is not required to, be registered under section 4101 if the person
is a—
(1) Gasohol blender;
(2) Industrial user;
(3) Throughputter that is not a position holder; or

14

(4) Ultimate vendor of diesel fuel.
(e) Application instructions. Application for registration under section
4101 must be made in accordance with
the instructions for Form 637 (or such
other form as the Commissioner may
designate).
(f) R e g i s t r a t i o n t e s t s—(1) In
general—(i) Persons other than ultimate vendors. Except as provided in
paragraph (f)(1)(ii) of this section, the
district director will register an applicant only if the district director determines that the applicant meets the
following three tests (collectively, the
registration tests):
(A) The activity test of paragraph
(f)(2) of this section.
(B) The acceptable risk test of paragraph (f)(3) of this section.
(C) The adequate security test of
paragraph (f)(4) of this section.
(ii) Ultimate vendors. The district
director will register an applicant as an
ultimate vendor of diesel fuel only if
the district director—
(A) Determines that the applicant
meets the activity test of paragraph
(f)(2) of this section; and
(B) Is satisfied with the filing, deposit, payment, and claim history for
all federal taxes of the applicant and
any related person.
(2) The activity test. An applicant
meets the activity test of this paragraph
(f)(2) only if the district director
determines that the applicant—
(i) Is, in the course of its trade or
business, regularly engaged as an operator of a bus or train or in the characteristic activity of a person described in
paragraph (c)(1) or (d) of this section;
or
(ii) Is likely to be (because of such
factors as the applicant’s business
experience, financial standing, or trade
connections), in the course of its trade
or business, regularly engaged as an
operator of a bus or train or in the
characteristic activity of a person described in paragraph (c)(1) or (d) of
this section within a reasonable time
after becoming registered under section
4101.
(3) Acceptable risk test—(i) In general. An applicant meets the acceptable
risk test of this paragraph (f)(3) only
if—
(A) Neither the applicant nor a
related person has been penalized for a
wrongful act; or
(B) Even though the applicant or a
related person has been penalized for a

wrongful act, the district director determines, after review of evidence offered
by the applicant, that the registration of
the applicant does not create a significant risk of nonpayment or late payment of the tax imposed by sections
4041(a)(1) and 4081.
(ii) Significant risk of nonpayment
or late payment of tax. In making the
determination described in paragraph
(f)(3)(i)(B) of this section, the district
director may consider factors such as
the following:
(A) The time elapsed since the applicant or related person was penalized
for a wrongful act.
(B) The present relationship between
the applicant and any related person
that was penalized for any wrongful
act.
(C) The degree of rehabilitation of
the person penalized for any wrongful
act.
(D) The amount of bond given by
the applicant. In this regard, the district
director may accept a bond under
paragraph (j) of this section, without
regard to the limits on the amount of
the bond set by paragraph (j)(2) of this
section.
(4) Adequate security test—(i) In
general. An applicant meets the adequate security test of this paragraph
(f)(4) only if the district director
determines that the applicant has both
adequate financial resources and a
satisfactory tax history, or the applicant
gives the district director a bond (under
the provisions of paragraph (j) of this
section).
(ii) Adequate financial resources—
(A) In general. An applicant has
adequate financial resources only if the
district director determines that the
applicant is financially capable of
paying—
(1) Its expected tax liability under
sections 4041(a)(1) and 4081 for a
representative 6-month period (as determined by the district director);
(2) In the case of a terminal operator, the expected tax liability under
section 4081 of persons other than the
terminal operator with respect to taxable fuel removed at the racks of its
terminals during a representative
1-month period (as determined by the
district director); and
(3) In the case of a gasohol blender,
the gasohol bonding amount.
(B) Basis for determination. The
determination under this paragraph

(f)(4)(ii) must be based on financial
information such as the applicant’s
income statement, balance sheet or
bond ratings, or other information
related to the applicant’s financial
status.
(iii) Satisfactory tax history. An applicant has a satisfactory tax history
only if the district director is satisfied
with the filing, deposit, and payment
history for all federal taxes of the
applicant and any related person.
(g) Action on the application by the
district director—(1) Review of application. The district director may
investigate the accuracy and completeness of any representations made by an
applicant, request any additional relevant information from the applicant,
and inspect the applicant’s premises
during normal business hours without
advance notice.
(2) Denial. If the district director
determines that an applicant does not
meet all of the applicable registration
tests described in paragraph (f) of this
section, the district director must notify
the applicant, in writing, that its
application for registration is denied
and state the basis for the denial.
(3) Approval. If the district director
determines that an applicant meets all
of the applicable registration tests
described in paragraph (f) of this
section, the district director must register the applicant under section 4101
and issue the applicant a letter of
registration containing the effective
date of the registration. The effective
date of the registration must be no
earlier than the date on which the
district director signs the letter of
registration. A copy of an application
for registration (Form 637) is not a
letter of registration.
(h) Terms and conditions of registration—(1) Affirmative duties. Each
registrant must—
(i) Make deposits, file returns, and
pay taxes required by the Internal
Revenue Code and the regulations;
(ii) Keep records sufficient to show
the registrant’s tax liability under sections 4041(a)(1) and 4081 and payments or deposits of such liability;
(iii) Make all information reports
required under section 4101(d) and
§48.4101–2;
(iv) Make available for inspection on
demand by the Internal Revenue Service during normal business hours records relevant to a determination of tax

