Communications excise tax, toll telephone service. Collectors must stop collecting and paying over the tax on nontaxable service that is billed after July 31, 2006. Nontaxable service is bundled service and long distance service. These terms are defined in Chapter 4. Taxpayers may claim a credit or refund only on their 2006 federal income tax return for nontaxable service that was billed after February 28, 2003, and before August 1, 2006. Instructions will be provided on the applicable income tax returns. Claims for nontaxable service can no longer be filed on Form 8849, Form 720, or Form 843; the IRS will not process these claims. Information on the credit and refund procedures for collectors is described in Chapter 4 and also provided in the Instructions for Form 720. For more information, see Notice 2006-50 that is available on page 1141 of Internal Revenue Bulletin 2006-25 at www.irs.gov/pub/irs-irbs/irb06-25.pdf.

Fuel tax credits and refunds. Information in Publication 378, Fuel Tax Credits and Refunds, has been combined with Publication 510. Publication 378 is no longer available as a separate publication. See chapter 2 for complete information on credits and refunds for 2006.

Wagering taxes. The information on wagering taxes has been removed from Publication 510. You can find the information in the instructions for Forms 730 and 11-C, as applicable.

Appendix. All model certificates and waivers are now in the Appendix. Model certificates Q, R, and S have been added.

LUST tax. The Leaking Underground Storage Tank (LUST) tax rate ($.001) generally applies to removals, entries, and sales of dyed diesel fuel, dyed kerosene, kerosene for use in aviation (nontaxable uses and foreign trade), gasoline blendstocks, kerosene used for a feed stock purpose, and diesel fuel or kerosene used in Alaska. New lines have been added to Form 720 to report these taxes. See Form 720 and its separate instructions for more information. The LUST tax generally will not be credited or refunded, except for exported fuel.

Kerosene used in aviation. Aviation-grade kerosene terminology has been replaced with kerosene used in aviation. Kerosene used in aviation is taxed at $.244 per gallon unless a reduced rate applies such as on a removal into the fuel supply tank of an aircraft ($.219 per gallon) or used in commercial aviation ($.044 per gallon). Refunds and credits are available if the full rate is paid and the kerosene is used for a reduced rate or exempt use. Registered ultimate vendors may claim the refunds for noncommercial aviation.

Undyed diesel and undyed kerosene for use on a farm. Registered ultimate vendors cannot make claims for undyed diesel fuel and undyed kerosene (other than kerosene for use in aviation) sold for use on a farm for farming purposes. The ultimate purchaser makes these claims.

Farmers. The aerial applicator waiver is no longer required to be provided by the farmer and is not included in this publication. For aviation gasoline, the aerial applicator is the claimant. For kerosene used in aviation, the registered ultimate vendor is the claimant. The definition of farming purposes includes fuel used flying between farms and fuel used during take-off and landing.

Diesel-water fuel emulsion. A diesel-water fuel emulsion is taxable at a reduced rate of $.198 per gallon if certain requirements are met. If undyed diesel fuel taxed at $.244 per gallon is used to produce a diesel-water fuel emulsion, a claim may be filed for $.046 per gallon on the diesel fuel so used.

Renewable diesel. Renewable diesel will generally be treated the same as biodiesel for credit purposes. See Renewable Diesel Credits in chapter 2.

Alternative fuels. Effective after September 30, 2006, there will be a tax on the sale for use or use of any liquid used as a fuel in a motor vehicle or motorboat, other than gas oil, fuel oil, or any product taxable under Internal Revenue Code section 4081. See Special Motor Fuel/Alternative Fuel in chapter 1. The October 2006 revision of Form 720 will list the alternative fuels and the tax rates. Also effective after September 30, 2006 two new credits will be available: the alternative fuel credit and the alternative fuel mixture credit. See Alternative Fuel Credits in chapter 2. Form 720 and Form 8849 will be revised to include the new credits.

Use of international air travel facilities. The tax on use of international air travel facilities has increased for amounts paid during 2006 to:

Domestic segment tax. For amounts paid for each domestic segment of taxable transportation of persons by air, the domestic segment tax is $3.30 per segment for transportation that begins in 2006.

