4.24.22. Campus Procedures for Excise Taxes

(1) Form 720 is filed quarterly as shown below.

(2) The Filing Requirement Code (FRC) is used to identify the type of return filed by the taxpayer and the tax return filing frequency. The FRC is displayed on CC ENMOD and CC INOLE. The table below provides the Form 720 codes:

(3) The FRC 4 identifies Form 720 casual filers (annual filers) who are not required to file quarterly. Taxpayers only reporting the Floor Stocks Tax, IRS No. 20, or the Patient-Centered Outcomes Research Fee, IRS No. 133, are casual filers and must report the tax liability on the second calendar quarter. The FRC 4 will prevent erroneous return delinquency (RD) and taxpayer delinquent investigation (TDI) activity on the other calendar quarters.

(1) Generally, all taxes are deposited under the rules for regular method taxes.

(2) All excise taxes that must be deposited are subject to the “September Rules”.

(3) The safe harbor rule applies separately to deposits under the regular method and the alternative method. See IRM 20.1.4.10.6, Safe Harbor (1/6th Rule) for Deposits Form 720.

(4) No deposits are required for taxes as follows:

• Taxes reported in Part II of Form 720.(Exception: The payment for floor stocks' tax on ozone-depleting chemicals is due by June 30.),

• Net tax liability of less than $2,500.00 for the quarter, and

• One time filings defined in Rev. Proc. 40.6011 (a) -2(b).

(5) Beginning after December 31, 2010, authorized depositories will no longer accept Form 8109, Federal Tax Deposit Coupon, and Form 8109-B, FTD Deposit Form (Over The Counter Version), to deposit their quarterly taxes. Most taxpayers will be required to electronically deposit all employment, excise, and corporate depository taxes using EFTPS. However, some taxpayers may be able to remit payment for their excise tax due on Form 720 with their tax return. See IRM 20.1.4.10.5, De Minimis Exception to Deposit Requirements Form 720, for more information. Otherwise, the payments must be paid through EFTPS. See IRM 21.7.1.4.8.1, Electronic Federal Tax Payment System (EFTPS), for more information.

(1) Taxes are identified by an "IRS No." (also known as "Abstract Number") on Form 720 and in IRS account records.

(2) When tax is adjusted on Form 720, the adjustment must include the IRS No. that identifies the type of tax being adjusted. Credits are made using CRNs.

(3) Each IRS No. is a separate return for all purposes. If an original return is filed timely reporting one IRS No. and later a supplemental return ( Form 720-X, Amended Quarterly Federal Excise Tax Return) is filed reporting an additional IRS No., the second return may be subject to a late filing penalty. This penalty must be manually computed if the tax module is restricted. See IRM 20.1.2, Failure to File/Failure to Pay Penalties.

(1) Excise taxes shown below are reported in Part I of Form 720. These taxes generally have deposit requirements recorded on Form 720, Schedule A, Excise Tax Liability.

(1) Excise taxes shown below are reported in Part II of Form 720. These excise taxes do not require federal tax deposits recorded on Schedule A, Excise Tax Liability.

(1) The Schedule C is used to make a claim against current excise tax liability reported in Part III, line 3, of Form 720. The total Schedule C claim amount is reported on line 4. Adjustments are input on MFT 03 with the appropriate credit reference number (CRN). The CRN will generate a TC 766 (refundable credit). A CRN with a minus sign (-) will generate a TC 767 (reversal of refundable credit).

(2) A taxpayer should not use a Schedule C:

• If a liability has not been reported on Form 720, Part l or Part II;

• To make adjustments to liability reported on Form 720 filed for prior quarters. The Form 720-X, Amended Quarterly Federal Excise Tax Return, is used for this purpose;

• To claim credit amounts already reported or will be reported on Form 4136, Credits for Federal Tax Paid on Fuels, or Form 8849, Claim for Refund of Excise Taxes, and its separate schedules;

• For an IRC 4081(e) refund. The refund must be reported on, Form 8849 Schedule 5 Section 4081(e) Claims;

• To claim a refund of the surtax on any liquid used in a fractional ownership program aircraft as fuel. The Form 720-X, is used for this purpose; or

• To request an abatement or refund of interest under section 6404(e), due to an IRS error, or an abatement or refund of a penalty or addition to tax under section 6404(f) due to erroneous IRS written advice, the taxpayer should use Form 843, Claim for Refund and Request for Abatement. Also, use Form 843 to request refund of the penalty for misuse of dyed fuel.

(3) The following table provides the nontaxable uses of fuel allowable on Form 720, Schedule C. The taxpayer must enter the number from the table in the "Type of Use" column on Schedule C (lines 1a, 2b, 3a, 4a, e, and f, 5c and d, 6a through 6h, lines 9d and e, and lines 14b through 14d)

(4) If a claim on lines 1 through 9, 12, 13, or 14b through 14e was not made for any gallons, an annual claim may be made. However, annual claims cannot be filed for the Alternative Fuel Mixture credit and sales of gasoline and aviation gasoline by Registered Ultimate Vendors or Registered Credit Card Issuers. Generally, an annual claim is made on Form 4136 for the income tax year during which the fuel was used by the ultimate purchaser, sold by the registered ultimate vendor, used to produce a mixture, or used in mobile machinery. The Form 4136 instructions provide additional information.

(1) Form 720-X, line 1 is used to report adjustments to tax liability reported for previous quarters.

(2) Form 720-X, line 2, must be used for any adjustments to IRC 4051(d), tire credit. A tax credit may be taken equal to the amount of tax that has been imposed on each tire that is sold on, or in connection with, the first retail sale of a taxable vehicle reported on IRS No. 33. Form 720-X, must show an adjustment to IRS No. 33 on line 1 to allow the credit. Adjust the credit using CRN 366.

(3) A claimant must be registered to file a claim for an alternative fuel credit and/or an alternative fuel mixture credit. If the claimant is not registered, they must apply for registration on Form 637, Application for Registration. Form 720-X, line 2, must be used to report any adjustment to IRC 6426, fuel credits. The claimant must have first used Form 720, Schedule C, to reduce their IRC 4041 or IRC 4081 fuel liability. (See Form 720 X instructions, line 2.) The claimant must use a separate line for each adjustment. See the table below for applicable types of credit, CRNs and credit rates.

(4) The IRC 6415 conditions for claim allowance on Form 720-X apply to IRS Nos. 22, 26, 27, and 28. The claimant must have repaid the amount of the tax to the person from whom it was collected or have the consent of that person for the allowance of the adjustment.

(5) The IRC 6416(a) conditions for claim allowance on Form 720-X apply to all other IRS Nos. except 18, 19, 20, 21, 29, 30, 31, 51, 64, 98, 117, 125 and 133; or if tax is based on use of IRS Nos. 71, 79, and 112, 118, 120-124. The claimant must not have included the tax in the price of the article and has not collected the tax from the purchaser or has the written consent of the ultimate purchaser for the allowance of the adjustment.

(6) For each adjustment reported on line one of Form 720-X, a statement must be attached, or line 6 can be used for providing:

1. A detailed description of each adjustment, and

2. A computation of the amount claimed

   Note: The supporting evidence is not required to be submitted with the claim.

(7) Input any adjustment on MFT 03 for the quarter in which the tax was originally reported, or should have been reported, using TC 291 for a tax decrease or TC 290 for a tax increase, using the appropriate IRS No. Credit interest is allowable on an overpayment of tax liability reported on a Form 720 filed for previous quarters.

