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E File

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E File

E file 1. E file   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. E file Gasoline and Aviation GasolineTaxable Events Gasoline Blendstocks Diesel Fuel and KeroseneTaxable Events Dyed Diesel Fuel and Dyed Kerosene Alaska and Feedstocks Back-up Tax Diesel-Water Fuel Emulsion Kerosene for Use in AviationTaxable Events Liability For Tax Surtax on any liquid used in a fractional ownership program aircraft as fuel Certificate for Commercial Aviation and Exempt UsesExempt use. E file Reseller statement. E file Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. E file Deep-draft ocean-going vessels. E file Passenger vessels. E file Ocean-going barges. E file State or local governments. E file Cellulosic or Second Generation Biofuel Not Used as Fuel Biodiesel Sold as But Not Used as Fuel Definitions Excise taxes are imposed on all the following fuels. E file Gasoline, including aviation gasoline and gasoline blendstocks. E file Diesel fuel, including dyed diesel fuel. E file Diesel-water fuel emulsion. E file Kerosene, including dyed kerosene and kerosene used in aviation. E file Other Fuels (including alternative fuels). E file Compressed natural gas (CNG). E file Fuels used in commercial transportation on inland waterways. E file Any liquid used in a fractional ownership program aircraft as fuel. E file The following terms are used throughout the discussion of fuel taxes. E file Other terms are defined in the discussion of the specific fuels to which they pertain. E file Agri-biodiesel. E file   Agri-biodiesel means biodiesel derived solely from virgin oils, including esters derived from virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, mustard seeds, and camelina, and from animal fats. E file Approved terminal or refinery. E file   This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner. E file Biodiesel. E file   Biodiesel means the monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet the registration requirements for fuels and fuel additives established by the Environmental Protection Agency (EPA) under section 211 of the Clean Air Act, and the requirements of the American Society of Testing Materials (ASTM) D6751. E file Blended taxable fuel. E file   This means any taxable fuel produced outside the bulk transfer/terminal system by mixing taxable fuel on which excise tax has been imposed and any other liquid on which excise tax has not been imposed. E file This does not include a mixture removed or sold during the calendar quarter if all such mixtures removed or sold by the blender contain less than 400 gallons of a liquid on which the tax has not been imposed. E file Blender. E file   This is the person that produces blended taxable fuel. E file Bulk transfer. E file   This is the transfer of taxable fuel by pipeline or vessel. E file Bulk transfer/terminal system. E file   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. E file Fuel in the supply tank of any engine, or in any tank car, railcar, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system. E file Cellulosic biofuel. E file   Cellulosic biofuel means any liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis that meets the registration requirements for fuels and fuel additives established by the EPA under section 211 of the Clean Air Act. E file Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). E file For fuels sold or used after December 31, 2009, cellulosic biofuel does not include fuel of which more than 4% (determined by weight) is any combination of water and sediment, fuel of which the ash content is more than 1%, or fuel that has an acid number greater than 25. E file Also see Second generation biofuel below. E file Diesel-water fuel emulsion. E file   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. E file The emulsion additive used to produce the fuel must be registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. E file Dry lease aircraft exchange. E file   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. E file Enterer. E file   This is the importer of record (under customs law) for the taxable fuel. E file However, if the importer of record is acting as an agent, such as a customs broker, the person for whom the agent is acting is the enterer. E file If there is no importer of record, the owner at the time of entry into the United States is the enterer. E file Entry. E file   Taxable fuel is entered into the United States when it is brought into the United States and applicable customs law requires that it be entered for consumption, use, or warehousing. E file This does not apply to fuel brought into Puerto Rico (which is part of the U. E file S. E file customs territory), but does apply to fuel brought into the United States from Puerto Rico. E file Fractional ownership aircraft program and fractional program aircraft. E file   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. E file Measurement of taxable fuel. E file   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. E file Other fuels. E file   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. E file Pipeline operator. E file   This is the person that operates a pipeline within the bulk transfer/terminal system. E file Position holder. E file   This is the person that holds the inventory position in the taxable fuel in the terminal, as reflected in the records of the terminal operator. E file You hold the inventory position when you have a contractual agreement with the terminal operator for the use of the storage facilities and terminaling services for the taxable fuel. E file A terminal operator that owns taxable fuel in its terminal is a position holder. E file Rack. E file   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. E file Refiner. E file   This is any person that owns, operates, or otherwise controls a refinery. E file Refinery. E file   This is a facility used to produce taxable fuel and from which taxable fuel may be removed by pipeline, by vessel, or at a rack. E file However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. E file For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. E file Registrant. E file   This is a taxable fuel registrant (see Registration Requirements, later). E file Removal. E file   This is any physical transfer of taxable fuel. E file It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. E file However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. E file Renewable diesel. E file   See Renewable Diesel Credits in chapter 2. E file Sale. E file   For taxable fuel not in a terminal, this is the transfer of title to, or substantial incidents of ownership in, taxable fuel to the buyer for money, services, or other property. E file For taxable fuel in a terminal, this is the transfer of the inventory position if the transferee becomes the position holder for that taxable fuel. E file Second generation biofuel. E file   This is any liquid fuel derived by, or from, qualified feedstocks, and meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U. E file S. E file C. E file 7545). E file It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. E file It is not alcohol of less than 150 proof (disregard any added denaturants). E file See Form 6478 for more information. E file State. E file   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. E file An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. E file Taxable fuel. E file   This means gasoline, diesel fuel, and kerosene. E file Terminal. E file   This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. E file It does not include a facility at which gasoline blendstocks are used in the manufacture of products other than finished gasoline if no gasoline is removed from the facility. E file A terminal does not include any facility where finished gasoline, diesel fuel, or kerosene is stored if the facility is operated by a registrant and all such taxable fuel stored at the facility has been previously taxed upon removal from a refinery or terminal. E file Terminal operator. E file   This is any person that owns, operates, or otherwise controls a terminal. E file Throughputter. E file   This is any person that is a position holder or that owns taxable fuel within the bulk transfer/terminal system (other than in a terminal). E file Vessel operator. E file   This is the person that operates a vessel within the bulk transfer/terminal system. E file However, vessel does not include a deep draft ocean-going vessel. E file Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. E file A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. E file For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. E file The returns are due the last day of the month following the month in which the transaction occurs. E file Generally, these returns can be filed on paper or electronically. E file For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. E file Publication 3536 is only available on the IRS website. E file Form 720-TO. E file   This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. E file Each terminal operator must file a separate form for each approved terminal. E file Form 720-CS. E file   This information return must be filed by bulk transport carriers (barges, vessels, and pipelines) who receive liquid product from an approved terminal or deliver liquid product to an approved terminal. E file Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. E file See Form 637 for other persons who must register and for more information about registration. E file Persons that are required to be registered. E file   You are required to be registered if you are a: Blender; Enterer; Pipeline