b' Marketer InformationRules & RegulationsIRS DYED FUEL ENFORCEMENT INSPECTIONS Your Rights and Responsibilities WVerify dyed fuel dispensers contain the required notice.Washington - D.C.I am often asked what criteria the IRS uses when they stop Verify that the strength or composition of dyed fuel has not by retail gasoline stations to check for compliance with federal tax regulations.been altered.IRS field agents are deployed nationwide, Verify fuel dispensed from undyed diesel and undyed kero-every day for this purpose, primarily enforcing diesel fuel and kerosene point ofsene pumps do not show visible evidence of dye. sale requirements under Internal Revenue Determine the concentration of sulfur in samples obtained Mark S. Morgan, EsqCode 6702. It is never pleasant to havefrom diesel fuel pumps.Energy Marketers an IRS field agent poking around your Verify registered IRS Form 637 UP Activity Letter meets facility. However, compliance enforce-of America (EMA) ment benefits all retailers by levelling thethe IRS blocked pump criteria for the sale of tax-free clear Regulatory Counsel competitive marketplace. On the otherkerosene from a retail dispenser.hand, unannounced enforcement inspec-Determine if gasoline has been adulterated. tions can feel intrusive. Under federal lawEducate taxpayers concerning fuel tax laws.(IRC4083(d)), IRS field agents are given the authority to make a warrantless entryInspecting the Facilityonto the commercial premises of wholesal-ers, distributors, and retailers of taxableNext, the field agent will tour the retail facility and request infor-fuel. IRS field agents arrive unannounced,mation needed to understand the operation of the business includ-and are authorized to examine businessing; the hours of operation, location of all pumps and tanks, the records, inspect equipment and sampletypes of fuel stored and/or sold at this location, identity of the fuel fuel. This isnt to say retailers dont havesupplier(s), types of records kept for sales and deliveries, sales of any rights during an onsite enforcementdyed products to end users, source of the fuel in the propulsion inspection. An IRS field agent must presenttanks of the retailers trucks and IRS 637 registration information. his/her credentials before the inspectionThis information must be provided by the retailer upon request, begins and inform retailers of their rightsthere are no exceptions.in writing. Retailer rights have their limit.Fuel SamplingRetailers do not have the right to copy a field agents credentials, although it is of- After inspecting the retail facility, the field agent will obtain a ten attempted but never successful. Dontnozzle sample from each tank holding diesel fuel and kerosene if get off on the wrong foot. Once the fieldwarranted. Dyed fuel samples will be forwarded to a testing labo-agent arrives, the path of least resistance isratory if any anomalies are identified during the field inspection. to cooperate fully.Testing will identify if there is visible evidence of dye in clear IRS field agents follow a tightly scriptedfuel or if dyed fuel lacks the required concentration of red dye. process when conducting a retail enforce- Samples obtained for sulfur testing will likely be taken if informa-ment inspection. The process is set downtion in retailer records indicates the fuel may exceed the allow-in an IRS practice manual that all fieldable sulfur level. Gasoline sample and testing for adulterants are inspectors carry. While some discretion isless common and are taken only during special IRS enforcement allowed, field agents pretty much go by theprojects or under orders by IRS field office management. book. Here is what to expect when an IRSInspecting Dispensers field agent visits your retail site: LabelsField agents will inspect dispensers for required IRSInspecting Retailer Records labels. Dyed diesel fuel pumps must display a label reading:Retailer inspections, including truck stops,DYED DIESEL FUEL, NONTAXABLE USE ONLY, PEN-are conducted to look primarily for motorALTY FOR TAXABLE USE. Likewise, dyed kerosene pumps fuel excise tax evasion. The inspectingmust display a label reading: DYED KEROSENE, NONTAX-field agent will: ABLE USE ONLY, PENALTY FOR TAXABLE USE. These 44 www.wpma.com / Winter 2020'