(8) If the box on line 5b of Form 720-X is checked, the overpayment is shown on line 7 of Form 720. Line 6 of Form 720 should include the amount from line 7, if any, as an overpayment from a previous quarter.

(9) Input any adjustment on MFT 03 for the quarter in which the tax was originally reported, or should have been reported, using TC 291 for a tax decrease or TC 290 for a tax increase on MFT 03 and appropriate IRS No. See IRM 20.1.4.10, Form 720 Reporting Requirements, if a failure to deposit penalty may apply.

(1) CP 183 is generated with Form 15105 and issued to the taxpayer when the Form 720 does not provide a breakdown of the tax liability by IRS No. (abstract number). The notice requests a tax breakdown within 30 days.

(2) When IRS Nos. are not identified by the taxpayer, the original return is coded with a Computer Condition Code (CCC) "Z" and processed with IRS No. 080 (unidentified/unknown IRS No.).

(3) If the taxpayer provides a complete response, take the following action to correct the tax module:

1. Input a TC 290 with zero and the appropriate IRS Nos. and amounts. If the taxpayer provides an amended tax return, the tax liability may need to be addressed on the ADJ54,

2. On the same ADJ54 reverse the IRS No. 080 amount with a minus (-), and

3. Review penalties and interest for correction.

   Note: One time filings, returns reporting a net tax liability less than $2,500, and IRS Nos. 20, 41, 42, 44, 51, 64, 106, 110, 114, 117, 125, 133, and 140, do not require federal tax deposits.

(4) If the taxpayer's response is incomplete, attempt to secure the missing information by phone. If the taxpayer doesn't respond, send the taxpayer a 3011C letter explaining we were unable to correct the account based on the provided information.

(5) If the taxpayer responds by phone, accept the information and correct the tax module following the steps under paragraph 3 above.

(1) Form 720-TO, Terminal Operator Report, is an information return used by terminal operators to report their monthly receipts and disbursements of all liquid products to and from all approved terminals.

(2) Form 720-CS, Carrier Summary, is an information return used by bulk transport carriers (barges, ships, and pipelines) who receive or deliver liquid product to or from an approved terminal or any other location designated by a Facility Control Number (FCN).

(3) Form 720-TO and Form 720-CS must be filed monthly. The report is due the last day of the month following the month in which the transaction occurs.

(4) Electronic filing is required for each return reporting 25 or more transactions a month. However, all taxpayers are encouraged to electronically file. The forms are filed electronically through the Excise Summary Terminal Activity Reporting System (ExSTARS). Additional information is available at www.irs.gov/excise and in Pub 3536, Motor Fuel Excise Tax EDI Guide.

(5) Forward Form 720-TO and Form 720-CS returns and correspondence to:

Internal Revenue Service

Attn: Excise Operation

Stop: 5701-G

Cincinnati, OH 45999

(1) Generally, after December 31, 2007, qualified subchapter's subsidiaries (QSubs) and eligible single-owner disregarded entities are treated as separate entities for excise tax payments and reporting purposes. QSubs and eligible single-owner disregarded entities must pay and report excise tax activities, register for excise tax activities, and claim any refunds, credits, and payments under the entity's Employer Identification Number (EIN). These actions cannot take place under the owner's Taxpayer Identification Number (TIN). Some QSubs and disregarded entities may already have an EIN. If the taxpayer is unsure if they have an EIN, the taxpayer may call the IRS Business and Specialty Tax line at 1-800-829-4933.

(2) Generally, QSubs and eligible single-owner disregarded entities will continue to be treated as disregarded entities for other federal tax purposes (other than employment taxes). Example: Taxpayers filing a Form 4136, Credit for Federal Tax Paid on Fuels, with Form 1040, Individual Income Tax Return, can use the owner's TIN.

(1) Electronic filing for Form 720, Quarterly Federal Excise Tax Return, is available through an Electronic Return Originator (ERO), transmitter, and/or Intermediate Service Provider (ISP) participating in the IRS e-file program for excise taxes. The ERO, ISP and Transmitter can be separate entities; however, most of the electronic filed returns are filed using a web-based service provider.

(2) The Modernized e-File (MeF) system allows two alternative signature options for business taxpayers and the ERO to sign electronic returns filed via MeF. The taxpayer must decide whether to use a Personal Identification Number (PIN) to sign the return or whether they authorize the ERO to enter the PIN chosen by the ERO. The filer can choose to sign the applicable Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, that must be scanned and attached to the return when transmitted. A paper copy of the scanned Form 8453 should not be mailed to the IRS. The business filer can also choose the Practitioner PIN Option, using the applicable Form 8879, e-file Signature Authorization, that is retained by the ERO as part of the taxpayer's record and is not sent to the IRS. An electronic return will be rejected if the required signatures are not present. See IRM 3.42.4, IRS e-file For Business Income Tax Returns, for additional information.

(1) A duplicate filing condition occurs when a return (TC 976) posts to a module already containing an original return (TC 150). IDRS generates a -A freeze which prevents any refund or offset from the tax module until an adjustment (TC 29X) is input. IDRS also generates a Transcript (TRNS) 193 or TRNS 293 which is associated with the TC 976 tax return. All excise duplicate filing conditions are systemically controlled on IDRS with category DUPX. All duplicate filing conditions age in 45 days and are not considered correspondence. If correspondence is attached to the duplicate return, the case must be re-controlled with category "TPRQ". See IRM 21.7.9, BMF Duplicate Filing Conditions, for additional information.

(2) The -A freeze must be resolved before closing the case. Determine and resolve the duplicate filing condition by examining and comparing the return and IDRS information. Use the TRNS 193, duplicate return, CFOL command codes (CCs), and original return (secure only if absolutely necessary) to resolve the case.

(3) The generation of the TRNS 193 is considered the first request for the missing tax return. If the TRNS 193 is received with the duplicate return:

• Research IDRS CCs and/or pull returns from Files to determine if the tax reported on the duplicate, amended or supplemental return should be considered as a tax increase or tax decrease. See IRM 21.7.9.4.1, Resolving TRNS 193s and Amended/Corrected/Supplemental Returns, for additional information.

• If it is determined the duplicate return is a true duplicate (no change), see IRM 21.7.9.4.1.3, True Duplicate.

(4) If the TRNS 193 is received without the duplicate return attached:

1. Research the Business Return Transaction File View (CC BRTVU) to determine if it is a true duplicate and/or for another tax period.

2. If Files is unable to secure the return, input another request as Special Search and suspend the case for 15 days.

3. If a copy of the return cannot be secured from Files after 15 days, attempt to call the taxpayer to request a copy of the return(s). If unable to reach the taxpayer by phone, send Letter 418C to request a copy of the returns(s) and suspend the case for 40 days.

(5) If the return has not been secured, the suspense period has ended, and no payment was received with duplicate return:

1. Input TC 290 $.00 to release the -A freeze.

2. Send appropriate C-letter to the taxpayer to inform them of the determination.

(6) If a payment was received with the duplicate return:

1. Assess tax equal to the payment amount.

2. If module credit balance is in excess of payment submitted with return, determine reason for additional excess credit.

3. Resolve any misapplied payments or other module freeze conditions before making an assessment.

(7) Follow the guidelines in IRM 21.5.2.4.23.11, Reprocessing Dummy Returns, when it is necessary to recreate or reprocess a return.

(8) When adjusting accounts:

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• Use caution when inputting Hold Codes. See IRM 21.5.2.4.15, Rules on Hold Codes.

