WASHINGTON (AP) - The Internal Revenue Service acted Friday to expand the nationwide supply of diesel fuel by letting more vehicles use fuel intended for farm equipment and government vehicles.
The action allows commercial trucks and other vehicles to use special dyed diesel without paying a penalty excise tax. The dyed diesel fuel is used by farm, government and some off-road equipment, ordinarily not subject to federal excise taxes.
"Today's action is a relatively simple and straightforward step that will immediately increase the available supply of diesel fuel nationwide, which is especially needed in Gulf Coast relief efforts," said Treasury Secretary John Snow.
Treasury Department officials said the possibility of reducing the federal tax on gasoline is not under active consideration in the administration. They said it would require legislation to reduce the tax.
Gasoline in some parts of the country has risen above $3 a gallon, triggering thousands of consumer complaints of price gouging.
Treasury Department officials said it was possible that some members of Congress might push for a cut in the federal gasoline tax to help ease the pain of higher prices, but they would not say which lawmakers might be considering the idea.
State officials started to consider whether to suspend gas taxes in their states. Georgia Gov. Sonny Perdue said he will sign an executive order Friday to suspend state motor fuel taxes through the end of September to "relieve some of the financial burden" on consumers in the wake of Hurricane Katrina.
The order will remove the 7.5-cents-a-gallon tax and a 4 percent sales tax on gas, the governor said, and was set to begin at midnight.
Leaders in several other states, including Massachusetts, Connecticut and Pennsylvania, have either proposed or said they are considering gas tax suspensions in their states.
Federal officials are starting to think about whether they need legislation keep the economy moving as it recovers from the hurricane and surging gas prices.
"We also need to be looking at the long-term economic impact not just to the states affected, but to the economy of the entire region. And I suspect that means some kind of stimulus package out there to be sure that we see the economy move forward as it needs to rather than it might in response to this disaster," said House Majority Whip Roy Blunt, R-Mo.
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WASHINGTON — The Internal Revenue Service, in response to shortages of clear diesel fuel caused by Hurricane Katrina, will not impose a tax penalty when dyed diesel fuel is sold for use or used on the highway.
This relief applies beginning August 25, 2005, in Florida, August 30, 2005, in Alabama, Louisiana, and Mississippi, and August 31, 2005, in the rest of the United States, and will remain in effect through September 15, 2005.
This penalty relief is available to any person that sells or uses dyed fuel for highway use. In the case of the operator of the vehicle in which the dyed fuel is used, the relief is available only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon. The IRS will not impose penalties for failure to make semimonthly deposits of this tax. IRS Publication 510, Excise Taxes for 2005, has information on the proper method for reporting and paying the tax.
Ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes and to local governments for buses.
Finally, the Internal Revenue Service will not impose the recently enacted tax penalty on a failure to meet the requirements of EPA highway diesel fuel sulfur content regulations if EPA has waived those requirements.
The EPA says this:
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EPA Grants Emergency Fuel Waiver for Katrina-Blasted States
30 August 2005
The EPA is granting an emergency waiver of clean fuel standards in Alabama, Florida, Louisiana and Mississippi because the impact of Hurricane Katrina “will prevent the distribution of an adequate supply of fuel to consumers that is compliant with the Clean Air Act.”
The EPA is temporarily allowing refiners, importers, distributors, carriers and retail outlets (regulated parties) to supply gasoline meeting a Reid Vapor Pressure (RVP) standard of 9.0 psi in areas of the affected states where a lower RVP is required.
Reid Vapor Pressure is one of the standards applied to gasoline quality, and is an indicator of the propensity of the fuel to evaporate, thereby emitting Volatile Organic Compounds (VOCs) that contribute to ozone formation. RVP is measured in pounds per square inch (psi), and the lower the psi, the fewer evaporative emissions.
Federal regulations require use of lower RVP gasoline in hot summer months to reduce VOCs emissions. Delivering gasoline with the correct RVP is a task of the refinery.
Under normal circumstances at this time of year, the metropolitan and high-ozone areas of Louisiana and Florida are required to use gasoline with an RVP of 7.8. Alabama high-ozone areas (including Birmingham) are required to use gasoline with an RVP of 7.0. All other areas in those states—and the entire state of Mississippi—are to use gasoline with an RVP of 9.0.
Further, because of the expected shortage of motor vehicle diesel fuel meeting the 500 parts per million (ppm) sulfur standard, EPA will temporarily allow regulated parties to supply motor vehicle diesel fuel to affected states having a sulfur content greater than 500 ppm.
The waiver is effective immediately and will continue through the remainder of the high-ozone period, through Sept. 15, 2005. However, retail outlets or wholesale purchaser-consumers that receive motor vehicle diesel fuel having a sulfur content greater than 500 ppm, under the terms of this waiver may continue selling or dispensing this fuel after Sept. 15, 2005, until supplies are depleted.
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