Taxable Fuel Measurement

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 48 [TD 8945] RIN 1545-AY85

TITLE: Taxable Fuel Measurement

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final regulations relating to the
measurement of taxable fuel. The regulations affect certain
blenders, enterers, refiners, terminal operators, and
throughputters.

DATES: Effective Date: These regulations are effective May 18, 2001.
Applicability Date: These regulations are applicable January 1,
1994.

FOR FURTHER INFORMATION CONTACT: Frank Boland (202) 622-3130 (not a
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

Section 4081 imposes a tax on certain removals, entries, and sales
of taxable fuel. Section 4083 provides that taxable fuel means
gasoline, diesel fuel, and kerosene.

Before July 1, 2000, regulations provided that gallons of taxable
fuel could be measured on the basis of actual volumetric gallons or
gallons adjusted to 60 degrees Fahrenheit. However, regulations that
were published in the Federal Register on March 31, 2000, (TD 8879;
65 FR 17149) provide that beginning July 1, 2000, for each period
from July 1 through the following June 30 a person liable for tax on
a removal may use only one of the two bases of measurement with
respect to taxable fuel removed from any particular terminal,
refinery, or blending facility. This rule (the consistency
requirement) also applies to taxable entries and sales.

After publication of TD 8879, the IRS and the Treasury Department
determined that many taxpayers would have had to change their
accounting systems to comply with the consistency requirement and
would have been unable to complete the necessary changes by July 1,
2000. Accordingly, Notice 2000-33 (2000-27 I.R.B. 97) provided that
taxpayers would not be required to comply with the consistency
requirement before July 1, 2001. In the meantime, a taxpayer could
use either basis of measurement for each taxable removal, entry, or
sale of taxable fuel.

Explanation of Provisions

The IRS and the Treasury Department have now determined that the
consistency requirement would force many taxpayers to alter current
standard business practices and potentially could make routine IRS
examinations more time consuming and burdensome. To avoid these
adverse consequences, the final regulations in this document remove
the consistency requirement and reinstate the provision that was in
effect before July 1, 2000.

Effect on Other Documents

Notice 2000-33 (2000-27 I.R.B. 97) is obsolete as of May 18, 2001.

Special Analyses

This rule relieves taxpayer burden by eliminating a requirement with
respect to the measurement of taxable fuel. Therefore, it has been
determined that notice and public comment are unnecessary and
contrary to the public interest. For the same reason, a delayed
effective date under 5 U.S.C. 553(d) is not required. Because no
preceding notice of proposed rulemaking is required for this
Treasury decision and the rule does not impose on small entities a
collection of information requirement, the provisions of the
Regulatory Flexibility Act do not apply. It also has been determined
that this Treasury decision is not a significant regulatory action
as defined in Executive Order 12866. Therefore, a regulatory
assessment is not required. Pursuant to section 7805(f) of the Code,
these final regulations were submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on their
impact on small business.

Drafting Information

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

List of Subjects in 26 CFR Part 48

Excise taxes, Reporting and recordkeeping requirements. Adoption of
Amendments to the Regu ations Accordingly, 26 CFR part 48 is amended
as follows:

PART 48-MANUFACTURERS AND RETAILERS EXCISE TAXES

Paragraph 1. The authority citation for part 48 continues to read in
part as follows:

Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 48.4081-8 is revised to read as follows:
§48.4081-8 Taxable fuel; measurement.

(a) In general. Volumes of taxable fuel may be measured on the basis
of actual volumetric gallons or gallons adjusted to 60 degrees
Fahrenheit.

(b) Effective date. This section is applicable January 1, 1994.

Robert E. Wenzel
Deputy Commissioner of Internal Revenue

Approved: May 10, 2001

Mark A. Weinberger
Assistant Secretary of the Treasury

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