IRS extends dyed diesel fuel penalty relief in Louisiana, response to hurricanes

Penalty relief extended through September 30, 2021

Penalty relief extended through September 30, 2021

The IRS today—in response to shortages of undyed diesel fuel caused by Hurricanes Ida and Nicholas—announced that it will extend penalty relief when dyed diesel fuel is sold for use or used on the highway.

The IRS on September 1, 2021, announced that due Hurricane Ida, it would not impose a penalty when dyed diesel fuel is sold for use or used on the highway for certain parishes in the state of Louisiana through September 15, 2021. Read TaxNewsFlash

Today’s release—IR-2021-187—extends that relief through September 30, 2021.

Today’s release also announces that, due to Hurricanes Ida and Nicholas, the IRS is providing dyed diesel fuel-penalty relief to the parishes of Acadia, Allen, Avoyelles, Beauregard, Calcasieu, Cameron, Evangeline, Jefferson Davis, Lafayette, Rapides, St. Landry, Vermilion, and Vernon. This additional penalty relief is effective as of August 29, 2021, and will remain in effect through September 30, 2021.

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 (as normally applied to diesel fuel for highway use). The IRS stated that it will not impose penalties for a failure to make semi-monthly deposits of this tax.

As the IRS noted, dyed diesel fuel generally is not taxed because it is sold for uses exempt from excise tax—such as to farmers for farming purposes, for home heating use, and to local governments for buses.

Today’s waiver does not apply to the penalty imposed 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.


For more information, contact a tax professional with KPMG’s Excise Tax Practice group:

Taylor Cortright | +1 (202) 533 6188 | tcortright@kpmg.com


 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.