Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free Federal Tax Filing

Irs Gov Forms 1040xCan You Still File 2012 TaxesAmended Federal Tax ReturnH&r Block File OnlineCheap Tax SoftwareH7r Block Free File1040ez Form1040ez FilingWhere To Get Tax Form 1040xFile My State Taxes Online FreeTax Amendment Form 1040xFile An Extension OnlineFiling Late Returns2012 E File Tax ReturnFile State Tax For Free OnlineFree State Tax UsaH & R Block FreeH&r Block Free Tax For MilitaryState Free Tax Return2012 Form 1040 EzFiling 2010 Taxes Online1040 Ez DownloadIrs Gov 2012 Tax FormsCan I Still E File My 2012 TaxesTax Forms 1040ezDoes A Working Student Have To File For TaxesFree Tax EfileIrs Gov Com2012 Tax Return OnlineWww Irs Gov FreefileHow To Complete 1040x2011 Amended ReturnForm1040x2012 Federal Tax Form 1040ez1040 Tax Forms For 2011Free 2010 Tax ReturnTax Exemptions For Students1040 Tax Forms For 2012Form1040Irs Ez Form

Free Federal Tax Filing

Free federal tax filing 6. Free federal tax filing   How To Report Table of Contents Where To ReportGifts. Free federal tax filing Statutory employees. Free federal tax filing Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. Free federal tax filing Standard mileage rate. Free federal tax filing Actual expenses. Free federal tax filing Car rentals. Free federal tax filing Hours of service limits. Free federal tax filing Allocating your reimbursement. Free federal tax filing 1. Free federal tax filing Limit on meals and entertainment. Free federal tax filing 2. Free federal tax filing Limit on miscellaneous itemized deductions. Free federal tax filing 3. Free federal tax filing Limit on total itemized deductions. Free federal tax filing Special Rules This chapter explains where and how to report the expenses discussed in this publication. Free federal tax filing It discusses reimbursements and how to treat them under accountable and nonaccountable plans. Free federal tax filing It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. Free federal tax filing The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. Free federal tax filing Where To Report This section provides general information on where to report the expenses discussed in this publication. Free federal tax filing Self-employed. Free federal tax filing   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. Free federal tax filing You do not use Form 2106 or 2106-EZ. Free federal tax filing    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. Free federal tax filing You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. Free federal tax filing   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. Free federal tax filing Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. Free federal tax filing   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. Free federal tax filing You can only include 50% of your meals and entertainment in that total. Free federal tax filing If you include car expenses, you must also complete Part III of the form. Free federal tax filing    If you file Schedule F (Form 1040): Report your car expenses on line 10. Free federal tax filing Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. Free federal tax filing Report all other business expenses discussed in this publication on line 32. Free federal tax filing You can only include 50% of your meals and entertainment on that line. Free federal tax filing See your form instructions for more information on how to complete your tax return. Free federal tax filing Both self-employed and an employee. Free federal tax filing   If you are both self-employed and an employee, you must keep separate records for each business activity. Free federal tax filing Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. Free federal tax filing Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. Free federal tax filing Employees. Free federal tax filing    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. Free federal tax filing However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. Free federal tax filing You are an employee deducting expenses attributable to your job. Free federal tax filing You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Free federal tax filing If you claim car expenses, you use the standard mileage rate. Free federal tax filing   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. Free federal tax filing Gifts. Free federal tax filing   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Free federal tax filing Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). Free federal tax filing Statutory employees. Free federal tax filing    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). Free federal tax filing Do not complete Form 2106 or 2106-EZ. Free federal tax filing   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. Free federal tax filing If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. Free federal tax filing Reimbursement for personal expenses. Free federal tax filing    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. Free federal tax filing You cannot deduct personal expenses. Free federal tax filing Income-producing property. Free federal tax filing   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. Free federal tax filing   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. Free federal tax filing See Publication 527, Residential Rental Property, for more information on the rental of real estate. Free federal tax filing If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. Free federal tax filing Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. Free federal tax filing The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. Free federal tax filing You cannot use the standard mileage rate. Free federal tax filing Value reported on Form W-2. Free federal tax filing   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). Free federal tax filing Your employer must separately state the amount if 100% of the annual lease value was included in your income. Free federal tax filing If you are unsure of the amount included on your Form W-2, ask your employer. Free federal tax filing Full value included in your income. Free federal tax filing   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. Free federal tax filing On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. Free federal tax filing    To claim your expenses, complete Form 2106, Part II, Sections A and C. Free federal tax filing Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Free federal tax filing Complete the rest of the form. Free federal tax filing Less than full value included in your income. Free federal tax filing   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. Free federal tax filing Do not enter this value on your Form 2106 because it is not deductible. Free federal tax filing   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. Free federal tax filing Examples of costs that you may have are gas, oil, and repairs. Free federal tax filing Complete Form 2106, Part II, Sections A and C. Free federal tax filing Enter your actual costs on line 23 of Section C and leave line 25 blank. Free federal tax filing Complete the rest of the form. Free federal tax filing Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. Free federal tax filing If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Free federal tax filing This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. Free federal tax filing It also covers rules for independent contractors. Free federal tax filing No reimbursement. Free federal tax filing   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. Free federal tax filing In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. Free federal tax filing Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. Free federal tax filing Reimbursement, allowance, or advance. Free federal tax filing   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. Free federal tax filing Arrangements include per diem and car allowances. Free federal tax filing    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. Free federal tax filing (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. Free federal tax filing ) A car allowance is an amount your employer gives you for the business use of your car. Free federal tax filing   Your employer should tell you what method of reimbursement is used and what records you must provide. Free federal tax filing Employers. Free federal tax filing   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Free federal tax filing Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Free federal tax filing Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. Free federal tax filing See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. Free federal tax filing Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Free federal tax filing You must adequately account to your employer for these expenses within a reasonable period of time. Free federal tax filing You must return any excess reimbursement or allowance within a reasonable period of time. Free federal tax filing “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. Free federal tax filing An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. Free federal tax filing Reasonable period of time. Free federal tax filing   The definition of reasonable period of time depends on the facts and circumstances of your situation. Free federal tax filing However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Free federal tax filing You receive an advance within 30 days of the time you have an expense. Free federal tax filing You adequately account for your expenses within 60 days after they were paid or incurred. Free federal tax filing You return any excess reimbursement within 120 days after the expense was paid or incurred. Free federal tax filing You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. Free federal tax filing Employee meets accountable plan rules. Free federal tax filing   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. Free federal tax filing If your expenses equal your reimbursements, you do not complete Form 2106. Free federal tax filing You have no deduction since your expenses and reimbursement are equal. Free federal tax filing    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. Free federal tax filing Accountable plan rules not met. Free federal tax filing   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. Free federal tax filing All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). Free federal tax filing Failure to return excess reimbursements. Free federal tax filing   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. Free federal tax filing See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. Free federal tax filing Reimbursement of nondeductible expenses. Free federal tax filing   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. Free federal tax filing The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. Free federal tax filing Example. Free federal tax filing Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. Free federal tax filing The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. Free federal tax filing The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. Free federal tax filing If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. Free federal tax filing Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. Free federal tax filing You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. Free federal tax filing (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. Free federal tax filing ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. Free federal tax filing See Per Diem and Car Allowances , later. Free federal tax filing You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. Free