26 USC 6427 - Fuels not used for taxable purposes

U.S Code last checked for updates: May 04, 2024

§ 6427.

Fuels not used for taxable purposes

(a)

Nontaxable uses

Except as provided in subsection (k), if tax has been imposed under paragraph (2) or (3) of section 4041(a) or section 4041(c) on the sale of any fuel and the purchaser uses such fuel other than for the use for which sold, or resells such fuel, the Secretary shall pay (without interest) to him an amount equal to—

(1)

the amount of tax imposed on the sale of the fuel to him, reduced by

(2)

if he uses the fuel, the amount of tax which would have been imposed under section 4041 on such use if no tax under section 4041 had been imposed on the sale of the fuel.

(b)

Intercity, local, or school buses

(1)

Allowance

Except as otherwise provided in this subsection and subsection (k), if any fuel other than gasoline (as defined in section 4083(a)) on the sale of which tax was imposed by section 4041(a) or 4081 is used in an automobile bus while engaged in—

(A)

furnishing (for compensation) passenger land transportation available to the general public, or

(B)

the transportation of students and employees of schools (as defined in the last sentence of section 4221(d)(7)(C)),

the Secretary shall pay (without interest) to the ultimate purchaser of such fuel an amount equal to the product of the number of gallons of such fuel so used multiplied by the rate at which tax was imposed on such fuel by section 4041(a) or 4081, as the case may be.

(2)

Reduction in refund in certain cases

(A)

In general

(B)

Exception for school bus transportation

(C)

Exception for certain intracity transportation

Subparagraph (A) shall not apply to fuel used in any automobile bus while engaged in furnishing (for compensation) intracity passenger land transportation—

(i)

which is available to the general public, and

(ii)

which is scheduled and along regular routes,

but only if such bus is a qualified local bus.

(D)

Qualified local bus

For purposes of this paragraph, the term “qualified local bus” means any local bus—

(i)

which has a seating capacity of at least 20 adults (not including the driver), and

(ii)

which is under contract (or is receiving more than a nominal subsidy) from any State or local government (as defined in section 4221(d)) to furnish such transportation.

(3)

Limitation in case of nonscheduled intercity or local buses

(4)

Refunds for use of diesel fuel in certain intercity buses

With respect to any fuel to which paragraph (2)(A) applies, if the ultimate purchaser of such fuel waives (at such time and in such form and manner as the Secretary shall prescribe) the right to payment under paragraph (1) and assigns such right to the ultimate vendor, then the Secretary shall pay the amount which would be paid under paragraph (1) to such ultimate vendor, but only if such ultimate vendor—

(A)

is registered under section 4101, and

(B)

meets the requirements of subparagraph (A), (B), or (D) of section 6416(a)(1).

(c)

Use for farming purposes

(d)

Use by certain aircraft museums or in certain other aircraft uses

Except as provided in subsection (k), if—

(1)

any gasoline on which tax was imposed by section 4081, or

(2)

any fuel on the sale of which tax was imposed under section 4041,

is used by an aircraft museum (as defined in section 4041(h)(2)) in an aircraft or vehicle owned by such museum and used exclusively for purposes set forth in section 4041(h)(2)(C), or is used in a helicopter or a fixed-wing aircraft for a purpose described in section 4041(l), the Secretary shall pay (without interest) to the ultimate purchaser of such gasoline or fuel an amount equal to the aggregate amount of the tax imposed on such gasoline or fuel.

(e)

Alcohol, biodiesel, alternative fuel, or sustainable aviation fuel

Except as provided in subsection (k)—

(1)

Used to produce a mixture

(2)

Alternative fuel

(3)

Coordination with other repayment provisions

(4)

Registration requirement for alternative fuels

(5)

Limitation to fuels with connection to the United States

(6)

Termination

This subsection shall not apply with respect to—

(A)

any alcohol fuel mixture (as defined in section 6426(b)(3)) sold or used after December 31, 2011,

(B)

any biodiesel mixture (as defined in section 6426(c)(3)) sold or used after December 31, 2024,

(C)

any alternative fuel (as defined in section 6426(d)(2)) sold or used after December 31, 2024,

(D)

any alternative fuel mixture (as defined in section 6426(e)(2)) sold or used after December 31, 2011, and

(E)

any qualified mixture of sustainable aviation fuel (as defined in section 6426(k)(3)) 1

 See References in Text note below.

sold or used after December 31, 2024.

