For the latest information about developments related to Pub. 510, such as legislation enacted after it was published, go to IRS.gov/Pub510.
. Due to the IRS' acquiescence in a recent court case, the section 4611 tax on exported crude oil currently doesn’t apply. See AOD 2023-01, at IRS.gov/Actions on Decisions. .
Pub. 510 updates. Pub. 510 isn't updated annually; instead it's only updated when there are major changes in the tax law. If you need further assistance see the Instructions for Forms 720, 8864, 4136, 6478, or Schedule 3 (Form 8849) for the most recent updates.Don’t claim the credits or payments for fuel sold or used after the year they expire unless they’re extended again. Only one credit may be taken for each amount of any fuel type.
Note. “IRS Nos.” refers to pre-printed numbers on Form 720.
The Infrastructure Investment and Jobs Act. Effective July 1, 2022, the Infrastructure Investment and Jobs Act reinstates the section 4661 excise tax on chemicals (other than ODCs) (IRS No. 54) and the section 4671 tax on imported chemical substances (IRS No. 17) (they previously expired on December 31,1995). See the Instructions for Form 6627, and Environmental Taxes , later.
The Inflation Reduction Act of 2022 (the Act) made the following changes.
| a) Renewable diesel. Renewable diesel no longer includes fuel derived from biomass that meets the requirements of a Department of Defense specification for military jet fuel or an American Society of Testing Materials (ASTM) specification for aviation turbine fuel. |
| b) Kerosene. Kerosene is no longer treated as diesel fuel for purposes of the renewable diesel mixture credit. |
| a) Underground mined coal. The rate of tax on coal from underground mines is increased to the lower of $1.10 per ton or 4.4% of the sale price (was $.50 per ton or 2% of sales price before October 1, 2022). |
| b) Surfaced mined coal. The rate of tax on coal from surface mines is increased to the lower of $.55 per ton or 4.4% of the sale price (was $.25 per ton or 2% of sales price beforel October 1, 2022). |
Inflation Adjustments for 2023.
Reducing your excise tax liability. For federal income tax purposes, reduce your section 4081 excise tax liability by the amount of excise tax credit allowable under section 6426(c) or (e) and your section 4041 excise tax liability by the amount of your excise tax credit allowable under section 6426(d), in determining your deduction for those excise taxes or your cost of goods sold deduction attributable to those excise taxes.
Butane mixture doesn’t qualify for a credit. A mixture of butane (or other gasoline blendstock) and gasoline is a mixture of two taxable fuels. Therefore, it isn’t an alternative fuel mixture and doesn’t qualify for the section 6426 alternative fuel mixture credit. See Revenue Ruling 2018-02 at IRS.gov/IRB#RR2018-02.
Disregarded entities and qualified subchapter S subsidiaries. Qualified subchapter S subsidiaries (QSubs) and eligible single-owner disregarded entities are treated as separate entities for excise tax and reporting purposes. QSubs and eligible single-owner disregarded entities must pay and report excise taxes (other than IRS Nos. 31, 51, and 117) register for most excise tax activities; and claim any refunds, credits, and payments under the entity's employer identification number (EIN). These actions can't take place under the owner's taxpayer identification number (TIN). Some QSubs and disregarded entities may already have an EIN. However, if you're unsure, please call the IRS Business and Specialty Tax line at 800-829-4933.Generally, QSubs and eligible single-owner disregarded entities will continue to be treated as disregarded entities for other federal tax purposes (other than employment taxes). For more information on these regulations, see Treasury Decisions (T.D.) 9356, T.D. 9462, and T.D. 9596. You can find T.D. 9356 of Internal Revenue Bulletin (I.R.B.) 2007-39 at
IRS.gov/Pub/IRB/2007-39_IRB#TD9356;
T.D. 9462, I.R.B. 2009-42, at
IRS.gov/Pub/IRB/2009-42_IRB#TD9462;
and T.D. 9596, I.R.B. 2012-30, at
IRS.gov/Pub/IRB/2012-30_IRB#TD9596.
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
This publication covers the excise taxes for which you may be liable and which are reported on Form 720 and other forms. It also covers fuel tax credits and refunds. For information on fuel credits against income tax see the instructions for Forms 4136, 6478, or 8864. Only one credit may be taken for each amount of any fuel type.
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Publication
Form (and Instructions)
Information Returns
See How To Get Tax Help in chapter 17 for information about ordering forms and publications.