federal tax filing This includes amounts you charged to your employer by credit card or other method. Free federal tax filing You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. Free federal tax filing You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. Free federal tax filing Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. Free federal tax filing A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. Free federal tax filing Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. Free federal tax filing The allowance is similar in form to and not more than the federal rate (defined later). Free federal tax filing You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. Free federal tax filing You are not related to your employer (as defined next). Free federal tax filing If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. Free federal tax filing If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. Free federal tax filing In this case, you must be able to prove your expenses to the IRS. Free federal tax filing Related to employer. Free federal tax filing   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. Free federal tax filing You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. Free federal tax filing The federal rate. Free federal tax filing   The federal rate can be figured using any one of the following methods. Free federal tax filing For per diem amounts: The regular federal per diem rate. Free federal tax filing The standard meal allowance. Free federal tax filing The high-low rate. Free federal tax filing For car expenses: The standard mileage rate. Free federal tax filing A fixed and variable rate (FAVR). Free federal tax filing    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. Free federal tax filing Regular federal per diem rate. Free federal tax filing   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. Free federal tax filing The rates are different for different locations. Free federal tax filing Your employer should have these rates available. Free federal tax filing You can also find federal per diem rates at www. Free federal tax filing gsa. Free federal tax filing gov/perdiem. Free federal tax filing The standard meal allowance. Free federal tax filing   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). Free federal tax filing The rate for most small localities in the United States is $46 a day. Free federal tax filing Most major cities and many other localities qualify for higher rates. Free federal tax filing You can find this information on the Internet at www. Free federal tax filing gsa. Free federal tax filing gov/perdiem. Free federal tax filing   You receive an allowance only for meals and incidental expenses when your employer does one of the following. Free federal tax filing Provides you with lodging (furnishes it in kind). Free federal tax filing Reimburses you, based on your receipts, for the actual cost of your lodging. Free federal tax filing Pays the hotel, motel, etc. Free federal tax filing , directly for your lodging. Free federal tax filing Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. Free federal tax filing Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. Free federal tax filing High-low rate. Free federal tax filing   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Free federal tax filing It eliminates the need to keep a current list of the per diem rates for each city. Free federal tax filing   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. Free federal tax filing All other areas have a per diem amount of $163 (including $52 for M&IE). Free federal tax filing For more information, see Notice 2012-63, which can be found on the Internet at www. Free federal tax filing irs. Free federal tax filing gov/irb/2012-42_IRB/ar12. Free federal tax filing html. Free federal tax filing    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). Free federal tax filing The rate for all other locations increased to $170 (including $52 for M&IE). Free federal tax filing Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. Free federal tax filing For more information, see Notice 2013-65, which can be found on the Internet at www. Free federal tax filing irs. Free federal tax filing gov/pub/irs-drop/n-13–65. Free federal tax filing pdf and Revenue Procedure 2011-47 at www. Free federal tax filing irs. Free federal tax filing gov/irb/2011-42_IRB/ar12. Free federal tax filing html. Free federal tax filing Prorating the standard meal allowance on partial days of travel. Free federal tax filing   The standard meal allowance is for a full 24-hour day of travel. Free federal tax filing If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. Free federal tax filing This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. Free federal tax filing   You can use either of the following methods to figure the federal M&IE for that day. Free federal tax filing Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. Free federal tax filing For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. Free federal tax filing Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. Free federal tax filing For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. Free federal tax filing m. Free federal tax filing of one day to 5 p. Free federal tax filing m. Free federal tax filing of the next day as being no more than the federal rate. Free federal tax filing This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. Free federal tax filing The standard mileage rate. Free federal tax filing   This is a set rate per mile that you can use to compute your deductible car expenses. Free federal tax filing For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Free federal tax filing Fixed and variable rate (FAVR). Free federal tax filing   This is an allowance your employer may use to reimburse your car expenses. Free federal tax filing Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. Free federal tax filing ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. Free federal tax filing ). Free federal tax filing If your employer chooses to use this method, your employer will request the necessary records from you. Free federal tax filing Reporting your expenses with a per diem or car allowance. Free federal tax filing   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. Free federal tax filing The federal rate. Free federal tax filing Whether the allowance or your actual expenses were more than the federal rate. Free federal tax filing The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. Free federal tax filing Allowance less than or equal to the federal rate. Free federal tax filing   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. Free federal tax filing You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. Free federal tax filing   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). Free federal tax filing If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. Free federal tax filing If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. Free federal tax filing Example 1. Free federal tax filing In April, Jeremy takes a 2-day business trip to Denver. Free federal tax filing The federal rate for Denver is $215 per day. Free federal tax filing As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. Free federal tax filing His employer reimburses him $215 a day ($430 total) for living expenses. Free federal tax filing Jeremy's living expenses in Denver are not more than $215 a day. Free federal tax filing Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. Free federal tax filing Example 2. Free federal tax filing In June, Matt takes a 2-day business trip to Boston. Free federal tax filing Matt's employer uses the high-low method to reimburse employees. Free federal tax filing Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. Free federal tax filing Matt's actual expenses totaled $700. Free federal tax filing Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. Free federal tax filing Matt completes Form 2106 (showing all of his expenses and reimbursements). Free federal tax filing He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . Free federal tax filing Example 3. Free federal tax filing Nicole drives 10,000 miles in 2013 for business. Free federal tax filing Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. Free federal tax filing Her employer pays her a mileage allowance of 40 cents a mile. Free federal tax filing Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. Free federal tax filing Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. Free federal tax filing Allowance more than the federal rate. Free federal tax filing   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. Free federal tax filing This amount is not taxable. Free federal tax filing However, the excess allowance will be included in box 1 of your Form W-2. Free federal tax filing You must report this part of your allowance as if it were wage income. Free federal tax filing   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. Free federal tax filing   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. Free federal tax filing You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. Free federal tax filing You should be able to prove these amounts to the IRS. Free federal tax filing Example 1. Free federal tax filing Laura lives and works in Austin. Free federal tax filing In July her employer sent her to Albuquerque for 4 days on business. Free federal tax filing Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. Free federal tax filing Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. Free federal tax filing Table 6-1. Free federal tax filing Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. Free federal tax filing No amount. Free federal tax filing No amount. Free federal tax filing Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. Free federal tax filing The excess amount as wages in box 1. Free federal tax filing No amount. Free federal tax filing Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. Free federal tax filing No amount. Free federal tax filing All expenses and reimbursements only if excess expenses are claimed. Free federal tax filing Otherwise, form is not filed. Free federal tax filing Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. Free federal tax filing The excess amount as wages in box 1. Free federal tax filing The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Free federal tax filing No amount. Free federal tax filing Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. Free federal tax filing The excess amount as wages in box 1. Free federal tax filing The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Free federal tax filing All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. Free federal tax filing Otherwise, form is not filed. Free federal tax filing A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. Free federal tax filing The entire amount as wages in box 1. Free federal tax filing All expenses. Free federal tax filing No reimbursement plan: The entire amount as wages in box 1. Free federal tax filing All expenses. Free federal tax filing * You may be able to use Form 2106-EZ. Free federal tax filing See Completing Forms 2106 and 2106-EZ . Free federal tax filing Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. Free federal tax filing Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. Free federal tax filing This amount is not included in Laura's income. Free federal tax filing Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). Free federal tax filing Example 2. Free federal tax filing Joe also lives in Austin and works for the same employer as Laura. Free federal tax filing