[(f)

Repealed. Pub. L. 109–59, title XI, § 11151(a)(1), Aug. 10, 2005, 119 Stat. 1968]

[(g)

Repealed. Pub. L. 104–188, title I, § 1606(a), Aug. 20, 1996, 110 Stat. 1839]

(h)

Blend stocks not used for producing taxable fuel

(1)

Gasoline blend stocks or additives not used for producing gasoline

(2)

Diesel fuel blend stocks or additives not used for producing diesel

(i)

Time for filing claims; period covered

(1)

General rule

(2)

Exceptions

(A)

In general

If, at the close of any quarter of the taxable year of any person, at least $750 is payable in the aggregate under subsections (a), (b), (d), (h), (l), (m), and (o) of this section and section 6421 to such person with respect to fuel used during—

(i)

such quarter, or

(ii)

any prior quarter (for which no other claim has been filed) during such taxable year,

a claim may be filed under this section with respect to such fuel.

(B)

Time for filing claim

(C)

Nonapplication of paragraph

(3)

Special rule for mixture credits and the alternative fuel credit

(A)

In general

A claim may be filed under subsection (e)(1) by any person with respect to a mixture described in section 6426 or under subsection (e)(2) by any person with respect to an alternative fuel (as defined in section 6426(d)(2)) for any period—

(i)

for which $200 or more is payable under such subsection (e)(1) or (e)(2), and

(ii)

which is not less than 1 week.

In the case of an electronic claim, this subparagraph shall be applied without regard to clause (i).

(B)

Payment of claim

(C)

Time for filing claim

(4)

Special rule for vendor refunds

(A)

In general

A claim may be filed under paragraph (4)(C) or (5) of subsection (l) by any person with respect to fuel sold by such person for any period—

(i)

for which $200 or more ($100 or more in the case of kerosene) is payable under paragraph (4)(C) or (5) of subsection (l), and

(ii)

which is not less than 1 week.

Notwithstanding subsection (l)(1), paragraph (3)(B) shall apply to claims filed under subsections (b)(4), (l)(4)(C)(ii), and (l)(5).

(B)

Time for filing claim

(j)

Applicable laws

(1)

In general

(2)

Examination of books and witnesses

(k)

Income tax credit in lieu of payment

(1)

Persons not subject to income tax

Payment shall be made under this section only to—

(A)

the United States or an agency or instrumentality thereof, a State, a political subdivision of a State, or any agency or instrumentality of one or more States or political subdivisions, or

(B)

an organization exempt from tax under section 501(a) (other than an organization required to make a return of the tax imposed under subtitle A for its taxable year).

(2)

Exception

(3)

Allowance of credit against income tax

(l)

Nontaxable uses of diesel fuel and kerosene

(1)

In general

(2)

Nontaxable use

(3)

Refund of certain taxes on fuel used in diesel-powered trains

For purposes of this subsection, the term “nontaxable use” includes fuel used in a diesel-powered train. The preceding sentence shall not apply with respect to—

(A)

the Leaking Underground Storage Tank Trust Fund financing rate under sections 4041 and 4081, and

(B)

so much of the rate specified in section 4081(a)(2)(A) as does not exceed the rate applicable under section 4041(a)(1)(C)(ii).

The preceding sentence shall not apply in the case of fuel sold for exclusive use by a State or any political subdivision thereof.

(4)

Refunds for kerosene used in aviation

(A)

Kerosene used in commercial aviation

In the case of kerosene used in commercial aviation (as defined in section 4083(b)) (other than supplies for vessels or aircraft within the meaning of section 4221(d)(3)), paragraph (1) shall not apply to so much of the tax imposed by section 4041 or 4081, as the case may be, as is attributable to—

(i)

the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section, and

(ii)

so much of the rate of tax specified in section 4041(c) or 4081(a)(2)(A)(iii), as the case may be, as does not exceed 4.3 cents per gallon.

(B)

Kerosene used in noncommercial aviation

In the case of kerosene used in aviation that is not commercial aviation (as so defined) (other than any use which is exempt from the tax imposed by section 4041(c) other than by reason of a prior imposition of tax), paragraph (1) shall not apply to—

(i)

any tax imposed by subsection (c) or (d)(2) of section 4041, and

(ii)

so much of the tax imposed by section 4081 as is attributable to—

(I)

the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section, and

(II)

so much of the rate of tax specified in section 4081(a)(2)(A)(iii) as does not exceed the rate specified in section 4081(a)(2)(C)(ii).

(C)

Payments to ultimate, registered vendor

(i)

In general

With respect to any kerosene used in aviation (other than kerosene described in clause (ii) or kerosene to which paragraph (5) applies), if the ultimate purchaser of such kerosene waives (at such time and in such form and manner as the Secretary shall prescribe) the right to payment under paragraph (1) and assigns such right to the ultimate vendor, then the Secretary shall pay the amount which would be paid under paragraph (1) to such ultimate vendor, but only if such ultimate vendor—

(I)

is registered under section 4101, and

(II)

meets the requirements of subparagraph (A), (B), or (D) of section 6416(a)(1).

