94-25763. Gasoline and Diesel Fuel Excise Tax; Rules Relating to Gasohol; Tax on Compressed Natural Gas  

  • [Federal Register Volume 59, Number 201 (Wednesday, October 19, 1994)]
    [Unknown Section]
    [Page 0]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 94-25763]
    
    
    [[Page Unknown]]
    
    [Federal Register: October 19, 1994]
    
    
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    DEPARTMENT OF THE TREASURY
    
    Internal Revenue Service
    
    26 CFR Parts 40 and 48
    
    [PS-66-93]
    RIN 1545-AS10
    
     
    
    Gasoline and Diesel Fuel Excise Tax; Rules Relating to Gasohol; 
    Tax on Compressed Natural Gas
    
    AGENCY: Internal Revenue Service (IRS), Treasury.
    
    ACTION: Notice of proposed rulemaking and notice of public hearing.
    
    -----------------------------------------------------------------------
    
    SUMMARY: This document contains proposed regulations relating to 
    gasohol blending and the taxes on diesel fuel and compressed natural 
    gas. This document also proposes to remove obsolete excise tax 
    regulations. The proposed regulations reflect and implement certain 
    changes made by the Energy Policy Act of 1992 (the Energy Act) and the 
    Omnibus Budget Reconciliation Act of 1993 (the 1993 Act). The proposed 
    regulations relating to gasoline and diesel fuel affect certain 
    blenders, enterers, industrial users, refiners, terminal operators, and 
    throughputters. The proposed regulations relating to compressed natural 
    gas affect persons that sell or buy compressed natural gas for use as a 
    fuel in a motor vehicle or motorboat.
    
    DATES: Written comments must be submitted by December 19, 1994. 
    Outlines of comments to be presented at the public hearing scheduled 
    for January 11, 1995, must be received by December 21, 1994.
    
    ADDRESSES: Send submissions to: CC:DOM:CORP:T:R (PS-66-93), room 5228, 
    Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, 
    DC 20044. In the alternative, submissions may be hand delivered between 
    the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:T:R (PS-66-93), 
    Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., 
    Washington, DC. The public hearing will be held in the IRS Auditorium, 
    Seventh Floor, 7400 Corridor, Internal Revenue Building, 1111 
    Constitution Avenue NW., Washington, DC.
    
    FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
    Frank Boland, (202) 622-3130; concerning submissions and the hearing, 
    Carol Savage, at (202) 622-8452; (not toll-free numbers).
    
    SUPPLEMENTARY INFORMATION:
    
    Paperwork Reduction Act
    
        The collections of information contained in this notice of proposed 
    rulemaking have been submitted to the Office of Management and Budget 
    for review in accordance with the Paperwork Reduction Act (44 U.S.C. 
    3504(h)). Comments on the collections of information should be sent to 
    the Office of Management and Budget, Attn: Desk Officer for the 
    Department of the Treasury, Office of Information and Regulatory 
    Affairs, Washington, DC 20503, with copies to the Internal Revenue 
    Service, Attn: IRS Reports Clearance Officer, PC:FP, Washington, DC 
    20224.
        The collections of information in this proposed regulation are in 
    Secs. 48.4041-21 and 48.6427-10. This information is required by the 
    IRS to verify compliance with sections 4041 and 6427 and will be used 
    to determine whether an amount of tax, credit, or payment has been 
    computed correctly. The likely respondents are businesses and other 
    for-profit organizations, including small businesses and organizations.
        Estimated total annual reporting burden: 10 hours.
        Estimated average annual burden per respondent: .1 hour.
        Estimated number of respondents: 100
        Estimated annual frequency of responses: On occasion.
    
    Explanation of Provisions
    
    Background
    
        Effective January 1, 1994, the 1993 Act amends section 4081 to 
    impose the diesel fuel tax in the same manner as the gasoline tax. 
    Thus, tax is imposed on (1) the removal of gasoline and diesel fuel 
    (collectively taxable fuel) from any refinery, (2) the removal of 
    taxable fuel from any terminal, (3) the entry of taxable fuel into the 
    United States for consumption, use, or warehousing, and (4) the sale of 
    taxable fuel to an unregistered person unless there was a prior taxable 
    removal, entry, or sale of the taxable fuel. However, tax does not 
    apply to any entry or removal of taxable fuel transferred in bulk to a 
    refinery or terminal if the persons involved (including the terminal 
    operator) are registered by the IRS.
    
    Conforming Amendments to Gasoline Regulations
    
        On November 30, 1993, the IRS published in the Federal Register (58 
    FR 63069) temporary regulations under section 4081 relating to the 
    imposition of the diesel fuel excise tax for diesel fuel that is 
    removed at a terminal rack, removed from a refinery, entered into the 
    United States, or blended outside of the bulk/transfer terminal system. 
    Those rules are similar to the rules relating to the removal, entry, or 
    blending of gasoline under Secs. 48.4081-2 and 48.4081-3.
        These proposed regulations generally consolidate the rules relating 
    to gasoline and diesel fuel into a single set of rules applicable to 
    all taxable fuel.
    
    Compressed Natural Gas
    
        Effective October 1, 1993, section 4041(a)(3) (added to the 
    Internal Revenue Code by section 13241(e) of the 1993 Act) imposes a 
    tax on compressed natural gas (CNG) that is sold for use or used as a 
    fuel in a motor vehicle or motorboat.
        The proposed regulations provide rules relating to the imposition 
    of, and liability for, the tax on CNG. These rules are similar to the 
    regulations relating to taxes on special motor fuels imposed by section 
    4041.
    