In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. Free federal tax filing The employer reimbursed Joe $75 a day for his meals and incidental expenses. Free federal tax filing The federal rate for San Diego is $71 a day. Free federal tax filing Joe can prove that his actual meal expenses totaled $380. Free federal tax filing His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. Free federal tax filing However, he does account for the time, place, and business purpose of the trip. Free federal tax filing This is Joe's only business trip this year. Free federal tax filing Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). Free federal tax filing The employer includes the $16 as income on Joe's Form W-2 in box 1. Free federal tax filing The employer also enters $284 in box 12 of Joe's Form W-2. Free federal tax filing Joe completes Form 2106 to figure his deductible expenses. Free federal tax filing He enters the total of his actual expenses for the year ($380) on Form 2106. Free federal tax filing He also enters the reimbursements that were not included in his income ($284). Free federal tax filing His total deductible expense, before the 50% limit, is $96. Free federal tax filing After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. Free federal tax filing Example 3. Free federal tax filing Debbie drives 10,000 miles in 2013 for business. Free federal tax filing Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. Free federal tax filing Her total reimbursement is $6,000. Free federal tax filing Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. Free federal tax filing That amount is not taxable. Free federal tax filing Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. Free federal tax filing This is the reimbursement that is more than the standard mileage rate. Free federal tax filing If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. Free federal tax filing If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). Free federal tax filing She would then claim the excess expenses as an itemized deduction. Free federal tax filing Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. Free federal tax filing Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. Free federal tax filing For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. Free federal tax filing “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. Free federal tax filing Travel advance. Free federal tax filing   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. Free federal tax filing Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. Free federal tax filing   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). Free federal tax filing Unproved amounts. Free federal tax filing   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. Free federal tax filing If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). Free federal tax filing Per diem allowance more than federal rate. Free federal tax filing   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. Free federal tax filing However, the difference will be reported as wages on your Form W-2. Free federal tax filing This excess amount is considered paid under a nonaccountable plan (discussed later). Free federal tax filing Example. Free federal tax filing Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. Free federal tax filing The federal per diem for meals and incidental expenses for Phoenix is $71. Free federal tax filing Your trip lasts only 3 days. Free federal tax filing Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. Free federal tax filing For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). Free federal tax filing However, the $27 will be reported on your Form W-2 as wages. Free federal tax filing Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. Free federal tax filing In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. Free federal tax filing See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. Free federal tax filing An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. Free federal tax filing This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. Free federal tax filing If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. Free federal tax filing Reporting your expenses under a nonaccountable plan. Free federal tax filing   Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. Free federal tax filing Your employer will report the total in box 1 of your Form W-2. Free federal tax filing    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. Free federal tax filing Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. Free federal tax filing Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Free federal tax filing Example 1. Free federal tax filing Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. Free federal tax filing Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. Free federal tax filing Kim is being reimbursed under a nonaccountable plan. Free federal tax filing Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. Free federal tax filing If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. Free federal tax filing Example 2. Free federal tax filing Kevin is paid $2,000 a month by his employer. Free federal tax filing On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. Free federal tax filing Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. Free federal tax filing No part of the $50 a day designated by his employer is treated as paid under an accountable plan. Free federal tax filing Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. Free federal tax filing The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. Free federal tax filing You are considered an independent contractor if you are self-employed and you perform services for a customer or client. Free federal tax filing Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. Free federal tax filing If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. Free federal tax filing You must keep adequate records of these expenses whether or not you account to your client for these expenses. Free federal tax filing If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. Free federal tax filing See 50% Limit in chapter 2. Free federal tax filing Adequate accounting. Free federal tax filing   As a self-employed person, you adequately account by reporting your actual expenses. Free federal tax filing You should follow the recordkeeping rules in chapter 5 . Free federal tax filing How to report. Free federal tax filing   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. Free federal tax filing Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. Free federal tax filing However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. Free federal tax filing Contractor adequately accounts. Free federal tax filing   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . Free federal tax filing Use your records as proof for a deduction on your tax return. Free federal tax filing If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. Free federal tax filing If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. Free federal tax filing Contractor does not adequately account. Free federal tax filing    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. Free federal tax filing You are not subject to the 50% limit on entertainment in this case. Free federal tax filing You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. Free federal tax filing However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. Free federal tax filing How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. Free federal tax filing The Two Substantiation Methods High-low method. Free federal tax filing   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. Free federal tax filing Notice 2012–63, available at www. Free federal tax filing irs. Free federal tax filing gov/irb/2012–42_IRB/ar12. Free federal tax filing html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. Free federal tax filing For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. Free federal tax filing   Notice 2013–65, available at www. Free federal tax filing irs. Free federal tax filing gov/pub/irs-drop/n-13–65. Free federal tax filing pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. Free federal tax filing For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). Free federal tax filing Regular federal per diem rate method. Free federal tax filing   Regular federal per diem rates are published by the General Services Administration (GSA). Free federal tax filing Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. Free federal tax filing The rates listed for FY2013 at www. Free federal tax filing gsa. Free federal tax filing gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. Free federal tax filing The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). Free federal tax filing For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). Free federal tax filing Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. Free federal tax filing During this period, you generally may change to the new rates or finish out the year with the rates you had been using. Free federal tax filing High-low method. Free federal tax filing   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. Free federal tax filing However, you must continue using the high-low method for the rest of the calendar year (through December 31). Free federal tax filing If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. Free federal tax filing   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. Free federal tax filing You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. Free federal tax filing irs. Free federal tax filing gov/irb. Free federal tax filing Federal per diem rate method. Free federal tax filing   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Free federal tax filing Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). Free federal tax filing However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. Free federal tax filing   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. Free federal tax filing Go to www. Free federal tax filing gsa. Free federal tax filing gov/perdiem. Free federal tax filing Per diem rates for localities listed for FY2014 may change at any time. Free federal tax filing To be sure you have the most current rate, check www. Free federal tax filing gsa. Free federal tax filing gov/perdiem. Free federal tax filing Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. Free federal tax filing Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. Free federal tax filing The instructions for the forms have more information on completing them. Free federal tax filing If you are self-employed, do not file Form 2106 or 2106-EZ. Free federal tax filing Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Free federal tax filing See the instructions for the form that you must file. Free federal tax filing Form 2106-EZ. Free federal tax filing   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. Free federal tax filing You can use this form if you meet all the following conditions. Free federal tax filing You are an employee deducting ordinary and necessary expenses attributable to your job. Free federal tax filing You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Free federal tax filing If you are claiming car expenses, you are using the standard mileage rate. Free federal tax filing Car expenses. Free federal tax filing   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. Free federal tax filing These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. Free federal tax filing Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. Free federal tax filing Information on use of cars. Free federal tax filing   