15

liability under sections 4041(a)(1) and
4081; and
(v) Notify the district director of any
change (such as a change in ownership)
in the information the registrant submitted in connection with its application for registration, or previously
submitted under this paragraph (h)(1)(v), within 10 days after the change
occurs.
(2) Prohibited actions. A registrant
may not—
(i) Sell, lease or otherwise allow
another person to use its registration;
(ii) Make any false statement to the
district director in connection with a
submission under paragraph (h)(1) or
(h)(3) of this section;
(iii) Make any false statement on, or
violate the terms of—
(A) A notification certificate of a
taxable fuel registrant (as described in
§48.4081–5(b)); or
(B) A certificate of a registered
gasohol blender (as described in
§48.4081–6(c)(2)).
(3) Additional terms and conditions
for terminal operators—(i) Notice required with respect to dyed diesel fuel.
A legible and conspicuous notice stating: DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR
TAXABLE USE must be provided by
each terminal operator to any person
that receives dyed diesel fuel at a
terminal rack of that operator. This
notice must be provided by the time of
the removal and must appear on all
shipping papers, bills of lading, and
similar documents that are provided by
the terminal operator to accompany the
removal of the fuel.
(ii) Records to be maintained relating to removals of diesel fuel. Each
terminal operator must keep the following information with respect to each
rack removal of diesel fuel at each
terminal it operates:
(A) The bill of lading or other
shipping document.
(B) The record of whether the fuel
was dyed and marked in accordance
with §48.4082–1.
(C) The volume and date of the
removal.
(D) The identity of the person, such
as a common carrier, that physically
received the fuel.
(E) Any other information required
by the Commissioner.
(iii) Records to be maintained relating to dye. With respect to each of its

terminals, a terminal operator must
keep records relating to dye inventories
and usage.
(iv) Retention of information. In addition to any other requirement relating
to the retention of records, the terminal
operator must—
(A) Maintain the information described in paragraph (h)(3)(ii) of this
section at the terminal from which the
removal occurred for at least 3 months
after the removal to which it relates;
and
(B) Maintain the information described in paragraph (h)(3)(iii) of this
section at the terminal where the dye
was received for at least 3 months after
the receipt.
(v) Prohibition on providing incorrect information. In connection with
the removal of diesel fuel that is not
dyed and marked in accordance with
§48.4082–1, a terminal operator may
not provide any person (including the
position holder with respect to the fuel)
with any bill of lading, shipping paper,
or similar document indicating that the
diesel fuel is dyed and marked in accordance with §48.4082–1.
(i) Adverse actions by the district
director against a registrant—(1) Mandatory revocation or suspension. The
district director must revoke or suspend
the registration of any registrant if the
district director determines that the
registrant, at any time—
(i) Does not meet one or more of the
applicable registration tests under paragraph (f) of this section and has not
corrected the deficiency within a reasonable period of time after notification
by the district director;
(ii) Has used its registration to
evade, or attempt to evade, the payment of any tax imposed by section
4041(a)(1) or 4081, or to postpone or
in any manner to interfere with the
collection of any such tax, or to make a
fraudulent claim for a credit or
payment;
(iii) Has aided or abetted another
person in evading, or attempting to
evade, payment of any tax imposed by
section 4041(a)(1) or 4081, or in
making a fraudulent claim for a credit
or payment; or
(iv) Has sold, leased, or otherwise
allowed another person to use its
registration.
(2) Remedial action permitted in
other cases. If the district director
determines that a registrant has, at any

time, failed to comply with the terms
and conditions of registration under
paragraph (h) of this section, made a
false statement to the district director in
connection with its application for
registration or retention of registration,
or otherwise used its registration in a
manner that creates a significant risk of
nonpayment or late payment of tax,
then the district director may—
(i) Revoke or suspend the registrant’s registration;
(ii) In the case of a registrant other
than an ultimate vendor, require the
registrant to give a bond under the
provisions of paragraph (j) of this
section as a condition of retaining its
registration; and
(iii) In the case of a registrant other
than an ultimate vendor, require the
registrant to file monthly or semimonthly returns under §40.6011(a)–
1(b) of this chapter as a condition of
retaining its registration.
(3) Action by the district director to
revoke or suspend a registration. If the
district director revokes or suspends a
registration, the district director must
so notify the registrant in writing and
state the basis for the revocation or
suspension. The effective date of the
revocation or suspension may not be
earlier than the date on which the
district director notifies the registrant.
(j) Bonds—(1) Form. Each bond
given to the district director as a
condition of registration under paragraph (f)(4)(i) or (i)(2)(ii) of this
section must be executed in the form
prescribed by the district director. Each
bond must be—
(i) A public debt obligation of the
United States Government;
(ii) An obligation the principal and
interest of which are unconditionally
guaranteed by the United States
Government;
(iii) A bond executed by a surety
company listed in Department of the
Treasury Circular 570 as an acceptable
surety or reinsurer of federal bonds (a
surety bond); or
(iv) Any other bond with security
(including liens under section 4101(b)(1)(B)) considered acceptable by the
district director.
(2) Amount of bond. A bond given
under this paragraph (j) must be in an
amount that the district director determines will ensure timely collection of
the taxes imposed by sections 4041(a)(1) and 4081, taking into account the