(ii)

Payments for kerosene used in noncommercial aviation

The amount which would be paid under paragraph (1) with respect to any kerosene to which subparagraph (B) applies shall be paid only to the ultimate vendor of such kerosene. A payment shall be made to such vendor if such vendor—

(I)

is registered under section 4101, and

(II)

meets the requirements of subparagraph (A), (B), or (D) of section 6416(a)(1).

(5)

Registered vendors to administer claims for refund of diesel fuel or kerosene sold to State and local governments

(A)

In general

(B)

Sales of kerosene not for use in motor fuel

Paragraph (1) shall not apply to kerosene (other than kerosene used in aviation) sold by a vendor—

(i)

for any use if such sale is from a pump which (as determined under regulations prescribed by the Secretary) is not suitable for use in fueling any diesel-powered highway vehicle or train, or

(ii)

to the extent provided by the Secretary, for blending with heating oil to be used during periods of extreme or unseasonable cold.

(C)

Payment to ultimate, registered vendor

Except as provided in subparagraph (D), the amount which would (but for subparagraph (A) or (B)) have been paid under paragraph (1) with respect to any fuel shall be paid to the ultimate vendor of such fuel, if such vendor—

(i)

is registered under section 4101, and

(ii)

meets the requirements of subparagraph (A), (B), or (D) of section 6416(a)(1).

(D)

Credit card issuer

(m)

Diesel fuel used to produce emulsion

(1)

In general

(2)

Definitions

For purposes of paragraph (1)—

(A)

Regular tax rate

(B)

Incentive tax rate

(n)

Regulations

(o)

Payments for taxes imposed by section 4041(d)

(p)

Cross references

(1)

For civil penalty for excessive claims under this section, see section 6675.

(2)

For fraud penalties, etc., see chapter 75 (section 7201 and following, relating to crimes, other offenses, and forfeitures).

(3)

For treatment of an Indian tribal government as a State (and a subdivision of an Indian tribal government as a political subdivision of a State), see section 7871.

