The IRS today announced that because of shortages of undyed diesel fuel caused by Hurricane Florence, it will waive a penalty when dyed diesel fuel is sold for use or is used on the highway in North Carolina. This penalty relief is being made available by the IRS in response to shortages of undyed diesel fuel caused by Hurricane Florence.
According to the IRS release—IR-2018-189—the IRS will not impose a penalty when dyed diesel fuel is sold for use or is used on the highway in the state of North Carolina. This penalty relief is effective as of September 17, 2018, and will remain in effect through September 28, 2018.
Typically, dyed diesel fuel is not taxed because it is sold for uses that are exempt from excise tax—such as sales to farmers for farming purposes, for home heating use, and to local governments for buses. A penalty generally applies when dyed diesel fuel is used for non-exempt purposes.
For operators of vehicles in which the dyed fuel is used, the hurricane-related penalty relief is available only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use. The IRS said that it will not impose penalties for failure to make semi-monthly deposits of this tax.
Today’s penalty waiver does not apply with respect to uses of adulterated fuels that do not comply with applicable 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 | email@example.com
© 2020 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.KPMG International Cooperative (“KPMG International”) is a Swiss entity.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. 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 KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in 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.