16

applicant’s financial capabilities, tax
history, and expected liability under
sections 4041(a)(1) and 4081. The
district director may increase or decrease the amount of the required bond
to take into account changes in the
applicant’s financial capabilities, tax
history, and expected liability under
sections 4041(a)(1) and 4081. However, in no case may the amount of the
bond be greater than the amount that
the district director determines is equal
to—
(i) The applicant’s expected tax liability under sections 4041(a)(1) and
4081 for a representative 6-month
period (as determined by the district
director);
(ii) In the case of a terminal operator, the expected tax liability of persons
other than the terminal operator under
section 4081 with respect to taxable
fuel removed at the racks of its
terminals (determined as if all removals
of taxable fuel were taxable) during a
representative 1-month period (as determined by the district director); and
(iii) In the case of a gasohol blender,
the gasohol bonding amount.
(3) Collection of taxes from a bond.
If a bonded registrant does not pay the
amount of tax it incurs under section
4041(a)(1) or 4081 by the time prescribed in section 6151 for paying that
tax, the district director may collect the
amount of the unpaid tax (including
penalties and interest with respect to
that tax) from the bonded registrant’s
bond.
(4) Termination of bonds—(i) Surety
bonds. A surety on a bond may give
written notice to the district director
and the bonded registrant that the
surety desires to be relieved of liability
under the bond after a certain date,
which date must be at least 60 days
after the receipt of the notice by the
district director. The surety will be
relieved of any liability that the bonded
registrant incurs after the date named in
the notice. However, the surety remains
liable for the amount of tax that the
bonded registrant incurred under sections 4041(a)(1) and 4081 during the
term of the bond and for penalties and
interest with respect to that tax.
(ii) Other bonds. A bond (other than
a surety bond) given to the district
director may be returned to the bonded
registrant only after the earlier of—
(A) The district director’s determination that the bonded registrant has paid
all taxes that the bonded registrant

incurred under sections 4041(a)(1) and
4081 during the period covered by the
bond and any penalties and interest
with respect to the taxes;
(B) The expiration of the period for
assessment of the taxes that the bonded
registrant incurred under sections
4041(a)(1) and 4081 taxes during the
period covered by the bond, as determined under the provisions of subchapter A of chapter 66 of the Internal
Revenue Code; or
(C) The date that the district director
receives from the registrant a substitute
bond given under this paragraph (j).
(5) Determination that bond is no
longer required. If the district director
determines that the bonded registrant
meets the adequate security test of
paragraph (f)(4) of this section without
a bond, the registrant is to be released
from the obligation to give a bond as a
condition of registration under section
4101.
(k) Cross references. For a rule
relating to the filing of monthly and
semimonthly returns by certain persons
that are registered under section 4101,
see §40.6011(a)–1(b)(2) of this chapter.
For rules relating to the tax on taxable
fuel, see §§48.4081–1 through
48.4083–1. For rules relating to claims
by registered ultimate vendors, see
§48.6427–9.
(l) Effective dates. (1) Except as
otherwise provided in this paragraph
(l), this section is applicable as of
January 1, 1994.
(2) Paragraph (c)(1) of this section
(relating to persons required to be
registered) is applicable as of January
1, 1995.
(3) Paragraph (h)(3)(iii) of this section (relating to certain recordkeeping
requirements) is applicable as of July
1, 1996.
Par. 30. Section 48.4101–2 is added
to read as follows:
§48.4101–2 Information reporting.
(a) In general—(1) Taxable fuel registrants. Each taxable fuel registrant
must make a return showing—
(i) The name and registration number (if any) of each person that is a
position holder at each terminal it
operates;
(ii) The amount of taxable fuel
received at each terminal it operates;
(iii) The identity of each position
holder with respect to—

