IRS Issues New Regulations On the Entry of Taxable Fuel
The Internal Revenue Service (IRS) has issued final and temporary regulations, effective September 28, 2004, relating to the entry of taxable fuel (gasoline, diesel fuel, and kerosene) into the U.S. The IRS states that these final and temporary regulations affect enterers of taxable fuel, other importers of record, and certain sureties.
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(According to 26 CFR 48.4081-3(c)(1), tax is imposed on the entry of taxable fuel into the U.S. if (i) the entry is by bulk transfer and the enterer is not a taxable fuel registrant; or (ii) the entry is not by bulk transfer.)
The following are highlights of these final and temporary regulations:
Definition of enterer. The IRS is adding temporary regulation 26 CFR 48.4081-1T and revising existing regulation 26 CFR 48.4081-1 in order to:
Temporary definition - add a temporary definition of enterer which states that enterer generally means, in the case of an entry of taxable fuel on or after September 28, 2004, the importer of record (under customs law) with respect to the taxable fuel, except that -
(1) if the importer of record is a customs broker engaged by the owner of the
taxable fuel, the person for whom the broker is acting is the enterer; and
(2) if there is no importer of record for taxable fuel entered into the U.S., the owner
of the taxable fuel at the time it is brought into the U.S. is the enterer.
Existing definition - revise the existing definition of enterer to state that it does not apply with respect to an entry if the above temporary definition is applicable to that entry.
(IRS sources noted by phone that the temporary definition of enterer more accurately reflect existing business practices and does not represent a substantial revision to the existing definition of enterer.)
Importer of record and enterer share liability for fuel tax in certain situation. The IRS is adding temporary regulation 26 CFR 48.4081-3T to state that in the case of an entry of taxable fuel on or after September 28, 2004, the importer of record with respect to the taxable fuel is jointly and severally liable with the enterer for the fuel tax if-
a) the importer of record is not the enterer of the taxable fuel; and
b) the enterer is not a taxable fuel registrant.
In addition, the existing regulation at 26 CFR 48.4081-3 is revised to state that, in general, the enterer is liable for the fuel tax; however, the above temporary regulation should be consulted for further guidance.
Exception to the above shared liability for fuel tax. Temporary regulation 26 CFR 48.4081-3T also states that the importer of record does not have this joint and several liability with the enterer for the fuel tax, if at the time of the entry the importer of record -
a) has an unexpired notification certificate from the enterer; and
b) has no reason to believe that any information in the notification certificate is false.
Exceptions to charging bond(s) if fuel tax not paid. Temporary regulation 26 CFR 48.4081-3T additionally states that, in the case of an entry of taxable fuel on or after September 28, 2004, the Customs bond posted with respect to the importation of the fuel will not be charged for the tax imposed on the entry of the fuel if the enterer is a taxable fuel registrant.
A surety bond will not be charged for the tax imposed on an entry of the fuel covered by the bond, if at the time of entry, the surety -
a) has an unexpired notification certificate from the enterer; and
b) has no reason to believe that an information in the notification certificate is false.
(BP is checking on the IRS' use of the terms "customs bond" and "surety bond", and will update subscribers when new information is available.)
IRS Issues Companion Proposed Rule With Same Text as Temporary Regulations
At the same time as it has issued these final and temporary regulations, the IRS has also issued a proposed rule, the text of which is the same as the text of the temporary regulations. Written and electronic comments, as well as requests for a public hearing, on the IRS' proposed rule, must be received by October 28, 2004.
(See ITT's Online Archives or today's news, 04082715, for BP summary of U.S. Customs and Border Protection (CBP) administrative message on these regulations.)
| IRS contact - | Celia Gabrysh (202) 622-3130 |
IRS final and temporary regulations (FR Pub 07/30/04) available at
http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-17449.pdf and IRS correction (FR Pub 08/20/04) available at
http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-19163.pdf.
IRS proposed rule (FR Pub 07/30/04) available at
http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-17450.pdf.