Rev. Rul. 59-179

Advice has been requested whether the retailers excise tax on special motor fuels applies to the sale or use of so-called `JP-4' jet fuel.

So-called `JP-4' jet fuel is produced and sold by a petroleum refining company for use as a fuel in jet-propelled airplanes. This liquid is produced in compliance with official military specifications. These specifications require that the distillation range of the liquid conform to 20 percent evaporated at 290 degrees Fahrenheit (143.3 degrees centigrade), 50 percent evaporated at 370 degrees Fahrenheit (187.8 degrees centigrade), 90 percent evaporated at 470 degrees Fahrenheit (243.3 degrees centigrade), and that the vapor pressure range be not less than two or more than three pounds per square inch.

Section 4041(b) of the Internal Revenue Code of 1954 imposes a tax upon certain special motor fuels, but not upon kerosene, gas oil, or fuel oil, sold by any person to an owner, lessee, or other operator of a motor vehicle, motorboat, or airplane for use as a fuel for the propulsion of such motor vehicle, motorboat, or airplane. That section further provides that unless there was a taxable sale of the liquid, the tax will apply to such liquid used by any person as a fuel for the propulsion of a motor vehicle, motorboat, or airplane.

Pending the issuance of regulations on the provisions of section 4041(b) of the 1954 Code, the Internal Revenue Service considers that the distillation ranges contained in section 314.30(b)(2) and 314.30(c) of Regulations 44 still provide an acceptable guide for classification of products as special motor fuels, or as kerosene, gas oil, or fuel oil. See Revenue Ruling 58-398, C.B. 1958-2, 754.

While there is no excise tax on jet fuels, as such, the liquid produced by the refining company in the instant case meets the distillation test for special motor fuel. Therefore, it is held that such liquid is subject to the retailers excise tax imposed by section 4041(b) of the Code when sold for use, or used, as fuel for the propulsion of motor vehicles, motorboats, or airplanes, subject to certain statutory exemptions, including that for sales for use as fuel supplies for certain vessels or aircraft.