(A) All rack removals of taxable fuel
from each terminal it operates, and the
volume and dates of the removals; and
(B) In the case of rack removals of
diesel fuel, whether the fuel was dyed
and marked at the operator’s terminal
in accordance with §48.4082–1;
(iv) The amount of taxable fuel
stored at each terminal it operates;
(v) The destination (by state) of all
taxable fuel removed at a terminal rack
of each terminal it operates, to the
extent such information has been
provided to the registrant;
(vi) The name and registration number (if any) of the operator of each
terminal at which it is a position
holder;
(vii) The volume and date of the
removal with respect to all rack removals of taxable fuel for which it is
the position holder;
(viii) In the case of nonbulk removals and entries of gasoline
blendstocks for which it would be
liable for tax but for the special rule in
§48.4081–4(c), the name and registration number of each operator of each
refinery and terminal where the gasoline blendstocks are received;
(ix) The name and registration number (if any) of each person to which it
sells (within the meaning of §48.4081–
1) taxable fuel located in the bulk
transfer/terminal system;
(x) The name and registration number of each person from which it
receives a certificate described in
§48.4081–6(c) (relating to certificate of
registered gasohol blender);
(xi) With respect to any liability
incurred under §48.4081–3(e) (relating
to tax on bulk transfers not received at
an approved terminal or refinery)—
(A) The date on which the removal
of the taxable fuel from a pipeline or
vessel gave rise to the liability; and
(B) The location of the taxable fuel
at the time of the removal; and
(xii) Any other information required
by the Commissioner.
(2) Gasohol blenders. Each registered gasohol blender must make a
return showing, with respect to each
batch of gasohol it produced from
gasoline it bought at the gasohol
production tax rate—
(i) The name and registration number of the person that sold it the
gasoline;
(ii) The date and location of the purchase of the gasoline;

17

(iii) The volume of the gasoline;
(iv) The name, address, and employer identification number of the
person that sold it the alcohol;
(v) The date and location of the
purchase of the alcohol;
(vi) The volume and type of the
alcohol; and
(vii) Any other information required
by the Commissioner.
(3) Pipeline and vessel operators.
Each operator of a pipeline or vessel
that makes a bulk transfer of taxable
fuel to a terminal or refinery must
make a return showing—
(i) The location of the terminal or
refinery where the taxable fuel was
delivered;
(ii) The date of the delivery; and
(iii) Any other information required
by the Commissioner.
(b) Form and time of return. Each
return required under this section must
be made at the time and in the form
required by the Commissioner.
(c) Consequences for failure to make
a return. For the consequences for failing to make an information return required by this section, see §48.4101–
1(i) (relating to adverse actions against
a registrant) and section 6721 (relating
to a penalty for failure to file an
information return).
(d) Effective date. This section is
applicable as of April 1, 1996.
§§48.4101–2T, 48.4101–3, 48.4101–
3T, and 48.4101–4T [Removed]
Par. 31. Sections 48.4101–2T,
48.4101–3, 48.4101–3T, and 48.4101–
4T are removed.
Par. 32. Section 48.4102–1 is
amended as follows:
1. Paragraph (a) is revised.
2. Paragraph (b)(1) is amended by
removing the language ‘‘on the sale or
use of gasoline or lubricating oil,
respectively,’’.
3. Paragraph (b)(2) is amended by removing ‘‘gasoline or lubricating oil’’
each place it appears and adding ‘‘taxable fuel or aviation fuel’’ in its place.
The revision reads as follows:
§48.4102–1 Inspection of records by
State or local tax officers.
(a) Inspection of records maintained
by taxpayer. The records that a tax-

payer is required to keep with respect
to the taxes imposed by section 4081 or
4091 must be open to inspection by
any officer of any State or political
subdivision thereof, or of the District
of Columbia, who is charged with the
enforcement or collection of any tax on
taxable fuel or aviation fuel.
*

*

*

*

*

*

§48.4221 [Removed]
Par. 33. Section 48.4221 is removed.
Par. 34. Section 48.4221–1 is
amended as follows:
1. Paragraph (a) is revised.
2. Paragraph (b)(2)(iv) is amended
by adding ‘‘and’’ at the end.
3. Paragraph (b)(2)(v) is revised.
4. Paragraphs (b)(2)(vi) through
(b)(2)(xii) are removed.
5. Paragraph (b)(3) is removed and
paragraphs (b)(4) and (b)(5) are redesignated as paragraphs (b)(3) and
(b)(4), respectively.
The revised provisions read as
follows:
§48.4221–1 Tax-free sales; general
rule.
(a) Application of regulations under
section 4221—(1) In general. The
regulations under section 4221 provide
rules under which the manufacturer,
producer, or importer of an article
subject to tax under chapter 32 (or the
retailer of an article subject to tax
under subchapter A or C of chapter 31)
may sell the article tax free under
section 4221.
(2) Limitations. The following restrictions must be taken into account in
applying the regulations under section
4221:
(i) The exemptions under section
4221(a)(4) and (a)(5) do not apply to
the tax imposed by section 4064 (gas
guzzler tax).
(ii) The exemptions under section
4221 do not apply to the tax imposed
by section 4081 (gasoline and diesel
fuel tax).
(iii) The exemptions under section
4221 do not apply to the tax imposed
by section 4091 (aviation fuel tax). For
rules relating to tax-free sales of
aviation fuel, see section 4092 and the
regulations thereunder.
(iv) The exemptions under section
4221 do not apply to the tax imposed
by section 4121 (coal tax).

