Dyed diesel fuel and dyed kerosene. Dyed diesel fuel and dyed kerosene used for a nontaxable use (such as farm use) are not taxed. However, the excise tax and a penalty will be imposed on users of dyed diesel fuel or dyed kerosene who know or have reason to know they used the fuel for a taxable use. You cannot use dyed diesel fuel or dyed kerosene in operating a vehicle on the highways. For more information, see How To Buy Diesel Fuel and Kerosene Tax Free.

Undyed diesel fuel and undyed kerosene. A registered ultimate vendor that sells undyed diesel fuel or undyed kerosene for use on a farm for farming purposes is allowed to claim a refund or credit of the excise tax on that fuel. Farmers cannot claim a refund or credit for the excise tax paid on that fuel. See How To Buy Diesel Fuel and Kerosene Tax Free.

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