• Posting Delay Codes are used to make some transactions post later than others when multiple transactions are required to adjust an account. See IRM 21.5.2.4.17, Posting Delay Code (PDC).

(9) Input TC 29X to adjust tax, use appropriate IRS No. to match tax adjustment. For credit adjustment, use appropriate CRN to match credit adjustment.

(1) The taxable period begins each July 1 and ends the following June 30.

(2) For vehicles first used in July of the taxable period, Form 2290 is due by August 31.

(3) For vehicles first used after July of the taxable period, Form 2290 for that period is due by the last day of the month following the month of first use.

(4) Some taxpayers file several tax returns for one tax period. This is usually done because they have several offices and each office needs its own Schedule 1. Do not send a 673C letter in these situations.

(1) A person must file a Form 2290 if the vehicle is registered, or required to be registered, in the person's name under state, District of Columbia, Canadian, or Mexican law, at the time:

• The vehicle is first used on public highways during the period,

• A suspended vehicle exceeds the mileage use limit (5,000 miles, 7,500 miles for agricultural vehicles), or

• An increase in the taxable gross weight of the vehicle results in an additional tax liability.

(2) A Form 2290 must also be filed by a person who acquires a vehicle for which tax had been suspended under the previous owner.

(1) A State must receive proof of payment of the IRC 4481 tax or an acceptable substitute from the taxpayer before it will register a taxable vehicle subject to the tax. The IRC 4481 tax is reported on the Form 2290 return. In general, proof of payment consists of a the receipted (stamped) Form 2290, Schedule 1 that is returned by the IRS after processing the tax return. A photocopy of the receipted Schedule 1 also serves as proof of payment.

(2) The following list provides acceptable substitutes:

• Photocopy of the Form 2290 (with Schedule 1 attached) which was filed with the IRS, and sufficient documentation that the taxpayer paid the tax due at the time the Form 2290 was filed (such as a photocopy of both sides of the cancelled check),

• Original or a photocopy of the bill of sale showing that the vehicle was purchased either new or used within the last 60 days per Treas. Reg. 41.6001-2(b)(1), or

• The State may use the proof of payment for the immediately preceding taxable period if the taxpayer submits an application for registration in the months of July, August, September per Treas. Reg. 41.6001–2(b)(4).

(3) The table below will assist Centralized Excise Operations and Taxpayer Assistance Centers (TAC) employees with proof of payment determination.

(1) If the taxpayer filed a paper Form 2290, there is a possibility that the paper Schedule 1 can be misplaced by the taxpayer or lost during the mailing process described under IRM 4.24.22.4.2.3, Form 2290, Required Proof of Payment. Telephone requests for a missing Schedule 1 are received frequently by the Centralized Excise Operations.

(2) The Service will replace a missing Schedule 1 for the current tax period. If the taxpayer makes a request for a prior tax period, advise the taxpayer to file Form 4506, Request for Copy of Tax Return. See IRM 21.3.6.4.3, Taxpayer Request for Copies of Tax Returns, for additional information.

(3) The tax return must be filed and the tax paid before a stamped Schedule 1 can be obtained as proof of payment. If a payment is not found on the appropriate tax module and the caller indicates payment was sent to the IRS, research IDRS for the missing payment. See IRM 21.5.7.3, Missing Payments Research, for additional information.

(4) The taxpayer may use an acceptable proof of payment substitute to register a taxable vehicle. See IRM 4.24.22.4.2.3, Form 2290, Required Proof of Payment, for additional information.

(5) Before providing a replacement for a missing Schedule 1, verify that the replacement Schedule 1 reports the same amount and category of vehicles that was originally reported by the taxpayer.

(6) Use the chart below to assist an established (after the first year) Form 2290 filer with securing a replacement Schedule 1.

(1) The payment must show an Employer Identification Number (EIN) and the beginning date of the tax period. A Social Security Number (SSN) cannot be used to make a payment.

(2) There are four methods of payment:

• Electronic Federal Tax Payment System (EFTPS);

• Electronic funds withdrawal (direct debit) with electronic filing;

• Check or money order using the Form 2290-V, Payment Voucher; and

• Credit or debit card from an approved payment processor for a fee.

(3) Using EFTPS is voluntary. For the EFTPS payment to be timely, the taxpayer must make the transaction one business day before the payment is due. See IRM 4.24.22.4.2.11, Form 2290, Electronic Filing For Taxpayers Reporting 25 Or More Vehicles.

(1) The "Tax Computation" table on page 2 of Form 2290, Heavy Highway Vehicle Use Tax Return, provides the taxable gross weight for each vehicle category code (A through V) and the annual tax (vehicles used during July) due per taxable vehicle.

(2) Refer to Form 2290 instructions, Partial Period Tax Tables, Table 1, for the amount of prorated tax due for vehicles first used after July.

(3) The tax rate for logging vehicles is reduced by 25 percent. This reduction is reflected in the annual tax and partial period tax tables. A vehicle qualifies as a logging vehicle if:

1. It is used exclusively for the transportation of products harvested from the forested site, or it exclusively transports the products harvested from the forested site to and from locations on a forested site (public highways may be used between the forested site locations), and

2. It is registered (under the laws of the State or States in which the vehicle is required to be registered) as a highway motor vehicle used exclusively in the transportation of harvested forest products.

(4) Beginning July 1, 2005, the reduced rate of tax for Canadian and Mexican vehicles was repealed per the American Jobs Creation Act, HR 4520. Taxpayers reporting Canadian or Mexican vehicles must use column (1) (a) of Form 2290, "Tax Computation" table to figure their annual tax.

(1) Statement in Support of Suspension of Tax, Part II of Form 2290, must be completed if taxpayer expects to use a vehicle on public highways 5,000 miles or less (7,500 miles or less for agricultural vehicles) during the tax period.

(2) Tax on that vehicle is suspended for the tax period if the mileage use limit is not exceeded.

(1) If a vehicle is sold while under suspension, the suspension of tax continues until the vehicle is used more than 5,000 miles (7,500 for agricultural vehicles) during the taxable period.

(2) If, after the sale, the use of the vehicle exceeds the mileage use limit (including the highway mileage recorded by the seller during the taxable period, the buyer is liable for the tax. The seller also may be liable for tax (see paragraphs 3 and 4, below).

(3) The seller will not be liable for any tax on the use of the vehicle for the taxable period if the seller provides the buyer with a statement that includes:

• Seller’s name, address, and EIN,

• Vehicle Identification Number (VIN),

• Date of sale,

• Number of taxable miles the vehicle has been used on the public highways during the taxable period,

• Odometer reading at beginning of the taxable period,

• Odometer reading at time of sale, and

• Buyer’s name, address and EIN

(4) If the seller does not provide the required sale statement to the buyer, then the seller is also liable for the tax during the taxable period. See IRM 4.24.22.4.2.12, Used Vehicles, for the previous and second owner's tax responsibility.

(5) The new owner files Form 2290 by the last day of the month following the month in which the vehicle was first used by the new owner. The required sale statement explained in paragraph (3) and is attached to the tax return.

(1) If the taxable gross weight of a vehicle increases during the taxable period and the vehicle falls under a new category, the taxpayer must file an amended tax return reporting the additional tax due. The taxpayer is required to check the Amended Return box and to the right of "Amended Return" write the month the taxable gross weight increased.

(2) The amended tax return and payment of tax is due by last day of month following month in which taxable gross weight increased and is reported on Line 3, "Additional tax from increase in taxable gross weight."

