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Obviously, the destruction caused by Hurricane Katrina has had a major impact on fuel supplies. The IRS is temporarily waiving regulations that ban the sale of certain diesel fuels to address shortages. Dyed Diesel Fuel No Longer Banned Diesel fuel comes in two general forms, clear and dyed. Dyed diesel is not environment friendly. Under laws passed by Congress, the IRS effectively bans the sale of dyed diesel fuel for use on highways. Put another way, the trucking industry must use clear diesel for transports. In the wake of serious fuel shortage issues caused by Hurricane Katrina, the IRS is immediately waiving the tax penalties applicable to the use of dyed diesel on highways. This surprisingly quick policy decision is a reflection of exploding fuel prices and a stark lack of supply. The order issued by the Commissioner of the IRS is only effective until September 15, 2005 at this time. It is anticipated that the Commissioner will extend this time period since it is clear the fuel issues will not be overcome by the deadline. While the penalties associated with dyed diesel are waived, the IRS has chosen to keep a basic diesel fuel tax in place. All sales of dyed diesel fuel are subject to a 24.4 cent tax per gallon. Either the retailer or purchaser can pay. The IRS, however, has indicated that it will waive any penalties and interest assessments associated with failure to make bi-weekly deposits of the tax. In addition, users of dyed diesel fuel need not concern themselves with any EPA restrictions related to its use during this temporary waiver. In Closing Typically criticized for reacting slowly, the IRS should be commended for taking quick steps to free up fuel from a tax perspective. To support the trucking industry, let us hope the deadlines are extended well past September 15, 2005.
About The Author
Richard Chapo is with http://www.businesstaxrecovery.com - recovering overpaid business taxes for small businesses. Visit our article page - http://www.businesstaxrecovery.com/articles - to read more tax articles.
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