(v) The exemptions under section
4221(a)(3) through (a)(5) do not apply
to the tax imposed by section 4131
(vaccine tax). In addition, the exemption under section 4221(a)(2) applies to
the vaccine tax only to the extent
provided in §48.4221–3(e) (relating to
tax-free sales of vaccine for export).
(vi) The exemptions under section
4221(a) apply only in those cases
where the exportation or use referred to
is to occur before any other use.
(b) * * *
(2) * * *
(v) Section 4221(e)(3) relating to the
sale of tires used on intercity, local, or
school buses (see §48.4221–8).
*

*

*

*

*

*

Par. 35. Section 48.4221–2 is
amended by:
1. Removing from the first sentence
of paragraph (a)(1) the language
‘‘(other than a tire or inner tube taxable
under section 4071, which are given
special treatment under sections
4221(e)(2) and (4), and §§48.4221–7
and 48.4221–8)’’ and adding ‘‘(other
than a tire taxable under section 4071,
which is given special treatment under
section 4221(e)(2) and §48.4221–7)’’
in its place.
2. Removing paragraph (a)(2) and
redesignating paragraph (a)(3) as paragraph (a)(2).
3. Revising paragraph (b).
The revision reads as follows:
§48.4221–2 Tax-free sale of articles
to be used for, or resold for, further
manufacture.
*

*

*

*

*

*

(b) Circumstances under which an
article is considered to have been sold
for use in further manufacture. (1) An
article shall be treated as sold for use
in further manufacture if the article is
sold for use by the buyer as material in
the manufacture or production of, or as
a component part of, another article
taxable under chapter 32 of the Internal
Revenue Code.
(2) An article is used as material in
the manufacture or production of, or as
a component of, another article if it is
incorporated in, or is a part or accessory of, the other article when the
other article is sold by the manufacturer. In addition, an article is considered to be used as material in the
manufacture of another article if it is

18

consumed in whole or in part in testing
such other article. However, an article
that is consumed in the manufacturing
process other than in testing, so that it
is not a physical part of the manufactured article, is not considered to have
been used as material in the manufacture of, or as a component part of,
another article.
*

*

*

*

*

*

Par. 36. Section 48.4221–5 is
amended as follows:
1. Paragraph (c)(1) is amended by:
a. Removing the first sentence.
b. Removing the language ‘‘If a
State or local government is not
registered, the’’ and adding ‘‘The’’ in
its place in the new first sentence.
2. In paragraph (d), the first sentence is amended by:
a. Removing the language ‘‘(whether
on the basis of a registration number or
an exemption certificate)’’.
b. Removing the language ‘‘(such as
gasoline that is’’ and adding ‘‘(such as
tires that are’’ in its place.
§§48.4221–8, 48.4221–9, 48.4221–10
[Removed]
Par. 37. Sections 48.4221–8,
48.4221–9, and 48.4221–10 are
removed.
§48.4221–11 [Redesignated as
§48.4221–8]
Par. 38. Section 48.4221–11 is redesignated as §48.4221–8.
§48.4221–12 [Removed]
Par. 39. Section 48.4221–12 is
removed.
Par. 40. In §48.4222(a)–1, paragraphs (a) and (b) are revised to read
as follows:
§48.4222(a)–1 Registration.
(a) General rule. Except as provided
in §48.4222(b)–1, tax-free sales under
section 4221 may be made only if the
manufacturer, first purchaser, and second purchaser, as the case may be,
have been registered by the Internal
Revenue Service.
(b) Application instructions. Application for registration under section
4222 must be made in accordance with

instructions for Form 637 (or such
other form as the Commissioner may
designate).
*

*

*

*

*

*

Par. 41. In §48.4222(b)–1, paragraph
(a) is revised to read as follows:
§48.4222(b)–1 Exceptions to the
requirement for registration.

*

*

*

*

*

§48.4222(d)–1 [Amended]
Par. 42. Section 48.4222(d)–1 is
amended by:
1. Removing paragraphs (a), (b), and
(c).
2. Redesignating paragraph (d) as
paragraph (a).
3. Removing paragraphs (e) and (f).
4. Redesignating paragraph (g) as
paragraph (b).
§48.6206–1 [Removed]
Par. 43.
removed.

Section

48.6206–1

Par. 48. In §48.6427–3, paragraph
(d)(2) is amended by removing from
the first sentence the language ‘‘Form
843’’ and adding ‘‘Form 8849 (or on
such other form as the Commissioner
may designate)’’ in its place.
§48.6427–7 [Amended]

(a) State and local governments. The
Internal Revenue Service will not register State or local governments under
section 4222. To establish the right to
sell articles tax free to a State or local
government, the manufacturer must
obtain the information described in
§48.4221–5(c).
*

§48.6427–3 [Amended]

is

§48.6416(b)(2)–2 [Amended]
Par. 44. In §48.6416(b)(2)–2, paragraphs (g) through (k) are removed.
§48.6416(g)–1 [Removed]
Par. 45. Section 48.6416(g)–1 is
removed.
§48.6421–3 [Amended]
Par. 46. In §48.6421–3, paragraph
(d)(2) is amended by removing from
the first sentence the language ‘‘Form
843’’ and adding ‘‘Form 8849 (or on
such other form as the Commissioner
may designate)’’ in its place.
§§6424–0 through 48.6424–6
[Removed]
Par. 47. Sections 48.6424–0 through
48.6424–6 are removed.

