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Tax Refund for Dyed Fuel: New Payment System for Diesel and Kerosene Distributors.

This legislation creates a new system for businesses to recover federal excise taxes paid on diesel fuel or kerosene. The refund applies specifically when the fuel is subsequently dyed for tax-exempt uses, such as farming or heating. This change simplifies the process for distributors to reclaim taxes previously paid on the fuel.
Key points
Introduces a direct payment mechanism for distributors who dye fuel, allowing them to recover the previously paid federal excise tax.
This applies only to diesel and kerosene designated as 'eligible indelibly dyed fuel' for tax-exempt purposes (e.g., off-road use).
The goal is to streamline the tax recovery process for fuel distributors.
The new rules will take effect 180 days after the law is enacted.
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Additional Information
A bill to amend the Internal Revenue Code of 1986 to allow for payments to certain individuals who dye fuel, and for other purposes.
Print number: S 1692
Sponsor: Sen. Baldwin, Tammy [D-WI]
Process start date: 2023-05-18