Environmental taxes. The oil spill liability tax has been reinstated, beginning April 1, 2006. The tax will be reported on Form 6627, Environmental Taxes, and Form 720, Quarterly Federal Excise Tax Return (IRS Nos. 18 and 21). See Oil Spill Liability Tax in chapter 3. Current Form 720 filers who incur liability for the oil spill liability tax during the quarter beginning April 1, 2006, cannot use the safe harbor method for deposits of regular method taxes in the second and third calendar quarters of 2006. Deposits for semimonthly periods in the second and third calendar quarters must not be less than 95% of the net tax liability for the semimonthly period. For more information on deposits and the safe harbor rule, see the Instructions for Form 720.

Truck, trailer, and semitrailer chassis and bodies, and tractors. Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% tax.

Gas guzzler tax. Limousines over 6,000 pounds are not subject to the gas guzzler tax. See Form 6197, Gas Guzzler Tax, for more information.

Fishing rods and fishing poles. The rate of tax on fishing rods and fishing poles (and component parts) taxed at a rate of 10% of the sales price has a maximum tax of $10 per article. See Sports Fishing Equipment in chapter 5.

Arrow shafts. The tax on arrow shafts has increased for arrow shafts sold during 2006 to $.40 per arrow shaft. See Arrow Shafts in
chapter 5.

Taxable tires. Taxable tires have been divided into three taxable types: taxable tires other than biasply or super single tires; taxable tires, biasply or super single tires (other than super single tires designed for steering); and taxable tires, super single tires designed for steering. Three new lines replace IRS No. 66 on Form 720; the new lines are IRS Nos. 108, 109, and 113 respectively. See Taxable Tires in
chapter 5.

Registration for certain activities. You are required to register for certain excise tax activities, such as blending of gasoline, diesel fuel, or kerosene outside the bulk transfer/terminal system. See the instructions for Form 637 for the list of activities for which you must register. Also see Registration Requirements under Fuel Taxes in chapter 1 information on registration for activities related to fuel. Each business unit that has, or is required to have, a separate employer identification number must register. To apply for registration, complete Form 637 and provide the information requested in its instructions. If your application is approved, you will receive a Letter of Registration showing the activities for which you are registered, the effective date of the registration, and your registration number. A copy of Form 637 is not a Letter of Registration.

Imported products table. The imported products table has been deleted from the Appendix of Publication 510. It can be found in Regulations section 52.4682-3(f)(6).

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

This publication covers the excise taxes for which you may be liable during 2006 and which are reported on Form 720. It also covers fuel tax credits and refunds previously covered in
Publication 378.

In addition to the taxes discussed in this publication, you may have to report certain other excise taxes.

For tax forms relating to alcohol and tobacco, visit the Alcohol and Tobacco Bureau of Trade website at www.ttb.gov.

Heavy Highway Vehicle Use Tax

You report the federal excise tax on the use of certain trucks, truck tractors, and buses used on public highways on Form 2290, Heavy Highway Vehicle Use Tax Return. The tax applies to highway motor vehicles with a taxable gross weight of 55,000 pounds or more. Vans, pickup trucks, panel trucks, and similar trucks generally are not subject to this tax.

Note.   A Spanish version (Form 2290-SP) and a French version (Form 2290-FR) and separate instructions for each are also available. See How To Get Tax Help in chapter 15.

Registration of vehicles.   Generally, you must prove that you paid your federal highway use tax to register your taxable vehicle with your state motor vehicle department or to enter the United States in a Canadian or Mexican registered taxable vehicle. Generally, a copy of Schedule 1 (Form 2290) is stamped by the IRS and returned to you as proof of payment.

  

If you have questions on Form 2290, see How to Get Tax Help in chapter 15, or you can call the Form 2290 call site at 1-866-699-4096 (toll free) from the United States, and 1-859-669-5733 (not toll free) from Canada and Mexico. The hours of service are 8:00 a.m. to 6:00 p.m., EST.