operator; Position holder; Refiner; Terminal operator; Vessel operator; Producer or importer of alcohol, biodiesel, agri-biodiesel, and renewable diesel; or Producer of cellulosic or second generation biofuel. E file Persons that may register. E file   You may, but are not required to, register if you are a: Feedstock user, Industrial user, Throughputter that is not a position holder, Ultimate vendor, Diesel-water fuel emulsion producer, Credit card issuer, or Alternative fuel claimant. E file Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. E file However, they must be registered to file claims for certain sales and uses of fuel. E file See Form 637 for more information. E file Taxable fuel registrant. E file   This is an enterer, an industrial user, a refiner, a terminal operator, or a throughputter who received a Letter of Registration under the excise tax registration provisions and whose registration has not been revoked or suspended. E file The term registrant as used in the discussions of these fuels means a taxable fuel registrant. E file Additional information. E file   See the Form 637 instructions for the information you must submit when you apply for registration. E file Failure to register. E file   The penalty for failure to register if you must register, unless due to reasonable cause, is $10,000 for the initial failure, and then $1,000 each day thereafter you fail to register. E file Gasoline and Aviation Gasoline Gasoline. E file   Gasoline means all products commonly or commercially known or sold as gasoline with an octane rating of 75 or more that are suitable for use as a motor fuel. E file Gasoline includes any gasoline blend other than: Qualified ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from coal, including peat), Partially exempt ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from natural gas), or Denatured alcohol. E file Gasoline also includes gasoline blendstocks, discussed later. E file Aviation gasoline. E file   This means all special grades of gasoline suitable for use in aviation reciprocating engines and covered by ASTM specification D910 or military specification MIL-G-5572. E file Taxable Events The tax on gasoline is $. E file 184 per gallon. E file The tax on aviation gasoline is $. E file 194 per gallon. E file When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. E file 141 per gallon. E file See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. E file Tax is imposed on the removal, entry, or sale of gasoline. E file Each of these events is discussed later. E file Also, see the special rules that apply to gasoline blendstocks, later. E file If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. E file See Refunds of Second Tax in chapter 2. E file Removal from terminal. E file   All removals of gasoline at a terminal rack are taxable. E file The position holder for that gasoline is liable for the tax. E file Two-party exchanges. E file   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. E file A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. E file The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. E file The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. E file The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. E file The transaction is subject to a written contract. E file Terminal operator's liability. E file   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. E file   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. E file The terminal operator is a registrant. E file The terminal operator has an unexpired notification certificate (discussed later) from the position holder. E file The terminal operator has no reason to believe any information on the certificate is false. E file Removal from refinery. E file   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. E file It is made by bulk transfer and the refiner, the owner of the gasoline immediately before the removal, or the operator of the pipeline or vessel is not a registrant. E file It is made at the refinery rack. E file The refiner is liable for the tax. E file Exception. E file   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. E file The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. E file The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. E file The removal from the refinery is by railcar. E file The same person operates the refinery and the facility at which the gasoline is received. E file Entry into the United States. E file   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. E file It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. E file It is not made by bulk transfer. E file The enterer is liable for the tax. E file Importer of record's liability. E file   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. E file   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. E file The importer of record has an unexpired notification certificate (discussed later) from the enterer. E file The importer of record has no reason to believe any information in the certificate is false. E file Customs bond. E file   The customs bond will not be charged for the tax imposed on the entry of the gasoline if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. E file Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. E file   The removal by bulk transfer of gasoline from a terminal is taxable if the position holder for the gasoline or the operator of the pipeline or vessel is not a registrant. E file The position holder is liable for the tax. E file The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. E file However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. E file Bulk transfers not received at approved terminal or refinery. E file   The removal by bulk transfer of gasoline from a terminal or refinery, or the entry of gasoline by bulk transfer into the United States, is taxable if the following conditions apply. E file No tax was previously imposed (as discussed earlier) on any of the following events. E file The removal from the refinery. E file The entry into the United States. E file The removal from a terminal by an unregistered position holder. E file Upon removal from the pipeline or vessel, the gasoline is not received at an approved terminal or refinery (or at another pipeline or vessel). E file   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. E file However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. E file The owner is a registrant. E file The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. E file The owner has no reason to believe any information on the certificate is false. E file The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. E file The operator is jointly and severally liable if the owner does not meet these conditions. E file Sales to unregistered person. E file   The sale of gasoline located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. E file   The seller is liable for the tax. E file However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. E file   The seller is a registrant. E file The seller has an unexpired notification certificate (discussed later) from the buyer. E file The seller has no reason to believe any information on the certificate is false. E file The buyer of the gasoline is liable for the tax if the seller meets these conditions. E file The buyer is jointly and severally liable if the seller does not meet these conditions. E file Exception. E file   The tax does not apply to a sale if all of the following apply. E file The buyer's principal place of business is not in the United States. E file The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. E file The seller is a registrant and the exporter of record. E file The fuel was exported. E file Removal or sale of blended gasoline. E file   The removal or sale of blended gasoline by the blender is taxable. E file See Blended taxable fuel under Definitions, earlier. E file   The blender is liable for the tax. E file The tax is figured on the number of gallons not previously subject to the tax on gasoline. E file   Persons who blend alcohol with gasoline to produce an alcohol fuel mixture outside the bulk transfer/terminal system must pay the gasoline tax on the volume of alcohol in the mixture. E file See Form 720 to report this tax. E file You also must be registered with the IRS as a blender. E file See Form 637. E file   However, if an untaxed liquid is sold as taxed taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. E file Notification certificate. E file   The notification certificate is used to notify a person of the registration status of the registrant. E file A copy of the registrant's letter of registration cannot be used as a notification certificate. E file A model notification certificate is shown in the Appendix as Model Certificate C. E file A notification certificate must contain all information necessary to complete the model. E file   The certificate may be included as part of any business records normally used for a sale. E file A certificate expires on the earlier of the date the registrant provides a new certificate, or the date the recipient of the certificate is notified that the registrant's registration has been revoked or suspended. E file The registrant must provide a new certificate if any information on a certificate has changed. E file Additional persons liable. E file   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax is imposed on: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty, or Anyone who willfully causes the person to fail to pay the tax. E file Gasoline Blendstocks Gasoline blendstocks may be subject to $. E file 001 per gallon LUST tax as discussed below. E file Gasoline includes gasoline