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Rev. Rul. 66-276


Rev. Rul. 66-276; 1966-2 C.B. 505

DATED
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Citations: Rev. Rul. 66-276; 1966-2 C.B. 505

Obsoleted by Rev. Rul. 92-4 Supplemented by Rev. Rul. 67-28

Rev. Rul. 66-276 1

The purpose of this Revenue Ruling is to clarify the provisions of sections 39 and 6424 of the Internal Revenue Code of 1954, as added by sections 809(c) and 202(b), respectively, of the Excise Tax Reduction Act of 1965, Public Law 89-44, C.B. 1965-2, 568, which allow persons to claim six cents a gallon for lubricating oil used for nonhighway purposes such as oil used otherwise than in a highway motor vehicle.

There are two methods for obtaining the amount of the payment computed under section 6424 of the Code. Generally, the amount due under section 6424 must be claimed by the ultimate purchaser as a credit against his income tax for the taxable year in which the lubricating oil is used. This credit is allowed by section 39(a)(3) of the Code.

Section 39(b) of the Code provides that the first return on which the credit for lubricating oil placed in use after December 31, 1965, may be claimed is a taxpayer's income tax return for his first taxable year beginning on or after January 1, 1966. The effect of section 39(b) of the Code is that a taxpayer who files his income tax returns on the basis of a fiscal year, rather than a calendar year, may not claim the six-cents-a-gallon credit on his return for his fiscal year beginning in 1965 and ending in 1966 for lubricating oil used during the portion of this fiscal year which falls in alendar year 1966. Instead, the credit due him for lubricating oil used by him during this period may be claimed on his return for his fiscal year beginning in 1966 and ending in 1967.

The following example illustrates the operation of section 39(b):

Example .-A taxpayer files his income tax returns on the basis of a fiscal year beginning on August 1 and ending on July 31. He may not claim the credit on his return for the fiscal year beginning August 1, 1965, and ending July 31, 1966, for the lubricating oil used by him during the period January 1, 1966, through July 31, 1966. However, on his return for the fiscal year beginning August 1, 1966, and ending July 31, 1967, he may claim the credit for lubricating oil used by him otherwise than in a highway motor vehicle during the period January 1, 1966, through July 31, 1967.

A taxpayer who files his income tax returns on a calendar year basis may, on his return for the calendar year 1966 or a subsequent calendar year, claim the credit for lubricating oil used by him during the calendar year covered by the return.

For taxable years beginning after December 31, 1965, a person may make an estimate of the credit against the tax provided by section 39 of the Code and take this estimate into consideration in his declaration of estimated income tax.

In certain situations the ultimate purchaser may file a quarterly claim for payment for amounts due him under section 6424 of the Code. This is permitted with respect to any of the first three quarters of his taxable year for which he is entitled to a payment of $1,000 or more.

Section 6424(b) of the Code provides that, unless a person is entitled to a payment of $1,000 or more for any of the first three quarters of his taxable year, he may not file more than one claim for payment or credit with respect to lubricating oil used during his taxable year. The effect of section 6424(b) of the Code is that, as in the case of other claimants, the United States, State, and local governments and certain tax exempt organizations may file quarterly claims for payment only for quarters for which they are entitled to a payment of at least $1,000, and a quarterly claim may not be filed for the last quarter of a taxable year. If, at the close of the taxable year, they are entitled to amounts for which quarterly claims have not been filed, they may file a cumulative claim for these amounts on or before the due date for filing an income tax return for the taxable year.

For the purpose of these payments, the taxable year of the United States, a State, a local government, or a tax exempt organization will generally be the annual period (calendar year or fiscal year) on the basis of which it regularly keeps its books.

It should be noted that payments are allowable under section 6424 of the Code only for lubricating oil which was purchased tax paid. Thus, for example, a State of local government should not file a claim for any oil which it purchased tax free from the producer under section 4221(a)(4) of the Code, even though the State or local government used the oil so purchased otherwise than in a highway motor vehicle.

Similarly, the ultimate purchaser of lubricating oil should not file a claim for payment if he knows that another person is entitled to claim a payment or refund for the same oil under section 6424 or another provision of the Code. For example, a State or local government should not file a claim if it has executed a certificate of ultimate purchaser, or other documentation, to enable the producer to claim a refund under section 6416(b)(2)(C) of the Code for the same oil.

Revenue Ruling 66-48, C.B. 1966-1, 9, is hereby supplemented.

1 Based on Technical Information Releases 784 and 819, dated Dec. 8, 1965, and May 16, 1966, respectively.

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