The tax on dyed diesel fuel for inland waterways fuel use applies at the rate listed on Form 720. This is in addition to all other taxes imposed on the sale or use of the fuel. The section 4081(e) refund (discussed below) cannot be claimed.
If the tax is paid and reported to the government on more than one taxable event for a taxable fuel under Internal Revenue Code section 4081, the person paying the "second tax" may claim a refund (without interest) of that tax if certain conditions and reporting requirements are met. No credit against any tax is allowed for this tax. For information about taxable events, see the discussions under Gasoline, Diesel Fuel and Kerosene, and Kerosene for Use in Aviation in chapter 1.taxmap/pubs/p510-020.htm#en_us_publink1000116978
A claim for refund of the tax is allowed only if all the following conditions are met.
- A tax on the fuel was paid to the government and not credited or refunded (the "first tax").
- After the first tax was imposed, another tax was imposed on the same fuel and was paid to the government (the "second tax").
- The person that paid the second tax filed a timely claim for refund containing the information required (see Refund claim, later).
- The person that paid the first tax has met the reporting requirements, discussed next.
Generally, the person that paid the first tax must file a "First Taxpayer's Report" with its Form 720 for the quarter to which the report relates. A model first taxpayer's report is shown in the Appendix as Model Certificate B. The report must contain all information needed to complete the model.
By the due date for filing the Form 720, you must also send a separate copy of the report to the following address. taxmap/pubs/p510-020.htm#en_us_publink1000116980
Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999-0555
Write "EXCISE – FIRST TAXPAYER'S REPORT" across the top of that copy.
A first taxpayer's report is not required for the tax imposed on:
- Removal at a terminal rack,
- Nonbulk entries into the United States, and
- Removals or sales by blenders.
However, if the person liable for the tax expects that another tax will be imposed on that fuel, that person should (but is not required to) file a first taxpayer's report.
The first taxpayer must give a copy of the report to the buyer of the fuel within the bulk transfer/terminal system or to the owner of the fuel immediately before the first tax was imposed, if the first taxpayer is not the owner at that time. If an optional report is filed, a copy should (but is not required to) be given to the buyer or owner.
A person that receives a copy of the first taxpayer's report and later sells the fuel within the bulk transfer/terminal system must give the copy and a "Statement of Subsequent Seller" to the buyer. If the later sale is outside the bulk transfer/terminal system and that person expects that another tax will be imposed, that person should (but is not required to) give the copy and the statement to the buyer. A model statement of subsequent seller is shown in the Appendix as Model Certificate A. The statement must contain all information necessary to complete the model.
If the first taxpayer's report relates to fuel sold to more than one buyer, copies of that report must be made when the fuel is divided. Each buyer must be given a copy of the report. taxmap/pubs/p510-020.htm#en_us_publink1000116982
You must have filed Form 720 and paid the second tax before you file for a refund of that tax. You must make your claim for refund on Form 8849. Complete Schedule 5 (Form 8849) and attach it to your Form 8849. Do not include this claim with a claim under another tax provision. You must not have included the second tax in the price of the fuel and must not have collected it from the purchaser. You must submit the following information with your claim.
- A copy of the first taxpayer's report (discussed earlier).
- A copy of the statement of subsequent seller if the fuel was bought from someone other than the first taxpayer.