blendstocks. E file The previous discussions apply to these blendstocks. E file However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. E file 001 per gallon or are not subject to the excise tax. E file Blendstocks. E file   Gasoline blendstocks are: Alkylate, Butane, Butene, Catalytically cracked gasoline, Coker gasoline, Ethyl tertiary butyl ether (ETBE), Hexane, Hydrocrackate, Isomerate, Methyl tertiary butyl ether (MTBE), Mixed xylene (not including any separated isomer of xylene), Natural gasoline, Pentane, Pentane mixture, Polymer gasoline, Raffinate, Reformate, Straight-run gasoline, Straight-run naphtha, Tertiary amyl methyl ether (TAME), Tertiary butyl alcohol (gasoline grade) (TBA), Thermally cracked gasoline, and Toluene. E file   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. E file Not used to produce finished gasoline. E file   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. E file Removals and entries not connected to sale. E file   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant. E file Removals and entries connected to sale. E file   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant, and at the time of the sale, meets the following requirements. E file The person has an unexpired certificate (discussed later) from the buyer. E file The person has no reason to believe any information in the certificate is false. E file Sales after removal or entry. E file   The sale of a gasoline blendstock that was not subject to tax on its nonbulk removal or entry, as discussed earlier, is taxable. E file The seller is liable for the tax. E file However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. E file The seller has an unexpired certificate (discussed next) from the buyer. E file The seller has no reason to believe any information in the certificate is false. E file Certificate of buyer. E file   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. E file The certificate may be included as part of any business records normally used for a sale. E file A model certificate is shown in the Appendix as Model Certificate D. E file The certificate must contain all information necessary to complete the model. E file   A certificate expires on the earliest of the following dates. E file The date 1 year after the effective date (not earlier than the date signed) of the certificate. E file The date a new certificate is provided to the seller. E file The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. E file The buyer must provide a new certificate if any information on a certificate has changed. E file   The IRS may withdraw the buyer's right to provide a certificate if that buyer uses the gasoline blendstocks in the production of finished gasoline or resells the blendstocks without getting a certificate from its buyer. E file Received at approved terminal or refinery. E file   The nonbulk removal or entry of gasoline blendstocks received at an approved terminal or refinery is not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) meets all the following requirements. E file The person is a registrant. E file The person has an unexpired notification certificate (discussed earlier) from the operator of the terminal or refinery where the gasoline blendstocks are received. E file The person has no reason to believe any information on the certificate is false. E file Bulk transfers to registered industrial user. E file   The removal of gasoline blendstocks from a pipeline or vessel is not taxable (other than LUST) if the blendstocks are received by a registrant that is an industrial user. E file An industrial user is any person that receives gasoline blendstocks by bulk transfer for its own use in the manufacture of any product other than finished gasoline. E file Credits or Refunds. E file   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. E file For more information, see chapter 2. E file Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). E file However, special rules (discussed later) apply to dyed diesel fuel and dyed kerosene, and to undyed diesel fuel and undyed kerosene sold or used in Alaska for certain nontaxable uses and undyed kerosene used for a feedstock purpose. E file Diesel fuel means: Any liquid that without further processing or blending is suitable for use as a fuel in a diesel-powered highway vehicle or train, and Transmix. E file A liquid is suitable for this use if the liquid has practical and commercial fitness for use in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. E file A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. E file 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 diesel-powered highway vehicle or diesel-powered train. E file Diesel fuel does not include gasoline, kerosene, excluded liquid, No. E file 5 and No. E file 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. E file An excluded liquid is either of the following. E file A liquid that contains less than 4% normal paraffins. E file A liquid with all the following properties. E file Distillation range of 125 degrees Fahrenheit or less. E file Sulfur content of 10 ppm or less. E file Minimum color of +27 Saybolt. E file Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. E file Kerosene. E file   This means any of the following liquids. E file One of the two grades of kerosene (No. E file 1-K and No. E file 2-K) covered by ASTM specification D3699. E file Kerosene-type jet fuel covered by ASTM specification D1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8). E file See Kerosene for Use in Aviation, later. E file   However, kerosene does not include excluded liquid, discussed earlier. E file   Kerosene also includes any liquid that would be described above but for the presence of a dye of the type used to dye kerosene for a nontaxable use. E file Diesel-powered highway vehicle. E file   This is any self-propelled vehicle designed to carry a load over public highways (whether or not also designed to perform other functions) and propelled by a diesel-powered engine. E file Specially designed mobile machinery for nontransportation functions and vehicles specially designed for off-highway transportation are generally not considered diesel-powered highway vehicles. E file For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. E file 2) in chapter 2. E file Diesel-powered train. E file   This is any diesel-powered equipment or machinery that rides on rails. E file The term includes a locomotive, work train, switching engine, and track maintenance machine. E file Taxable Events The tax on diesel fuel and kerosene is $. E file 244 per gallon. E file It is imposed on the removal, entry, or sale of diesel fuel and kerosene. E file Each of these events is discussed later. E file Only the $. E file 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. E file If the tax is paid on the diesel fuel or kerosene in more than one event, a refund may be allowed for the “second” tax paid. E file See Refunds of Second Tax in chapter 2. E file Use in certain intercity and local buses. E file   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. E file A claim for $. E file 17 per gallon may be made by the registered ultimate vendor (under certain conditions) or the ultimate purchaser for undyed diesel fuel or undyed kerosene sold for use in certain intercity or local buses. E file An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. E file The bus must be engaged in one of the following activities. E file Scheduled transportation along regular routes regardless of the size of the bus. E file Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). E file 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. E file Removal from terminal. E file   All removals of diesel fuel and kerosene at a terminal rack are taxable. E file The position holder for that fuel is liable for the tax. E file Two-party exchanges. E file   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. E file A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. E file The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. E file The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. E file The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. E file The transaction is subject to a written contract. E file Terminal operator's liability. E file   The terminal operator is jointly and severally liable for the tax if the terminal operator provides any person with any bill of lading, shipping paper, or similar document indicating that diesel fuel or kerosene is dyed (discussed later). E file   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. E file However, a terminal operator will not be liable for the tax in this situation if, at the time of the removal, the following conditions are met. E file The terminal operator is a registrant. E file The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. E file The terminal operator has no reason to believe any information on the certificate is false. E file Removal from refinery. E file   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. E file It is made by bulk transfer and the refiner, the owner of the fuel immediately before the removal, or the operator of the pipeline or vessel is not a registrant. E file It is made at the refinery rack. E file The refiner is liable for the tax. E file Exception. E file   The tax does not apply to a removal of diesel fuel or kerosene at the refinery rack if all the following conditions are met. E file The diesel fuel or kerosene is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. E file The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. E file The removal from the refinery is by: Railcar and the same person operates the refinery and the facility at which the diesel fuel