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. Free federal tax filing The information relates to the following items. Free federal tax filing Date placed in service. Free federal tax filing Mileage (total, business, commuting, and other personal mileage). Free federal tax filing Percentage of business use. Free federal tax filing After-work use. Free federal tax filing Use of other vehicles. Free federal tax filing Whether you have evidence to support the deduction. Free federal tax filing Whether or not the evidence is written. Free federal tax filing Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. Free federal tax filing Standard mileage rate. Free federal tax filing   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. Free federal tax filing The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. Free federal tax filing In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. Free federal tax filing If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. Free federal tax filing See Standard Mileage Rate in chapter 4 for information on using this rate. Free federal tax filing Actual expenses. Free federal tax filing   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. Free federal tax filing You must complete Form 2106, Part II, Section C. Free federal tax filing In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. Free federal tax filing   If you are still using a car that is fully depreciated, continue to complete Section C. Free federal tax filing Since you have no depreciation deduction, enter zero on line 28. Free federal tax filing In this case, do not complete Section D. Free federal tax filing Car rentals. Free federal tax filing   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. Free federal tax filing If so, you can show your car expenses and any inclusion amount as follows. Free federal tax filing Compute the inclusion amount without taking into account your business use percentage for the tax year. Free federal tax filing Report the inclusion amount from (1) on Form 2106, Part II, line 24b. Free federal tax filing Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). Free federal tax filing The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. Free federal tax filing Transportation expenses. Free federal tax filing   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. Free federal tax filing Also include on this line business expenses you have for parking fees and tolls. Free federal tax filing Do not include expenses of operating your car or expenses of commuting between your home and work. Free federal tax filing Employee business expenses other than meals and entertainment. Free federal tax filing   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. Free federal tax filing Do not include expenses for meals and entertainment on those lines. Free federal tax filing Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. Free federal tax filing    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Free federal tax filing Claim these amounts directly on Schedule A (Form 1040), line 21. Free federal tax filing List the type and amount of each expense on the dotted lines and include the total on line 21. Free federal tax filing Meal and entertainment expenses. Free federal tax filing   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. Free federal tax filing Include meals while away from your tax home overnight and other business meals and entertainment. Free federal tax filing Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. Free federal tax filing   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. Free federal tax filing Enter the result on line 5. Free federal tax filing Hours of service limits. Free federal tax filing   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. Free federal tax filing Reimbursements. Free federal tax filing   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. Free federal tax filing This includes any amount reported under code L in box 12 of Form W-2. Free federal tax filing Allocating your reimbursement. Free federal tax filing   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. Free federal tax filing This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. Free federal tax filing You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. Free federal tax filing Example. Free federal tax filing Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. Free federal tax filing The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. Free federal tax filing The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. Free federal tax filing Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). Free federal tax filing Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. Free federal tax filing To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. Free federal tax filing His completed worksheet follows. Free federal tax filing Reimbursement Allocation Worksheet (Keep for your records)   1. Free federal tax filing Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. Free federal tax filing Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. Free federal tax filing Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. Free federal tax filing Divide line 3 by line 2. Free federal tax filing Enter the result as a decimal (rounded to at least three places) . Free federal tax filing 529   5. Free federal tax filing Multiply line 1 by line 4. Free federal tax filing Enter the result here and in Column B, line 7 3,703   6. Free federal tax filing Subtract line 5 from line 1. Free federal tax filing Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. Free federal tax filing After you complete the form. Free federal tax filing   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. Free federal tax filing For most taxpayers, this is line 21 of Schedule A (Form 1040). Free federal tax filing However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. Free federal tax filing Limits on employee business expenses. Free federal tax filing   Your employee business expenses may be subject to either of the limits described next. Free federal tax filing They are figured in the following order on the specified form. Free federal tax filing 1. Free federal tax filing Limit on meals and entertainment. Free federal tax filing   Certain meal and entertainment expenses are subject to a 50% limit. Free federal tax filing If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. Free federal tax filing (See 50% Limit in chapter 2. Free federal tax filing ) 2. Free federal tax filing Limit on miscellaneous itemized deductions. Free federal tax filing   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). Free federal tax filing Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. Free federal tax filing This limit is figured on line 26 of Schedule A (Form 1040). Free federal tax filing 3. Free federal tax filing Limit on total itemized deductions. Free federal tax filing   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. Free federal tax filing See your form instructions for information on how to figure this limit. Free federal tax filing Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. Free federal tax filing Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Free federal tax filing The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Free federal tax filing See Per Diem and Car Allowances , earlier, for more information. Free federal tax filing Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. Free federal tax filing Member of a reserve component. Free federal tax filing   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. Free federal tax filing How to report. Free federal tax filing   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. Free federal tax filing Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Free federal tax filing Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. Free federal tax filing   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. Free federal tax filing Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. Free federal tax filing Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). Free federal tax filing Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. Free federal tax filing They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. Free federal tax filing If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Free federal tax filing Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Free federal tax filing To qualify, you must meet all of the following requirements. Free federal tax filing During the tax year, you perform services in the performing arts as an employee for at least two employers. Free federal tax filing You receive at least $200 each from any two of these employers. Free federal tax filing Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. Free federal tax filing Your adjusted gross income is not more than $16,000 before deducting these business expenses. Free federal tax filing Special rules for married persons. Free federal tax filing   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. Free federal tax filing If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. Free federal tax filing However, requirement (4) applies to your and your spouse's combined adjusted gross income. Free federal tax filing Where to report. Free federal tax filing   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. Free federal tax filing Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Free federal tax filing   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. Free federal tax filing Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. Free federal tax filing Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. Free federal tax filing After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. Free federal tax filing Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. Free federal tax filing Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. Free federal tax filing You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Free federal tax filing You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Free federal tax filing Example 1. Free federal tax filing You are blind. Free federal tax filing You must use a reader to do your work. Free federal tax filing You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Free federal tax filing The reader's services are only for your work. Free federal tax filing You can deduct your expenses for the reader as business expenses. Free federal tax filing Example 2. Free federal tax filing You are deaf. Free federal tax filing You must use a sign language interpreter during meetings while you are at work. Free federal tax filing The interpreter's services are used only for your work. Free federal tax filing You can deduct your expenses for the interpreter as business expenses. Free federal tax filing Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Understanding Your CP62 Notice

We applied a payment to your account.


What you need to do

  • Review your notice as it provides the date and amount of the payment we applied.
  • If your notice shows we owe you a refund, you do not need to respond. If you have not already received the refund, you should receive it within 2-3 weeks.
  • If your notice shows an amount due:
    • Pay the amount you owe by the date stated on the notice.
    • If you can't pay the amount in full, pay as much as you can now and make payment arrangements for the remainder. Learn more about payment options such as installment payment plans or call us at 1-800-829-8374.

You may want to...


Answers to Common Questions

Why did I receive this notice?
You received this notice because we applied a payment to your account.

What should I do if I the wrong payment was applied?
