Kerosene Tax; Aviation Fuel Tax; Tax on
Heavy Trucks & Trailers

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 48 [REG-119227-97] RIN 1545-
AV71

TITLE: Kerosene Tax; Aviation Fuel Tax; Tax on Heavy Trucks and
Trailers

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Proposed rule, notice of proposed rulemaking by cross-
reference to temporary regulations and notice of public hearing.

SUMMARY: In the Rules and Regulations section of this issue of the
Federal Register, the IRS is issuing temporary regulations relating
to the kerosene and aviation fuel excise taxes and the tax on the
first retail sale of certain tractors, truck, trailer, and
semitrailer chassis and bodies. The text of those temporary
regulations also serves as the text of these proposed regulations.

DATES: Written comments must be received by September 29, 1998.

Requests to speak and outlines of oral comments to be discussed at
the public hearing scheduled for Wednesday, November 4, 1998, must
be received by September 29, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-119227-97), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand delivered between the
hours of 8:00 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-119227-97),
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue
NW., Washington, DC. Alternatively, taxpayers may submit comments
electronically via the Internet by selecting the "Tax Regs" option
on the IRS Home Page, or by submitting comments directly to the IRS
Internet site at
http://www.irs.ustreas.gov/prod/tax_regs/comments.html. The public
hearing will be held in the IRS Auditorium, Seventh Floor, 7400
Corridor, Internal Revenue Building, 1111 Constitution Avenue, NW.,
Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Frank
Boland (202) 622-3130; concerning submissions and the hearing,
LaNita VanDyke (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in this notice of proposed
rulemaking has been submitted to the Office of Management and Budget
for review in accordance with the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)). Comments on the collection of information
should be sent to the Office of Management and Budget, Attn: Desk
Officer for the Department of the Treasury, Office of Information
and Regulatory Affairs, Washington, DC 20503, with copies to the
Internal Revenue Service, Attn: IRS Reports Clearance Officer,
OP:FS:FP, Washington, DC 20224. Comments on the collection of
information should be received by August 31, 1998. Comments are
specifically requested concerning:

Whether the proposed collection of information is necessary for the
proper performance of the functions of the Internal Revenue Service,
including whether the information will have practical utility;

The accuracy of the estimated burden associated with the proposed
collection of information (see below);

How the quality, utility, and clarity of the information to be
collected may be enhanced;

How the burden of complying with the proposed collection of
information may be minimized, including through the application of
automated collection techniques or other forms of information
technology; and Estimates of capital or start-up costs of operation,
maintenance, and purchase of services to provide information.

The collection of information in this notice of proposed rulemaking
is in §§48.4052-1, 48.4082-7(a), 48.4082-8(e), 48.4091-3(c),
48.4101-2(a)(4), 48.4101-3(d), and 48.6427-11.

This information is required to support exempt transactions and to
inform consumers of the type of fuel that is being purchased.

The likely respondents are businesses and other for-profit
organizations.

Estimated total annual reporting burden: 3,340 hoU.S.
The estimated annual burden per respondent varies from .20 hours to
1 hour, depending on individual circumstances, with an estimated
average of .29 hour.

Estimated number of respondents: 11,600.

Estimated annual frequency of responses: On occasion.

An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number assigned by the Office
of Management and Budget.

Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns
and tax return information are confidential, as required by 26
U.S.C. 6103.

Background

Temporary regulations published in the Rules and Regulations section
of this issue of the Federal Register provide rules relating to the
kerosene tax, certain aviation fuel tax refunds allowed by section
4091(d), and registration requirements for certain heavy vehicle
manufacturers and retailers. The text of those regulations also
serves as the text of these proposed regulations relating to
kerosene. The preamble to the temporary regulations explains the
temporary regulations.

Special Analyses

It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in EO 12866.
Therefore, a regulatory assessment is not required.

It also has been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to
these regulations. It is hereby certified that the collection of
information in these regulations will not have a significant
economic impact on a substantial number of small entities. This
certification is based upon the fact that the time required to
prepare and submit the exemption certificates described in these
regulations (many of which are similar to certificates that are
already in use) is minimal and will not have a significant impact on
those small entities that choose to provide the certificates.

Therefore, a Regulatory Flexibility Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to
section 7805(f) of the Internal Revenue Code, this notice of
proposed rulemaking will be submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on its
impact on small business.

Comments and Public Hearing

Before these proposed regulations are adopted as final regulations,
consideration will be given to any comments that are submitted (in
the manner described in the ADDRESSES caption) timely to the IRS.
All comments will be available for public inspection and copying.

A public hearing has been scheduled for Wednesday, November 4, 1998,
at 10 a.m. in the IRS Auditorium, Internal Revenue Building, 1111
Constitution Avenue, NW., Washington DC. Because of access
restrictions, visitors will not be admitted beyond the Internal
Revenue Building lobby more than 15 minutes before the hearing
starts.

The rules of 26 CFR 601.601(a)(3) apply to the hearing.

Persons that wish to present oral comments at the hearing must
submit comments by September 29, 1998, and submit an outline of the
topics to be discussed and the time to be devoted to each topic by
September 29, 1998.