    Gasohol; Tolerance Rule
    
        The gasoline tax rate is 18.4 cents per gallon (the regular rate). 
    However, a reduction from the regular rate is allowed for gasohol (a 
    gasoline/alcohol mixture). Before January 1, 1993, section 4081(c) 
    treated a mixture of gasoline and alcohol as gasohol only if at least 
    10 percent of the mixture was alcohol. The rate reduction under pre-
    1993 law was 5.4 cents per gallon for gasohol containing ethanol and 6 
    cents per gallon for gasohol containing alcohol other than ethanol. 
    This was equivalent to a subsidy of 54 cents or 60 cents per gallon of 
    alcohol used to produce gasohol.
        Section 48.4081-6(b)(2) provides a special rule for the application 
    of the ``at least 10 percent'' requirement by allowing a tolerance for 
    mixtures that contain less than 10 percent alcohol but at least 9.8 
    percent alcohol. Under the tolerance rule, a portion of the mixture 
    equal to the number of gallons of alcohol in the mixture multiplied by 
    10 is considered to be gasohol. Any excess liquid in the mixture is 
    taxed at the regular rate. Absent the tolerance rule, pre-1993 law 
    would have taxed the entire mixture at the regular rate.
        The tolerance rule accommodates operational problems associated 
    with the blending of gasohol. For example, blenders may fail to attain 
    the required 10-percent alcohol level because the device used to meter 
    the amount of gasoline or alcohol added to a tank truck is imprecise or 
    because the high-speed gasoline or alcohol pump used does not shut off 
    at the proper moment. Blenders cannot compensate for these errors by 
    aiming for an alcohol content in excess of 10 percent because 
    Environmental Protection Agency (EPA) rules do not authorize the sale 
    of gasohol containing more than 10 percent alcohol.
        Effective January 1, 1993, section 1920 of the Energy Act amended 
    section 4081(c) to allow a reduction from the regular rate for mixtures 
    containing at least 5.7 percent alcohol but less than 7.7 percent 
    alcohol (5.7 percent gasohol) and mixtures containing at least 7.7 
    percent alcohol but less than 10 percent alcohol (7.7 percent gasohol). 
    The 5.4- and 6-cents-per-gallon rate reductions were retained for 
    mixtures containing at least 10 percent alcohol (10 percent gasohol) 
    and were prorated for 5.7 percent and 7.7 percent gasohol to maintain 
    the subsidy level of 54 cents or 60 cents per gallon, respectively, for 
    ethanol or other alcohol that is mixed with gasoline.
        The proposed regulations continue the present tolerance rule for 
    mixtures that contain less than 10 percent alcohol but at least 9.8 
    percent alcohol. However, a similar rule is not extended to mixtures 
    that contain less than 7.7 or 5.7 percent alcohol because blenders can 
    compensate for any operational problems by aiming for an alcohol 
    content above 7.7 or 5.7 percent without violating EPA rules.
    
    Gasohol; Blender Credit or Payment
    
        If a gasohol blender produces gasohol from gasoline that was taxed 
    at the regular rate, section 6427(f) allows the gasohol blender to 
    obtain a partial credit or payment relating to that tax. The proposed 
    regulations provide the conditions under which a credit or payment 
    under section 6427(f) will be allowed.
    
    Gasohol; ETBE
    
        The regulations under section 40 provide that alcohol used to 
    produce ethyl tertiary butyl ether (ETBE) generally is treated as 
    alcohol for purposes of the alcohol fuels credit when the ETBE is mixed 
    with gasoline. The proposed regulations provide a similar rule with 
    respect to alcohol used to produce ETBE for purposes of the reduced tax 
    rates for gasohol.
        For example, a gasoline/ETBE mixture would qualify as 5.7 percent 
    gasohol if the mixture contains 12.7 percent ETBE and each gallon of 
    ETBE is made from .45 gallon of alcohol.
    
    Reliance on These Proposed Regulations
    
        These regulations are being issued in proposed form to provide 
    timely guidance to taxpayers and to allow interested parties 
    appropriate opportunity to provide comments before issuance of final 
    regulations. Although final regulations may include changes made, for 
    example, in response to comments, taxpayers may rely on the proposed 
    regulations until final regulations are issued. For example, alcohol 
    used to produce ETBE is treated as alcohol for purposes of the gasohol 
    tax rates.
    
    Special Analyses
    
        It has been determined that this notice of proposed rulemaking is 
    not a significant regulatory action as defined in EO 12866. Therefore, 
    a regulatory assessment is not required. It also has been determined 
    that section 553(b) of the Administrative Procedure Act (5 U.S.C. 
    chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do 
    not apply to these regulations, and, therefore, a Regulatory 
    Flexibility Analysis is not required. Pursuant to section 7805(f) of 
    the Internal Revenue Code, this notice of proposed rulemaking will be 
    submitted to the Chief Counsel for Advocacy of the Small Business 
    Administration for comment on its impact on small business.
    
    Comments and Public Hearing
    
        Before these proposed regulations are adopted as final regulations, 
    consideration will be given to any written comments that are submitted 
    timely (preferably a signed original and eight copies) to the IRS. All 
    comments will be available for public inspection and copying.
        A public hearing has been scheduled for Wednesday, January 11, 
    1995, at 1 p.m. in the Auditorium, Internal Revenue Building, 1111 
    Constitution Avenue NW, Washington, DC. Because of access restrictions, 
    visitors will not be admitted beyond the building lobby more than 15 
    minutes before the hearing starts.
        The rules of Sec. 601.601(a)(3) apply to the hearing.
        Persons that have submitted written comments by December 19, 1994 
    and want to present oral comments at the hearing must submit an outline 
    of the topics to be discussed and the time to be devoted to each topic 
    by December 21, 1994.
        A period of 10 minutes will be allotted to each person for making 
    comments.
        An agenda showing the scheduling of the speakers will be prepared 
    after the deadline for receiving outlines has passed. Copies of the 
    agenda will be available free of charge at the hearing.
    
    Drafting Information
    
        The principal author of these regulations is Frank Boland, Office 
    of Assistant Chief Counsel (Passthroughs and Special Industries). 
    However, other personnel from the IRS and Treasury Department 
    participated in their development.
    
    List of Subjects in 26 CFR Parts 40 and 48
    
        Excise taxes, Reporting and recordkeeping requirements.
    
    Proposed Amendments to the Regulations
    
        Accordingly, 26 CFR parts 40 and 48 are proposed to be amended as 
    follows:
    
    PART 40--EXCISE TAX PROCEDURAL REGULATIONS
    
        Paragraph 1. The authority citation for part 40 continues to read 
    in part as follows:
    
        Authority: 26 U.S.C. 7805 * * *
    
        Par. 2. Section 40.6302(c)-0 is amended by revising the entries for 
    Sec. 40.6302(c)-1(b)(1)(ii), (b)(5)(ii), (b)(6)(iii), (c)(2)(iv), and 
    (c)(3)(iii) to read as follows:
    
    
    Sec. 40.6302(c)-0  Table of contents.
    
    * * * * *
    
    
    Sec. 40.6302(c)-1  Use of Government depositaries.
    
    * * * * *
        (b) * * *
        (1) * * *
        (ii) Special rule for section 4081 tax deposits for September.
    * * * * *
        (5) * * *
        (ii) Special rule for section 4081 tax deposits for September.
    * * * * *
        (6) * * *
        (iii) Special rule for section 4081 tax deposits for September.
    * * * * *
        (c) * * *
        (2) * * *
        (iv) Modification for section 4081 tax deposits for September.
        (3) * * *
        (iii) Modification for section 4081 tax deposits for September.
    * * * * *
        Par. 3. Section 40.6302(c)-1 is amended as follows:
        1. Paragraph (a) is amended by removing the parenthetical 
    ``(relating to taxes imposed on gasoline by section 4081)'' from the 
    last sentence and adding the parenthetical ``(relating to section 4081 
    taxes)'' in its place.
        2. The heading for paragraph (b)(1)(ii) is revised.
        3. Paragraph (b)(1)(ii) is amended by removing the parenthetical 
    ``(relating to gasoline)''.
        4. The heading for paragraph (b)(5)(ii) is revised.
        5. Paragraph (b)(5)(ii) is amended by removing the parenthetical 
    ``(relating to gasoline)'' from the first sentence.
        6. Paragraph (b)(6)(ii) is amended by removing the parenthetical 
    ``(relating to deposits of gasoline tax for September)'' and adding 
    ``(relating to deposits of section 4081 tax for September)'' in its 
    place.
        7. The heading for paragraph (b)(6)(iii) is revised.
        8. Paragraph (b)(6)(iii)(A), first sentence, is amended by removing 
    the parenthetical ``(relating to gasoline)''.
        9. Paragraph (b)(6)(iii)(B), first sentence, is amended by removing 
    the parenthetical ``(relating to gasoline)''.
        10. The heading for paragraph (c)(2)(iv) is revised.
        11. Paragraph (c)(2)(iv)(A) is amended by removing the 
    parenthetical ``(relating to gasoline)''.
        12. The heading for paragraph (c)(3)(iii) is revised.
        13. Paragraph (c)(3)(iii)(A) is revised by removing the 
    parenthetical ``(relating to gasoline)''.
        14. The revised provisions read as follows:
    
    
    Sec. 40.6302(c)-1  Use of Government depositaries.
    
