IRS Lifts Taxes on Some Diesel Fuel

WASHINGTON -- The Internal Revenue Service, in response to shortages of clear diesel fuel caused by Hurricane Katrina, will not impose a tax penalty when dyed diesel fuel is sold for use or used on the highway, according to a press release.

This relief applies beginning Aug. 25, 2005, in Florida, Aug. 30, 2005, in Alabama, Louisiana, and Mississippi, and Aug. 31, 2005, in the rest of the United States, and will remain in effect through September 15, 2005.

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. The IRS will not impose penalties for failure to make semimonthly deposits of this tax. IRS Publication 510, Excise Taxes for 2005, has information on the proper method for reporting and paying the tax.

Finally, the IRS will not impose the recently enacted tax penalty on a failure to meet the requirements of EPA highway diesel fuel sulfur content regulations if EPA has waived those requirements.

Also, Treasury Department officials said the possibility of reducing the federal tax on gasoline is not under active consideration in the administration. They said it would require legislation to reduce the tax, The Associated Press reported.

Treasury Department officials said it was possible that some members of Congress might push for a cut in the federal gasoline tax to help ease the pain of higher prices, but they would not say which lawmakers might be considering the idea.

State officials started to consider whether to suspend gas taxes in their states.

Georgia Gov. Sonny Perdue said he will sign an executive order Friday to suspend state motor fuel taxes through the end of September to ''relieve some of the financial burden'' on consumers in the wake of Hurricane Katrina. The order will remove the 7.5-cents-a-gallon tax and a 4 percent sales tax on gas, the governor said, and was set to begin at midnight.

Leaders in several other states, including Massachusetts, Connecticut and Pennsylvania, have either proposed or said they are considering gas tax suspensions in their states, according to the AP.

-- NYSSCPA.org News Staff

Posted on 9/2/05