Par. 49. In §48.6427–7, paragraph
(g)(4) is amended by removing the
language ‘‘Form 843 (Claim)’’ and
adding ‘‘Form 8849 (or such other
form as the Commissioner may designate)’’ in its place.
Par. 50. Sections 48.6427–8 and
48.6427–9 are added to read as
follows:
§48.6427–8 Claims by ultimate
purchasers with respect to diesel fuel
taxed after December 31, 1993.
(a) Overview. This section provides
the rules for obtaining a credit or
payment with respect to undyed diesel
fuel that was taxed after December 31,
1993, and that was used in a nontaxable use (other than on a farm for
farming purposes or by a State). A
credit or payment for undyed diesel
fuel used on a farm for farming
purposes or by a State is allowable
only to a registered ultimate vendor
under the rules of §48.6427–9.
(b) Conditions to allowance of credit
or payment—(1) In general. Except as
provided in section 6427(l)(5), a claim
for credit or payment with respect to
diesel fuel is allowable under section
6427(l) only if—
(i) Tax was imposed by section 4081
on the diesel fuel to which the claim
relates;
(ii) The claimant produced or bought
the fuel and did not resell it in the
United States;
(iii) The claimant has filed a timely
claim for a credit or payment that
contains the information required under
paragraph (d) of this section;
(iv) The fuel was not bought under a
certificate described in §48.6427–9(e)(2) (relating to certificate of farmer or
State to support claim of ultimate
vendor);
(v) The fuel was not used on a farm
for farming purposes (as defined in
§48.6420–4) or by a State; and
(vi) The fuel was either—

19

(A) Used in a use described in
§48.4082–4(c)(3) through (c)(10);
(B) Exported;
(C) Used other than as a fuel in a
propulsion engine of a diesel-powered
highway vehicle or diesel-powered
boat;
(D) Used as a fuel in a propulsion
engine of a diesel-powered train; or
(E) Used as a fuel in the propulsion
engine of a diesel-powered bus if the
bus was used in a use described in
section 6427(b)(1) (after the application
of section 6427(b)(3)).
(2) Examples. The following examples illustrate this paragraph (b).
Example 1. (i) In September 1996, F bought
250 gallons of undyed diesel fuel. In October
1996, F used 200 gallons of the fuel in a farm
tractor. This use qualifies as use on a farm for
farming purposes (as defined in §48.6420–4).
The farm tractor is not a diesel-powered highway
vehicle (as defined in §48.4081–1(h)). F used the
remaining 50 gallons to heat F’s residence. F
filed a complete and timely claim for a credit
relating to the 250 gallons.
(ii) A credit or payment is not allowable to F
with respect to the 200 gallons of diesel fuel
used in the farm tractor. Even though this fuel
was used other than as a fuel in a propulsion
engine of a diesel-powered highway vehicle (thus
meeting the condition in paragraph (b)(1)(vi)(C)
of this section), the condition in paragraph
(b)(1)(v) of this section is not satisfied because
the fuel was used on a farm for farming
purposes.
(iii) A credit is allowable to F with respect to
the 50 gallons F used for heating purposes
because the conditions in paragraph (b)(1) of this
section have been met. F used this fuel other
than as a fuel in a propulsion engine of a dieselpowered highway vehicle and the use of the fuel
for residential heating is not use on a farm for
farming purposes.
Example 2. (i) In September 1996, W, a
wholesale distributor, sold 3,500 gallons of
diesel fuel on which tax has been imposed to C,
a construction company located in the United
States. W’s selling price to C did not include an
amount equal to the federal excise tax on the
fuel. C used the fuel other than as a fuel in a
propulsion engine of a diesel-powered highway
vehicle or diesel-powered boat. Both W and C
file a complete and timely claim for a credit
relating to the fuel.
(ii) Because W resold the fuel in the United
States, the condition of paragraph (b)(1)(ii) of
this section is not met. Thus, W is not allowed a
credit or payment with respect to the fuel.
(iii) C is eligible for a credit or payment with
respect to the fuel because the conditions to
allowance in paragraph (b)(1) of this section
have been met. The conditions to allowance do
not include a requirement that C buy the fuel at a
price that includes the amount of the tax.

(c) Form of claim. Each claim for an
income tax credit under this section
must be made on Form 4136 (or on
such other form as the Commissioner