    * * * * *
        (b) * * *
        (1) * * *
        (ii) Special rule for section 4081 tax deposits for September. * * 
    *
    * * * * *
        (5) * * *
        (ii) Special rule for section 4081 tax deposits for September. * * 
    *
    * * * * *
        (6) * * *
        (iii) Special rule for section 4081 tax deposits for September. * * 
    *
    * * * * *
        (c) * * *
        (2) * * *
        (iv) Modification for section 4081 tax deposits for September. * * 
    *
        (3) * * *
        (iii) Modification for section 4081 tax deposits for September. * * 
    *
    * * * * *
        Par. 4. In Sec. 40.6302(c)-4, paragraph (a) is amended by removing 
    the parenthetical ``(relating to gasoline)''.
        Par. 5. In Sec. 40.9999-1, Example 3 is amended by removing the 
    language ``diesel fuel'' each place it appears (including the heading) 
    and adding ``aviation fuel'' in its place.
    
    PART 48--MANUFACTURERS AND RETAILERS EXCISE TAXES
    
        Par. 6. The authority citation for part 48 is amended by removing 
    the entries for Secs. 48.4041.21 and 48.4081-2; revising the entry for 
    Sec. 48.4081-4; and adding an entry in numerical order to read as 
    follows:
    
        Authority: 26 U.S.C. 7805 * * *
    
        Section 48.4081-4 also issued under 26 U.S.C. 4083(a)(2). * * *
        Section 48.6427-10 also issued under 26 U.S.C. 6427(f).
        Par. 7. Section 48.4041-21 is revised to read as follows:
    
    
    Sec. 48.4041-21  Compressed natural gas.
    
        (a) Delivery of compressed natural gas into the fuel supply tank of 
    a motor vehicle or motorboat--(1) Imposition of tax. Tax is imposed on 
    the delivery of compressed natural gas (CNG) into the fuel supply tank 
    of the propulsion engine of a motor vehicle or motorboat unless tax was 
    previously imposed on the CNG under paragraph (b) of this section.
        (2) Liability for tax. If the delivery of the CNG is in connection 
    with a sale, the seller of the CNG is liable for the tax imposed under 
    paragraph (a)(1) of this section. If the delivery of the CNG is not in 
    connection with a sale, the operator of the motor vehicle or motorboat, 
    as the case may be, is liable for the tax imposed under paragraph 
    (a)(1) of this section.
        (b) Bulk sales of CNG--(1) In general. Tax is imposed on the sale 
    of CNG that is not in connection with the delivery of the CNG into the 
    fuel supply tank of the propulsion engine of a motor vehicle or 
    motorboat if, by the time of the sale--
        (i) The buyer has given the seller a written statement stating that 
    the entire quantity of the CNG covered by the statement is for use as a 
    fuel in a motor vehicle or motorboat; and
        (ii) The seller has given the buyer a written acknowledgement of 
    receipt of the statement described in paragraph (b)(1)(i) of this 
    section.
        (2) Liability for tax. The seller of the CNG is liable for the tax 
    imposed under paragraph (b) of this section.
        (c) Exemptions--(1) In general. The taxes imposed under this 
    section do not apply to a delivery or sale of CNG for a use described 
    in Sec. 48.4082-4T(c)(1) through (5)(A) or (6) through (11). However, 
    if the person otherwise liable for tax under this section is the seller 
    of the CNG, the exemption under this section applies only if, by the 
    time of sale, the seller has an unexpired certificate (described in 
    this section) from the buyer and has no reason to believe any 
    information in the certificate is false.
        (2) Certificate; in general. The certificate to be provided by a 
    buyer of CNG is to consist of a statement that is signed under 
    penalties of perjury by a person with authority to bind the buyer, 
    should be in substantially the same form as the model certificate 
    provided in paragraph (c)(4) of this section, and should contain all 
    information necessary to complete the model certificate. A new 
    certificate must be given if any information in the current certificate 
    changes. The certificate may be included as part of any business 
    records normally used to document a sale. The certificate expires on 
    the earliest of the following dates:
        (i) The date one year after the effective date of the certificate 
    (which may be no earlier than the date it is signed).
        (ii) The date a new certificate is provided to the seller.
        (iii) The date the seller is notified by the Internal Revenue 
    Service or the buyer that the buyer's right to provide a certificate 
    has been withdrawn.
        (3) Withdrawal of right to provide certificate. The Internal 
    Revenue Service may withdraw the right of a buyer of CNG to provide a 
    certificate under this paragraph (c) if the buyer uses CNG to which a 
    certificate applies in a taxable use. The Internal Revenue Service may 
    notify any seller to whom the buyer has provided a certificate that the 
    buyer's right to provide a certificate has been withdrawn.
        (4) Model certificate.
    
    CERTIFICATE OF PERSON BUYING CNG FOR A NONTAXABLE USE
    
    (To support tax-free sales of CNG under section 4041 of the Internal 
    Revenue Code.)
    
    ----------------------------------------------------------------------
    ----------------------------------------------------------------------
    Name, address, and employer identification number of seller
        ________________ (``Buyer'') certifies the
        Name of buyer
    following under penalties of perjury:
        The CNG to which this certificate relates will be used in a 
    nontaxable use.
        This certificate applies to the following (complete as 
    applicable):
        If this is a single purchase certificate, check here ________ 
    and enter:
    1. Invoice or delivery ticket number ____________
    2. ________ (number of MCFs)
        If this is a certificate covering all purchases under a 
    specified account or order number, check here ________ and enter:
    1. Effective date------------------------------------------------------
    2. Expiration date-----------------------------------------------------
    (period not to exceed 1 year after the effective date)
    3. Buyer account or order number---------------------------------------
        Buyer will not claim a credit or refund under section 6427 of 
    the Internal Revenue Code for any CNG to which this certificate 
    relates.
        Buyer will provide a new certificate to the seller if any 
    information in this certificate changes.
        Buyer understands that if Buyer violates the terms of this 
    certificate, the Internal Revenue Service may withdraw Buyer's right 
    to provide a certificate.
        Buyer has not been notified by the Internal Revenue Service that 
    its right to provide a certificate has been withdrawn. In addition, 
    the Internal Revenue Service has not notified Buyer that the right 
    to provide a certificate has been withdrawn from a purchaser to 
    which Buyer sells CNG tax free.
        Buyer understands that the fraudulent use of this certificate 
    may subject Buyer and all parties making any fraudulent use of this 
    certificate to a fine or imprisonment, or both, together with the 
    costs of prosecution.
    