or kerosene is received, or For diesel fuel only, a trailer or semi-trailer used exclusively to transport the diesel fuel from a refinery (described in (1)) to a facility (described in (2)) less than 20 miles from the refinery. E file Entry into the United States. E file   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. E file It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. E file It is not made by bulk transfer. E file The enterer is liable for the tax. E file Importer of record's liability. E file   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. E file   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. E file The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. E file The importer of record has no reason to believe any information in the certificate is false. E file Customs bond. E file   The customs bond will not be charged for the tax imposed on the entry of the diesel fuel or kerosene if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. E file Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. E file   The removal by bulk transfer of diesel fuel or kerosene from a terminal is taxable if the position holder for that fuel or the operator of the pipeline or vessel is not a registrant. E file The position holder is liable for the tax. E file The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. E file However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. E file Bulk transfers not received at approved terminal or refinery. E file   The removal by bulk transfer of diesel fuel or kerosene from a terminal or refinery or the entry of diesel fuel or kerosene by bulk transfer into the United States is taxable if the following conditions apply. E file No tax was previously imposed (as discussed earlier) on any of the following events. E file The removal from the refinery. E file The entry into the United States. E file The removal from a terminal by an unregistered position holder. E file Upon removal from the pipeline or vessel, the diesel fuel or kerosene is not received at an approved terminal or refinery (or at another pipeline or vessel). E file   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. E file However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. E file The owner is a registrant. E file The owner has an unexpired notification certificate (discussed under Gasoline) from the operator of the terminal or refinery where the diesel fuel or kerosene is received. E file The owner has no reason to believe any information on the certificate is false. E file The operator of the facility where the diesel fuel or kerosene is received is liable for the tax if the owner meets these conditions. E file The operator is jointly and severally liable if the owner does not meet these conditions. E file Sales to unregistered person. E file   The sale of diesel fuel or kerosene located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. E file   The seller is liable for the tax. E file However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. E file The seller is a registrant. E file The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. E file The seller has no reason to believe any information on the certificate is false. E file The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. E file The buyer is jointly and severally liable if the seller does not meet these conditions. E file Exception. E file   The tax does not apply to a sale if all of the following apply. E file The buyer's principal place of business is not in the United States. E file The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. E file The seller is a registrant and the exporter of record. E file The fuel was exported. E file Removal or sale of blended diesel fuel or kerosene. E file   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. E file Blended taxable fuel produced using biodiesel is subject to the tax. E file See Blended taxable fuel under Definitions, earlier. E file   The blender is liable for the tax. E file The tax is figured on the number of gallons not previously subject to the tax. E file   Persons who blend biodiesel with undyed diesel fuel to produce and sell or use a biodiesel mixture outside the bulk transfer/terminal system must pay the diesel fuel tax on the volume of biodiesel in the mixture. E file Generally, the biodiesel mixture must be diesel fuel (defined earlier). E file See Form 720 to report this tax. E file You also must be registered by the IRS as a blender. E file See Form 637 for more information. E file   However, if an untaxed liquid is sold as taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. E file Additional persons liable. E file   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax applies to: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty; or Anyone who willfully causes the person to fail to pay the tax. E file Credits or Refunds. E file   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. E file For more information, see chapter 2. E file Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. E file 001 per gallon LUST tax as discussed below, unless the fuel is for export. E file The excise tax is not imposed on the removal, entry, or sale of diesel fuel or kerosene (other than the LUST tax) if all the following tests are met. E file The person otherwise liable for tax (for example, the position holder) is a registrant. E file In the case of a removal from a terminal, the terminal is an approved terminal. E file The diesel fuel or kerosene satisfies the dyeing requirements (described next). E file Dyeing requirements. E file   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. E file It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. E file 9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of fuel or any dye of a type and in a concentration that has been approved by the Commissioner. E file Is indelibly dyed by mechanical injection. E file See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. E file Notice required. E file   A legible and conspicuous notice stating either: DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE or DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE must be: Provided by the terminal operator to any person that receives dyed diesel fuel or dyed kerosene at a terminal rack of that operator, and Posted by a seller on any retail pump or other delivery facility where it sells dyed diesel fuel or dyed kerosene for use by its buyer. E file   The notice under item (1) must be provided by the time of the removal and must appear on all shipping papers, bills of lading, and similar documents accompanying the removal of the fuel. E file   Any seller that fails to post the required notice under item (2) is presumed to know that the fuel will be used for a taxable use (a use other than a nontaxable use listed later). E file That seller is subject to the penalty described next. E file Penalty. E file   A penalty is imposed on a person if any of the following situations apply. E file Any dyed fuel is sold or held for sale by the person for a use the person knows or has reason to know is not a nontaxable use of the fuel. E file Any dyed fuel is held for use or used by the person for a use other than a nontaxable use and the person knew, or had reason to know, that the fuel was dyed. E file The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. E file The person has knowledge that a dyed fuel that has been altered, as described in (3) above, sells or holds for sale such fuel for any use for which the person knows or has reason to know is not a nontaxable use of the fuel. E file   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. E file After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. E file   This penalty is in addition to any tax imposed on the fuel. E file   If the penalty is imposed, each officer, employee, or agent of a business entity who willfully participated in any act giving rise to the penalty is jointly and severally liable with that entity for the penalty. E file   There is no administrative appeal or review allowed for the third and subsequent penalty imposed by section 6715 on any person except for: Fraud or a mistake in the chemical analysis, or Mathematical calculation of the penalty. E file   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. E file However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. E file The penalty may apply if the fuel is held for sale or use for a taxable use while the back-up tax does not apply unless the fuel is delivered into a fuel supply tank. E file Exception to penalty. E file   The penalty under item (3) will not apply in any of the following situations. E file Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any undyed liquid and the resulting product meets the dyeing requirements. E file Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any other liquid (other than diesel fuel or kerosene) that contains the type and amount of dye required to meet the dyeing requirements. E file The alteration or attempted alteration occurs in an exempt area of Alaska. E file See Removal for sale or use in Alaska, later. E file Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with diesel fuel or kerosene not meeting the dyeing requirements and the blending occurs as part of a nontaxable use (other than export), discussed later. E file Alaska and Feedstocks Tax of $. E file 001 per gallon is imposed on: Undyed diesel fuel or undyed kerosene sold or used in Alaska for certain nontaxable uses (see Later sales on page 10). E file Undyed kerosene used for feedstock purposes. E file Removal for sale or use in Alaska. E file   No tax is imposed on the removal, entry, or sale of diesel fuel or kerosene in