Federal road taxes on WVO/BIO, and 400 gallon exemption info

[JOAT]

The IRS agent working on my application for fuel manufacture/blending, form 937, gave me some more info today.

First, there is no need to file a form 937 if your homebrew is for personal non business use and not for sale. Taxes are still due (.244 per gallon) however and are filed on Form 720, section 60c.

He put some extra effort into the 400 gallon/Qtr exemption thing and explained his and other agents take on why it doesn't apply to us, tho he is the first to admit the language makes it confusing.

-Where the confusion comes in is understanding that fuel taxes are due when certain "taxable events" occur. Several such events may occur from manufacture to tank, so if the tax were to get paid multiple times, it can be refunded.

-As to the 400 gallon exemption, this is so "blenders" do not have to pay the tax on the "event" of removal or sale if the total is less than 400 gallons per quarter. Does not mean the tax isn't owed, just that it doesn't have to be paid by the blender at that time.

-Putting the fuel in your tank is a separate event that I'm told is not the same as removal or sale. Once you put it in your tank the tax is owed. There is no correlation between using the fuel and blending it (two separate events). That is why the 400 gallon exemption doesn't apply overall. While it may apply to the blending and removal activity, unless you never use it you owe the tax, as far as the IRS is concerned.

The information is somewhat found in the new (june 06) Form 510.
--Mention of 400 gallon exemption on bottom L of page 4
--Taxes due when used on page 10 center, "backup tax"

Pretty much any fuel that can be used in a diesel engine is covered, except for a few specific exceptions.

I'm planning to eventually get all this detailed better and with some sample forms to make this all easier for anyone who intends to pay the road tax. My 720's are filed but that is a different department from the 937 agent I'm currently dealing with. Once I get confirmation on the proper way to fill out the form I'll post it

 

[rickh]

Thanks Don..
It just gets better and better dont it!!@^@%##^%@
Rick H...

 

[JOAT]

Yeah, be nice if some politician would get us an exemption, but I'm not holding my breath. From what I've gleaned 95% of the homebrewers out there have no intention of ever paying the tax. Just a few of us.

Lets see with CA road tax and Fed, thats about 43 cents a gallon for my "free" fuel. Add $175 a year for CA grease haulers permit and require $1m insurance or bond. Kind of adds up. You Bio makers then have Methanol expense on top of that. If Diesel wasn't so high almost wouldn't be worth it.

I'm actually surprised the EPA hasn't stepped into the picture. Not likely they would ever fuss with individuals, but to stop the folks like frybrid and greasel selling uncertified kits for highway vehicles. They shut down a bunch of them in the 90's making E85 conversion kits. Fortunately they seem to mostly focus on gas powered vehicles, but if diesels become more popular that could change.

 

[happeetxn]

I am taxed enough and don't like what they are doing with my money that they steal from me as it is: Federal Income Tax, State Income Tax (For some of y'all), Gas Tax, Sales tax 8.25%, Property tax (Vehicles, boats, etc....), Federal Excise Tax?????? WTF????????, Registration Fees, License Fees, Hunting Fees,Tolls, TX 911 Equalization Surcharge ???????????, TX Telecom Infrastructure Fund Reimbursement?????, TX USF (5.65%) ????????????, TX Utility Gross Recpt's Assesment. The last ones are from my phone bill alone.
Don't get me wrong I understand the need for taxes but look at this site to see the waste http://www.cagw.org/site/PageServer
Craig
P.S. Sorry for hijacking the link

 

[dpantazis]

its gonna happen

politics don't apply here folks. forget about your altruistic notings of avoiding the revenuers. taxing of wvo and bioD is GOING to happen. so far we have been lucky in the government stuck in its own red tape. the europeans have been doing this for YEARS! the brits require you to keep wvo usage and tax logs and available for inspection at any time. ie, roadside stop. fines if you are not current.

road tax is used tax. you have to pay to play. it just does not get thought about because its a hidden tax.

remember when commerce on the internet was such a great frontier thing? no tax. those days are long gone. ecommerce is starting to pay taxes.

my hat is off to JOAT for doing this on the up and up. its guys like him that will set the precident on how to do it the right way.

politicians stepping in for exepmtions: that would be great, but consider the implication- if enough people are doing it to get their attention, then what will harvesting WVO be like? and at that point, there will be taxes levied on the greasels, frybirds etc of the world. and what about the insurance companies who will take notice how we 'modify' our vehicles.

dennis

 

[Russ]

So if I buy a bottle of Power Service, and add that to my tank, I have to pay road tax on it?