A period of 10 minutes will be allotted to each person for making
comments.

An agenda showing the scheduling of the speakers will be prepared
after the deadline for receiving outlines has passed.

Copies of the agenda will be available free of charge at the
hearing.

Drafting Information

The principal author of these regulations is Frank Boland, Office of
the Assistant Chief Counsel (Passthroughs and Special Industries),
IRS. However, other personnel from the IRS and the Treasury
Department participated in their development.

List of Subjects in 26 CFR Part 48

Excise taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations Accordingly, 26 CFR part 48
is proposed to be amended as follows:

PART 48--MANUFACTURERS AND RETAILERS EXCISE TAXES

Paragraph 1. The authority citation for part 48 is amended by adding
entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Section 48.4052-1 also issued under 26 U.S.C. 4052 * * *

Sections 48.4082-6, 48.4082-7, and 48.4082-8 also issued under 26
U.S.C. 4082 * * *

Section 48.4101-3 also issued under 26 U.S.C. 4101(a) * * *

Sections 48.6427-10 and 48.6427-11 also issued under 26 U.S.C.
6427(n) * * *

Par. 2. In subpart H, §48.4052-1 is added to read as follows:

§48.4052-1 Special rule.

After June 30, 1998, the sale of an article is a taxable sale unless
the seller has in good faith accepted from the purchaser a statement
that the purchaser executed in good faith and that is in
substantially the same form as the certificate described in
§145.4052-1(a)(6) of this chapter, except that the statement must be
signed under penalties of perjury and need not include a
registration number.

Par. 3. Section 48.4081-1 is amended as follows:

1. Paragraph (b) is amended by adding the definition of kerosene.

2. Paragraph (d) is revised.

The addition and revision read as follows:

§48.4081-1 Taxable fuel; definitions.

* * * * *

(b) * * *

Kerosene means--

(1) The two grades of kerosene (No. 1-K and No. 2-K) described in
ASTM Specification D 3699; and

(2) Kerosene-type jet fuel described in ASTM Specification D 1655
and military specifications MIL-T-5624R and MIL-T-83133D (Grades
JP-5 and JP-8). For availability of ASTM and military specification
material, see §48.4081-1(c)(2)(i).

* * * * *

(d) Effective date.

(1) Except as provided in paragraph (d)(2) of this section, this
section is applicable January 1, 1994.

(2) In paragraph (b) of this section--

(i) The definition of aviation gasoline and the third sentence in
the definition of terminal are applicable January 2, 1998; and

(ii) The definition of kerosene is applicable July 1, 1998.

Par. 4. Sections 48.4082-6, 48.4082-7, 48.4082-8, 48.4082-9 and
48.4082-10 are added to read as follows:

§48.4082-6 Kerosene; treatment as diesel fuel in certain cases.

[The text of this proposed section is the same as the text of
§48.4082-6T published elsewhere in this issue of the Federal
Register.]

§48.4082-7 Kerosene; notice required with respect to dyed kerosene.

[The text of this proposed section is the same as the text of
§48.4082-7T published elsewhere in this issue of the Federal
Register.]

§48.4082-8 Kerosene; exemption for aviation-grade kerosene.

[The text of this proposed section is the same as the text of
§48.4082-8T published elsewhere in this issue of the Federal
Register.]

§48.4082-9 Kerosene; exemption from non-fuel feedstock purposes.

[The text of this proposed section is the same as the text of
§48.4082-9T published elsewhere in this issue of the Federal
Register.]

§48.4082-10 Kerosene; additional exemption from floor stocks tax.

[The text of this proposed section is the same as the text of
§48.4082-10T published elsewhere in this issue of the Federal
Register.]

Par. 5. Section 48.4091-3 is added to read as follows:

§48.4091-3 Aviation fuel; conditions to allowance of refunds of
aviation fuel tax under section 4091(d).

[The text of this proposed section is the same as the text of
§48.4091-3T published elsewhere in this issue of the Federal
Register.]

Par. 6. Section 48.4101-2 is amended by adding paragraph (a)(4) to
read as follows:

§48.4101-2 Information reporting.

(a) * * *

(4) Registered aviation fuel producers.

[The text of this proposed paragraph is the same as the text of
§48.4101-2T(a)(4) published elsewhere in this issue of the Federal
Register].

Par. 7. Section 48.4101-3 is added to read as follows:

§48.4101-3 Registration; special rules for kerosene.

[The text of this proposed section is the same as the text of
§48.4101-3T published elsewhere in this issue of the Federal
Register.]

Par. 8. Sections 48.6427-10 and 48.6427-11 are added to read as
follows:

§48.6427-10 Claims with respect to kerosene.

[The text of this proposed section is the same as the text of
§48.6427-10T published elsewhere in this issue of the Federal
Register.]

§48.6427-11 Special rules for claims by registered ultimate vendors
of kerosene (blocked pump).

[The text of this proposed section is the same as the text of
§48.6427-11T published elsewhere in this issue of the Federal
Register.]

Michael P. Dolan
Deputy Commissioner of Internal Revenue

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