Alaska for ultimate sale or use in certain areas of Alaska for certain nontaxable uses. E file The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. E file The person otherwise liable for the tax (position holder, refiner, or enterer): Is a registrant, Can show satisfactory evidence of the nontaxable nature of the transaction, and Has no reason to believe the evidence is false. E file In the case of a removal from a terminal, the terminal is an approved terminal. E file The owner of the fuel immediately after the removal or entry holds the fuel for its own use in a nontaxable use (discussed later) or is a qualified dealer. E file   If all three of the requirements above are not met, then tax is imposed at $. E file 244 per gallon. E file   A qualified dealer is any person that holds a qualified dealer license from the state of Alaska or has been registered by the IRS as a qualified retailer. E file Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. E file Later sales. E file   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. E file The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. E file However, the sale is not taxable (other than the LUST tax at $. E file 001 per gallon) if all the following requirements are met. E file The fuel is sold in Alaska for certain nontaxable uses. E file The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. E file The seller can show satisfactory evidence of the nontaxable nature of the transaction and has no reason to believe the evidence is false. E file Feedstock purposes. E file   The $. E file 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. E file The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. E file In the case of a removal from a terminal, the terminal is an approved terminal. E file Either: The person otherwise liable for tax uses the kerosene for a feedstock purpose, or The kerosene is sold for use by the buyer for a feedstock purpose and, at the time of the sale, the person otherwise liable for tax has an unexpired certificate (described later) from the buyer and has no reason to believe any information on the certificate is false. E file   If all of the requirements above are not met, then tax is imposed at $. E file 244 per gallon. E file   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. E file For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. E file A feedstock user is a person that uses kerosene for a feedstock purpose. E file A registered feedstock user is a person that has been registered by the IRS as a feedstock user. E file See Registration Requirements, earlier. E file Later sales. E file   The excise tax ($. E file 244 per gallon) applies to kerosene sold for use by the buyer for a feedstock purpose (item (3)(b) above) if the buyer in that sale later sells the kerosene. E file The tax is imposed at the time of the later sale and that seller is liable for the tax. E file Certificate. E file   The certificate from the buyer certifies the buyer is a registered feedstock user and the kerosene will be used by the buyer for a feedstock purpose. E file The certificate may be included as part of any business records normally used for a sale. E file A model certificate is shown in the Appendix as Model Certificate G. E file Your certificate must contain all information necessary to complete the model. E file   A certificate expires on the earliest of the following dates. E file The date 1 year after the effective date (not earlier than the date signed) of the certificate. E file The date the seller is provided a new certificate or notice that the current certificate is invalid. E file The date the seller is notified the buyer's registration has been revoked or suspended. E file   The buyer must provide a new certificate if any information on a certificate has changed. E file Back-up Tax Tax is imposed on the delivery of any of the following into the fuel supply tank of a diesel-powered highway vehicle. E file Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. E file Any undyed diesel fuel or undyed kerosene on which a credit or refund (for fuel used for a nontaxable purpose) has been allowed. E file Any liquid other than gasoline, diesel fuel, or kerosene. E file Generally, this back-up tax is imposed at a rate of $. E file 244 per gallon. E file Liability for tax. E file   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. E file In addition, the seller of the diesel fuel or kerosene is jointly and severally liable for the tax if the seller knows or has reason to know that the fuel will be used for other than a nontaxable use. E file Exemptions from the back-up tax. E file   The back-up tax does not apply to a delivery of diesel fuel or kerosene for uses 1, 2, 6, 7, 12, 13, 14, and 15 listed under Definitions of Nontaxable Uses in chapter 2. E file   In addition, since the back-up tax is imposed only on the delivery into the fuel supply tank of a diesel-powered vehicle or train, the tax does not apply to diesel fuel or kerosene used as heating oil or in stationary engines. E file Diesel-Water Fuel Emulsion Diesel-water fuel emulsion means diesel fuel at least 14% of which is water and for which the emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. E file A reduced tax rate of $. E file 198 per gallon is imposed on a diesel-water fuel emulsion. E file To be eligible for the reduced rate, the person who sells, removes, or uses the diesel-water fuel emulsion must be registered by the IRS. E file If the diesel-water fuel emulsion does not meet the requirements above, or if the person who sells, removes, or uses the fuel is not registered, the diesel-water fuel emulsion is taxed at $. E file 244 per gallon. E file Credits or refunds. E file   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. E file Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. E file 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). E file For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $. E file 219. E file The rate of $. E file 219 also applies if kerosene is removed into any aircraft from a qualified refueler truck, tanker, or tank wagon that is loaded with the kerosene from a terminal that is located within an airport. E file The airport terminal does not need to be a secured airport terminal for this rate to apply. E file However, the refueler truck, tanker, or tank wagon must meet the requirements discussed under Certain refueler trucks, tankers, and tank wagons, treated as terminals, later. E file For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. E file 044 per gallon. E file For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. E file 044 rate applies only if the truck, tanker, or tank wagon is loaded at a terminal that is located in a secured area of the airport. E file See Terminal located within a secured area of an airport, later. E file In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. E file For kerosene removed directly into the fuel tank of an aircraft for a use exempt from tax under section 4041(c) (such as use in an aircraft for the exclusive use of a state or local government), the rate of tax is $. E file 001. E file There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. E file The kerosene must be removed from a qualifying refueler truck, tanker, or tank wagon loaded at a terminal located within a secured area of an airport. E file See Terminal located within a secured area of an airport, later. E file In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. E file The position holder is liable for the $. E file 001 per gallon tax. E file For kerosene removed directly from a terminal into the fuel tank of an fractional ownership program aircraft after March 31, 2012, a surtax of $. E file 141 per gallon applies. E file Certain refueler trucks, tankers, and tank wagons treated as terminals. E file   For purposes of the tax imposed on kerosene for use in aviation removed directly into the fuel tank of an aircraft for use in commercial aviation, certain refueler trucks, tankers, and tank wagons are treated as part of a terminal if the following conditions are met. E file Such terminal is located within an area of an airport. E file Any kerosene for use in aviation that is loaded in a refueler truck, tanker, or tank wagon at a terminal is for delivery into aircraft at the airport in which the terminal is located. E file Except in exigent circumstances, such as those identified in Notice 2005-80, no vehicle registered for highway use is loaded with kerosene for use in aviation at the terminal. E file The refueler truck, tanker, or tank wagon meets the following requirements: Has storage tanks, hose, and coupling equipment designed and used for fueling aircraft, Is not registered for highway use, and Is operated by the terminal operator or a person that makes a daily accounting to the terminal operator of each delivery of fuel from the refueler truck, tanker, or tank wagon. E file Information reporting will be required by terminal operators regarding this provision. E file Until the format of this information reporting is issued, taxpayers are required to retain records regarding the daily accounting, but are not required to report such information. E file Terminal located within a secured area of an airport. E file   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. E file This list refers to fueling operations at airport terminals as it applies to the federal excise tax on kerosene for use in aviation, and has nothing to do with the general security of airports either included or not included in the list. E file Liability For Tax If the kerosene is removed directly into the fuel tank of an aircraft for use in commercial aviation, the operator of the aircraft in commercial