Gasoline Tax Claims Under Section 6416(a)(4)

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 48 [REG-143219-01] RIN 1545-
BA27

TITLE: Gasoline Tax Claims Under Section 6416(a)(4)

AGENCY:  Internal Revenue Service (IRS), Treasury.

ACTION:  Advance notice of proposed rulemaking.

SUMMARY: This document invites comments from the public on issues
that the IRS may address in proposed regulations relating to claims
for credits or refunds of the gasoline tax.  All materials submitted
will be available for public inspection and copying.

DATES:  Written and electronic comments must be received by January
22, 2002.

ADDRESSES:  Send submissions to: CC:ITA:RU (REG-143219-01), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand delivered Monday
through Friday between the hours of 8 a.m. and 5 p.m. to:  CC:ITA:RU
(REG-143219-01), Courier's Desk, Internal Revenue Service, 1111
Constitution Avenue NW., Washington, DC.  Alternatively, taxpayers
may send submissions electronically via the Internet by selecting
the "Tax Regs" option on the IRS Home Page, or directly to the IRS
Internet site athttp://www.irs.gov/tax_regs/regslist.html.

FOR FURTHER INFORMATION CONTACT: Concerning submissions, the
Regulations Unit, (202) 622-7180; concerning the proposals, Frank
Boland, (202) 622-3130 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Under section 6416(b)(2), the person that paid the gasoline tax
imposed by section 4081 to the government may receive a credit or
refund of the amount of the tax if the gasoline is, by any person,
exported, used or sold for use as supplies for vessels or aircraft,
sold to a state or local government for its exclusive use, sold to a
nonprofit educational organization for its exclusive use, or used or
sold for use in the production of special fuels (exempt purposes).

Section 6102 of the Technical and Miscellaneous Revenue Act of 1988
(the 1988 Act) (Public Law 100-647, 102 Stat. 3342) added section
6416(a)(4) to the Internal Revenue Code.  Under section 6416(a)(4)
(A), a wholesale distributor (described in section 6416(a) (4)(B))
that buys gasoline on which the tax imposed by section 4081 has been
paid and sells the gasoline to its ultimate purchaser for an exempt
purpose is treated as the person (and the only person) that paid the
tax to the government and thus is the person eligible to claim a
credit or refund of that tax.

Section 6416(a)(4)(B), as added by the 1988 Act, provides that the
term wholesale distributor includes any person that sells gasoline
to producers, retailers, or to users that purchase in bulk
quantities and accept delivery into bulk storage tanks. For this
purpose, the term producer includes a refiner, blender, or wholesale
distributor of gasoline, or a dealer selling gasoline exclusively to
producers of gasoline.  The term wholesale distributor does not
include any person that is an importer, refiner, or blender of
gasoline, or is a dealer selling gasoline exclusively to producers.
Section 905 of the Taxpayer Relief Act of 1997 (Public Law 105-34,
111 Stat. 788) amended section 6416(a)(4)(B) of the Code by
providing that the term wholesale distributor also includes any
person that makes retail sales of gasoline at 10 or more retail
motor fuel outlets.

Notice 89-29 (1989-1 C.B. 669) provides rules for implementing
section 6416(a)(4), as added by the 1988 Act.  These include rules
that allow claims by the person that actually paid the tax to the
government instead of claims by the wholesale distributor if (1) tax
is not included in the price of the gasoline bought by the wholesale
distributor or (2) the sale by the wholesale distributor is charged
on an oil company credit card issued to an exempt person.

In response to questions that have arisen concerning the application
of the rules in Notice 89-29, the IRS is considering proposing
regulations under section 6416(a)(4) that, when finalized, would
replace the guidance provided by Notice 89-29.  The IRS invites
comments from the public on issues that should be addressed in the
regulations, including issues relating to refund claims by persons
other than the wholesale distributor.

Paul Kugler
Associate Chief Counsel
(Passthroughs and Special Industries).

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