Send us correspondence with the correct actions needed to the address on the notice or call us at the number listed on the notice.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 04-Mar-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Free Federal Tax Filing

Free federal tax filing 1. Free federal tax filing   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. Free federal tax filing 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. Free federal tax filing Reseller statement. Free federal tax filing Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. Free federal tax filing Deep-draft ocean-going vessels. Free federal tax filing Passenger vessels. Free federal tax filing Ocean-going barges. Free federal tax filing State or local governments. Free federal tax filing 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. Free federal tax filing Gasoline, including aviation gasoline and gasoline blendstocks. Free federal tax filing Diesel fuel, including dyed diesel fuel. Free federal tax filing Diesel-water fuel emulsion. Free federal tax filing Kerosene, including dyed kerosene and kerosene used in aviation. Free federal tax filing Other Fuels (including alternative fuels). Free federal tax filing Compressed natural gas (CNG). Free federal tax filing Fuels used in commercial transportation on inland waterways. Free federal tax filing Any liquid used in a fractional ownership program aircraft as fuel. Free federal tax filing The following terms are used throughout the discussion of fuel taxes. Free federal tax filing Other terms are defined in the discussion of the specific fuels to which they pertain. Free federal tax filing Agri-biodiesel. Free federal tax filing   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. Free federal tax filing Approved terminal or refinery. Free federal tax filing   This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner. Free federal tax filing Biodiesel. Free federal tax filing   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. Free federal tax filing Blended taxable fuel. Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing Blender. Free federal tax filing   This is the person that produces blended taxable fuel. Free federal tax filing Bulk transfer. Free federal tax filing   This is the transfer of taxable fuel by pipeline or vessel. Free federal tax filing Bulk transfer/terminal system. Free federal tax filing   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Free federal tax filing 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. Free federal tax filing Cellulosic biofuel. Free federal tax filing   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. Free federal tax filing Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). Free federal tax filing 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. Free federal tax filing Also see Second generation biofuel below. Free federal tax filing Diesel-water fuel emulsion. Free federal tax filing   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. Free federal tax filing 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. Free federal tax filing Dry lease aircraft exchange. Free federal tax filing   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Free federal tax filing Enterer. Free federal tax filing   This is the importer of record (under customs law) for the taxable fuel. Free federal tax filing 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. Free federal tax filing If there is no importer of record, the owner at the time of entry into the United States is the enterer. Free federal tax filing Entry. Free federal tax filing   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. Free federal tax filing This does not apply to fuel brought into Puerto Rico (which is part of the U. Free federal tax filing S. Free federal tax filing customs territory), but does apply to fuel brought into the United States from Puerto Rico. Free federal tax filing Fractional ownership aircraft program and fractional program aircraft. Free federal tax filing   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Free federal tax filing Measurement of taxable fuel. Free federal tax filing   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. Free federal tax filing Other fuels. Free federal tax filing   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. Free federal tax filing Pipeline operator. Free federal tax filing   This is the person that operates a pipeline within the bulk transfer/terminal system. Free federal tax filing Position holder. Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing A terminal operator that owns taxable fuel in its terminal is a position holder. Free federal tax filing Rack. Free federal tax filing   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. Free federal tax filing Refiner. Free federal tax filing   This is any person that owns, operates, or otherwise controls a refinery. Free federal tax filing Refinery. Free federal tax filing   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. Free federal tax filing However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. Free federal tax filing For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. Free federal tax filing Registrant. Free federal tax filing   This is a taxable fuel registrant (see Registration Requirements, later). Free federal tax filing Removal. Free federal tax filing   This is any physical transfer of taxable fuel. Free federal tax filing It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. Free federal tax filing However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. Free federal tax filing Renewable diesel. Free federal tax filing   See Renewable Diesel Credits in chapter 2. Free federal tax filing Sale. Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing Second generation biofuel. Free federal tax filing   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. Free federal tax filing S. Free federal tax filing C. Free federal tax filing 7545). Free federal tax filing It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. Free federal tax filing It is not alcohol of less than 150 proof (disregard any added denaturants). Free federal tax filing See Form 6478 for more information. Free federal tax filing State. Free federal tax filing   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. Free federal tax filing An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. Free federal tax filing Taxable fuel. Free federal tax filing   This means gasoline, diesel fuel, and kerosene. Free federal tax filing Terminal. Free federal tax filing   This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing Terminal operator. Free federal tax filing   This is any person that owns, operates, or otherwise controls a terminal. Free federal tax filing Throughputter. Free federal tax filing   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). Free federal tax filing Vessel operator. Free federal tax filing   This is the person that operates a vessel within the bulk transfer/terminal system. Free federal tax filing However, vessel does not include a deep draft ocean-going vessel. Free federal tax filing Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. Free federal tax filing A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. Free federal tax filing For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. Free federal tax filing The returns are due the last day of the month following the month in which the transaction occurs. Free federal tax filing Generally, these returns can be filed on paper or electronically. Free federal tax filing For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. Free federal tax filing Publication 3536 is only available on the IRS website. Free federal tax filing Form 720-TO. Free federal tax filing   This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. Free federal tax filing Each terminal operator must file a separate form for each approved terminal. Free federal tax filing Form 720-CS. Free federal tax filing   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. Free federal tax filing Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. Free federal tax filing See Form 637 for other persons who must register and for more information about registration. Free federal tax filing Persons that are required to be registered. Free federal tax filing   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. Free federal tax filing Persons that may register. Free federal tax filing   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. Free federal tax filing Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. Free federal tax filing However, they must be registered to file claims for certain sales and uses of fuel. Free federal tax filing See Form 637 for more information. Free federal tax filing Taxable fuel registrant. Free federal tax filing   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. Free federal tax filing The term registrant as used in the discussions of these fuels means a taxable fuel registrant. Free federal tax filing Additional information. Free federal tax filing   See the Form 637 instructions for the information you must submit when you apply for registration. Free federal tax filing Failure to register. Free federal tax filing   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. Free federal tax filing Gasoline and Aviation Gasoline Gasoline. Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing Gasoline also includes gasoline blendstocks, discussed later. Free federal tax filing Aviation gasoline. Free federal tax filing   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. Free federal tax filing Taxable Events The tax on gasoline is $. Free federal tax filing 184 per gallon. Free federal tax filing The tax on aviation gasoline is $. Free federal tax filing 194 per gallon. Free federal tax filing When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. Free federal tax filing 141 per gallon. Free federal tax filing See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. Free federal tax filing Tax is imposed on the removal, entry, or sale of gasoline. Free federal tax filing Each of these events is discussed later. Free federal tax filing Also, see the special rules that apply to gasoline blendstocks, later. Free federal tax filing If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. Free federal tax filing See Refunds of Second Tax in chapter 2. Free federal tax filing Removal from terminal. Free federal tax filing   All removals of gasoline at a terminal rack are taxable. Free federal tax filing The position holder for that gasoline is liable for the tax. Free federal tax filing Two-party exchanges. Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. Free federal tax filing 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. Free federal tax filing The transaction is subject to a written contract. Free federal tax filing Terminal operator's liability. Free federal tax filing   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. Free federal tax filing   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. Free federal tax filing The terminal operator is a registrant. Free federal tax filing The terminal operator has an unexpired notification certificate (discussed later) from the position holder. Free federal tax filing The terminal operator has no reason to believe any information on the certificate is false. Free federal tax filing Removal from refinery. Free federal tax filing   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. Free federal tax filing 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. Free federal tax filing It is made at the refinery rack. Free federal tax filing The refiner is liable for the tax. Free federal tax filing Exception. Free federal tax filing   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. Free federal tax filing The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Free federal tax filing The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Free federal tax filing The removal from the refinery is by railcar. Free federal tax filing The same person operates the refinery and the facility at which the gasoline is received. Free federal tax filing Entry into the United States. Free federal tax filing   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. Free federal tax filing It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Free federal tax filing It is not made by bulk transfer. Free federal tax filing The enterer is liable for the tax. Free federal tax filing Importer of record's liability. Free federal tax filing   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. Free federal tax filing   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Free federal tax filing The importer of record has an unexpired notification certificate (discussed later) from the enterer. Free federal tax filing The importer of record has no reason to believe any information in the certificate is false. Free federal tax filing Customs bond. Free federal tax filing   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. Free federal tax filing Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Free federal tax filing   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. Free federal tax filing The position holder is liable for the tax. Free federal tax filing The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Free federal tax filing However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Free federal tax filing Bulk transfers not received at approved terminal or refinery. Free federal tax filing   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. Free federal tax filing No tax was previously imposed (as discussed earlier) on any of the following events. Free federal tax filing The removal from the refinery. Free federal tax filing The entry into the United States. Free federal tax filing The removal from a terminal by an unregistered position holder. Free federal tax filing Upon removal from the pipeline or vessel, the gasoline is not received at an approved terminal or refinery (or at another pipeline or vessel). Free federal tax filing   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. Free federal tax filing However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Free federal tax filing The owner is a registrant. Free federal tax filing The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. Free federal tax filing The owner has no reason to believe any information on the certificate is false. Free federal tax filing The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. Free federal tax filing The operator is jointly and severally liable if the owner does not meet these conditions. Free federal tax filing Sales to unregistered person. Free federal tax filing   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. Free federal tax filing   The seller is liable for the tax. Free federal tax filing However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Free federal tax filing   The seller is a registrant. Free federal tax filing The seller has an unexpired notification certificate (discussed later) from the buyer. Free federal tax filing The seller has no reason to believe any information on the certificate is false. Free federal tax filing The buyer of the gasoline is liable for the tax if the seller meets these conditions. Free federal tax filing The buyer is jointly and severally liable if the seller does not meet these conditions. Free federal tax filing Exception. Free federal tax filing   The tax does not apply to a sale if all of the following apply. Free federal tax filing The buyer's principal place of business is not in the United States. Free federal tax filing The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Free federal tax filing The seller is a registrant and the exporter of record. Free federal tax filing The fuel was exported. Free federal tax filing Removal or sale of blended gasoline. Free federal tax filing   The removal or sale of blended gasoline by the blender is taxable. Free federal tax filing See Blended taxable fuel under Definitions, earlier. Free federal tax filing   The blender is liable for the tax. Free federal tax filing The tax is figured on the number of gallons not previously subject to the tax on gasoline. Free federal tax filing   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. Free federal tax filing See Form 720 to report this tax. Free federal tax filing You also must be registered with the IRS as a blender. Free federal tax filing See Form 637. Free federal tax filing   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. Free federal tax filing Notification certificate. Free federal tax filing   The notification certificate is used to notify a person of the registration status of the registrant. Free federal tax filing A copy of the registrant's letter of registration cannot be used as a notification certificate. Free federal tax filing A model notification certificate is shown in the Appendix as Model Certificate C. Free federal tax filing A notification certificate must contain all information necessary to complete the model. Free federal tax filing   The certificate may be included as part of any business records normally used for a sale. Free federal tax filing 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. Free federal tax filing The registrant must provide a new certificate if any information on a certificate has changed. Free federal tax filing Additional persons liable. Free federal tax filing   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. Free federal tax filing Gasoline Blendstocks Gasoline blendstocks may be subject to $. Free federal tax filing 001 per gallon LUST tax as discussed below. Free federal tax filing Gasoline includes gasoline blendstocks. Free federal tax filing The previous discussions apply to these blendstocks. Free federal tax filing However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. Free federal tax filing 001 per gallon or are not subject to the excise tax. Free federal tax filing Blendstocks. Free federal tax filing   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. Free federal tax filing   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. Free federal tax filing Not used to produce finished gasoline. Free federal tax filing   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. Free federal tax filing Removals and entries not connected to sale. Free federal tax filing   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant. Free federal tax filing Removals and entries connected to sale. Free federal tax filing   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. Free federal tax filing The person has an unexpired certificate (discussed later) from the buyer. Free federal tax filing The person has no reason to believe any information in the certificate is false. Free federal tax filing Sales after removal or entry. Free federal tax filing   The sale of a gasoline blendstock that was not subject to tax on its nonbulk removal or entry, as discussed earlier, is taxable. Free federal tax filing The seller is liable for the tax. Free federal tax filing However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. Free federal tax filing The seller has an unexpired certificate (discussed next) from the buyer. Free federal tax filing The seller has no reason to believe any information in the certificate is false. Free federal tax filing Certificate of buyer. Free federal tax filing   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. Free federal tax filing The certificate may be included as part of any business records normally used for a sale. Free federal tax filing A model certificate is shown in the Appendix as Model Certificate D. Free federal tax filing The certificate must contain all information necessary to complete the model. Free federal tax filing   A certificate expires on the earliest of the following dates. Free federal tax filing The date 1 year after the effective date (not earlier than the date signed) of the certificate. Free federal tax filing The date a new certificate is provided to the seller. Free federal tax filing The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. Free federal tax filing The buyer must provide a new certificate if any information on a certificate has changed. Free federal tax filing   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. Free federal tax filing Received at approved terminal or refinery. Free federal tax filing   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. Free federal tax filing The person is a registrant. Free federal tax filing The person has an unexpired notification certificate (discussed earlier) from the operator of the terminal or refinery where the gasoline blendstocks are received. Free federal tax filing The person has no reason to believe any information on the certificate is false. Free federal tax filing Bulk transfers to registered industrial user. Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing Credits or Refunds. Free federal tax filing   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. Free federal tax filing For more information, see chapter 2. Free federal tax filing Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. Free federal tax filing 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. Free federal tax filing Diesel fuel does not include gasoline, kerosene, excluded liquid, No. Free federal tax filing 5 and No. Free federal tax filing 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. Free federal tax filing An excluded liquid is either of the following. Free federal tax filing A liquid that contains less than 4% normal paraffins. Free federal tax filing A liquid with all the following properties. Free federal tax filing Distillation range of 125 degrees Fahrenheit or less. Free federal tax filing Sulfur content of 10 ppm or less. Free federal tax filing Minimum color of +27 Saybolt. Free federal tax filing Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. Free federal tax filing Kerosene. Free federal tax filing   This means any of the following liquids. Free federal tax filing One of the two grades of kerosene (No. Free federal tax filing 1-K and No. Free federal tax filing 2-K) covered by ASTM specification D3699. Free federal tax filing 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). Free federal tax filing See Kerosene for Use in Aviation, later. Free federal tax filing   However, kerosene does not include excluded liquid, discussed earlier. Free federal tax filing   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. Free federal tax filing Diesel-powered highway vehicle. Free federal tax filing   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. Free federal tax filing Specially designed mobile machinery for nontransportation functions and vehicles specially designed for off-highway transportation are generally not considered diesel-powered highway vehicles. Free federal tax filing For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. Free federal tax filing 2) in chapter 2. Free federal tax filing Diesel-powered train. Free federal tax filing   This is any diesel-powered equipment or machinery that rides on rails. Free federal tax filing The term includes a locomotive, work train, switching engine, and track maintenance machine. Free federal tax filing Taxable Events The tax on diesel fuel and kerosene is $. Free federal tax filing 244 per gallon. Free federal tax filing It is imposed on the removal, entry, or sale of diesel fuel and kerosene. Free federal tax filing Each of these events is discussed later. Free federal tax filing Only the $. Free federal tax filing 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. Free federal tax filing 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. Free federal tax filing See Refunds of Second Tax in chapter 2. Free federal tax filing Use in certain intercity and local buses. Free federal tax filing   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. Free federal tax filing A claim for $. Free federal tax filing 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. Free federal tax filing An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. Free federal tax filing The bus must be engaged in one of the following activities. Free federal tax filing Scheduled transportation along regular routes regardless of the size of the bus. Free federal tax filing Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). Free federal tax filing 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. Free federal tax filing Removal from terminal. Free federal tax filing   All removals of diesel fuel and kerosene at a terminal rack are taxable. Free federal tax filing The position holder for that fuel is liable for the tax. Free federal tax filing Two-party exchanges. Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. Free federal tax filing 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. Free federal tax filing The transaction is subject to a written contract. Free federal tax filing Terminal operator's liability. Free federal tax filing   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). Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing The terminal operator is a registrant. Free federal tax filing The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. Free federal tax filing The terminal operator has no reason to believe any information on the certificate is false. Free federal tax filing Removal from refinery. Free federal tax filing   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. Free federal tax filing 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. Free federal tax filing It is made at the refinery rack. Free federal tax filing The refiner is liable for the tax. Free federal tax filing Exception. Free federal tax filing   The tax does not apply to a removal of diesel fuel or kerosene at the refinery rack if all the following conditions are met. Free federal tax filing The diesel fuel or kerosene is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Free federal tax filing The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Free federal tax filing 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. Free federal tax filing Entry into the United States. Free federal tax filing   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. Free federal tax filing It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Free federal tax filing It is not made by bulk transfer. Free federal tax filing The enterer is liable for the tax. Free federal tax filing Importer of record's liability. Free federal tax filing   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. Free federal tax filing   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Free federal tax filing The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. Free federal tax filing The importer of record has no reason to believe any information in the certificate is false. Free federal tax filing Customs bond. Free federal tax filing   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. Free federal tax filing Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Free federal tax filing   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. Free federal tax filing The position holder is liable for the tax. Free federal tax filing The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Free federal tax filing However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Free federal tax filing Bulk transfers not received at approved terminal or refinery. Free federal tax filing   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. Free federal tax filing No tax was previously imposed (as discussed earlier) on any of the following events. Free federal tax filing The removal from the refinery. Free federal tax filing The entry into the United States. Free federal tax filing The removal from a terminal by an unregistered position holder. Free federal tax filing 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). Free federal tax filing   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. Free federal tax filing However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Free federal tax filing The owner is a registrant. Free federal tax filing 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. Free federal tax filing The owner has no reason to believe any information on the certificate is false. Free federal tax filing The operator of the facility where the diesel fuel or kerosene is received is liable for the tax if the owner meets these conditions. Free federal tax filing The operator is jointly and severally liable if the owner does not meet these conditions. Free federal tax filing Sales to unregistered person. Free federal tax filing   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. Free federal tax filing   The seller is liable for the tax. Free federal tax filing However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Free federal tax filing The seller is a registrant. Free federal tax filing The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. Free federal tax filing The seller has no reason to believe any information on the certificate is false. Free federal tax filing The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. Free federal tax filing The buyer is jointly and severally liable if the seller does not meet these conditions. Free federal tax filing Exception. Free federal tax filing   The tax does not apply to a sale if all of the following apply. Free federal tax filing The buyer's principal place of business is not in the United States. Free federal tax filing The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Free federal tax filing The seller is a registrant and the exporter of record. Free federal tax filing The fuel was exported. Free federal tax filing Removal or sale of blended diesel fuel or kerosene. Free federal tax filing   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. Free federal tax filing Blended taxable fuel produced using biodiesel is subject to the tax. Free federal tax filing See Blended taxable fuel under Definitions, earlier. Free federal tax filing   The blender is liable for the tax. Free federal tax filing The tax is figured on the number of gallons not previously subject to the tax. Free federal tax filing   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. Free federal tax filing Generally, the biodiesel mixture must be diesel fuel (defined earlier). Free federal tax filing See Form 720 to report this tax. Free federal tax filing You also must be registered by the IRS as a blender. Free federal tax filing See Form 637 for more information. Free federal tax filing   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. Free federal tax filing Additional persons liable. Free federal tax filing   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. Free federal tax filing Credits or Refunds. Free federal tax filing   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. Free federal tax filing For more information, see chapter 2. Free federal tax filing Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. Free federal tax filing 001 per gallon LUST tax as discussed below, unless the fuel is for export. Free federal tax filing 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. Free federal tax filing The person otherwise liable for tax (for example, the position holder) is a registrant. Free federal tax filing In the case of a removal from a terminal, the terminal is an approved terminal. Free federal tax filing The diesel fuel or kerosene satisfies the dyeing requirements (described next). Free federal tax filing Dyeing requirements. Free federal tax filing   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. Free federal tax filing It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. Free federal tax filing 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. Free federal tax filing Is indelibly dyed by mechanical injection. Free federal tax filing See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. Free federal tax filing Notice required. Free federal tax filing   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. Free federal tax filing   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. Free federal tax filing   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). Free federal tax filing That seller is subject to the penalty described next. Free federal tax filing Penalty. Free federal tax filing   A penalty is imposed on a person if any of the following situations apply. Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. Free federal tax filing 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. Free federal tax filing   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. Free federal tax filing After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. Free federal tax filing   This penalty is in addition to any tax imposed on the fuel. Free federal tax filing   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. Free federal tax filing   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. Free federal tax filing   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. Free federal tax filing However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. Free federal tax filing 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. Free federal tax filing Exception to penalty. Free federal tax filing   The penalty under item (3) will not apply in any of the following situations. Free federal tax filing Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any undyed liquid and the resulting product meets the dyeing requirements. Free federal tax filing 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. Free federal tax filing The alteration or attempted alteration occurs in an exempt area of Alaska. Free federal tax filing See Removal for sale or use in Alaska, later. Free federal tax filing 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. Free federal tax filing Alaska and Feedstocks Tax of $. Free federal tax filing 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). Free federal tax filing Undyed kerosene used for feedstock purposes. Free federal tax filing Removal for sale or use in Alaska. Free federal tax filing   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. Free federal tax filing The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. Free federal tax filing 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. Free federal tax filing In the case of a removal from a terminal, the terminal is an approved terminal. Free federal tax filing 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. Free federal tax filing   If all three of the requirements above are not met, then tax is imposed at $. Free federal tax filing 244 per gallon. Free federal tax filing   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. Free federal tax filing Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. Free federal tax filing Later sales. Free federal tax filing   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. Free federal tax filing The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. Free federal tax filing However, the sale is not taxable (other than the LUST tax at $. Free federal tax filing 001 per gallon) if all the following requirements are met. Free federal tax filing The fuel is sold in Alaska for certain nontaxable uses. Free federal tax filing The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. Free federal tax filing The seller can show satisfactory evidence of the nontaxable nature of the transaction and has no reason to believe the evidence is false. Free federal tax filing Feedstock purposes. Free federal tax filing   The $. Free federal tax filing 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. Free federal tax filing The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. Free federal tax filing