aviation is liable for the tax on the removal at the rate of $. E file 044 per gallon. E file However, the position holder is liable for the LUST tax for kerosene for use in aviation removed directly into the fuel tank of an aircraft for use exempt from tax under section 4041(c) (except foreign trade). E file For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. E file For the aircraft operator to be liable for the tax $. E file 044 rate, the position holder must meet the following requirements: Is a taxable fuel registrant, Has an unexpired certificate (a model certificate is shown in the Appendix as Model Certificate K) from the operator of the aircraft, and Has no reason to believe any of the information in the certificate is false. E file Commercial aviation. E file   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. E file However, commercial aviation does not include any of the following uses. E file Any use exclusively for the purpose of skydiving. E file Certain air transportation by seaplane. E file See Seaplanes under Transportation of Persons by Air in chapter 4. E file Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. E file For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. E file Any use of an aircraft that has a maximum certificated takeoff weight of 6,000 pounds or less, unless the aircraft is operated on an established line. E file For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. E file Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. E file See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. E file Surtax on any liquid used in a fractional ownership program aircraft as fuel Fuel used in a fractional ownership program aircraft (as defined below) after March 31, 2012, is subject to a surtax of $. E file 141 per gallon. E file The fractional ownership program manager is liable for the tax. E file The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. E file If the surtax is imposed, the following air transportation taxes do not apply. E file Transportation of persons by air. E file Transportation of property by air. E file Use of international air travel facilities. E file These taxes are described under Air Transportation Taxes, later. E file A fractional ownership program aircraft flight is considered noncommercial aviation, for the rules for kerosene used in noncommercial aviation, see Kerosene for Use in Aviation above. E file Fractional ownership aircraft program    is a program under which:  A single fractional ownership program manager provides fractional ownership program management services on behalf of the fractional owners; There are one or more fractional owners per fractional program aircraft, with at least one fractional program aircraft having more than one owner; For at least two fractional program aircraft, none of the ownership interests in the aircraft are less than the minimum fractional ownership interest or held by the program manager; There exists a dry-lease aircraft exchange arrangement among all of the fractional owners; and There are multi-year program agreements covering the fractional ownership, fractional ownership program management services, and dry-lease aircraft exchange aspects of the program. E file Fractional program aircraft. E file   Any aircraft that, in any fractional ownership aircraft program, is listed as a fractional program aircraft in the management specifications issued to the manager of such program by Federal Aviation Administration under subpart K of part 91 title 14, Code of Federal Regulations, and is registered in the U. E file S. E file   Fractional program aircraft are not considered used for transportation of a qualified fractional owner, or on account of such qualified fractional owner when they are used for flight demonstration, maintenance or crew training. E file In such situations, the flight is not commercial aviation. E file Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. E file Fractional owner. E file   Any person owning any interest (including the entire interest) in a fractional program aircraft. E file Dry lease aircraft exchange. E file   An agreement, documented by the written program agreements, under which the fractional program aircraft are available, on an as-needed basis without crew, to each fractional owner. E file Special rule relating to deadhead service. E file   A fractional program aircraft will not be considered to be used on account of a qualified fractional owner when it is used in deadhead service and a person other than a qualified fractional owner is separately charged for such service. E file More information. E file   See section 4043 for more information on the surtax. E file Certificate for Commercial Aviation and Exempt Uses A certificate is required from the aircraft operator: To support aircraft operator liability for tax on removal of kerosene for use in aviation directly into the fuel tank of an aircraft in commercial aviation, or For exempt uses. E file Certificate. E file   The certificate may be included as part of any business records normally used for a sale. E file See Model Certificate K in the Appendix. E file   A certificate expires on the earliest of the following dates. E file The date 1 year after the effective date (not earlier than the date signed) of the certificate. E file The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. E file The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. E file   The buyer must provide a new certificate if any information on a certificate has changed. E file   The IRS may withdraw the buyer's right to provide a certificate if the buyer uses the kerosene for use in aviation to which a certificate relates other than as stated in the certificate. E file Exempt use. E file   The rate on kerosene for use in aviation is $. E file 001 (LUST tax) if it is removed from any refinery or terminal directly into the fuel tank of an aircraft for an exempt use. E file An exempt use includes kerosene for the exclusive use of a state or local government. E file There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. E file Flash title transaction. E file   A position holder is not liable for tax if, among other conditions, it obtains a certificate (described above) from the operator of the aircraft into which the kerosene is delivered. E file In a “flash title transaction” the position holder sells the kerosene to a wholesale distributor (reseller) that in turn sells the kerosene to the aircraft operator as the kerosene is being removed from a terminal into the fuel tank of an aircraft. E file In this case, the position holder will be treated as having a certificate from the operator of the aircraft if: The aircraft operator puts the reseller's name, address, and EIN on the certificate in place of the position holder's information; and The reseller provides the position holder with a statement of the kerosene reseller. E file Reseller statement. E file   This is a statement that is signed under penalties of perjury by a person with authority to bind the reseller; is provided at the bottom or on the back of the certificate (or in an attached document); and contains: The reseller's name, address, and EIN; The position holder's name, address, and EIN; and A statement that the reseller has no reason to believe that any information in the accompanying aircraft operator's certificate is false. E file Credits or Refunds. E file   A claim may be made by the ultimate purchaser (the operator) for taxed kerosene for use in aviation used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia). E file A claim may be made by a registered ultimate vendor for certain sales. E file For more information, see chapter 2. E file Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. E file Other Fuels include alternative fuels. E file Alternative fuels are: Liquefied petroleum gas (LPG), “P Series” fuels, Compressed natural gas (CNG) (discussed later), Liquefied hydrogen, Any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, Liquid fuel derived from biomass, Liquefied natural gas (LNG), and Liquefied gas derived from biomass. E file Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. E file Qualified methanol and ethanol fuels. E file   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. E file The tax rates are listed in the Instructions for Form 720. E file Partially exempt methanol and ethanol fuels. E file   A reduced tax rate applies to these fuels. E file Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. E file The tax rates are listed in the Instructions for Form 720. E file Motor vehicles. E file   Motor vehicles include all types of vehicles, whether or not registered (or required to be registered) for highway use, that have both the following characteristics. E file They are propelled by a motor. E file They are designed for carrying or towing loads from one place to another, regardless of the type of material or load carried or t
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Non-filer Investigations - Criminal Investigation (CI)

Overview
Taxpayers who fail to file income tax returns and pay taxes pose a serious threat to tax administration and the American economy.

Who Must File
All citizens must comply with the requirements of the tax law to file returns and pay taxes.

Facts & Fiction of Frivolous Arguments
The 16th Amendment was ratified on February 3, 1913 giving Congress the power "to lay and collect taxes."

IRS Warns of Frivolous Tax Arguments
IRS issued Press Releases that summarize several cases where the taxpayer was fined or penalized for frivolous contentions.

Department of Justice Issues Injunction
The Department of Justice has issued several injunctions against promoters of illegal tax plans or shelters that urge taxpayer to violate the tax laws.