(3) The Form 2290 Instructions provide a computation worksheet to determine the additional tax due. The worksheet is located under the Line 3 instructions.

(4) Use a TC 298 to assess the additional tax on the tax period the vehicle was originally reported. The due date of the amended return is used as the interest start date.

(1) If Form 2290 has been filed to suspend the tax and the vehicle is used more than 5,000 miles (7,500 for agricultural vehicles), an amended Form 2290 must be filed and the tax paid.

(2) Once the mileage use limit is exceeded, tax is due for the taxable period, regardless of when the limit was exceeded and is computed on the basis of the month the vehicle was first used in that period. If a suspended vehicle exceeds 5,000 miles (7,500 for agriculture) within the tax period, the tax is due as follows:

(3) No interest is charged if return is filed and tax is paid by last day of month following month in which vehicle use exceeded 5,000 miles (7,500 for agricultural vehicles).

(4) Assess tax using TC 298 with due date of return on which vehicles were reported as taxable as interest start date.

(5) The taxpayer is required to check the Amended Return box on page 1 of Form 2290 and to the right of "Amended Return" write the month in which the mileage use limit was exceeded. If the taxpayer does not indicate when the vehicle exceeded 5,000 miles (7,500 miles for agricultural vehicles), assess tax with TC 290 and let interest compute as normal. Contact taxpayer explaining that the month vehicle exceeded 5,000 miles (7,500 for agricultural vehicles) could not be established.

(1) Treasury Decision 9698 contains final regulations that provide guidance on the mandatory electronic filing of Form 2290, Heavy Highway Vehicle Use Tax Return, reporting 25 or more vehicles. For purposes of defining 25 or more, this includes the number of vehicles for which tax is reported and does not include tax suspended vehicles.

(2) Filing a paper Form 2290 for 25 or more vehicles does not constitute a failure to file (FTF) for the purposes of penalty under Section 6651 and the IRS will not withhold a receipted Schedule 1 for not electronically filing the return. The IRS and the Treasury Department continue to consider ways to ensure compliance with the electronic filing requirement.

(3) The Employee User Portal (EUP) is used to access electronically filed tax returns. See IRM 3.42.8.6.1.1, Employee User Portal (EUP), for system access information.

(4) The Schedule 1 is systemically sent to the Electronic Return Originator (ERO). The ERO or the Intermediate Service Provider (ISP) will provide the taxpayer with an electronically receipted (water marked) Schedule 1.

(5) The taxpayer can file multiple tax returns and/or amended returns electronically. See IRM 4.24.22.4.1.11, Electronic Filing for Form 720, Quarterly Excise Tax Return, for information on signature requirements.

(1) The buyer of a used taxable vehicle is required to keep records showing whether there was a use of the vehicle or a suspension of the tax during the period before the vehicle was registered in the name of the buyer. The evidence of use may be a written statement signed and dated by an individual or dealer from whom the buyer purchased the vehicle.

(2) If a previous owner of a registered vehicle uses the vehicle first during a taxable period, the previous owner is liable for the tax only for the months the vehicle was used by the previous owner. See IRM 4.24.22.4.2.14, Form 2290, Claims, for information about prorating the tax for claiming a refund. See IRM 4.24.22.4.2.8, Form 2290, Vehicle Sold While Tax is Suspended, for information about vehicles transferred while tax is suspended. See IRM 4.24.22.4.2.12.1, Privately Purchased Used Vehicles, for information about vehicles purchased privately.

(3) The second owner is liable for the tax for the remaining months of the taxable period the vehicle is used on public highways by the second owner (prorated tax period). Form 2290 must be filed and the tax paid by the last day of the month after the month the vehicle is first used on a public highway.

(4) If the previous owner used the vehicle on public highways and has not paid the tax, and the new owner uses the vehicle before the end of the taxable period, the new owner becomes liable for the total tax for the entire period to the extent not paid by the previous owner. The new owner must file Form 2290 and pay the tax by the last day of the month after the month notification is received from the IRS that the tax has not been paid in full.

(1) If a taxable vehicle is registered in the name of both the owner and another person, the owner is liable for the tax. This rule also applies to dual registration of a leased vehicle.

(2) Any vehicle operated under a dealer's tag, license, or permit is considered registered in the name of the dealer.

(1) Credit Reference Number (CRN) 365 should be used for line 5 (credit) adjustments. Submission Processing transcribes line 5 using CRN 365 in initial processing. If a credit adjustment is required for line 5, input using TC 290 and CRN 365. A TC 766 will generate for CRN 365. To reverse the credit, input TC 290 and CRN 365 (with a minus). The reversal will generate a TC 767.

(2) Taxpayers may use line 5 of the Form 2290 to claim a credit for tax paid in the three following circumstances:

• Vehicle was sold,

• Vehicle is destroyed (so damaged by accident or other casualty it is not economical to rebuild it) or stolen before June 1 of the taxable period and is not used during the remainder of the taxable period, or

• Vehicle was used during the prior period 5,000 miles or less (7,500 for agricultural vehicles).

Note: A vehicle with a blown motor is not considered a destroyed vehicle.

(3) The amount of the line 5 credit cannot exceed tax liability reported on the return. Any excess credit must be claimed as a refund using Form 8849, Schedule 6.

(4) A credit, reduced tax, exemption, or refund is not allowed for an occasional light or decreased load or a discontinued or changed use of a vehicle.

(5) Instead of taking a line 5 credit on Form 2290, the taxpayer may make a claim on Form 8849, Schedule 6. See IRM 4.24.22.4.5.6.12, Form 8849, Schedule 6, Claims Relating to Taxes Reported on Form 2290.

(1) There are no provisions in the law to allow a credit, exemption, or refund for:

• An occasional light or decreased load, and/or

• A discontinued or changed use of vehicle.

(2) Reject claim using appropriate disallowance letter.

(1) There is no provision in the law for a credit or refund if weight of vehicle decreases during a taxable period.

(2) Refund can be given only if change is due to a reporting error.

(3) If taxpayer is claiming weight that is less than reported, proof is needed. The vehicle registration will show weight at which vehicle is registered.

(4) Taxpayer must file Form 8849, Schedule 6, to claim a refund based on a reporting error.

(1) If the taxpayer must correct a VIN previously reported on a filed Schedule 1, a corrected tax return must be filed with the IRS. The taxpayer must check the "VIN Correction" box located on page 1 of the Form 2290.

(2) If the correction on Schedule 1 is a typographical error (transposed or incorrectly entered characters within an otherwise correct VIN), stamp the Schedule 1 and return one copy to the taxpayer. The second copy, including the corrected return, must be associated with the original tax return by adjustment action or an appropriate DLN association form (i.e., Form 10023-B).

(3) If the new VIN is completely different from the original VIN, the taxpayer must provide an explanation. When an explanation is not available, attempt to contact the taxpayer and process the VIN Correction based upon the taxpayer's response. The VIN could be completely different for the following reasons:

• The vehicle first reported was sold prior to the beginning of the tax period and the vehicle was erroneously added to the current tax return. The taxpayer may provide a copy of the sales receipt showing the date of sale, or

• The vehicle first reported was wrecked prior to the beginning of the tax period and was erroneously added to the current tax return. The taxpayer may provide a copy of the insurance claim showing the date of loss.

(4) If the explanation is sufficient, stamp the Schedule 1 and return one copy to the taxpayer. The second copy, including the corrected return, must be associated with the original tax return by refile adjustment action or an appropriate DLN association form (i.e., Form 10023-B). The explanation must remain with the case file. If the explanation is received by phone (oral statement), document the phone call and include the statement with the case file.

