SERVICE CLARIFIES POSITION STATED IN PRIOR GUIDANCE RELATING TO DIESEL AND AVIATION FUEL EXCISE TAX.

Announcement 88-64

Notice 88-30, 1988-13 I.R.B. 7, described issues arising from the changes made by section 10502 of the Revenue Act of 1987 (P.L. 100-203, 101 Stat. 1330) ("1987 Act") to the excise tax on diesel fuel and aviation fuel that the Internal Revenue Service intends to address in regulations. The 1987 Act added sections 4091, 4092, and 4093 to the Internal Revenue Code, which, beginning on April 1, 1988, move the point of collection of the diesel fuel and aviation fuel tax from the sale by the retailer to the sale by the producer.

(1) Various provisions of Notice 88-30 provided that the regulations will require certain documentation to be attached to, or appear on the face of, the invoice relating to a sale of taxable fuel. An invoice is generally prepared by the seller and furnished to the purchaser at the time of sale. For this reason, it is sometimes not possible for information required to be supplied by the purchaser to the seller to be attached to, or appear on the face of, the invoice. Therefore, the following sentence is added immediately following the last sentence of section I(A) of Notice 88-30:

"Furthermore, the term 'invoice' as used in this notice, includes an invoice, purchase order, or other record of sale which is maintained by the seller in the normal course of business."

(2) Section III(B)(l)(b) explained that the regulations will provide that a person who would qualify as a producer (but for not being registered under section 4101) will be deemed to be registered during April, 1988, if certain documentation is furnished to the seller. Sections III(B)(1)(b)(i) and (ii) of Notice 88-30 did not clearly explain the rule that will be contained in the regulations.

(a) Therefore, section III(B)(1)(b)(i) is changed to state as follows:

"(i) The seller of taxable fuel to such purchaser in the normal course of its business maintains on file copies of invoices of sales of taxable fuel showing the name of the purchaser, the date of sale, the type and volume of product sold, and a written statement clearly indicating that the purchaser is a producer who has furnished a certification required by section III(B)(1)(b)(ii) of this notice to the seller, and"

(b) In addition, the first paragraph of section III(B)(1)(b)(ii) is changed to read as follows:

"(ii) The seller obtains from such purchaser and keeps on file a certification, signed under penalties of perjury by a person having authority to bind the purchaser, stating the name, address, employer identification number of the purchaser, and the title of the person signing the certification. Such certification may cover sales to such purchaser for the period from April 1, 1988, to April 30, 1988, inclusive and shall take the following form:"

(3) Section IV(F) of Notice 88-30 explains the registration procedures to be followed by purchasers of fuel for use other than as a motor fuel. Paragraph (2) of section IV(F) describes how to make the application for registry on Form 637, "Registration for Tax-Free Transactions Under Chapters 31, 32, and 38 of the Internal Revenue Code." Form 637, as revised in October, 1987, does not have a category for non-motor fuel use. Therefore, the first paragraph of section IV(F)(2) is amended to read as follows:

"The regulations will provide that application for registry must be made on Form 637, "Registration for Tax-Free Transactions Under Chapters 31, 32, and 38 of the Internal Revenue Code". See section III(B)(2) of this notice, describing that the regulations will require a purchaser of taxable fuel for use other than as a motor fuel to be registered in order to make tax-free purchases of diesel fuel for this use on or after October 1, 1988, and the procedures to be followed for tax-free sales until that time.

"The application must include a statement that the applicant is a purchaser of taxable fuel "FOR USE OTHER THAN AS A MOTOR FUEL." In addition, the application for registry will be required to include a statement setting forth in detail --"

(4) Section VI(E) of Notice 88-30 explained the rules applicable to a return reflecting the floor stocks tax imposed on taxable fuel held by a taxable person on April 1, 1988. Paragraphs (2) and (3) of section VI(E) contained an inconsistency relating to the time for filing the return and for paying the tax in the case of a taxable person not otherwise required to file Form 720.

(a) Therefore, paragraph (2) of section VI(E) is changed to read as follows:

"The return reflecting the floor stocks tax is to be filed with the Service Center indicated by the instructions for the Form 720. The regulations will provide that in the case of a taxable person not otherwise required to file Form 720, the return must be filed before June 16, 1988, and must be marked 'FINAL'. If liability is subsequently incurred by such taxable person during the quarter ending June 30, 1988, so that a second Form 720 is required to be filed for that quarter, the taxable person must mark the second Form 720 'AMENDED'. In the case of all other taxable persons, the regulations will require that the return reflecting the floor stocks tax be filed on or before the date prescribed by the instructions for the Form 720 for the quarter ending June 30, 1988. For provisions relating to timely filing and paying, see sections 7502 and 7503. For provisions relating to additions to the tax in case of failure to file a return within the prescribed time, see section 6651 and section 301.6651."

(b) In addition, the second sentence of paragraph (3) of section VI(E) is changed to read as follows:

"If a taxable person is not required to make a deposit of any tax reported on Form 720 using a Federal Tax Deposit Coupon for the quarter ending June 30, 1988, the taxable person is to pay the tax, by check or money order."

This document serves as an "administrative pronouncement" as that term is described in section 1.6661-3(b)(2) of the Income Tax Regulations and may be relied upon to the same extent as a revenue ruling or revenue procedure.

The principal author of this announcement is Lauren Shaw of the Legislation and Regulations Division of Chief Counsel. For further information regarding this announcement, contact Ms. Shaw on (202) 566-3287 (not a toll-free call).

Notice 88-30 has been corrected, and changes will appear in Notice 88-30 when it is published in 1988-1 C.B.