Guidance
In addition to the taxes discussed in this publication, you may have to report certain other excise taxes.
For tax forms relating to alcohol, firearms, and tobacco, visit the Alcohol and Tobacco Tax and Trade Bureau website at www.ttb.gov.
Heavy highway vehicle use tax.
You report the federal excise tax on the use of certain trucks, truck tractors, and buses used on public highways on Form 2290, Heavy Highway Vehicle Use Tax Return. The tax applies to highway motor vehicles with a taxable gross weight of 55,000 pounds or more. Vans, pickup trucks, panel trucks, and similar trucks generally aren’t subject to this tax.
A Spanish version (Formulario 2290(SP)) is also available.
Registration of vehicles.
Generally, you must prove that you paid your heavy highway vehicle use tax to register your taxable vehicle with your state motor vehicle department or to enter the United States in a Canadian or Mexican registered taxable vehicle. Generally, a copy of Schedule 1 (Form 2290) is stamped by the IRS and returned to you as proof of payment.
. If you have questions on Form 2290, see its separate instructions, or you can call the Form 2290 call site at 1-866-699-4096 (toll free) from the United States, and 1-859-669-5733 (not toll free) from Canada and Mexico. The hours of service are 8:00 a.m. to 6:00 p.m. Eastern time. .
Wagering tax and occupational tax.
The information on wagering tax can be found in the Instructions for Form 730, and Form 11-C.
Chapter 1 defines the types of fuel, taxable events, and exemptions or exceptions to the fuel taxes. Chapter 2 provides information on, and definitions of, the nontaxable uses and explains how to make a claim.
Excise taxes are imposed on all the following fuels.
The following terms are used throughout the discussion of fuel taxes. Other terms are defined in the discussion of the specific fuels to which they pertain.
Agri-biodiesel.
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.
Approved terminal or refinery.
This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner.
Biodiesel.
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.
Blended taxable fuel.
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 hasn’t been imposed. This doesn't 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 hasn’t been imposed.
Blender.
This is the person that produces blended taxable fuel.
Bulk transfer.
This is the transfer of taxable fuel by pipeline or vessel.
Bulk transfer/terminal system.
This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Fuel in the supply tank of any engine, or in any tank car, railcar, trailer, truck, or other equipment suitable for ground transportation isn't in the bulk transfer/terminal system.
Diesel-water fuel emulsion.
A diesel-water fuel emulsion means an emulsion at least 14% of which is water. The emulsion additive used to produce the fuel must be registered by a U.S. manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003.
Dry lease aircraft exchange.
Enterer.
This is the importer of record (under customs law) for the taxable fuel. 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. If there is no importer of record, the owner at the time of entry into the United States is the enterer.
Entry.
Taxable fuel is entered into the United States when it's brought into the United States and applicable customs law requires that it be entered for consumption, use, or warehousing. This doesn't apply to fuel brought into Puerto Rico (which is part of the U.S. customs territory), but does apply to fuel brought into the United States from Puerto Rico.
Fractional ownership aircraft program and fractional program aircraft.
See Surtax on any liquid used in a fractional ownership program aircraft as fuel , later.
Measurement of taxable fuel.
Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit.
Other fuels.
Pipeline operator.
This is the person that operates a pipeline within the bulk transfer/terminal system.
Position holder.
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. 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. A terminal operator that owns taxable fuel in its terminal is a position holder.
Rack.
This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel.
Refiner.
This is any person that owns, operates, or otherwise controls a refinery.
Refinery.
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. However, this term doesn't include a facility where only blended fuel, and no other type of fuel, is produced. For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system.
Registrant.
This is a taxable fuel registrant (see Registration Requirements , later).
Removal.
This is any physical transfer of taxable fuel. It also means any use of taxable fuel other than as a material in the production of taxable fuel or other fuels. However, taxable fuel isn't removed when it evaporates or is otherwise lost or destroyed.
Renewable diesel.
Sale.
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. 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.
Second generation biofuel.
This is any liquid fuel derived by, or from, qualified feedstocks, and meets the registration requirements for fuels and fuel additives established by the EPA under section 211 of the Clean Air Act (42 U.S.C. 7545). It also includes certain liquid fuel that is derived by, or from, any cultivated algae, cyanobacteria, or lemna. It isn't alcohol of less than 150 proof (disregard any added denaturants). See Form 6478 for more information.
State.
This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function.
Taxable fuel.
This means gasoline, diesel fuel, and kerosene.
Terminal.
This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. It doesn't 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. A terminal doesn't 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.