(5) If the explanation is insufficient or the taxpayer does not respond to IRS contact within the requested time frame, assess additional tax for the new VIN and advise the taxpayer of the assessment with an appropriate C letter.

(1) During the Form 2290 paper (pipeline) process, the Schedule 1 can be erroneously detached from the original tax return or misrouted to a campus function. In some cases, the Schedule 1 is mailed to the IRS without a tax return or returned to the campus as undeliverable. A separated schedule is called a Loose Schedule 1 and is routed to the Excise Operations for resolution.

(2) The July 2011 revision of Schedule 1 was expanded to a full page to allow the entry of 24 vehicles. Taxpayers are instructed to complete and file two copies of the Schedule 1.

(3) The Excise Operations will research IDRS with the information available on the Schedule 1 and take the following action:

(1) The procedures in IRM 21.7.9, BMF Duplicate Filing Condition (TRNS 193), will be used to resolve Excise Tax duplicate filing conditions. IRM 4.24.22.4.1.12, Form 720, Excise Tax Reported on Duplicate, Amended Returns, or Supplemental Returns, provides additional information regarding Excise Tax duplicate filing conditions.

(2) A Form 2290 duplicate filing condition occurs when a return (TC 976) posts to a module already containing a return (TC 150). IDRS generates a -A freeze which prevents any refund or offset from the module until an adjustment (TC 29X) is made. IDRS also generates a TRNS 193 or TRNS 293 (open TC 420), which is associated with the TC 976 return and forwarded to the Excise Operation for resolution.

(3) The -A freeze must be resolved before closing the case. Determine and resolve the duplicate filing condition by examining and comparing the return and IDRS information. Use the TRNS 193, duplicate return, CFOL command codes (CCs), and original return (secure only if absolutely necessary) to resolve the case.

(4) The generation of the TRNS 193 is considered the first request for the missing tax return. If the TRNS 193 is received with the duplicate return:

• Research IDRS CCs and/or pull returns from Files to determine if the tax reported on the duplicate, amended or supplemental return should be considered as a tax increase or tax decrease. See IRM 21.7.9.4.1, Resolving TRNS 193s and Amended/Corrected/Supplemental Returns, for additional information.

• If it is determined the duplicate return is a true duplicate (no change), see IRM 21.7.9.4.1.3, True Duplicate.

(5) If the TRNS 193 is received without the duplicate return attached:

1. Research the Business Return Transaction File View (CC BRTVU) to determine if it is a true duplicate and/or for another tax period.

2. If Files is unable to secure the return, input another request as Special Search and suspend the case for 15 days.

3. If a copy of the return cannot be secured from Files after 15 days, attempt to call the taxpayer to request a copy of the return(s). If unable to reach the taxpayer by phone, send Letter 418C to request a copy of the return(s) and suspend the case for 40 days..

(6) If the return has not been secured, the suspense period has ended, and no payment was received with duplicate return:

1. Input TC 290 $.00 to release the -A freeze.

2. Send appropriate C-letter to the taxpayer to inform them of the determination.

(7) If a payment was received with the duplicate return:

1. Assess tax equal to the payment amount.

2. If module credit balance is in excess of payment submitted with return, determine reason for additional excess credit.

3. Resolve any misapplied payments or other module freeze conditions before making an assessment.

(8) Follow the guidelines in IRM 21.5.2.4.23.11, Reprocessing Dummy Returns, when it is necessary to recreate or reprocess a return.

(9) When adjusting accounts:

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• Use caution when inputting Hold Codes. See IRM 21.5.2.4.15, Rules on Hold Codes.

• Posting Delay Codes are used to make some transactions post later than others when multiple transactions are required to adjust an account. See IRM 21.5.2.4.17, Posting Delay Code (PDC).

(10) Determine and resolve duplicate filing conditions by examining and comparing information. The tax technician will use the TRNS 193, duplicate return, original return, and CFOL command codes to resolve the case. While reviewing a duplicate Form 2290 case, it is important to compare the VIN data between the TC 150 and TC 976 (secure additional returns only if absolutely necessary).

(11) If the taxpayer does not provide a reason (no reply), assess additional tax or reprocess the return based on the information available. Issue a letter of explanation to the taxpayer.

(1) A first return must be filed and the occupational tax must be paid before a taxpayer begins accepting taxable wagers. The tax period begins each July 1 and ends the following June 30.

(2) If wagers are first accepted in any month other than July, the first return covers the tax period from the start of business until the following June 30 and the tax is prorated for the first year by multiplying the applicable monthly rate by the number of months remaining in the taxable year. The Form 11-C General Instructions provide a prorated tax table.

(3) A first return is also due in certain situations in which there has been a change in ownership or control. The above rules apply. The return must be filed within 30 days of the following changes:

1. New members are admitted to a firm or partnership,

2. A corporation is formed to continue the business of a partnership, and

3. A stockholder continues the business of a dissolved corporation.

(4) A supplemental registration return must be filed, but no additional tax is due when certain conditions are met. See IRM 4.24.22.4.3.3, Form 11-C, Supplemental Registration Returns.

(5) A renewal return must be filed by July 1 for each year in which a principal or agent accepts taxable wagers.

(1) A first return must be filed before wagers are accepted. Whether a first return is timely filed and whether penalties may be appropriate is determined by the Centralized Excise Operation at the Cincinnati Campus.

(2) A renewal return must be filed by July 1, when required.

(3) A supplemental registration return must be filed according to certain provisions. See IRM 4.24.22.4.3.3, Form 11-C, Supplemental Registration Returns, below.

(1) Although additional tax is not due, a supplemental registration return must be filed by principals:

(2) Although additional tax is not due, a supplemental registration return must be filed by agents:

(1) Refer all tax decreases to Cincinnati IRS Campus (CIRSC) Centralized Excise Operation. There is no provision in the law to allow a refund for a portion of a year during which the person receives no taxable wagers. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) If an original return is available, use Blocking Series (BS) 08 to adjust account.

(3) If only an amended return is available, use BS 15 to adjust account.

(1) Taxpayers must file Form 730 and pay the tax on wagers under IRC 4401(a) if they:

1. Are in the business of accepting taxable wagers,

2. Conduct a wagering pool or lottery for profit, or

3. Are required to be registered and they received wagers for or on behalf of another person but did not report that person's name and address.

(1) The tax applies only to wagers accepted in the U.S. or placed by a person who is in the U.S. with a person who is a U.S. citizen or resident or in a wagering pool or lottery conducted by a person who is a citizen or resident of the United States. Taxable wagers include those placed:

1. On a sports event or contest with a person engaged in the business of accepting wagers on such events,

2. In a wagering pool on a sports event or contest if the pool is conducted for profit, or

3. In a lottery conducted for profit, including the numbers game, policy, punch boards, and similar types of wagering.

(1) The tax is not imposed on the following five items:

1. Pari-mutuel wagering, including horse racing, dog racing, and jai alai, when licensed under state law,

2. Coin-operated devices, such as pinball machines, slot machines, or video games,

3. Sweepstakes, wagering pools, or lotteries that are conducted by a state or an agency of a state, if the wager is placed with the state agency or its authorized agents or employees,

4. Games of the type in which all persons placing wagers in the game are present when wagers are placed, winners are determined, and prizes or other property are distributed, and

5. Drawings conducted by an organization exempt from tax under IRC 501 or IRC 521, as long as the net proceeds of the drawing do not directly or indirectly benefit a private shareholder or individual.

(1) IRC 4401(a)(1) imposes a 0.25 percent tax on wagers authorized under the laws of the state in which accepted. The tax is computed on the gross amount of the wagers accepted during the month and reported on Line 4a.

(2) All other taxable wagers are subject to a rate of 2 percent of the amount of the wager. The tax is computed on the gross amount of wagers accepted during the month and reported on Line 4b.

(1) Form 730, Monthly Tax Return for Wagers, is a monthly return that must be filed by the last day of the month following the month in which a taxable wager is accepted.

(2) Once a taxpayer begins filing, Form 730 must be filed each month, even if the taxpayer receives no wagers in a month, until a final return is filed. These returns will report a liability of zero for the month.

(3) If a taxpayer stops accepting wagers, a final Form 730 must be filed. The "Final Return" box should be checked on the form.

(4) When a final return is filed, input TC 591 with Closing Code (cc) 20 using FRM 49 to close filing requirements.

(1) Taxpayers may use line 5 of Form 730 to claim a credit for tax paid in the two following circumstances:

1. When there is an overpayment of tax, and

2. When there has been tax imposed with respect to a wager the taxpayer laid off with another person who is liable for the wagering tax.

(2) The amount of the credit cannot exceed the tax liability reported on the Form 730.

(3) Alternatively, a taxpayer may make claims on Form 8849, Schedule 6, Other Claims. See IRM 4.24.22.4.5.6.8, Form 8849, Schedule 6, Claims Relating To Taxes Reported On Form 730, for additional information.

(4) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 4.24.22.3.2, Excise Tax Research, for additional information.

(5) The claim must be filed within 3 years from the time the return reporting the tax was filed, or two years from the time the tax was paid, whichever is later.

(1) See IRM 21.7.9, BMF Duplicate Filing Conditions, for instructions on how to process duplicate returns. See IRM 4.24.22.4.1.12, Form 720, Excise Tax Reported on Duplicate, Amended or Supplemental Returns, for additional information.

(2) If the original (TC 150) and amended return were secured when adjusting the account, use BS 09. If only the amended return was needed, use BS 15.

(1) MFT 40 is used to process Ultimate Purchaser Claims (End User Claims) and some interest-bearing ultimate vendor claims issued systemically. See IRM 4.24.22.4.5.1.1, MFT 40, Interest Bearing Claims Systemically Processed, for more information.

(2) Interest bearing ultimate vendor claims (20-day and 45-day time frames) requiring a manual refund must not be processed on MFT 40.

(3) Ultimate Purchaser Claims must be processed on MFT 40 using the following procedures:

1. A dummy module must be created for the first claim that is processed using CC ACTON. (See the Command Code Job Aid on SERP, http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/command-code.dr/idrs_command_codes_job_aid.htm). This establishes the MFT 40 module and is not required after the TC 150 posts to the module;

2. Input TC 290 using the appropriate CRN for the fuel tax credit. The first TC 290 generates a TC 150 for zero tax liability;

3. Let the refund generate systemically; do not issue a manual refund; and

4. If it is necessary to input a manual refund, use priority code 6 with your adjustment. This alerts Master File that a TC 840 has been input and a TC 846 will not generate. Never use priority code 6 unless you are issuing a manual refund.

(4) One refund generates per cycle for the TC 290. If there are multiple transactions (TC 290), one refund generates the total of the credits per cycle.

(5) A CP 210 generates for each cycle, notifying the taxpayer of the refund.

(6) If a notice needs to be stopped, use appropriate hold code and write a letter of explanation to the taxpayer.

(1) Schedule 1 claims may be made only by the ultimate purchaser of the fuel. In the case of export, the exporter is the ultimate purchaser. Ultimate purchasers include purchasers of undyed diesel, undyed kerosene, gasoline, kerosene used for aviation gasoline and alternative fuel. To be considered a valid claim, the following requirements must be met:

1. Claim must be at least $750.00,

2. The $750.00 amount may be met by making a claim for fuel used during any quarter of a claimant's income tax year or aggregating amounts from any quarters of the claimant's income tax year for which no other claim has been made,

3. If dollar amount and/or the time for filing requirements are not met, an annual claim or a claim for qualifying aggregate amounts must be filed,

4. Claim must be filed during the first quarter following the last quarter included in the claim,

   Example: If a claim is filed for two quarters, January through March and April through June, the claim must be filed between July 1 and September 30.

5. Only one claim may be filed for a quarter, and

6. Annual claims are made on Form 4136, Credit for Federal Tax Paid on Fuels, attached to the income tax return. (See IRM 21.7.4.4.9.1, Form 4136 Credit for Federal Tax Paid on Fuels.)

(2) The instructions below must be used to process valid Schedule 1 claims.

1. Check fiscal year, MFT/ filing requirements using CC ENMOD,

2. Check CC TXMOD and CC ENMOD for pending transactions,

3. Math verify the claim, and

4. Using CFOL, check for debit balances for offset. See IRM 21.5.6.4, Freeze Code Procedures, for freeze code definitions.

(3) Types of fuel, credit reference numbers (CRN's), and tax rate for Form 8849, Schedule 1, Nontaxable Use of Fuels, are:

(4) Input adjustment with TC 290 on MFT 40 using appropriate CRN. No interest is allowable. See IRM 4.24.22.4.5.1, MFT 40, Ultimate Purchaser Claims, for adjustment procedures. Use the following category codes for Form 8849, Schedule 1, Nontaxable Use of Fuels, claims:

• SC1P for a paper-filed Schedule 1, and

• SC1E for an electronically-filed Schedule 1.

(5) If the claim is not allowable, reject the claim using “no consideration” procedures as referenced in IRM 21.5.3.4.6.3. For Claims under 10 pages,

• Scan the taxpayers unprocessable claim(s) to the designated common drive folder within the Cincinnati Centralized Specialty Tax Operation.

Note: These files should be maintained electronically for 60 days.

• Input a TC 290-0 upon receipt of the claim(s).

• Forward the physical claim(s) to Files once the TC 290 has posted.

(6) If the claim is not allowable, reject the claim using “no consideration” procedures as referenced in IRM 21.5.3.4.6.3. For Claims over 10 Pages,

• Maintain physical claim(s) for 60 days in Cincinnati Centralized Specialty Tax Operation.

• Input a TC 290-0 once the 60-day period has expired.

• Forward the physical claim(s) to Files once the TC 290 has posted.

(7) If missing information can be resolved via a telephone call, an attempt may be made to contact the taxpayer before partially disallowing the claim.

(8) If a claim is determined to be either disallowed or partially disallowed, refer to IRM 21.5.3.4.6.1 for processing procedures.

(1) A registered ultimate vendor of undyed diesel fuel, undyed kerosene, kerosene sold for use in aviation, gasoline, or aviation gasoline uses Schedule 2 to make a claim for refund. An ultimate vendor is the person who sold the fuel to the ultimate purchaser.

(2) When requested by the schedule, the ultimate vendor claimant must enter a valid registration number. The claimant is considered registered if they received a letter of registration from the IRS. The letter of registration provides a registration number, the approved activity (Activity Letter), and the conditions of registration. The Form 637, Application for Registration (For Certain Excise Activities), is used to obtain the appropriate registration. ExTRAS (Excise Tax Registration Authentication System) and IMS (Issue Management System) are used to determine whether the registration number has been revoked or suspended by the IRS. If the registration number provided on the schedule is not on file or is revoked or suspended, reject the claim using no consideration procedures. An ultimate vendor may be registered for one or more of the following activities:

• UV - Ultimate vendor that sells undyed diesel fuel, undyed kerosene, gasoline, or aviation gasoline,

• UB - Ultimate vendor that sells undyed diesel fuel or undyed kerosene for use in certain intercity and local buses,

• UP - Ultimate vendor that sells kerosene sold from a blocked pump, and

• UA - Ultimate vendor that sells kerosene for use in aviation.