may designate) in accordance with the
instructions for that form. Each claim
for a payment under this section must
be made on Form 8849 (or on such
other form as the Commissioner may
designate) in accordance with the instructions for that form.
(d) Content of claim. Each claim for
a credit or payment under this section
must contain the following information
with respect to all the diesel fuel
covered by the claim:
(1) The total number of gallons
covered by the claim.
(2) A statement by the claimant that
tax has been imposed on the diesel fuel
covered by the claim.
(3) The use made of the diesel fuel
covered by the claim described by
reference to specific categories listed in
paragraph (b)(1)(vi) of this section
(such as use in a boat employed in
commercial fishing or the exclusive use
of a nonprofit educational organization).
(4) If the diesel fuel covered by the
claim was exported, a declaration that
the claimant has proof of exportation
(as described in §48.4221–3(d)(1)).
(5) A declaration that the claimant
has in its possession the name and
address of the person(s) that sold the
diesel fuel to the claimant and the
date(s) of the purchase(s).
(e) Time and place for filing claim.
For rules relating to the time for filing
a claim under section 6427, see section
6427(i). A claim under this section is
not filed unless it contains all the
information required by paragraph (d)
of this section and is filed at the place
required by the form.
(f) Effective date. This section is
effective January 1, 1994, except for
paragraph (b)(1)(v) of this section,
which is effective for diesel fuel
bought by ultimate purchasers after
June 30, 1994.
§48.6427–9 Claims by registered
ultimate vendors with respect to
diesel fuel taxed after December 31,
1993.
(a) Overview. This section provides
the rules for obtaining a credit or
payment with respect to undyed diesel
fuel that was taxed after December 31,
1993, and that was used on a farm for
farming purposes or by a State.
(b) Definitions. (1) An ultimate
vendor, as used in this section, is a

person that sells undyed diesel fuel
to—
(i) The owner, tenant, or operator of
a farm for use by such person on a
farm for farming purposes (as defined
in §48.6420–4);
(ii) A person other than the owner,
tenant, or operator of a farm for use by
such person for any of the purposes
described in §48.6420–4(d) (relating to
cultivating, raising, or harvesting); or
(iii) Any State for its exclusive use.
(2) A registered ultimate vendor
is—
(i) An ultimate vendor that is registered under section 4101 as an ultimate
vendor; or
(ii) With respect to a claim filed
before January 1, 1995, an ultimate
vendor that is registered as a producer
of diesel fuel on December 31, 1993, if
the registration has not been revoked or
suspended.
(c) Conditions to allowance of credit
or payment. A claim for a credit or
payment with respect to diesel fuel is
allowable under section 6427(l)(5) only
if—
(1) Tax was imposed by section
4081 on the diesel fuel to which the
claim relates;
(2) The claimant sold the diesel fuel
to—
(i) The owner, tenant, or operator of
a farm for use by such person on a
farm for farming purposes (as defined
in §48.6420–4);
(ii) A person other than the owner,
tenant, or operator of a farm for use by
such person for any of the purposes
described in §48.6420–4(d) (relating to
cultivating, raising, or harvesting); or
(iii) Any State for its exclusive use;
(3) The claimant is a registered
ultimate vendor; and
(4) The claimant has filed a timely
claim for a credit or payment that
contains the information required under
paragraph (e) of this section.
(d) Form of claim. Each claim for an
income tax credit under this section
must be made on Form 4136 (or on
such other form as the Commissioner
may designate) in accordance with the
instructions for that form. Each claim
for a payment under this section must
be made on Form 8849 (or on such
other form as the Commissioner may
designate) in accordance with the instructions for that form.
(e) Content of claim—(1) In general.
Each claim for credit or payment under

20

this section must contain the following
information with respect to all the
diesel fuel covered by the claim:
(i) The total number of gallons
covered by the claim.
(ii) A statement by the claimant that
tax has been imposed on the diesel fuel
covered by the claim.
(iii) The claimant’s registration
number.
(iv) The name and taxpayer identification number of each person that
bought diesel fuel from the claimant in
a transaction described in paragraph
(c)(2) of this section and the number of
gallons that the claimant sold to that
person.
(v) A statement that the claimant—
(A) Has not included the amount of
the tax in its sales price of the diesel
fuel 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 the allowance of the
claim.
(vi) For claims relating to sales by
the claimant after March 31, 1994, a
statement that the claimant has in its
possession an unexpired certificate described in paragraph (e)(2) of this
section and the claimant has no reason
to believe any information in the
certificate is false.
(vii) For claims relating to sales by
the claimant before April 1, 1994,
either the statement described in paragraph (e)(1)(vi) of this section or a
statement that—
(A) The claimant has in its possession an unexpired exemption certificate
relating to tax-free sales of diesel fuel
for use on a farm for farming purposes
or for the exclusive use of a State;
(B) The certificate was received
from the buyer before January 1, 1994;
and
(C) The claimant has no reason to
believe any information in the certificate is false.
(2) Certificate—(i) 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 provided in
paragraph (e)(2)(ii) of this section, and
contains all information necessary to
complete such model certificate. A new
certificate must be given if any infor-

mation 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:
(A) The date one year after the
effective date of the certificate.

(B) The date a new certificate is
provided to the seller.
(ii) Model certificate.