In the case of a removal from a terminal, the terminal is an approved terminal. Free federal tax filing 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. Free federal tax filing   If all of the requirements above are not met, then tax is imposed at $. Free federal tax filing 244 per gallon. Free federal tax filing   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. Free federal tax filing For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. Free federal tax filing A feedstock user is a person that uses kerosene for a feedstock purpose. Free federal tax filing A registered feedstock user is a person that has been registered by the IRS as a feedstock user. Free federal tax filing See Registration Requirements, earlier. Free federal tax filing Later sales. Free federal tax filing   The excise tax ($. Free federal tax filing 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. Free federal tax filing The tax is imposed at the time of the later sale and that seller is liable for the tax. Free federal tax filing Certificate. Free federal tax filing   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. Free federal tax filing The certificate may be included as part of any business records normally used for a sale. Free federal tax filing A model certificate is shown in the Appendix as Model Certificate G. Free federal tax filing Your certificate must contain all information necessary to complete the model. Free federal tax filing   A certificate expires on the earliest of the following dates. Free federal tax filing The date 1 year after the effective date (not earlier than the date signed) of the certificate. Free federal tax filing The date the seller is provided a new certificate or notice that the current certificate is invalid. Free federal tax filing The date the seller is notified the buyer's registration has been revoked or suspended. Free federal tax filing   The buyer must provide a new certificate if any information on a certificate has changed. Free federal tax filing 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. Free federal tax filing Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. Free federal tax filing Any undyed diesel fuel or undyed kerosene on which a credit or refund (for fuel used for a nontaxable purpose) has been allowed. Free federal tax filing Any liquid other than gasoline, diesel fuel, or kerosene. Free federal tax filing Generally, this back-up tax is imposed at a rate of $. Free federal tax filing 244 per gallon. Free federal tax filing Liability for tax. Free federal tax filing   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. Free federal tax filing 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. Free federal tax filing Exemptions from the back-up tax. Free federal tax filing   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. Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing A reduced tax rate of $. Free federal tax filing 198 per gallon is imposed on a diesel-water fuel emulsion. Free federal tax filing 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. Free federal tax filing 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 $. Free federal tax filing 244 per gallon. Free federal tax filing Credits or refunds. Free federal tax filing   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. Free federal tax filing Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. Free federal tax filing 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). Free federal tax filing For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $. Free federal tax filing 219. Free federal tax filing The rate of $. Free federal tax filing 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. Free federal tax filing The airport terminal does not need to be a secured airport terminal for this rate to apply. Free federal tax filing 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. Free federal tax filing For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. Free federal tax filing 044 per gallon. Free federal tax filing For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. Free federal tax filing 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. Free federal tax filing See Terminal located within a secured area of an airport, later. Free federal tax filing In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Free federal tax filing 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 $. Free federal tax filing 001. Free federal tax filing There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Free federal tax filing 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. Free federal tax filing See Terminal located within a secured area of an airport, later. Free federal tax filing In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Free federal tax filing The position holder is liable for the $. Free federal tax filing 001 per gallon tax. Free federal tax filing For kerosene removed directly from a terminal into the fuel tank of an fractional ownership program aircraft after March 31, 2012, a surtax of $. Free federal tax filing 141 per gallon applies. Free federal tax filing Certain refueler trucks, tankers, and tank wagons treated as terminals. Free federal tax filing   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. Free federal tax filing Such terminal is located within an area of an airport. Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing Information reporting will be required by terminal operators regarding this provision. Free federal tax filing 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. Free federal tax filing Terminal located within a secured area of an airport. Free federal tax filing   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. Free federal tax filing 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. Free federal tax filing 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 $. Free federal tax filing 044 per gallon. Free federal tax filing 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). Free federal tax filing For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. Free federal tax filing For the aircraft operator to be liable for the tax $. Free federal tax filing 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. Free federal tax filing Commercial aviation. Free federal tax filing   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. Free federal tax filing However, commercial aviation does not include any of the following uses. Free federal tax filing Any use exclusively for the purpose of skydiving. Free federal tax filing Certain air transportation by seaplane. Free federal tax filing See Seaplanes under Transportation of Persons by Air in chapter 4. Free federal tax filing Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. Free federal tax filing For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. Free federal tax filing 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. Free federal tax filing For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. Free federal tax filing Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. Free federal tax filing See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. Free federal tax filing 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 $. Free federal tax filing 141 per gallon. Free federal tax filing The fractional ownership program manager is liable for the tax. Free federal tax filing The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. Free federal tax filing If the surtax is imposed, the following air transportation taxes do not apply. Free federal tax filing Transportation of persons by air. Free federal tax filing Transportation of property by air. Free federal tax filing Use of international air travel facilities. Free federal tax filing These taxes are described under Air Transportation Taxes, later. Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing Fractional program aircraft. Free federal tax filing   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. Free federal tax filing S. Free federal tax filing   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. Free federal tax filing In such situations, the flight is not commercial aviation. Free federal tax filing Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. Free federal tax filing Fractional owner. Free federal tax filing   Any person owning any interest (including the entire interest) in a fractional program aircraft. Free federal tax filing Dry lease aircraft exchange. Free federal tax filing   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. Free federal tax filing Special rule relating to deadhead service. Free federal tax filing   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. Free federal tax filing More information. Free federal tax filing   See section 4043 for more information on the surtax. Free federal tax filing 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. Free federal tax filing Certificate. Free federal tax filing   The certificate may be included as part of any business records normally used for a sale. Free federal tax filing See Model Certificate K in the Appendix. Free federal tax filing   A certificate expires on the earliest of the following dates. Free federal tax filing The date 1 year after the effective date (not earlier than the date signed) of the certificate. Free federal tax filing The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. Free federal tax filing The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. Free federal tax filing   The buyer must provide a new certificate if any information on a certificate has changed. Free federal tax filing   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. Free federal tax filing Exempt use. Free federal tax filing   The rate on kerosene for use in aviation is $. Free federal tax filing 001 (LUST tax) if it is removed from any refinery or terminal directly into the fuel tank of an aircraft for an exempt use. Free federal tax filing An exempt use includes kerosene for the exclusive use of a state or local government. Free federal tax filing There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Free federal tax filing Flash title transaction. Free federal tax filing   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. Free federal tax filing 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. Free federal tax filing 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. Free federal tax filing Reseller statement. Free federal tax filing   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. Free federal tax filing Credits or Refunds. Free federal tax filing   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). Free federal tax filing A claim may be made by a registered ultimate vendor for certain sales. Free federal tax filing For more information, see chapter 2. Free federal tax filing Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. Free federal tax filing Other Fuels include alternative fuels. Free federal tax filing 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. Free federal tax filing Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. Free federal tax filing Qualified methanol and ethanol fuels. Free federal tax filing   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. Free federal tax filing The tax rates are listed in the Instructions for Form 720. Free federal tax filing Partially exempt methanol and ethanol fuels. Free federal tax filing   A reduced tax rate applies to these fuels. Free federal tax filing Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. Free federal tax filing The tax rates are listed in the Instructions for Form 720. Free federal tax filing Motor vehicles. Free federal tax filing   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. Free federal tax filing They are propelled by a motor. Free federal tax filing They are designed for carrying or towing loads from one place to another, regardless of the type of material or load carried or t