(3) If an ultimate vendor claim is not filed within the required time frame (during a period of at least one week and by the last day of the first quarter following the earliest quarter of the claimant's income tax year included in the claim), reject the claim using "no consideration" procedures as referenced in IRM 21.5.3.4.6.3.

(4) Ultimate vendor claims that do not provide the required information can be perfected with a telephone call to the claimant. If there is no response within three business days, reduce the claim by the entries that are not complete and send a letter of explanation to the taxpayer.

(5) If the claim address does not match the address of record, use the table below:

(6) Ultimate vendor claims are interest bearing fuel claims (IRC 6427). To avoid payment of interest, electronically filed (e-file) interest bearing fuel claims must be processed within 20 days of the later of the claim receive date or claim processable date. Paper filed claims must be processed within 45 days of the later of the claim received date or claim processable date to avoid the payment of interest. If an allowable claim is not processed within these time frames, interest must be paid from the later of the claim received date or claim processable date to the refund scheduled date (less the appropriate back-off period for computer-generated refunds).

(7) The instructions below must be used to process valid interest bearing (20-day or 45-day) fuel claims.

1. Check fiscal year, MFT/ filing requirements using CC ENMOD,

Note: Fuel claims can be filed on several MFTs (02, 05, 06, 34). To avoid duplicate filings, all of the MFTs that meet the taxpayer's filing requirements must be reviewed before allowing the claim. Sole proprietors without income tax filing requirements use MFT 02. If duplicate claims are found on multiple MFTs, send the claim with supporting documentation to CAT-A for review.

2. Check CC TXMOD and CC ENMOD for pending transactions,

3. Math verify the claim, and

4. Using CFOL, check for debit balances for offset. See IRM 21.5.6.4, Freeze Code Procedures, for freeze code definitions.

(8) Adjust account as follows:

1. If no TC 150 is posted to the tax module, use blocking series 40,

2. If TC 150 is posted to the tax module, use appropriate blocking series and input TC 770 for zero to restrict interest,

   Reminder: Only use TC 770 for zero if the taxpayer is not entitled to any interest.

3. Use TC 290 and applicable CRN, with allowable refund amount and no minus sign. A TC 766 will generate on Master File,

4. Use the following category codes for Schedule 2, Sales by Registered Ultimate Vendors, claims: SC2P, for a paper-filed claim and SC2E, for an electronically-filed claim,

5. Use a Hold Code 4 on the adjustment when issuing a manual refund, and

6. Interest bearing fuel claims may require a manual refund. See IRM 21.4.4, Manual Refunds, for manual refund procedures. The Accounting function within Submission Processing approves manual refund documentation. In order to meet the Accounting function deadlines, manual refund documentation for e-filed fuel claims must be input no later than the 15th day of receipt and the 42nd day for paper fuel claims. See IRM 20.2.10.4.3, Interest Rules for Ultimate Vendor and Fuel Tax Claims, for additional information.

   Note: Due to the volume of ultimate vendor claims, the Excise Operation cannot use the Integrated Automation Technology (IAT) Manual Refund Tool described in IRM 21.4.4.6.1, Monitoring Manual Refunds. IRM 4.24.22.3.5, Monitoring Centralized Excise Manual Refunds, provides manual refund monitoring guidance.

(9) If the claim is not allowable, reject the claim using "no consideration" procedures as referenced in IRM 21.5.3.4.6.3. For Claims under 10 pages,

• Scan the taxpayers unprocessable claim(s) to the designated common drive folder within the Cincinnati Centralized Specialty Tax Operation .

  Note: These files should be maintained electronically for 60 days.

• Input a TC 290-0 upon receipt of the claim(s).

• Forward the physical claim(s) to Files once the TC 290 has posted.

(10) If the claim is not allowable, reject the claim using "no consideration" procedures as referenced in IRM 21.5.3.4.6.3. For Claims over 10 Pages,

• Maintain physical claim(s) for 60 days in Cincinnati Centralized Specialty Tax Operation.

• Input a TC 290-0 once the 60-day period has expired.

• Forward the physical claim(s) to Files once the TC 290 has posted.

(11) If missing information can be resolved via a telephone call, an attempt may be made to contact the taxpayer before partially disallowing the claim.

(12) If a claim is determined to be either disallowed or partially disallowed, refer to IRM 21.5.3.4.6.1 for processing procedures.

(1) The Form 8849, Schedule 3, is used to submit refund claims for the following:

• biodiesel mixture credits,

• renewable diesel mixture credits,

• alternative fuel credits, and

• sustainable aviation fuel. Effective for mixtures sold or used after December 31, 2022.

(2) Claims for Biodiesel Mixture Credits, Renewable Diesel Mixture Credits, and Alternative Fuel Credits allowable under IRC 6426 and IRC 6427 expired for fuels sold or used after December 31, 2017. The Taxpayer Certainty and Disaster Tax Relief Act of 2019 (Pub. L. 116-94) retroactively reinstated the credits for calendar years 2018 and 2019. The Biodiesel and Renewable Mixture Credits were extended for sales and uses through December 31, 2022.

(3) Public Law 117-169, commonly known as the Inflation Reduction Act, extended the biodiesel and renewable diesel mixture credits through December 31, 2024.

(4) The IRC 6426 alternative fuel mixture and IRC 6426 alternative fuel credits (and IRS 6427 payments) expired on December 31, 2017. The Taxpayer Certainty and Disaster Tax Relief Act of 2019 (Pub. L. 116-94), enacted on December 20, 2019, retroactively extended the alternative fuel and alternative fuel mixture credits for sales and uses beginning January 1, 2018 through December 31, 2020. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Pub. L. 116-260), enacted December 27, 2020, extended the credits to December 31, 2021.

(5) The IRC 6426 alternative fuel mixture and IRC 6426 alternative fuel credits (and IRS 6427 payments) expired on December 31, 2021. Public Law 117-169, commonly known as the Inflation Reduction Act, retroactively reinstated and extended the alternative fuel and alternative fuel mixture credits through December 31, 2024.

(6) Before claiming a refund on Form 8849, Schedule 3, any biodiesel or renewable diesel mixture credit or sustainable aviation fuel credit must first be taken on Form 720, Quarterly Federal Excise Tax Return, Schedule C, as a credit against the taxable fuel liability for gasoline, diesel fuel, or kerosene (IRS Nos. 60, 104, 35, 69, 77, 62, and 14) reported on Form 720. The alternative fuel credit must be taken on Form 720 as a credit against the claimant’s IRC 4041 liabilities reported on Form 720 (IRS Nos. 112, 118, 120, 121, 122, 123, 124, and 79). The credit taken against the claimant’s tax liability must be determined without regard to the LUST tax liability. Any excess credit may be taken on Schedule C (Form 720), Form 8849 (Schedule 3), or Form 4136.

(7) The alcohol fuel mixture credit, (line 1) expired for claim periods after 12/31/2011. The Schedule 3, line 1, has been marked reserved.