Statistical Data
Enforcement statistics on investigations initiated, prosecutions recommended, indictments, sentenced investigations and months to serve in prison.

Examples of Non-filer Investigations
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Page Last Reviewed or Updated: 30-Oct-2013

The E File

E file Index A Abroad, citizens living, filing requirements, U. E file S. E file Citizens or Resident Aliens Living Abroad Absence, temporary, Temporary absences. E file , Temporary absences. E file , Temporary absences. E file Accounting periods, joint returns, Accounting period. E file Adopted child, Exception for adopted child. E file , Adopted child. E file , Adopted child. E file Taxpayer identification number, Taxpayer identification numbers for adoptees. E file Age Filing status determination, Age. E file Gross income and filing requirements (Table 1), Table 1. E file 2013 Filing Requirements Chart for Most Taxpayers Standard deduction for age 65 or older, Higher Standard Deduction for Age (65 or Older) Test, Age Test Aliens Dual-status (see Dual-status taxpayers) Nonresident (see Nonresident aliens) Alimony, Alimony. E file Alternative minimum tax (AMT), effect on filing requirements (Table 3), Table 3. E file Other Situations When You Must File a 2013 Return Amended returns, Joint Return After Separate Returns, Changing your mind. E file (see also Form 1040X) Change from itemized to standard deduction (or vice versa), Electing to itemize for state tax or other purposes. E file American citizens abroad, U. E file S. E file Citizens or Resident Aliens Living Abroad Annulled marriages, filing status, Annulled marriages. E file Armed forces Combat zone, signing return for spouse, Spouse in combat zone. E file Dependency allotments, Armed Forces dependency allotments. E file GI Bill benefits, Tuition payments and allowances under the GI Bill. E file Military quarters allotments, Tax-exempt military quarters allowances. E file Assistance (see Tax help) ATINs (Adoption taxpayer identification numbers), Taxpayer identification numbers for adoptees. E file B Birth of child, Death or birth. E file Blind persons, standard deduction, Higher Standard Deduction for Blindness C Canada, resident of, U. E file S. E file citizen or resident alien. E file , Citizen or Resident Test, Child in Canada or Mexico. E file Capital expenses, Capital expenses. E file Child born alive, Child born alive. E file Child care expenses, Child care expenses. E file Child custody, Custodial parent and noncustodial parent. E file Child support under pre-1985 agreement, Child support under pre-1985 agreement. E file Child tax credit, Child tax credit. E file Child, qualifying, Qualifying Child Children Adopted child (see Adoption) Adoption (see Adopted child) Birth of child, Death or birth. E file , Death or birth. E file Claiming parent, when child is head of household, Special rule for parent. E file Custody of, Custodial parent and noncustodial parent. E file Death of child, Death or birth. E file , Death or birth. E file Dividends of, Unearned income. E file Filing requirements as dependents (Table 2), Table 2. E file 2013 Filing Requirements for Dependents Investment income of child under age 18, Table 2. E file 2013 Filing Requirements for Dependents , Unearned income. E file Kidnapped, Kidnapped child. E file , Kidnapped child. E file Social security number, Social Security Numbers for Dependents Stillborn, Stillborn child. E file Church employees, filing requirements (Table 3), Table 3. E file Other Situations When You Must File a 2013 Return Citizen or resident test, Citizen or Resident Test Citizens outside U. E file S. E file , filing requirements, U. E file S. E file Citizens or Resident Aliens Living Abroad Common law marriage, Considered married. E file Community property states, Community property states. E file Cousin, Cousin. E file Custody of child, Custodial parent and noncustodial parent. E file D Death Of child, Death or birth of child. E file Of dependent, Death or birth. E file , Death or birth. E file Of spouse, Spouse died during the year. E file , Spouse died. E file , Spouse died before signing. E file , Death of spouse. E file Decedents, Spouse died during the year. E file , Decedent's final return. E file (see also Death of spouse) Filing requirements, Deceased Persons Deductions Personal exemption, Personal Exemptions Standard deduction, Standard Deduction Dependent taxpayer test, Dependent Taxpayer Test Dependents Birth of, Death or birth. E file Born and died within year, Born and died in 2013. E file Child's earnings, Child's earnings. E file Death of, Death or birth. E file Earned income, Earned income. E file Exemption for, Exemptions for Dependents Filing requirements, Table 2. E file 2013 Filing Requirements for Dependents , Dependents Married, filing joint return, Joint Return Test, Joint Return Test (To Be a Qualifying Child) Not allowed to claim dependents, Dependent Taxpayer Test Qualifying child, Qualifying Child Qualifying relative, Qualifying Relative Social security number, Social Security Numbers for Dependents, Taxpayer identification numbers for adoptees. E file Standard deduction for, Standard Deduction for Dependents Unearned income, Unearned income. E file Disabled Child, Permanently and totally disabled. E file Dependent, Disabled dependent working at sheltered workshop. E file Divorced parents, Children of divorced or separated parents (or parents who live apart). E file Divorced taxpayers Child custody, Custodial parent and noncustodial parent. E file Filing status, Divorced persons. E file , Divorce and remarriage. E file , Divorced persons. E file Joint returns, responsibility for, Divorced taxpayer. E file Personal exemption, Divorced or separated spouse. E file Domestic help, no exemption for, Housekeepers, maids, or servants. E file Dual-status taxpayers Exemptions, Dual-status taxpayers. E file Joint returns not available, Nonresident alien or dual-status alien. E file E Earned income Defined for purposes of standard deduction, Earned income defined. E file Dependent filing requirements (Table 2), Table 2. E file 2013 Filing Requirements for Dependents Earned income credit Two persons with same qualifying child, Special Rule for Qualifying Child of More Than One Person Elderly persons Home for the aged, Home for the aged. E file Standard deduction for age 65 or older, Higher Standard Deduction for Age (65 or Older) Equitable relief, Innocent spouse, Relief from joint responsibility. E file Exemptions, Exemptions, Taxpayer identification numbers for adoptees. E file Dependents, Exemptions for Dependents Personal (see Personal exemption) F Fair rental value, Fair rental value defined. E file Figures (see Tables and figures) Filing requirements, Who Must File, Filing Status Filing status, Filing Status, Qualifying Widow(er) With Dependent Child Annulled marriages, Annulled marriages. E file Change to Joint return after separate returns, Joint Return After Separate Returns Separate returns after joint return, Separate Returns After Joint Return, Kidnapped child. E file Determination of, Filing status. E file , Filing Status Head of household, Head of household or qualifying widow(er) with dependent child. E file , Head of Household Marital status, determination of, Marital Status Married filing jointly (see Joint returns) Married filing separately (see Married filing separately) Unmarried persons (see Single taxpayers) Food benefits, Support provided by the state (welfare, food benefits, housing, etc. E file ). E file Foreign employment, filing requirements, U. E file S. E file Citizens or Resident Aliens Living Abroad Foreign students, Foreign students' place of residence. E file Form 1040 Personal exemption, Form 1040 filers. E file Social security numbers, Social Security Numbers for Dependents Use of, How to file. E file , How to file. E file , How to file. E file Form 1040A Personal exemption, Form 1040A filers. E file Social security numbers, Social Security Numbers for Dependents Use of, How to file. E file , How to file. E file , How to file. E file Form 1040EZ Personal exemption, Form 1040EZ filers. E file Use of, How to file. E file , How to file. E file Form 1040X Change of filing status, Joint Return After Separate Returns Itemized deductions, change to standard deduction, Changing your mind. E file Standard deduction, change to itemized deductions, Changing your mind. E file Form 1099-B, Form 1099-B received. E file Form 8814, parents' election to report child's interest and dividends, Election to report child's unearned income on parent's return. E file Form 8857, innocent spouse relief, Relief from joint responsibility. E file Form SS-5, social security number request, No SSN. E file Form W-7, individual taxpayer identification number request, Taxpayer identification numbers for aliens. E file Form W-7A, adoption taxpayer identification number request, Taxpayer identification numbers for adoptees. E file Foster care payments and expenses, Foster care payments and expenses. E file , Foster care. E file Foster child, Foster child. E file , Foster care payments and expenses. E file , Foster child. E file , Foster care. E file Free tax services, Free help with your tax return. E file Funeral expenses, Do Not Include in Total Support G GI Bill benefits, Tuition payments and allowances under the GI Bill. E file Gross income Defined, Gross income. E file Filing requirements (Table 1), Table 1. E file 2013 Filing Requirements Chart for Most Taxpayers Dependent filing requirements (Table 2), Table 2. E file 2013 Filing Requirements for Dependents Test, Gross Income Test Group-term life insurance, Table 3. E file Other