b'Member NewsAVOIDING IRS FET Liability for the Sale of Dyed Diesel Fuel to Private School Bus OperatorsWashington D.C.- Ever since Congressbelieved that energy marketers could no longer passed the Jobs Creation Act of 2004 (H.R. 4520)sell dyed fuel to school bus operators who also a cloud of uncertainty has hung over the motorengage in for-hire charter services. However, this fuel excise tax (FET) consequences of sellingis not the case. dyed fuel (diesel fuel or kerosene) to privateEnergy marketers may sell dyed diesel fuel or school bus operators under contract with a statekerosene to private school bus operators who or local government. The Jobs Act prohibited thealso engage in private, for-hire charter services. use of dyed fuel in intercity buses. An intercityHowever, the operator should have a supply of Mark S. Morgan, Esqbus is defined as being available to the generalclear, tax included diesel fuel or kerosene on hand EMA Regulatory public and either runs scheduled or non-scheduledas well when a school bus is privately chartered. Counsel routes in buses that seat more than 20 passengers.Typically, private for-hire charter service is as-Instead, a qualifying intercity bus using clear, taxsociated with gambling trips to casinos, concerts included diesel fuel is now provided with a 17or other non-school leisure activities. A reduced cpg credit with a taxable rate of 7.3 cpg, plus thefederal tax rate of 17 cpg on clear diesel fuel or nonrefundable $.001 for the Leaking Undergroundclear kerosene applies for such use if the bus has Storage Tank Trust Fund (LUST). more than 20 seats and is available for hire to the This change creates a problem for marketers general public (Note: the 1/10th of a cent Leaking who sell dyed fuel for use in a privately ownedUnderground Storage Tank (LUST) tax is not re-school bus under contract with a state or localfundable.) A claim for 17-cents per gallon refund government that also qualifies as an intercity busmay be made by the registered ultimate vendor or when used for private, for hire charter service.the ultimate purchaser on IRS Form 8849 if clear Due to this mix of private and public use, manyfuel is used for a private, for-hire charter use. 24 www.wpma.com / Fall 2024'