CERTIFICATE OF FARMING USE OR STATE USE
(To support vendor’s claim for a credit or payment under section 6427 of the Internal Revenue Code.)
Name, address, and employer identification number of vendor
The undersigned buyer (‘‘Buyer’’) hereby certifies the following under penalties of perjury:
Buyer will use the diesel fuel to which this certificate relates—(check one)
On a farm for farming purposes (as defined in §48.6420–4(c) of the Manufacturers and Retailers Excise Tax
Regulations) and Buyer is the owner, tenant, or operator of the farm on which the fuel will be used;
On a farm (as defined in §48.6420–4(c)) for any of the purposes described in paragraph (d) of that section (relating
to cultivating, raising, or harvesting) and Buyer is a person that is not the owner, tenant, or operator of the farm on which
the fuel will be used; or
For the exclusive use of a State or local government, or the District of Columbia.
This certificate applies to the following (complete as applicable):
If this is a single purchase certificate, check here
and enter:
1. Invoice or delivery ticket number
2.
(number of gallons)
If this is a certificate covering all purchases under a specified account or order number, check here
and enter:
1. Effective date
2. Expiration date
(period not to exceed 1 year after the effective date)
3. Buyer account or order number
Buyer will provide a new certificate to the vendor if any information in this certificate changes.
If Buyer uses the diesel fuel to which this certificate relates for a purpose other than stated in the certificate Buyer will be
liable for tax.
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

21

(f) Time and place for filing claim.
For rules relating to the time for filing
a claim under section 6427, see section
6427(i). A claim under this section is
not filed unless it contains all the
information required by paragraph (e)
of this section and is filed at the place
required by the form.
(g) Effective date. This section is
effective January 1, 1994.
§§48.6427–8T and 48.6427–9T
[Removed]
Par. 51. Sections 48.6427–8T and
48.6427–9T are removed.
§48.6675–1 [Removed]
Par. 52. Section 48.6675–1 is
removed.
Par. 53. Section 48.6714–1 is added
to read as follows:
§48.6714–1 Penalty for misuse of
dyed diesel fuel.
(a) In general. If any person willfully alters, or attempts to alter, the
strength or composition of any dye or
marking done pursuant to §48.4082–1
in any dyed fuel, then section 6714(a)(3) provides that such person shall pay
a penalty in addition to any tax. The
penalty imposed by section 6714(a)(3)
will not apply in the following cases:
(1) Diesel fuel that satisfies the
dyeing and marking requirements of
§48.4082–1(b) and (c) is blended with
any undyed liquid and the resulting
product satisfies the dyeing and marking requirements of §48.4082–1(b) and
(c).
(2) Diesel fuel that satisfies the
dyeing and marking requirements of
§48.4082–1(b) and (c) is blended with
any other liquid (other than diesel fuel)
that contains the type and amount of
dye and marker required for diesel fuel
dyed and marked in accordance with
§48.4082–1(b) and (c).
(3) Diesel fuel that is dyed one color
in accordance with §48.4082–1(b) is
blended with diesel fuel that is dyed
another color in accordance with
§48.4082–1(b).

(4) Diesel fuel that does not satisfy
the dyeing and marking requirements
of §48.4082–1(b) and (c) is blended
with diesel fuel that satisfies the dyeing
and marking requirements of §48.4082–
1(b) and (c) and the blending occurs as
part of a use described in §48.4082–
4(c) or §48.6427–8(b)(vi)(C), (D), or
(E).
(b) Effective date. This section is
effective January 1, 1994.
PART 602—OMB CONTROL
NUMBERS UNDER THE
PAPERWORK REDUCTION ACT
Par. 54. The authority citation for
part 602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 55. In §602.101, paragraph (c) is
amended as follows:
1. Removing the following entries
from the table:

2. Adding entries in numerical order
to the table to read as follows:
§602.101 OMB Control numbers.
*

*

*

*

*

*

(c) * * *
CFR part or section
where identified
and described
*

*

*

Current OMB
control number

*

*

*

48.4082–2 . . . . . . . . . . . . . . 1545–1418
48.4101–1 . . . . . . . . . . . . . . 1545–1418
48.4101–2 . . . . . . . . . . . . . . 1545–1418
*

*

*

*

*

*

48.6427–8 . . . . . . . . . . . . . . 1545–1418
48.6427–9 . . . . . . . . . . . . . . 1545–1418
*

*

*

*

*

*

§602.101 OMB Control numbers.
*

*

*

*

*

*

(c) * * *

Margaret Milner Richardson,
Commissioner of Internal Revenue.
Approved December 18, 1995.

CFR part or section
where identified
and described
*

*

*

Current OMB
control number

*

*

*

42.5(b) . . . . . . . . . . . . . . . . . 1545–1206
*

*

*

*

*

*

48.4041–2T . . . . . . . . . . . . . 1545–0143
*

*

*

*

*

*

48.4082–2T . . . . . . . . . . . . . 1545–1418
48.4101–1 . . . . . . . . . . . . . . 1545–0023
1545–0725
1545–0014
48.4101–2T . . . . . . . . . . . . . 1545–0725
48.4101–3T . . . . . . . . . . . . . 1545–1418
48.4101–4T . . . . . . . . . . . . . 1545–1418
*

*

*

*

*

*

48.6427–8T . . . . . . . . . . . . . 1545–1418
48.6427–9T . . . . . . . . . . . . . 1545–1418
*

*

*

*

22

*

*

Leslie Samuels,
Assistant Secretary of the Treasury.
(Filed by the Office of the Federal Register on
March 13, 1996, 8:45 a.m., and published in
the issue of the Federal Register for March 14,
1996, 61 F.R. 10450)