    ----------------------------------------------------------------------
    Printed or typed name of person signing
    
    ----------------------------------------------------------------------
    Title of person signing
    
    ----------------------------------------------------------------------
    Employer identification number
    
    ----------------------------------------------------------------------
    Address of Buyer
    
    ----------------------------------------------------------------------
    Signature and date signed
    
        (d) Rate of tax. The rate of the taxes imposed under this section 
    is the rate prescribed by section 4041(a)(3).
        (e) Effective date. This section is effective January 1, 1995.
        Par. 8. Section 48.4081-0 is amended as follows:
        1. The heading is revised.
        2. The entries for Secs. 48.4081-1 (c) and (k) and 48.4081-3(f) are 
    revised.
        3. The entries for the headings of Secs. 48.4081-1, 48.4081-2, 
    48.4081-3, 48.4081-5, 48.4081-7, and 48.4081-8 are revised.
        4. The revisions read as follows:
    
    
    Sec. 48.4081-0  Taxable fuel; table of contents.
    
    * * * * *
    
    Section 48.4081-1  Taxable Fuel; Definitions
    
    * * * * *
        (c) Blended taxable fuel.
    * * * * *
        (k) Taxable fuel registrant.
    * * * * *
    
    Section 48.4081-2  Taxable Fuel; Tax on Removal at a Terminal Rack
    
    * * * * *
    
    Section 48.4081-3  Taxable Fuel; Taxable Events Other Than Removal at 
    the Terminal Rack
    
    * * * * *
        (f) Tax on sales of taxable fuel within the bulk transfer/terminal 
    system.
    * * * * *
    
    Section 48.4081-5  Taxable Fuel; Notification Certificate of Taxable 
    Fuel Registrant
    
    * * * * *
    
    Section 48.4081-7  Taxable Fuel; Conditions for, and Reporting Relating 
    to, Refunds of Taxable Fuel Tax Under Section 4081(e)
    
    * * * * *
    
    Section 48.4081-8  Taxable Fuel; Measurement
    
    * * * * *
        Par. 9. Section 48.4081-1 is amended as follows:
        1. The heading for Sec. 48.4081-1 is revised.
        2. In paragraphs (a) and (b) the language ``gasoline'' is removed 
    each place it appears and ``taxable fuel'' is added in its place.
        3. Paragraph (c) is revised.
        4. In paragraphs (d) through (h), the heading and text of paragraph 
    (k), and paragraphs (m), (n), (p), (q), (r)(1), (s), (u), and (v) the 
    language ``gasoline'' is removed each place it appears and ``taxable 
    fuel'' is added in its place.
        5. Paragraph (w) is revised.
        6. The revised provisions read as follows:
    
    
    Sec. 48.4081-1  Taxable fuel tax; definitions.
    
    * * * * *
        (c) Blended taxable fuel--(1) In general. Except as provided in 
    paragraph (c)(2) of this section, blended taxable fuel is a mixture 
    of--
        (i) Taxable fuel with respect to which tax has been imposed under 
    section 4041(a)(1) or 4081(a); and
        (ii) Any substance with respect to which tax has not been imposed 
    under section 4041(a)(1) or 4081(a), other than a minor amount of a 
    product such as carburetor detergent or oxidation inhibitor.
        (2) Exception. Gasohol (as defined in Sec. 48.4081-6(b)(2)), is not 
    blended taxable fuel if--
        (i) The gasohol is a mixture of--
        (A) Gasoline with respect to which tax was imposed under section 
    4081(a) at the gasohol production tax rate described in Sec. 48.4081-
    6(e) (relating to gasohol) or with respect to which a valid claim is 
    made under section 6427(f); and
        (B) Alcohol (or alcohol and a minor amount of a product such as 
    carburetor detergent or oxidation inhibitor); and
        (ii) The mixture contains--
        (A) At least 9.8 percent alcohol by volume, without rounding, but 
    not more than 10 percent alcohol by volume, without rounding;
        (B) 7.7 percent alcohol by volume, without rounding; or
        (C) 5.7 percent alcohol by volume, without rounding.
    * * * * *
        (w) Effective date. This section is effective January 1, 1994.
        Par. 10. Section 48.4081-2 is amended as follows:
        1. The heading for Sec. 48.4081-2 is revised.
        2. The language ``and'' is added immediately following the 
    semicolon at the end of paragraph (c)(3)(ii).
        3. Paragraph (c)(3)(iii) is revised.
        4. Paragraph (c)(3)(iv) is removed.
        5. Paragraph (e) is revised.
        6. The revised and added provisions read as follows:
    
    
    Sec. 48.4081-2  Taxable fuel; tax on removal at a terminal rack.
    
    * * * * *
        (c) * * *
        (3) * * *
        (iii) Has no reason to believe that any information in the 
    certificate is false.
    * * * * *
        (e) Effective date. This section is effective January 1, 1994.
        Par. 11. Section 48.4081-3 is amended as follows:
        1. The heading for Sec. 48.4081-3 is revised.
        2. In paragraphs (a), (d)(1), (d)(2)(i), and (d)(2)(ii)(A) the 
    language ``gasoline'' is removed each place it appears and ``taxable 
    fuel'' is added in its place.
        3. Paragraph (d)(2)(iii) is revised.
        4. The introductory text of paragraph (e)(1) is revised.
        5. In paragraphs (e)(1)(i), (e)(1)(iii), and (e)(2)(i) the language 
    ``gasoline'' is removed each place it appears and ``taxable fuel'' is 
    added in its place.
        6. Paragraph (e)(2)(ii) is revised.
        7. In paragraph (e)(2)(iii) the language ``gasoline'' is removed 
    each place it appears and ``taxable fuel'' is added in its place.
        8. In paragraphs (f)(1) and (f)(2)(i) the language ``gasoline'' is 
    removed each place it appears and ``taxable fuel'' is added in its 
    place.
        9. Paragraphs (f)(2)(ii) is revised.
        10. In paragraphs (f)(2)(iii) and (g)(1) the language ``gasoline'' 
    is removed each place it appears and ``taxable fuel'' is added in its 
    place.
        11. Paragraph (h) is revised.
        12. The revised provisions read as follows:
    
    
    Sec. 48.4081-3  Taxable fuel; taxable events other than removal at the 
    terminal rack.
    
