Federal excise taxes are imposed on certain fuels as discussed in chapter 1. This chapter lists the nontaxable uses of each fuel and defines the nontaxable uses. Information on the refund of second tax is included. This chapter also explains credits and refunds for the alcohol fuel mixture credit, biodiesel mixture credit, alcohol fuel credit, cellulosic biofuel producer credit, biodiesel fuel credit, renewable diesel credits, and alternative fuel credits.

Information on how to make a claim for credit or refund is included in this chapter and can also be found in the instructions for:

• Form 720,
• Form 4136,
• Form 8849,
• Form 6478, and
• Form 8864.

The claim rates for exported taxable fuel are listed on Schedule C (Form 720), Schedule 1 (Form 8849), and Form 4136. Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation. Proof of exportation includes:

• A copy of the export bill of lading issued by the delivering carrier,
• A certificate by the agent or representative of the export carrier showing actual exportation of the fuel,
• A certificate of lading signed by a customs officer of the foreign country to which the fuel is exported, or
• A statement of the foreign consignee showing receipt of the fuel.

The following are the uses of gasoline (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser.

• On a farm for farming purposes (credit only).
• Off-highway business use.
• Export.
• In a boat engaged in commercial fishing.
• In certain intercity and local buses.
• In a school bus.
• Exclusive use by a qualified blood collector organization.
• In a highway vehicle owned by the United States that is not used on a highway.
• Exclusive use by a nonprofit educational organization (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later).
• Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later).
• In an aircraft or vehicle owned by an aircraft museum.

The following are the uses of aviation gasoline for which a credit or refund may be allowable to an ultimate purchaser.

• On a farm for farming purposes (credit only).
• Export.
• In foreign trade.
• Certain helicopter and fixed-wing air ambulance uses.
• In commercial aviation (other than foreign trade).
• Exclusive use by a qualified blood collector organization.
• Exclusive use by a nonprofit education organization (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later).
• Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later).
• In an aircraft owned by an aircraft museum.
• In military aircraft.

Except for sales to nonprofit educational organizations and states and local governments, a credit or refund is allowable to the person that paid the tax to the government if the gasoline was sold to the ultimate purchaser (including an exporter) by either that person or by a retailer and the fuel was exported; used or sold for use as supplies for vessels or aircraft, including military aircraft, commercial fishing, and foreign trade; sold to a qualified blood collector organization; or used or sold for use in the production of Other Fuels. See Filing Claims, later.

This is an ultimate vendor that sells gasoline or aviation gasoline to any of the following and that is purchased without the use of a credit card.

• A state or local government for its exclusive use (including essential government use by an Indian tribal government).
• A nonprofit educational organization for its exclusive use.

The registered ultimate vendor may make the claim if the ultimate purchaser did not use a credit card and waives its right to the credit or refund by providing the registered ultimate vendor with a certificate. A sample certificate is included as Model Certificate M in the Appendix. The registered ultimate vendor must have the certificate at the time the credit or refund is claimed.

The ultimate vendor must be registered by the IRS. See Registration Requirements, earlier.

If gasoline and aviation gasoline are purchased with a credit card issued to a state or local government for its exclusive use (including essential government use by an Indian tribal government), or a nonprofit educational organization for its exclusive use, the person who extended credit to the ultimate purchaser (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer:

• Is registered by the IRS,
• Has established that the amount of tax has not been collected from the person who purchased the gasoline or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and
• Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax.

If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim.

If the claim is made by the credit card issuer, see Schedule C 
(Form 720) or Schedule 8 (Form 8849).