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IRS Waives Diesel Fuel Tax Penalties In Texas

by Mike Godfrey, Tax-News.com, Washington

05 September 2017


In response to shortages of undyed diesel fuel caused by Hurricane Harvey, the Internal Revenue Service (IRS) will not impose a penalty when dyed diesel fuel is sold for use or used on the highway. The expanded waiver area now covers the entire state of Texas.

This relief applies beginning August 25, 2017, in the areas and counties for which the Environmental Protection Agency (EPA) issued waivers for Texas Low Emission Diesel Fuel. Those areas and counties now include the entire state of Texas, an expansion of the original areas announced earlier, the IRS said on September 3.

The IRS said: "This penalty relief is available to any person that sells or uses dyed fuel for highway use. In the case of the operator of the vehicle in which the dyed fuel is used, the relief is available only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use. The IRS will not impose penalties for failure to make semi-monthly deposits of this tax. IRS Publication 510, Excise Taxes, has information on the proper method for reporting and paying the tax."

The IRS noted that, ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes, for home heating use and to local governments for buses.

The penalty waiver for dyed diesel is effective through September 15, 2017. However, the waiver does not apply to the Internal Revenue Code penalty for using adulterated fuels that do not comply with applicable EPA regulations. Consequently, diesel fuel with sulfur content higher than 15 parts-per-million may not be used in highway vehicles.

TAGS: tax | Internal Revenue Service (IRS) | United States | penalties

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