 

[W4RLR]

The things I love about Florida:

1. No state income tax.
2. No property tax on motor vehicles, recreational vehicles, and boats.
3. No state inspections or state inspection fees.
4. Usually there is an alternate route to a toll road available. The toll roads that do exist are in excellent shape and usually provide a faster, economical route. Electronic toll collection (SunPass) gives you a discount on tolls.
5. State sales tax is only 6 percent, some counties have a 1 to 2 percent sales tax (not the county I live in).
6. 100 percent service connected disabled veterans are exempt from ad valorem property tax on homestead, registration fees on one vehicle. They also get hunting, fishing, and drivers licenses free of charge.
7. Fuel costs are moderate.
8. While it gets COLD in the panhandle in winter, it hardly ever snows.

The things I don't like about Florida:

1. Too many tourists who got their drivers license in a Cracker Jack box.
2. Spanish is the predominant language from West Palm Beach south.
3. Homeowner's insurance costs the equivalent of your first born male child, IF you can buy it from one of the few remaining insurance companies that sell in this state.
4. Everyone and his mother that moved here from up north thinks that the way they did things up north is the way things should be done in Florida. The north is already screwed up enough. Why bring these problems to the Sunshine State?
5. High rise condominiums on the beach.
6. Government that never met a developer they didn't like.

 

[JOAT]

May be awhile before I can get a "formal" ruling on the 400 gallon thing from the IRS, do to flood damage at the relevent building. Did get some more clarification for the Backup Tax.
Basically coming back to;
even tho the blender of less than 400 gallons is exempted, any fuel used on public roads is not.

[Code of Federal Regulations]
[Title 26, Volume 16]
[Revised as of April 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR48.4082-4]

[Page 126-127]

TITLE 26--INTERNAL REVENUE

CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
(CONTINUED)

PART 48_MANUFACTURERS AND RETAILERS EXCISE TAXES--Table of Contents

Subpart H_Motor Vehicles, Tires, Tubes, Tread Rubber, and Taxable Fuel

Sec. 48.4082-4 Diesel fuel and kerosene; back-up tax.

(a) Imposition of tax--(1) In general. Tax is imposed by section
4041 on the delivery into the fuel supply tank of the propulsion engine
of a diesel-powered highway vehicle (other than a diesel-powered bus)
of--
(i) Any diesel fuel or kerosene on which tax has not been imposed by
section 4081;
(ii) Any diesel fuel or kerosene for which a credit or payment has
been allowed under section 6427; or
(iii) Any liquid (other than taxable fuel) for use as fuel.
(2) Liability for tax--(i) In general. The operator of the highway
vehicle into which the fuel is delivered is liable for the tax imposed
under paragraph (a)(1) of this section.
(ii) Joint and several liability of the seller. The seller of the
fuel is jointly and severally liable for the tax imposed under paragraph
(a)(1) of this section if the seller knows or has reason to know that
the fuel will not be used in a nontaxable use.
(3) Rate of tax. The rate of tax is the rate imposed on diesel fuel
by section 4081(a).

 

[powerboatr]

let me throw a donut here

i see in ca you have to get a license to pick up oil.
but for states like tx. al and fl, you could glean oil and make wvo, but who would know
if they stopped you and dipped a tank, is an officer going to do anthing but look and see if its dyed?
i just wonder about declaring the taxes, what if your down next year and dont do it, the IRS has funny way of asking why your taxes went down
followed buy an audit or should i say exploratry surgery up your poop shoot)
prove you arent making fuel, or

my rental houses and irs audits shook some nasties out of the trees, they disallowed a spreadsheet i had to use as a tracker for expenses and phone calls and mileage, seems i could have made it up,
lucky for me i had gas machine recepts and phone bills to back it up

sorry to rant. I would be very hesitant to declare and pay taxes on this at this time if it was my sole source of fuel maybe, but not as a hobby
per say,
when kenedy gets convicted of drunk driving and such then i might be inclined to pay the tax
none of you guys are irs agents are you if so please ignore my rant

 

[JOAT]

Hey Robert,
Point taken. I just want to make sure everyone has correct information to make their decisions with. Probably 90% of homebrewers won't file taxes anyway, but there are many spreading information that we are tax exempt under 400 gallons/qtr, and that does not appear to be true...