    * * * * *
        (d) * * *
        (2) * * *
        (iii) Conditions for avoidance of liability. A terminal operator is 
    not liable for tax under this paragraph (d)(2) if, at the time of the 
    bulk transfer, the terminal operator--
        (A) Is a taxable fuel registrant;
        (B) Has an unexpired notification certificate (described in 
    Sec. 48.4081-5) from the position holder; and
        (C) Has no reason to believe that any information in the 
    certificate is false.
    * * * * *
        (e) * * * (1) * * * Except as provided in Sec. 48.4081-4 (relating 
    to gasoline blendstocks), and Sec. 48.4082-1T (relating to diesel 
    fuel), a tax on taxable fuel is imposed if--
    * * * * *
        (2) * * *
        (ii) Conditions for avoidance of liability. An owner of taxable 
    fuel is not liable for tax under paragraph (e)(2)(i) of this section 
    if, at the time the taxable fuel is removed from the pipeline or 
    vessel, the owner of the taxable fuel--
        (A) Is a taxable fuel registrant;
        (B) Has an unexpired notification certificate (described in 
    Sec. 48.4081-5) from the operator of the terminal or refinery where the 
    taxable fuel is received; and
        (C) Has no reason to believe that any information in the 
    certificate is false.
    * * * * *
        (f) * * *
        (2) * * *
        (ii) Conditions for avoidance of liability. A seller is not liable 
    for tax under paragraph (f)(2)(i) of this section if, at the time of 
    the sale, the seller--
        (A) Is a taxable fuel registrant;
        (B) Has an unexpired notification certificate (described in 
    Sec. 48.4081-5) from the buyer; and
        (C) Has no reason to believe that any information in the 
    certificate is false.
    * * * * *
        (h) Effective date. This section is effective January 1, 1994.
        Par. 12. Section 48.4081-4 is amended as follows:
        1. In paragraphs (b)(1)(i), (b)(2)(i), and (c)(1), the language 
    ``gasoline registrant'' is removed each place it appears and ``taxable 
    fuel registrant'' is added in its place.
        2. The language ``and'' is added immediately following the 
    semicolon at the end of paragraph (c)(2).
        3. Paragraph (c)(3) is revised.
        4. Paragraph (c)(4) is removed.
        5. In paragraph (d), the language ``gasoline registrant'' is 
    removed and ``taxable fuel registrant'' is added in its place.
        6. Paragraph (f) is revised.
        7. The revised provisions read as follows:
    
    
    Sec. 48.4081-4  Gasoline tax; special rules for gasoline blendstocks.
    
    * * * * *
        (c) * * *
        (3) Has no reason to believe that any information in the 
    certificate is false.
    * * * * *
        (f) Effective date. This section is effective January 1, 1994.
        Par. 13. Section 48.4081-5 is amended as follows:
        1. The heading for Sec. 48.4081-5 is revised.
        2. In paragraph (a), the first sentence in paragraph (b)(1), and 
    paragraph (b)(2), the language ``gasoline'' is removed each place it 
    appears and ``taxable fuel'' is added in its place.
        3. Paragraph (c) is revised.
        4. The revised provisions read as follows:
    
    
    Sec. 48.4081-5  Taxable fuel; notification certificate of taxable fuel 
    registrant.
    
    * * * * *
        (c) Effective date. This section is effective January 1, 1994.
        Par. 14. Section 48.4081-6 is amended as follows:
        1. The heading for Sec. 48.4081-6 is revised.
        2. In the last sentence of paragraph (a), the parenthetical 
    ``(which has been taxed at a reduced rate)'' is removed and ``that has 
    been taxed at a reduced rate'' is added in its place.
        3. Paragraph (b)(1)(iii) is added.
        4. Paragraph (b)(2) is revised.
        5. In paragraphs (c)(1)(i) and (ii), the language ``gasoline 
    registrant'' is removed each place it appears and ``taxable fuel 
    registrant'' is added in its place.
        6. The language ``and'' is added immediately following the 
    semicolon at the end of paragraph (c)(1)(ii)(A).
        7. Paragraph (c)(1)(ii)(B) is revised.
        8. Paragraph (c)(1)(ii)(C) is removed.
        9. Paragraph (c)(2)(ii) is revised.
        10. In the first sentence of paragraph (d), the language ``, 
    provided that the alcohol mixture credit allowed by section 40 has not 
    been taken with respect to the alcohol in the gasohol'' is added before 
    the end thereof.
        10a. Paragraph (e) is revised.
        11. In paragraphs (f)(1)(i) and (iii), the language ``10 percent'' 
    is removed each place it appears and ``5.7 percent'' is added in its 
    place.
        12. In paragraph (f)(4), Example 1, second sentence, the language 
    ``gasohol'' is removed and ``10 percent gasohol'' is added in its 
    place.
        13. In paragraph (f)(4), Example 2, fourth sentence, the language 
    ``10 percent'' is removed both places it appears and ``5.7 percent'' is 
    added in its place.
        14. Paragraphs (g)(2)(i) and (iii) are revised.
        15. Paragraph (g)(2)(iv) is added.
        16. Paragraph (h) is revised.
        17. The added and revised provisions read as follows:
    
    
    Sec. 48.4081-6   Taxable fuel; gasohol.
    
    * * * * *
        (b) * * *
        (1) * * *
        (iii) Products derived from alcohol. Alcohol includes alcohol 
    described in paragraphs (b)(1)(i) and (ii) of this section that is 
    chemically transformed in producing another product so that the alcohol 
    is no longer present as a separate chemical in the other product, 
    provided that there is no significant loss in the energy content of the 
    alcohol. Thus, for example, alcohol described in paragraphs (b)(1)(i) 
    and (ii) of this section that is used to produce ethyl tertiary butyl 
    ether (ETBE) in a chemical reaction in which there is no significant 
    loss in the energy content of the alcohol is treated as alcohol when 
    the ETBE is mixed with gasoline.
        (2) Gasohol--(i) In general. Gasohol is a mixture of gasoline and 
    alcohol that is 10 percent gasohol, 7.7 percent gasohol, or 5.7 percent 
    gasohol immediately after the mixture is blended. The determination of 
    whether a particular mixture is 10 percent gasohol, 7.7 percent 
    gasohol, or 5.7 percent gasohol is made on a batch-by-batch basis. A 
    batch of gasohol is a discrete mixture of gasoline and alcohol. If a 
    batch is splash blended, the contents of the batch typically correspond 
    to a gasoline meter delivery ticket and an alcohol meter delivery 
    ticket, each of which shows the number of gallons of liquid delivered 
    into the mixture. In such case, the volume of each component in a batch 
    (without adjustment for temperature) ordinarily is determined by the 
    number of metered gallons shown on the delivery tickets for the 
    gasoline and alcohol delivered. However, if a blender adds metered 
    gallons of gasoline and alcohol to a tank already containing more than 
    a minor amount of liquid (other than gasohol), the determination of 
    whether a batch is gasohol and of its type will be made by taking into 
    account the amount of alcohol and non-alcohol fuel contained in the 
    liquid already in the tank. Ordinarily, any amount in excess of 0.5 
    percent of the capacity of the tank will not be considered minor.
        (ii) 10 percent gasohol--(A) In general. A batch of gasoline/
    alcohol mixture is 10 percent gasohol if it contains at least 10 
    percent alcohol by volume, without rounding.
        (B) Batches containing less than 10 percent but at least 9.8 
    percent alcohol. If a batch of mixture contains less than 10 percent 
    alcohol but at least 9.8 percent alcohol, without rounding, a portion 
    of the batch is considered to be 10 percent gasohol. That portion 
    equals the number of gallons of alcohol in the batch multiplied by 10. 
    Any remaining liquid in the mixture is excess liquid. If tax was 
    imposed on the excess liquid at the gasohol production rate (as defined 
    in paragraph (e)(1) of this section), the excess liquid in the batch is 
    considered to be gasoline with respect to which there is a failure to 
    blend into gasohol for purposes of paragraph (g) of this section. 
    Excess liquid is considered to be removed before the removal of the 
    gasohol portion. If tax was imposed on the excess liquid at the rate of 
    tax described in section 4081(a), a credit or refund under section 
    6427(f) is not allowed with respect to the excess liquid.
        (iii) 7.7 percent gasohol. A batch of gasoline/alcohol mixture is 
    7.7 percent gasohol if and only if it contains at least 7.7 percent, 
    but less than 9.8 percent, alcohol by volume, without rounding.
        (iv) 5.7 percent gasohol. A batch of gasoline/alcohol mixture is 
    5.7 percent gasohol if and only if it contains at least 5.7 percent, 
    but less than 7.7 percent, alcohol by volume, without rounding.
        (v) Examples. This paragraph (b)(2) may be illustrated by the 
    following examples. In these examples, a gasohol blender creates a 
    gasoline/alcohol mixture by pumping a specified amount of gasoline into 
    an empty tank. The blender then splash blends a specified amount of 
    alcohol into gasoline.
    