Situations When You Must File a 2013 Return H Head of household, Head of Household, Kidnapped child. E file Exemption for spouse, Head of household. E file Filing requirements (Table 1), Table 1. E file 2013 Filing Requirements Chart for Most Taxpayers Health insurance premiums, Medical insurance premiums. E file Help (see Tax help) Home Aged, home for, Home for the aged. E file Cost of keeping up, Keeping Up a Home Household workers, no exemption for, Housekeepers, maids, or servants. E file I Income Gross, Gross Income Test Tax exempt, Tax-exempt income. E file Individual retirement arrangements (IRAs) Filing requirements (Table 3), Table 3. E file Other Situations When You Must File a 2013 Return Married filing separately, Individual retirement arrangements (IRAs). E file Individual taxpayer identification numbers (ITINs), Reminders, Taxpayer identification numbers for aliens. E file Innocent spouse relief, Relief from joint responsibility. E file Insurance premiums Life, Do Not Include in Total Support Medical, Medical insurance premiums. E file IRAs (see Individual retirement arrangements (IRAs)) Itemized deductions Changing from standard to itemized deduction (or vice versa), Changing your mind. E file Choosing to itemize, Who Should Itemize Married filing separately, Married persons who filed separate returns. E file When to itemize, When to itemize. E file ITINs (Individual taxpayer identification numbers), Taxpayer identification numbers for aliens. E file J Joint return test, Joint Return Test, Joint Return Test (To Be a Qualifying Child) Joint returns, Married Filing Jointly, Nonresident alien or dual-status alien. E file Dependents on, Joint return. E file Personal exemption, Joint return. E file K Kidnapped children Qualifying child, Kidnapped child. E file Qualifying relative, Kidnapped child. E file Widow(er) with dependent child, Death or birth. E file L Life insurance premiums, Do Not Include in Total Support Local income taxes, itemized deductions, Electing to itemize for state tax or other purposes. E file Local law violated, Local law violated. E file Lodging, Lodging. E file Losses, rental real estate, Rental activity losses. E file M Marital status, determination of, Marital Status Married dependents, filing joint return, Joint Return Test, Joint Return Test (To Be a Qualifying Child) Married filing jointly (see Joint returns) Married filing separately, Married Filing Separately Changing method from or to itemized deductions, Changing your mind. E file Exemption for spouse, Separate return. E file Itemized deductions, Married persons who filed separate returns. E file Married taxpayers, Married Filing Jointly (see also Joint returns) Age 65 or older spouse, standard deduction, Higher Standard Deduction for Age (65 or Older), Spouse 65 or Older or Blind Blind spouse, standard deduction, Higher Standard Deduction for Blindness, Spouse 65 or Older or Blind Dual-status alien spouse, Nonresident alien or dual-status alien. E file Filing status, Married persons. E file Medical insurance premiums, Medical insurance premiums. E file Medical savings accounts (MSAs, effect on filing requirements (Table 3), Table 3. E file Other Situations When You Must File a 2013 Return Medicare taxes, not support, Do Not Include in Total Support Member of household or relationship test, Member of Household or Relationship Test Mexico, resident of, U. E file S. E file citizen or resident alien. E file , Citizen or Resident Test, Child in Canada or Mexico. E file Military (see Armed forces) Missing children, photographs of in IRS publications, Reminders Multiple support agreement, Multiple Support Agreement N National of the United States, U. E file S. E file national. E file Nonresident aliens, Nonresident aliens. E file Dependents, Taxpayer identification numbers for aliens. E file Exemptions, Nonresident aliens. E file Joint return, Nonresident alien or dual-status alien. E file Spouse, Nonresident alien spouse. E file Taxpayer identification number, Taxpayer identification numbers for aliens. E file O Overseas taxpayers, U. E file S. E file Citizens or Resident Aliens Living Abroad P Parent, claiming head of household for, Special rule for parent. E file Parents who never married, Parents who never married. E file Parents, divorced or separated, Children of divorced or separated parents (or parents who live apart). E file Penalty, failure to file, Who Must File Personal exemption, Personal Exemptions Photographs of missing children in IRS publications, Reminders Publications (see Tax help) Puerto Rico, residents of, Residents of Puerto Rico Q Qualifying Child, Qualifying Child Relative, Qualifying Relative Surviving spouse, Qualifying Widow(er) With Dependent Child Widow/widower, Qualifying Widow(er) With Dependent Child R Recapture taxes, Table 3. E file Other Situations When You Must File a 2013 Return Relationship test, Relationship Test, Member of Household or Relationship Test Relative, qualifying, Qualifying Relative Remarriage after divorce, Divorce and remarriage. E file Rental losses, Rental activity losses. E file Residency test, Residency Test S Same-sex marriage Filing status, Same-sex marriage. E file Scholarships, Earned income. E file , Scholarships. E file , Gross income defined. E file , Do Not Include in Total Support , Earned income defined. E file Self-employed persons Filing requirements (Table 3), Table 3. E file Other Situations When You Must File a 2013 Return Gross income, Self-employed persons. E file Separate returns (see Married filing separately) Separated parents, Children of divorced or separated parents (or parents who live apart). E file Separated taxpayers Filing status, Considered married. E file , Married persons living apart. E file Living apart but not legally separated, Considered married. E file Personal exemption, Divorced or separated spouse. E file Signatures, joint returns, Signing a joint return. E file Single taxpayers Filing status, Unmarried persons. E file , Single Gross income filing requirements (Table 1), Table 1. E file 2013 Filing Requirements Chart for Most Taxpayers How to file and forms, How to file. E file Personal exemption, Your Own Exemption Social security and Medicare taxes Reporting of (Table 3), Table 3. E file Other Situations When You Must File a 2013 Return Support, not included in, Do Not Include in Total Support Social security benefits, Social security benefits. E file Social security numbers (SSNs) for dependents, Social Security Numbers for Dependents Spouse Deceased, Spouse died. E file , Spouse died before signing. E file , Death of spouse. E file Dual-status alien spouse, Nonresident alien or dual-status alien. E file Exemption for, Your Spouse's Exemption Innocent spouse relief, Relief from joint responsibility. E file Nonresident alien, Nonresident alien spouse. E file Signing joint returns, Signing a joint return. E file Surviving (see Surviving spouse) SSNs (see Social security numbers (SSNs) for dependents) Standard deduction, What's New, Standard Deduction, Married persons who filed separate returns. E file Married filing jointly, Married Filing Jointly State or local income taxes, Electing to itemize for state tax or other purposes. E file Stillborn child, Stillborn child. E file Students Defined, Student defined. E file Foreign, Foreign students' place of residence. E file Support test Qualifying child, Support Test (To Be a Qualifying Child) Qualifying relative, Support Test (To Be a Qualifying Relative) Surviving spouse Death of spouse (see Death of spouse) Gross income filing requirements (Table 1), Table 1. E file 2013 Filing Requirements Chart for Most Taxpayers Single filing status, Widow(er). E file Widow(er) with dependent child, Qualifying Widow(er) With Dependent Child, How to file. E file , Death or birth. E file T Tables and figures, Keeping Up a Home, Worksheet 2. E file Worksheet for Determining Support (see also Worksheets) Filing requirements Dependents (Table 2), Table 2. E file 2013 Filing Requirements for Dependents Gross income levels (Table 1), Table 1. E file 2013 Filing Requirements Chart for Most Taxpayers Other situations requiring filing (Table 3), Table 3. E file Other Situations When You Must File a 2013 Return Tax help, How To Get Tax Help Tax returns Amended (see Form 1040X) Filing of (see Filing requirements) Joint returns (see Joint returns) Who must file, What's New, Who Must File, Filing Requirements for Most Taxpayers, Who Should File Tax-exempt income, Tax-exempt income. E file Taxes, not support, Do Not Include in Total Support Temporary absences, Temporary absences. E file , Temporary absences. E file Tiebreaker rules, Tiebreaker rules. E file Tips, reporting of (Table 3), Table 3. E file Other Situations When You Must File a 2013 Return Total support, Total Support Tuition, benefits under GI Bill, Tuition payments and allowances under the GI Bill. E file U U. E file S. E file citizen or resident, Citizen or Resident Test U. E file S. E file citizens filing abroad, filing requirements Filing requirements, U. E file S. E file Citizens or Resident Aliens Living Abroad U. E file S. E file national, U. E file S. E file national. E file U. E file S. E file possessions, income from, Individuals With Income From U. E file S. E file Possessions Unmarried persons (see Single taxpayers) W Welfare benefits, Support provided by the state (welfare, food benefits, housing, etc. E file ). E file What's New, What's New Widow/widower (see Surviving spouse) Worksheets Exemption Phaseout, Worksheet 3. E file Worksheet for Determining the Deduction for Exemptions Head of household status and cost of keeping up home, Keeping Up a Home Support test, Worksheet 2. 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