(8) The biodiesel mixture credit is allowed for each gallon of biodiesel used to produce a biodiesel mixture that is at least 0.1 percent (by volume) diesel fuel. The person that produced and sold or used the mixture in their trade or business is the only person eligible to make this claim. The biodiesel used to produce the mixture must:

1. Meet ASTM D6751, and

2. Meet EPA's registration requirements for fuels and fuel additives under section 211 of the Clean Air Act.

(9) The renewable diesel mixture credit is allowed for each gallon of renewable diesel in the mixture if the claimant produced a mixture by mixing renewable diesel with liquid fuel (other than renewable diesel). The renewable diesel used to produce the renewable diesel mixture must:

1. Be derived from biomass;

2. Meet EPA's registration requirements for fuels and fuel additives;

3. Meet ASTM D975, D396, or other equivalent standard approved by the IRS; and

4. Be sold by the claimant to any person for use as a fuel or was used as a fuel by the claimant.

Note: Claimant must attach the Certificate for Biodiesel and, if applicable, the Statement of Biodiesel Reseller, both of which must be edited to indicate that the fuel to which the certificate and statement relate is renewable diesel and that the renewable diesel meets the requirements listed above.

Note: Renewable diesel is considered a taxable fuel. If the claimant did not report IRS No. 60 on Form 720, it does not mean that the tax has not been paid and further IRS Number (abstract) research may be needed to determine whether the excise tax was paid.

(10) The new sustainable aviation fuel credit is allowed for mixtures sold or used after December 31, 2022. The person that produced and sold or used a qualified mixture (a mixture of sustainable aviation fuel and kerosene) is the only person eligible to make this claim. The credit is based on the gallons of sustainable aviation fuel in the qualified mixture.

• The sustainable aviation fuel credit is $1.25 plus a supplementary amount equal to $.01 for each percentage point by which the lifecycle greenhouse gas emissions reduction percentage with respect to such fuel exceeds 50 percent. The supplementary amount shall not exceed $0.50.

• Sustainable aviation fuel means liquid fuel, the portion which is not kerosene, which meets the requirements of ASTM International Standard D7566, or the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1.

(11) The alternative fuel credit is allowed for each gallon or gallon equivalent of alternative fuel. The registered alternative fueler is the only person eligible to make the claim and must have:

1. Sold an alternative fuel at retail and delivered it into the fuel supply tank of a motor vehicle or motorboat; or

2. Delivered the alternative fuel in bulk for taxable use in a motor vehicle or motorboat and received the required statement of taxable use from the buyer; or

3. Used an alternative fuel (not sold at retail or in bulk) in a motor vehicle or motorboat; or

4. Sold the alternative fuel for use as a fuel in aviation.

(12) The alternative fuel mixture credit can only be taken on Schedule C to reduce the taxable fuel liability for gasoline, diesel fuel, and kerosene reported on Form 720. Claims that exceed the claimant's taxable fuel liability are no longer allowed.

(13) The biodiesel mixture credit and alternative fuel credit may not be claimed for biodiesel or alternative fuel produced outside the United States for use as a fuel outside the United States. The United States includes any possession of the United States.

(14) IRM 4.24.22.4.5.4.2, Form 8849, Schedule 3, Processing Claims for Certain Fuel Mixtures and the Alternative Fuel Credit, provides adjustment procedures.

(1) A person who has paid and reported a section 4081 fuel tax to the government uses Form 8849, Schedule 5 to claim a refund of that tax if another taxpayer has also paid and reported the same fuel tax to the government. The tax liability has been paid and reported twice for the same fuel.

(2) These claims may only be made on Form 8849, Schedule 5, IRC 4081(e) Claims. They are not allowable on Form 720, Quarterly Federal Excise Tax Return, or Form 4136, Credit for Federal Tax Paid on Fuels. See Reg. Section 48.4081-7 of the Manufacturers and Retailers Excise Tax Regulations.

(3) The person who reported on Form 720 and paid the second tax to the government is the only person eligible to make this claim. Types of fuel that are allowable on the claim are:

(4) Information that must be attached to the claim:

1. A copy of the First Taxpayer's Report,

2. A copy of the "Statement of the Subsequent Seller" (if the fuel was bought from someone other than the first taxpayer) that the claimant received with respect to the fuel covered on the claim, and

Note: The First Taxpayer’s Report and Statement of Subsequent Seller must contain all the information as shown in Model Certificates A and B in the Appendix of Pub. 510.

(5) There is no minimum amount for this claim.

(6) The claim must be filed within 3 years from the time the return for the second tax was filed or 2 years from the time the second tax was paid to the government, whichever is later.

(7) No interest is allowable.

(8) Research master file to verify a return was filed and tax paid.

(9) Send all Form 8849, Schedule 5, 4081(e) claims to CAT-A.

(1) Schedule 6 is used to report claims other than those reported on Schedules 1-5, including claims for overpayments of taxes reported on Form 720, Quarterly Federal Excise Tax Return, Form 2290, Heavy Highway Vehicle Use Tax Return, Form 730, Monthly Tax Return for Wagers, and Form 11-C, Occupational Tax and Registration Return for Wagering. The following information must be attached to each Schedule 6 claim:

1. A detailed description of the claim,

2. Any supporting information required by regulation, and

3. How the claim amount was figured

(2) Electronic filing is available for Form 8849, Schedule 6, Other Claims. These claims are not "ultimate vendor" claims and do not have to be processed for refund in twenty days. (Normal processing time of 45 days from received date must be used).

(3) See IRM 4.24.22.4.5.5.1 (6) and (7) for full disallowance and partial disallowance procedures for all Form 8849, Schedule 6, claims.

(4) Use the following category codes for all Schedule 6 claims:

• SC6P for paper-filed claims, and

• SC6E for electronically-filed claims

(5) Schedule 6 is not used to make adjustments to prior quarter liabilities reported on Form 720. The taxpayer is required to use Form 720-X, Amended Quarterly Federal Excise Tax Return. For example: adjustments required to an IRS No. (abstract).

(1) Schedule 8 is used by registered credit card issuers to make claims for sales of certain fuels for the exclusive use of a state or local government (taxable fuel), or for the exclusive use of a nonprofit educational organization (gasoline and aviation gasoline).

(2) The taxable fuel must have been purchased with a credit card issued to the state or local government or nonprofit educational organization by the credit card issuer making the claim. The credit card issuer must be registered with the IRS with a Form 637 Registration, activity letter “CC”.

(3) If the taxable fuel is purchased without the use of a credit card issued by the credit card issuer to state or local government or nonprofit educational organization, or if the credit card issuer is not registered, the credit card issuer cannot make the claim.

(4) The following claim requirements must be met:

1. Claim must be for taxable fuel sold during a period that is at least one week,

2. The amount of the claim must be at least $200.00. (Amounts from lines 1 through 5 of Schedule 8 may be combined.), and

3. The claim must be filed by the last day of the first quarter following the earliest quarter of the claimant's income tax year included in the claim.

(5) The Schedule 8 is an interest bearing claim and may be filed electronically. See IRM 4.24.22.4.5.3 paragraphs (3) through (10) for interest bearing ultimate vendor claim procedures and manual refund requirements.

(6) Use the following category codes for Schedule 8 claims:

• SC8P for paper-filed claims, and

• SC8E for electronically-filed claims

(1) Forward all Alcohol and Tobacco Tax and Trade Bureau (TTB) returns and correspondence to:

Alcohol and Tobacco Tax and Trade Bureau, TTB

Room 8002 Federal Office Bldg

550 Main Street

Cincinnati, OH 45202

(2) The toll-free number for TTB is: 1-877-882-3277.