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IRS to waive dyed fuel penalty in Florida; hurricane-related relief

IRS to waive dyed fuel penalty in Florida

The IRS on Friday, August 30, 2019, announced that it will not impose a penalty when dyed diesel fuel is sold for use or is used on the highway in Florida.

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According to the IRS release—IR-2019-148—the penalty relief is intended to minimize or prevent disruptions to the supply of fuel for diesel-powered highway vehicles because of Hurricane Dorian. The relief is effective immediately, and will continue through September 15, 2019.

The 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 that is typically applied to diesel fuel for highway use.
  • The IRS will not impose penalties for failure to make semi-monthly deposits of this tax.

In general, dyed diesel fuel is not taxed when sold for uses that are exempt from excise tax—e.g., sales to farmers for farming purposes, for home heating use, and to local governments for buses.

The penalty relief does not apply with respect to the penalty for using adulterated fuels that do not comply with applicable Environmental Protection Agency (EPA) regulations.  Consequently, diesel fuel with sulfur content higher than 15 parts-per-million may not be used in highway vehicles.

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