Oil & Fuel Bush says off-road diesel ok for on-road use?

cart99 · Sep 27, 2005

see article

The Treasury Department Has Waived Regulatory Rules For Dyed Diesel Fuel. The Internal Revenue Service (IRS) announced that it would allow use of "dyed diesel fuel" for on-road use without a tax penalty, increasing diesel supplies. Dyed diesel fuel ordinarily is not subject to Federal excise taxes because it is intended for off-road use in farm equipment or in certain government vehicles such as school buses. The IRS announced that it would not penalize those who used dyed diesel fuel for on-road use, and this waiver has been extended following Hurricane Rita.

hobbyfarm · Sep 27, 2005

Hmmmm,
does that mean that off-road fuel will be subject to the on-road tax?? /forums/images/graemlins/confused.gif /forums/images/graemlins/confused.gif i.e. tax it all! /forums/images/graemlins/crazy.gif

hobbyfarm · Sep 27, 2005

I can't help but be skeptical.
When you squeeze a balloon in your hands, it pops out somewhere else. /forums/images/graemlins/mad.gif Can't imagine the gov't would just give up on the revenue.

slowrev · Sep 27, 2005

There is X amount of diesel our there, whether off road or on road, so it makes little difference. The exception is the areas where there is high sulfur off road available.

To me this will make less fuel avail for farmers and such, It will allow their supply to be burned on road.

Ben

Bob_Skurka · Sep 27, 2005

( I can't help but be skeptical.
When you squeeze a balloon in your hands, it pops out somewhere else. /forums/images/graemlins/mad.gif Can't imagine the gov't would just give up on the revenue. )

This is a temporary solution to help prevent huge spikes in diesel fuel prices which would lead to higher transportation costs and the associated inflation of food, clothes, etc. At the same time they did this, they also relaxed the botique fuels that various cities require. It is all due to Hurricane Katrina. Both will very likely be revoked within 45 to 60 days. Both helped to prevent $4+/gallon pump prices.

RedRocker · Sep 27, 2005

I'm sure they'll add the tax. /forums/images/graemlins/frown.gif

Bob_Skurka · Sep 27, 2005

The way I understand through our trucking industry newsletters is that they will simply go back to the other way at some point. So off-road diesel will simply be made illegal for on-road use after some specified date.

This was simply a stopgap to make sure that there was no artificial shortage created by governement regulation that would add to the spiking price of fuel.

Farmwithjunk · Sep 27, 2005

I just stopped this morning to fill my transfer tank (in the truck bed) with off-road diesel for the farm. I buy a couple hundred gallons at a time that way. I get it at a fueling station where NORMALLY I pay $.18 to $.22 a gallon less for off-road than regular "on-road" sells for. This morning, there was $.05 difference.

The $10.00 I saved was countered by the approx. $15 worth of fuel I used to get to and from the station.

Even with my poor math skills, that isn't good . /forums/images/graemlins/shocked.gif /forums/images/graemlins/mad.gif /forums/images/graemlins/ooo.gif

Iplayfarmer · Sep 27, 2005

Supply and Demand.

This will increase the demand for off-road diesel, and, therefore, increase the price. It will bring the prices of the two closer together. The on-road stuff will not go as high as it would have otherwise, but the off-road stuff will go higher than it would have otherwise.

I agree with the other posters that have said in short time the dyed diesel will again be banned from use on-road and the fines, etc. will again be in force.

hobbyfarm · Sep 27, 2005

( Even with my poor math skills, that isn't good . /forums/images/graemlins/shocked.gif /forums/images/graemlins/mad.gif /forums/images/graemlins/ooo.gif )

Maybe the gov't is using them poor math skills themselves! /forums/images/graemlins/confused.gif /forums/images/graemlins/grin.gif

HGM · Sep 27, 2005

Just something else to think about guys. Here in Gerogia, the Governor removed the tax from all fuels including gas. If this is the case elsewhere you would also notice less of a difference between on and off road diesel.

Currently, the whole situation is a temporary reaction to the crisis the whole country is feeling. I feel safe in saying that the off road fuel will go back to being illegal on road and remain tax free. The on road fuel will go back to costing more. Dont worry about it.....Just be carefull where you buy it, make sure it is fresh and stored properly to avoid any drivability issues.

megotatractor · Sep 27, 2005

Politicians don't use math, they use greed.

HGM · Sep 27, 2005

yea, I agree there too they are all lawyers afterall... But I have a problem with conspiracy theories... I think its all is paranoia..

v8dave · Sep 27, 2005

You still have to pay the taxes on the off-road fuel. If you get stopped and checked, you will need the receipt to show you paid the taxes to avoid the BIG fine for using off-road diesel on-road. As some have said here it's a stop gap to increase the supply of Diesel fuel. Come on now, it's the IRS, even the prez isn't going to be able stop them from taking your money.

OkeeDon started this thread after Katrina that has pointers to the details.

cart99 · Sep 27, 2005

( You still have to pay the taxes on the off-road fuel. If you get stopped and checked, you will need the receipt to show you paid the taxes to avoid the BIG fine for using off-road diesel on-road. As some have said here it's a stop gap to increase the supply of Diesel fuel. Come on now, it's the IRS, even the prez isn't going to be able stop them from taking your money.

OkeeDon started this thread after Katrina that has pointers to the details. )

I disagree per quote from the article...

"Dyed diesel fuel ordinarily is not subject to Federal excise taxes because it is intended for off-road use in farm equipment or in certain government vehicles such as school buses. The IRS announced that it would not penalize those who used dyed diesel fuel for on-road use"

HuskerInVA · Sep 28, 2005

More info from IRS:

This relief is available to any person that sells or uses dyed diesel fuel for highway use. In the case of fuel that is dyed at the terminal to meet IRS standards, the relief is available to the operator of the vehicle in which the fuel is used only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon.

IRS Info Page

jgh · Sep 28, 2005

20050928

Note the distinction that seems to suggest that regular dyed diesel (that is, dyed at the REFINERY--the normal practice for off-road) is OK for road use and no tax payment is required.

As my various tax profs used to say during the agonizing process leading to my accounting degrees and CPA certificate , you gotta read this stuff more than once! And then someone else could read it differently and you are s______d. Your tax dollars at work.

Still like to know what European off-road diesel sells for (given how high taxes on their fuels are).

Jim

v8dave · Sep 28, 2005

(

I disagree per quote from the article...

"Dyed diesel fuel ordinarily is not subject to Federal excise taxes because it is intended for off-road use in farm equipment or in certain government vehicles such as school buses. The IRS announced that it would not penalize those who used dyed diesel fuel for on-road use" )

The news article is incomplete. When you have a question about a $10,000 fine you go to the source.

This is the IRS web site quote:
"This penalty relief is available to any person that sells or uses dyed fuel for highway use. In the case of the operator of the vehicle in which the dyed fuel is used, the relief is available only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon. The IRS will not impose penalties for failure to make semimonthly deposits of this tax. IRS Publication 510, Excise Taxes for 2005, has information on the proper method for reporting and paying the tax."

Still some question? See the IRS web site article here.

jgh · Sep 29, 2005

20050929

Dave, the article you linked to is older (Sep 2) than the one previously mentioned (Sep 15).

Without further reading/research which might alter my conclusions as a good CPA, I stand on my prior statement that Refinery (as opposed to Terminal) dyed fuel seems to be OK to use without any tax payment by the user. But since the article mainly uses the word "penalty" rather than "tax" in referring to what IRS will not do, I would be wary.

Not coming in on this one any more, got more pressing concerns, like Hay on the ground!

Jim