        Example 1. Mixtures containing exactly 10 percent alcohol. The 
    applicable delivery tickets show that the mixture is made with 7200 
    metered gallons of gasoline and 800 metered gallons of alcohol. 
    Accordingly, the mixture contains 10 percent alcohol (as determined 
    based on the delivery tickets provided to the blender) and qualifies 
    as 10 percent gasohol.
        Example 2. Mixtures containing less than 10 percent alcohol but 
    at least 9.8 percent alcohol. The applicable delivery tickets show 
    that the mixture is made with 7205 metered gallons of gasoline and 
    795 metered gallons of alcohol. Because the mixture contains less 
    than 10 percent alcohol, but more than 9.8 percent alcohol, (as 
    determined based on the delivery tickets provided to the blender), 
    7950 gallons of the mixture qualify as 10 percent gasohol. If tax 
    was imposed on the gasoline in the mixture at the gasohol production 
    rate, the remaining 50 gallons of the mixture are treated as 
    gasoline with respect to which there was a failure to blend into 
    gasohol for purposes of paragraph (g) of this section. If tax was 
    imposed on the gasoline in the mixture at the rate of tax described 
    in section 4081(a), a credit or refund under section 6427(f) is 
    allowed only with respect to 7155 gallons of gasoline.
        Example 3. The applicable delivery tickets show that the mixture 
    is made with 7550 metered gallons of gasoline and 450 metered 
    gallons of alcohol. Because the mixture contains only 5.625 percent 
    alcohol (as determined based on the delivery tickets provided to the 
    blender), the mixture does not qualify as gasohol. 
    * * * * * 
        (c) * * *
        (1) * * *
        (ii) * * *
        (B) Has no reason to believe that any information in the 
    certificate is false.
        (2) * * *
        (ii) Model certificate.
    
    CERTIFICATE OF REGISTERED GASOHOL BLENDER 
    (To support sales of gasoline at the gasohol production tax rate 
    under section 4081(c) of the Internal Revenue Code)
    
    ----------------------------------------------------------------------
    Name, address, and employer identification number of seller
        ________________ (Buyer) certifies the
        Name of Buyer
    following under penalties of perjury:
        Buyer is registered as a gasohol blender with registration 
    number ________________. Buyer's registration has not been suspended 
    or revoked by the Internal Revenue Service. The gasoline bought 
    under this certificate will be used by Buyer to produce gasohol (as 
    defined in Sec. 48.4081-6(b) of the Manufacturers and Retailers 
    Excise Tax Regulations) within 24 hours after buying the gasoline.
        Type of gasohol Buyer will produce (check one only):
        ________ 10% gasohol
        ________ 7.7% gasohol
        ________ 5.7% gasohol
        If the gasohol the Buyer will produce will contain ethanol, 
    check here: ________.
        This certificate applies to the following (complete as 
    applicable):
        If this is a single purchase certificate, check here and enter:
    1. Account number------------------------------------------------------
    2. Number of gallons---------------------------------------------------
        If this is a certificate covering all purchases under a 
    specified account or order number, check here __________ and enter:
    1. Effective date------------------------------------------------------
    2. Expiration date-----------------------------------------------------
    (period not to exceed 1 year after the effective date)
    3. Buyer account or order number ____________--------------------------
        Buyer will not claim a credit or refund under section 6427(f) of 
    the Internal Revenue Code for any gasoline covered by this 
    certificate.
        Buyer agrees to provide seller with a new certificate if any 
    information on this certificate changes.
        Buyer understands that Buyer's registration may be revoked if 
    the gasoline covered by this certificate is resold or is used other 
    than in Buyer's production of the type of gasohol identified above.
        Buyer will not take the alcohol mixture credit under section 
    40(b) with respect to the alcohol in the gasohol to which this 
    certificate relates.
        Buyer understands that the fraudulent use of this certificate 
    may subject Buyer and all parties making any fraudulent use of this 
    certificate to a fine or imprisonment, or both, together with the 
    costs of prosecution.
    
    ----------------------------------------------------------------------
    Printed or typed name of person signing
    
    ----------------------------------------------------------------------
    Title of person signing
    
    ----------------------------------------------------------------------
    Employer identification number
    
    ----------------------------------------------------------------------
    Address of Buyer
    
    ----------------------------------------------------------------------
    Signature and date signed
    * * * * *
        (e) Tax rates--(1) Gasohol production tax rate. The gasohol 
    production tax rate is the applicable rate of tax determined under 
    section 4081(c)(2)(A).
        (2) Gasohol tax rate. The gasohol tax rate is the applicable 
    alcohol mixture rate determined under section 4081(c)(4)(A).
    * * * * *
        (g) * * *
        (2) Failure to blend--(i) Imposition of tax. Tax is imposed on the 
    entry, removal, or sale of gasoline (including excess liquid described 
    in paragraph (b)(2)(ii)(B) of this section) with respect to which tax 
    was imposed at a gasohol production tax rate if--
        (A) The gasoline was not blended into gasohol; or
        (B) The gasoline was blended into gasohol but the gasohol 
    production tax rate applicable to the type of gasohol produced is 
    greater than the rate of tax originally imposed on the gasoline.
    * * * * *
        (iii) Rate of tax. The rate of tax imposed on gasoline described in 
    paragraph (g)(2)(i)(A) of this section is the difference between the 
    rate of tax applicable to gasoline not described in this section and 
    the rate of tax previously imposed on the gasoline. The rate of tax 
    imposed on gasoline described in paragraph (g)(2)(i)(B) of this section 
    is the difference between the gasohol production tax rate applicable to 
    the type of gasohol produced and the rate of tax previously imposed on 
    the gasoline.
        (iv) Example. The following example illustrates the rule of this 
    paragraph (g)(2):
    