(Added Pub. L. 91–258, title II, § 207(a), May 21, 1970, 84 Stat. 246; amended Pub. L. 94–455, title XIX, § 1906(a)(31)(A), (b)(13)(A), Oct. 4, 1976, 90 Stat. 1829, 1834; Pub. L. 94–530, § 1(b), (c)(2)–(5), Oct. 17, 1976, 90 Stat. 2487, 2488; Pub. L. 95–458, § 3(b), Oct. 14, 1978, 92 Stat. 1257; Pub. L. 95–599, title V, § 505(a), (b), (c)(2)–(4), Nov. 6, 1978, 92 Stat. 2758–2760; Pub. L. 95–600, title VII, § 703(l)(3), Nov. 6, 1978, 92 Stat. 2942; Pub. L. 95–618, title II, § 233(a)(2), Nov. 9, 1978, 92 Stat. 3190; Pub. L. 96–223, title II, § 232(d)(1), (2), (4)(B)–(D), Apr. 2, 1980, 94 Stat. 277, 278; Pub. L. 96–541, § 4, Dec. 17, 1980, 94 Stat. 3205; Pub. L. 97–248, title II, § 279(b)(2), Sept. 3, 1982, 96 Stat. 563; Pub. L. 97–424, title V, §§ 511(d)(4), (e)(1)–(3), (g)(2)(B)–(D), 516(b)(5), Jan. 6, 1983, 96 Stat. 2171, 2172, 2173, 2183; Pub. L. 97–473, title II, § 202(b)(13), Jan. 14, 1983, 96 Stat. 2610; Pub. L. 98–369, div. A, title IV, § 474(r)(38), title VII, §§ 732(a)(3), 734(c)(2), title IX, §§ 911(b), (d)(2)(B)–(F), 912(d), 914, 915(a), July 18, 1984, 98 Stat. 846, 977, 979, 1005–1008; Pub. L. 99–499, title V, § 521(c)(3)(A), (B)(i), (C), Oct. 17, 1986, 100 Stat. 1779; Pub. L. 99–514, title IV, § 422(b), title XVII, § 1703(d), (e)(1), (2)(A)–(E), title XVIII, §§ 1877(b), 1899A(55), (56), Oct. 22, 1986, 100 Stat. 2230, 2777, 2778, 2902, 2961, as amended by Pub. L. 99–499, title V, § 521(c)(3)(B)(ii), Oct. 17, 1986, 100 Stat. 1779; Pub. L. 100–17, title V, § 502(b)(8), (9), Apr. 2, 1987, 101 Stat. 257; Pub. L. 100–203, title X, § 10502(c), Dec. 22, 1987, 101 Stat. 1330–442; Pub. L. 100–223, title IV, § 405(b)(1), (2), Dec. 30, 1987, 101 Stat. 1534, 1535; Pub. L. 100–647, title I, § 1017(c)(3), (10), title II, §§ 2001(d)(7)(B)–(D), 2004(s)(2), (3), title III, § 3002(a)–(c), Nov. 10, 1988, 102 Stat. 3576, 3596, 3609, 3615, 3616; Pub. L. 101–239, title VII, §§ 7501(b)(3), 7812(a), 7822(b)(1)–(4), 7841(d)(20), Dec. 19, 1989, 103 Stat. 2361, 2412, 2424, 2425, 2429; Pub. L. 101–508, title XI, §§ 11211(b)(4)(B), (5), (6)(E)(ii), (d)(7), (8), 11213(b)(3), 11801(a)(46), (c)(23), Nov. 5, 1990, 104 Stat. 1388–425 to 1388–427, 1388–433, 1388–522, 1388–528; Pub. L. 102–240, title VIII, § 8002(b)(7), (8), Dec. 18, 1991, 105 Stat. 2203; Pub. L. 103–66, title XIII, §§ 13241(f)(8)–(10), 13242(c), (d)(21), (25)–(31), Aug. 10, 1993, 107 Stat. 512, 521, 524, 525; Pub. L. 104–188, title I, §§ 1606(a), (b)(2), 1702(b)(2)(B), 1703(k), Aug. 20, 1996, 110 Stat. 1839, 1868, 1877; Pub. L. 105–34, title X, § 1032(c)(3), (e)(7)–(10), Aug. 5, 1997, 111 Stat. 934, 935; Pub. L. 105–178, title IX, §§ 9003(a)(2), 9006(b)(2), 9009(a)–(b)(2), June 9, 1998, 112 Stat. 502, 506, 507; Pub. L. 105–206, title VI, §§ 6016(b), 6017(a), 6023(16), (25), (26), July 22, 1998, 112 Stat. 822, 825, 826; Pub. L. 108–357, title II, § 241(a)(2)(D), title III, § 301(c)(9), (10), title VIII, §§ 851(d)(3), 853(c), (d)(2)(J), (K), 857(b), (c), 870(b), Oct. 22, 2004, 118 Stat. 1438, 1462, 1609, 1611, 1613, 1617, 1624; Pub. L. 109–58, title XIII, §§ 1343(b)(1), (3), 1344(a), Aug. 8, 2005, 119 Stat. 1051, 1052; Pub. L. 109–59, title XI, §§ 11113(b)(3)(C), 11151(a), 11161(b)(2), (3)(B), (D)–(F), 11162(a), (b), 11163(c), Aug. 10, 2005, 119 Stat. 1948, 1968, 1970–1974; Pub. L. 109–432, div. A, title IV, § 420(a), (b)(1), (3), (4), Dec. 20, 2006, 120 Stat. 2968, 2969; Pub. L. 110–172, §§ 5(a)(1), 11(a)(37)–(39)(A), (e)(1), Dec. 29, 2007, 121 Stat. 2478, 2487–2489; Pub. L. 110–343, div. B, title II, §§ 202(a), 203(c)(2), 204(a)(3), Oct. 3, 2008, 122 Stat. 3832, 3834; Pub. L. 111–312, title VII, §§ 701(b)(2), 704(a), 708(c)(1), Dec. 17, 2010, 124 Stat. 3310–3312; Pub. L. 112–240, title IV, §§ 405(b)(2), 412(b), Jan. 2, 2013, 126 Stat. 2340, 2343; Pub. L. 113–295, div. A, title I, § 160(a)(2), (b)(2), (c)(2), Dec. 19, 2014, 128 Stat. 4022; Pub. L. 114–113, div. Q, title I, §§ 185(b)(2), 192(a)(2), Dec. 18, 2015, 129 Stat. 3073, 3075; Pub. L. 115–123, div. D, title I, §§ 40407(b)(2), 40415(a)(2), Feb. 9, 2018, 132 Stat. 149, 152; Pub. L. 116–94, div. Q, title I, §§ 121(b)(1)(B), 133(a)(2), Dec. 20, 2019, 133 Stat. 3230, 3233; Pub. L. 116–260, div. EE, title I, § 147(b), Dec. 27, 2020, 134 Stat. 3055; Pub. L. 117–169, title I, §§ 13201(b)(2), (e), 13203(d)(2)(B), Aug. 16, 2022, 136 Stat. 1932, 1935.)

cite as: 26 USC 6427