b'Member NewsRules & RegulationsAVOIDING IRS FET Liability for the Sale of Dyed Diesel Fuel to Private School Bus OperatorsWhile IRS regulations holds all parties along the distributioncharter services. The affidavit should be renewed annually. As chain liable for using dyed fuel for a taxable use, energy market- both a courtesy and insurance against possible misuse, marketers ers are not expected to actively police customer activity, lookingshould explain to operators that switching back and forth be-for evidence of misuse. Instead, it is what you know that couldtween clear and dyed fuel in the tank of a school bus could lead get you in trouble. Under Section 6715 of the IRS Code, liabilityto a violation if any visible evidence of dye remains when being attaches to any party in the distribution chain who knows orused for private, for hire charter service. IRS agents are known should have reason to know that the dyed fuel in question wasto test fuel in tanks of school busses parked at casinos and other used for a taxable use. It does not matter who owns the fuel atlarge non-school venues looking for visible evidence of dye. In the time of the violation or which party bears the risk of lossaddition, a statement on the product transfer document, accom-if price of the fuel increases. Liability attaches to all parties inpanying each sale that dyed fuel cannot be used in private, for the distribution chain, unless a valid defense can be raised. Thehire charter services would also make a strong defense against penalty for violation under Section 6715 is $10 per gallon plusliability for energy marketers. the 24.4 cpg federal excise tax. Suspension or revocation of theNow that state legislatures are increasingly turning to gambling ultimate vendors 637 certificate may also occur. as a source of new revenue, there are more opportunities for To avoid liability energy marketers must have a defense againstprivate school bus owners to switch between dyed and clear fuel the knows or has reason to know standard. The best way toas a way to expand their businesses. Marketers should actively establish a defense is to obtain an affidavit from the school busmake themselves aware of how the dyed diesel fuel they deliver operator stating clearly that the dyed fuel purchased will not beto charter operators will be used. Both the affidavit and the PTD used when school buses are engaged in private for-hire charterlanguage should be sufficient in most cases for marketers to service. The affidavit should also include a statement that theescape any liability for an operators misuse of dyed fuel.operator maintains a separate supply of clear fuel available for use when operating as a private engaging in private, for hire SWPMA News / Fall 202425'