        Example. (i) A registered gasohol blender bought gasoline in 
    connection with a removal described in paragraph (c)(1)(ii) of this 
    section. Based on the blender's certification (described in 
    paragraph (c)(2) of this section) that the blender would produce 10 
    percent gasohol with the gasoline, tax at the gasohol production tax 
    rate applicable to 10 percent gasohol was imposed on the removal.
        (ii) The blender then produced a mixture by splash blending in a 
    tank holding approximately 8000 gallons of mixture. The applicable 
    delivery tickets show that the mixture was blended by first pumping 
    7220 metered gallons of gasoline into the empty tank, and then 
    pumping 780 metered gallons of alcohol into the tank. Because the 
    mixture contains 9.75 percent alcohol (as determined based on the 
    delivery tickets provided to the blender) the entire mixture 
    qualifies as 7.7 percent gasohol, rather than 10 percent gasohol.
        (iii) Because the 7220 gallons of gasoline were taxed at the 
    gasohol production tax rate applicable to 10 percent gasohol but the 
    gasoline was blended into 7.7 percent gasohol, a failure to blend 
    has occurred with respect to the gasoline. As the person that bought 
    the gasoline in connection with the taxable removal, the blender is 
    liable for the tax imposed under paragraph (g)(2)(i) of this 
    section. The amount of tax imposed is the difference between--
        (A) 7220 gallons times the gasohol production tax rate 
    applicable to 7.7 percent gasohol; and
        (B) 7220 gallons times the gasohol production tax rate 
    applicable to 10 percent gasohol.
        (iv) Because the gasohol does not contain exactly 7.7 percent 
    alcohol, the benefit of the gasohol production tax rate with respect 
    to the alcohol is less than the amount of the alcohol mixture credit 
    under section 40(b) (determined before the application of section 
    40(c). Accordingly, the blender may be entitled to claim an alcohol 
    mixture credit for the alcohol used in the gasohol. Under section 
    40(c), however, the amount of the alcohol mixture credit must be 
    reduced to take into account the benefit provided with respect to 
    the alcohol by the gasohol production tax rate.
    
        (h) Effective date. This section is effective January 1, 1993.
        Par. 15. Section 48.4081-7 is amended as follows:
        1. The heading for Sec. 48.4081-7 is revised.
        2. In paragraphs (a), (b), (c), and (d), the language ``gasoline'' 
    is removed each place it appears and ``taxable fuel'' is added in its 
    place.
        3. In paragraph (f), Example 1, paragraph (i), first and fourth 
    sentences, and paragraph (ii), first and third sentences, the language 
    ``1993'' is removed each place it appears and ``1994'' is added in its 
    place.
        4. Paragraph (g) is revised.
        5. The revised provisions read as follows:
    
    
    Sec. 48.4081-7  Taxable fuel; conditions for, and reporting relating 
    to, refunds of taxable fuel tax under section 4081(e).
    
    * * * * *
        (g) Effective date. This section is effective in the case of 
    taxable fuel with respect to which the first tax is imposed after 
    December 31, 1993.
        Par. 16. Section 48.4081-8 is revised to read as follows:
    
    
    Sec. 48.4081-8  Taxable fuel; measurement.
    
        (a) In general. For purposes of the tax imposed by section 4081, 
    gallons of taxable fuel may be measured on the basis of--
        (1) Actual volumetric gallons;
        (2) Gallons adjusted to 60 degrees Fahrenheit; or
        (3) Any other temperature adjustment method approved by the 
    Commissioner.
        (b) Effective date. This section is effective January 1, 1994.
    
    
    Sec. 48.4221  [Removed]
    
        Par. 17. Section 48.4221 is removed.
        Par. 18. Section 48.4221-1 is amended as follows:
        1. Paragraph (a) is revised.
        2. Paragraph (b)(2)(iv) is amended by adding ``and'' at the end 
    thereof.
        3. Paragraph (b)(2)(v) is revised.
        4. Paragraphs (b)(2)(vi) through (xii) are removed.
        5. Paragraph (b)(3) is removed and paragraphs (b)(4) and (5) are 
    redesignated as paragraphs (b)(3) and (4), respectively.
        6. The revised provisions read as follows:
    
    
    Sec. 48.4221-1  Tax free sales; general rule.
    
        (a) Application of regulations under section 4221--(1) In general. 
    The regulations under section 4221 provide rules under which the 
    manufacturer, producer, or importer of an article subject to tax under 
    chapter 32 (or the retailer of an article subject to tax under 
    subchapter A or C of chapter 31) may sell the article tax free under 
    section 4221.
        (2) Limitations. The following restrictions must be taken into 
    account in applying the regulations under section 4221:
        (i) The exemptions under section 4221(a)(4) and (5) do not apply to 
    the tax imposed by section 4064 (gas guzzler tax).
        (ii) The exemptions under section 4221 do not apply to the tax 
    imposed by section 4081 (gasoline and diesel fuel tax).
        (iii) The exemptions under section 4221 do not apply to the tax 
    imposed by section 4091 (aviation fuel tax). For rules relating to tax-
    free sales of aviation fuel, see section 4092 and the regulations 
    thereunder.
        (iv) The exemptions under section 4221 do not apply to the tax 
    imposed by section 4121 (coal tax).
        (v) The exemptions under sections 4221(a)(3), (4), and (5) do not 
    apply to the tax imposed by section 4131 (vaccine tax). In addition, 
    the exemption under section 4221(a)(2) applies to the vaccine tax only 
    to the extent provided in Sec. 48.4221-3(e) (relating to tax-free sales 
    of vaccine for export).
        (vi) The exemptions under section 4221(a) apply only in those cases 
    where the exportation or use referred to is to occur before any other 
    use.
        (b) * * *
        (2) * * *
        (v) Section 4221(e)(3) relating to the sale of tires used on 
    intercity, local, or school buses (see Sec. 48.4221-8).
    * * * * *
        Par. 19. Section 48.4221-2 is amended by:
        1. Removing from the first sentence of paragraph (a)(1) the 
    language ``(other than a tire or inner tube taxable under section 4071, 
    which are given special treatment under sections 4221(e)(2) and (4), 
    and Secs. 48.4221-7 and 48.4221-8)'' and adding ``(other than a tire 
    taxable under section 4071, which is given special treatment under 
    section 4221(e)(2) and Sec. 48.4221-7)'' in its place.
        2. Removing paragraph (a)(2) and redesignating paragraph (a)(3) as 
    paragraph (a)(2).
        3. Revising paragraph (b).
        4. The revised provision reads as follows:
    
    
    Sec. 48.4221-2  Tax-free sale of articles to be used for, or resold 
    for, further manufacture.
    