Terminal operator.
This is any person that owns, operates, or otherwise controls a terminal.
Throughputter.
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).
Vessel operator.
This is the person that operates a vessel within the bulk transfer/terminal system. However, vessel doesn't include a deep-draft ocean-going vessel.
Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS.
The returns are due the last day of the month following the month in which the transaction occurs. Generally, these returns can be filed on paper or electronically. For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. Publication 3536 is only available on the IRS website.
Form 720-TO.
This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. Each terminal operator must file a separate form for each approved terminal.
Form 720-CS.
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.
The following discussion applies to excise tax registration requirements for activities relating to fuels only. See Form 637 for other persons who must register and for more information about registration.
Persons that are required to be registered.
you're required to be registered if you're a:
Persons that may register.
You may, but aren’t required to, register if you're a:
Ultimate vendors, credit card issuers, and alternative fuel claimants don’t need to be registered to buy or sell fuel. However, they must be registered to file claims for certain sales and uses of fuel. See Form 637 for more information.
Taxable fuel registrant.
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 hasn’t been revoked or suspended. The term “registrant” as used in the discussions of these fuels means a taxable fuel registrant.
Additional information.
See Form 637 instructions for the information you must submit when you apply for registration.
Failure to register.
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.
Gasoline.
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. Gasoline includes any gasoline blend other than:
Aviation gasoline.
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.
The tax on gasoline is $.184 per gallon. The tax on aviation gasoline is $.194 per gallon. When used in a fractional ownership program aircraft, gasoline is also subject to a surtax of $.141 per gallon. See Surtax on Any Liquid Used in a Fractional Ownership Program Aircraft as Fuel , later.
Tax is imposed on the removal, entry, or sale of gasoline. Each of these events is discussed later. Also, see the special rules that apply to Gasoline Blendstocks , later.
If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. See Refunds of Second Tax in chapter 2.
Removal from terminal.
All removals of gasoline at a terminal rack are taxable. The position holder for that gasoline is liable for the tax.
Two-party exchanges.
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. 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.
Terminal operator's liability.
The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and isn't a registrant.
However, a terminal operator meeting all the following conditions at the time of the removal won’t be liable for the tax.
Removal from refinery.
The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions.
Exception.
The tax doesn't apply to a removal of gasoline at the refinery rack if all the following requirements are met.
Entry into the United States.
The entry of gasoline into the United States is taxable if the entry meets either of the following conditions.
Importer of record's liability.
The importer of record is jointly and severally liable for the tax with the enterer if the importer of record isn't the enterer of the taxable fuel and the enterer isn't a taxable fuel registrant.
However, an importer of record meeting both of the following conditions at the time of the entry won’t be liable for the tax.
Customs bond.
The customs bond won’t 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.
Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator.
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 isn't a registrant. The position holder is liable for the tax. The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator.
Bulk transfers not received at approved terminal or refinery.
Tax is imposed if:
The owner of the gasoline when it's removed from the pipeline or vessel is liable for the tax. However, an owner meeting all the following conditions at the time of the removal won’t be liable for the tax.
The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. The operator is jointly and severally liable if the owner doesn't meet these conditions.
Sales to unregistered person.
The sale of gasoline located within the bulk transfer/terminal system to a person that isn't a registrant is taxable if tax wasn't previously imposed under any of the events discussed earlier.
The seller is liable for the tax. However, a seller meeting all the following conditions at the time of the sale won’t be liable for the tax.
The buyer of the gasoline is liable for the tax if the seller meets these conditions. The buyer is jointly and severally liable if the seller doesn't meet these conditions.
Exception.
The tax doesn't apply to a sale if all of the following apply.
Removal or sale of blended gasoline.
The removal or sale of blended gasoline by the blender is taxable. See Blended taxable fuel under Definitions , earlier.
The blender is liable for the tax. The tax is figured on the number of gallons not previously subject to the tax on gasoline.
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. See Form 720 to report this tax. You must also be registered with the IRS as a blender. See Form 637.
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.
Notification certificate.
The notification certificate is used to notify a person of the registration status of the registrant. A copy of the registrant's letter of registration can't be used as a notification certificate. A model notification certificate is shown in the Appendix as Model Certificate C. A notification certificate must contain all information necessary to complete the model.
The certificate may be included as part of any business records normally used for a sale. 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. The registrant must provide a new certificate if any information on a certificate has changed.
Additional persons liable.
When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax is imposed on: