The IRS today issued a release announcing that it will not impose a penalty on certain uses of “adulterated fuels” that do not comply with applicable Environmental Protection Agency (EPA) regulations, in response to shortages of ultra low sulfur diesel (ULSD) fuel caused by Hurricane Irma.
Today’s IRS release—IR-2017-157—notes that the EPA on September 13 issued a “no action assurance” letter when non-ultra low sulfur diesel is used in limited diesel-powered highway and non-road vehicles and equipment in Florida. According to that letter, the EPA will not pursue action for the use of certain diesel reserves of approximately 4 million gallons of dyed diesel fuel that has a sulfur content that is over 15 but no greater than 20 parts per million (ppm). The “no action assurance” letter imposes several conditions on the use of this fuel.
In response to requests from the EPA and the state government of Florida, the IRS has stated that it will waive penalties for the use of non-ULSD fuel that has a sulfur content of 20 ppm or less under these circumstances. The IRS will not impose the adulterated-fuel penalty on any uses that fully comply with the EPA’s “no action assurance.”
This relief is effective from September 13 through September 22, 2017, or until such dyed diesel reserves are exhausted, whichever is earlier. Because the reserves to which this relief applies consist of dyed diesel fuel, the penalty relief previously provided by the IRS and announced in IR-2017-149 is also available, provided that the operator or the person selling the fuel pays the tax of 24.4 cents per gallon for any such fuel used on the highway.
<p>© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.</p> <p>KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.</p>
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.