    * * * * *
        (b) Circumstances under which an article is considered to have been 
    sold for use in further manufacture--(1) An article shall be treated as 
    sold for use in further manufacture if the article is sold for use by 
    the buyer as material in the manufacture or production of, or as a 
    component part of, another article taxable under chapter 32 of the 
    Internal Revenue Code.
        (2) An article is used as material in the manufacture or production 
    of, or as a component of, another article if it is incorporated in, or 
    is a part or accessory of, the other article when the other article is 
    sold by the manufacturer. In addition, an article is considered to be 
    used as material in the manufacture of another article if it is 
    consumed in whole or in part in testing such other article. However, an 
    article that is consumed in the manufacturing process other than in 
    testing, so that it is not a physical part of the manufactured article, 
    is not considered to have been used as material in the manufacture of, 
    or as a component part of, another article.
    * * * * *
    
    
    Sec. 48.4221-5  [Amended]
    
        Par. 20. Section 48.4221-5 is amended as follows:
        1. Paragraph (c)(1) is amended by:
        a. Removing the first sentence.
        b. Removing the language ``If a State or local government is not 
    registered, the'' and adding ``The'' in its place in the new first 
    sentence.
        2. In paragraph (d), the first sentence, is amended by:
        a. Removing the language ``(whether on the basis of a registration 
    number or an exemption certificate)''.
        b. Removing the language ``(such as gasoline that is'' and adding 
    ``(such as tires that are'' in its place.
    
    
    Secs. 48.4221-8, 48.4221-9, 48.4221-10  [Removed]
    
        Par. 21. Sections 48.4221-8, 48.4221-9, and 48.4221-10 are removed.
    
    
    Sec. 48.4221-11  [Redesignated Sec. 48.4221-8]
    
        Par. 22. Section 48.4221-11 is redesignated Sec. 48.4221-8.
    
    
    Sec. 48.4221-12  [Removed]
    
        Par. 23. Section 48.4221-12 is removed.
        Par. 24. In Sec. 48.4222(a)-1, paragraphs (a) and (b) are revised 
    to read as follows:
    
    
    Sec. 48.4222(a)-1  Registration.
    
        (a) General rule. Except as provided in Sec. 48.4222(b)-1, tax- 
    free sales under section 4221 may be made only if the manufacturer, 
    first purchaser, and second purchaser, as the case may be, have been 
    registered by the Internal Revenue Service.
        (b) Application instructions. Application for registration under 
    section 4222 must be made in accordance with instructions for Form 637 
    (or such other form as the Commissioner may designate).
    * * * * *
        Par. 25. In Sec. 48.4222(b)-1, paragraph (a) is revised to read as 
    follows:
    
    
    Sec. 48.4222(b)-1  Exceptions to the requirement for registration.
    
        (a) State and local governments. The Internal Revenue Service will 
    not register state or local governments under section 4222. To 
    establish the right to sell articles tax free to a state or local 
    government, the manufacturer must obtain from a state or local 
    government the information described in Sec. 48.4221-5(c).
    * * * * *
    
    
    Sec. 48.6416(b)(2)-2  [Amended]
    
        Par. 26. In Sec. 48.6416(b)(2)-2, paragraphs (g) through (k) are 
    removed.
        Sec. 48.6416(g)-1  [Removed]
    
        Par. 27. Section 48.6416(g)-1 is removed.
    
    
    Secs. 6424-0 through 48.6424-6  [Removed]
    
        Par. 28. Section 48.6424-0 through 48.6424-6 are removed.
        Par. 29. Section 48.6427-10 is added to read as follows:
    
    
    Sec. 48.6427-10  Credit or payment with respect to gasoline used to 
    produce gasohol.
    
        (a) Conditions to allowance of credit or payment. A claim for 
    credit or payment with respect to gasoline is allowed under section 
    6427(f) only if--
        (1) The gasoline to which the claim relates was taxed at the 
    aggregate rate of tax imposed by section 4081 without regard to section 
    4081(c);
        (2) The claimant used the gasoline to produce gasohol (as defined 
    in Sec. 48.4081-6(b)(2)) that was sold or used in the claimant's trade 
    or business; and
        (3) The claimant has filed a timely claim for a credit or payment 
    that contains the information required under paragraph (c) of this 
    section.
        (b) Form of claim. Each claim for a payment under section 6427(f) 
    must be made on Form 8849 (or such other form as the Commissioner may 
    designate) in accordance with the instructions for that form. Each 
    claim for a credit under section 6427(f) must be made on Form 4136 (or 
    such other form as the Commissioner may designate) in accordance with 
    the instructions for that form.
        (c) Content of claim. Each claim for credit or payment under 
    section 6427(f) must contain the following information with respect to 
    each batch of gasohol that contains the gasoline covered by the claim:
        (1) The claimant's registration number, if the claimant is a 
    registered gasohol blender (as defined in Sec. 48.4081-6(b)(4)).
        (2) The name, address, and employer identification number of the 
    person that sold the claimant the gasoline.
        (3) The date and location of the sale of the gasoline.
        (4) The volume of the gasoline.
        (5) The name, address, and employer identification number of the 
    person that sold the claimant the alcohol.
        (6) The date and location of the sale of the alcohol.
        (7) The volume and type of the alcohol.
        (8) In the case of a claim for a payment, a copy of the invoice or 
    other record of sale relating to each purchase of alcohol.
        (9) The written or typed name of the individual signing the claim 
    and the telephone number of that individual.
        (10) The amount of credit or payment claimed.
        (d) Time for filing claim. For rules relating to the time for 
    filing a claim under section 6427(f), see section 6427(i). A claim 
    under section 6427(f) is not considered to be filed unless it contains 
    all the information required by paragraph (c) of this section and 
    received at the place required by the form.
        (e) Effective date. This section is effective with respect to 
    claims relating to gasohol produced after December 31, 1994.
    Margaret Milner Richardson,
    Commissioner of Internal Revenue.
    [FR Doc. 94-25763 Filed 10-17-94; 8:45 am]
    BILLING CODE 4830-01-P
    
    
    

Document Information

Published:
10/19/1994
Department:
Internal Revenue Service
Entry Type:
Uncategorized Document
Action:
Notice of proposed rulemaking and notice of public hearing.
Document Number:
94-25763
Dates:
Written comments must be submitted by December 19, 1994. Outlines of comments to be presented at the public hearing scheduled for January 11, 1995, must be received by December 21, 1994.
Pages:
0-0 (1 pages)
Docket Numbers:
Federal Register: October 19, 1994, PS-66-93
RINs:
1545-AS10
CFR: (25)
26 CFR 48.4081-5)
26 CFR 48.4222(a)-1
26 CFR 48.4222(b)-1
26 CFR 48.6416(b)(2)-2
26 CFR 40.6302(c)-0
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