Excise tax news

Alcohol and Tobacco

• CBP procedures for implementing alcoholic beverage import measures: The Craft Beverage Modernization and Tax Reform Act of 2017 (contained in Pub. L. No. 115-97) amended the Internal Revenue Code with respect to the tax treatment of certain alcoholic beverages. The relevant provisions of the CBMA are effective for importations made during calendar years 2018 and 2019. (published April 2, 2019)
• Claiming tax credits, reduced tax rates (imported spirits, beer, wine): U.S. Customs and Border Protection (CBP) announced the issuance of new procedures and guidance that revises previously issued CBP guidance concerning certain provisions under the part of the new U.S. tax law known as the “Craft Beverage Modernization and Tax Reform Act of 2017” (CBMA). (published October 16, 2018)
• Excise tax, transfers of beer between breweries not of same ownership: The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) this week issued a “procedure” as guidance reflecting changes to the excise tax rules for transfers of beer between breweries “not of the same ownership.” (published July 20, 2018)
• Refunds of excise tax on imported beer, wine, distilled spirits: U.S. Customs and Border Protection (CBP) issued a release on implementing federal excise tax relief for imports of beer, wine, and distilled spirits, and that outlines what refund procedures will apply with respect to such imports. (published June 28, 2018)
• TTB guidance: Calculating effective tax rates for distilled spirits products: The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) issued an “industry circular” concerning how to calculate the effective tax rates for distilled spirits products containing eligible wine and eligible flavors, and how to obtain approval of standard effective tax rates for imported distilled spirits products. (published June 28, 2018)
• Treasury offers expanded relief for producers claiming wine production credit : The TTB industry circular (May 2018) modifies and supersedes a prior industry circular (March 2018), and restates the alternate procedure, but specifically extends the alternative procedure’s provisions to wine that is stored at a bonded winery because the prior industry circular version only referred to wine stored at a bonded wine cellar.  (published May 31, 2018)
• Temporary relief for producers claiming the wine production credit: The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) announced that for a limited time, “producing wineries” can determine and pay the federal excise tax, on removal from bond, on such wine of their production that is stored “untaxpaid” at a bonded wine cellar as if the wine had been removed from the producing winery’s bonded premises. (published March 5, 2018)
• Indian tribe’s challenge, federal excise tax on tobacco products: The U.S. Court of Appeals for the Ninth Circuit today concluded that a federal district court lacked jurisdiction to hear a Native American (Indian) tribe’s claims concerning the imposition of the federal excise tax on tobacco products manufactured by an Indian-owned tobacco company. (published December 13, 2016)

Aviation

• Excise tax exemption for certain payments to aircraft management companies: The House Ways and Means Committee today approved, by voice vote, an amendment in the nature of a substitute to H.R. 3608—legislation to exempt certain amounts paid by aircraft owners to aircraft management services companies from the excise taxes imposed on transportation of persons and property by air. (Published July 13, 2016)
• House approves “clean” FAA authorization bill; only aviation-related tax provisions: The U.S. House of Representatives last night passed by voice vote a resolution concurring to Senate amendments to H.R. 636, the legislative vehicle for reauthorizing Federal Aviation Administration (FAA) programs, with House amendments. This resolution reflects a bipartisan, bicameral agreement on the FAA bill that was reached on July 6. (published July 12, 2016)
• House passes aviation-related tax extension bill: The House on March 14 passed H.R. 4721—a bill to extend the authorization of Federal Aviation Administration (FAA) programs through July 15, 2016, and to extend through March 31, 2017, certain taxes and tax rates that are dedicated to the airport and airway trust fund. (published March 15, 2016)
• Aviation-related tax extension bill introduced: House Ways and Means Committee Chairman Kevin Brady (R-TX) and Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) today introduced H.R. 4721—a bill to extend the authorization of Federal Aviation Administration (FAA) programs through July 15, 2016. The bill also would extend through March 31, 2017, certain taxes and tax rates that are dedicated to the airport and airway trust fund. (published March 10, 2016)

Automotive

• Notice 2016-81: Defining “chassis” and “body” for excise tax purposes: The IRS today released an advance version of Notice 2016-81 as interim guidance relating to the excise tax imposed under section 4051 on the first retail sale of heavy trucks, trailers, and tractors. (published December 19, 2016)

Energy

• Notice 2019-10: Comments requested, fuel excise tax regulations related to power take-off: The IRS released an advance version of Notice 2019-10 that requests comments on possible changes to the rules governing the excise tax treatment of fuel used in a motor vehicle to operate "auxiliary equipment." (published March 12, 2019)
• Federal Circuit: Alcohol fuel mixture credit reduces gasoline excise tax:  The U.S. Court of Appeals for the Federal Circuit affirmed a decision of the U.S. Court of Federal Claims and held that a section 6426 alcohol fuel mixture credit must be treated first as a reduction of the taxpayer's section 4081 excise tax liability, with any remaining mixture credit amount treated as a section 6427 tax-free payment. (published November 1, 2018) Read a similar article published in TaxNotes here. (note: must have TaxNotes subscription in order to view article)
• IRS clarifies rules for September oil spill tax calculations: This article published in TaxNotes discusses the IRS rules for oil spill calculations for September (must have a TaxNotes subscription to view this article)
• IRS waives dyed diesel fuel penalty, Hurricane Florence-related shortages: The  announced that because of shortages of undyed diesel fuel caused by Hurricane Florence, it will waive a penalty when dyed diesel fuel is sold for use or is used on the highway in North Carolina. (published September 18, 2018)
• IRS guidance for September 2018 deposits of oil spill liability tax: The IRS  posted information on its website concerning how to calculate deposits of the section 4611 oil spill liability tax for the second semi-monthly period in September 2018 under the modified safe harbor deposit rule (as provided by Notice 2018-21). (published September 14, 2018)
• Diesel particulate filters: Taxation and credits: In a byline article for Tax Adviser, KPMG’s Deborah Gordon and Taylor Cortright discuss the federal excise tax treatment of diesel particulate filters (DPFs) and potential fuel tax credits that may be claimed for fuel used to operate DPFs. (published June 1, 2018)
• Reminder: "Oil spill" excise tax now extended through 2018 : A provision of the Bipartisan Budget Act of 2018 (enacted February 9, 2018) extends the "oil spill" excise tax that is imposed on crude oil and imported petroleum products under section 4611. The tax had expired at the end of 2017. (published February 14, 2018)
• Bipartisan Budget Act enacted; includes tax-related measures, tax extenders: The president signed into law a short-term government spending and budget bill—the Bipartisan Budget Act of 2018 (H.R. 1892). The legislation includes certain tax-related measures and extends retroactively through 2017, certain other tax measures that had expired at the end of 2016. (published February 9, 2018)
• Tax extenders, tax measures in the Senate budget bill: The Senate is expected to vote today to consider a Senate substitute amendment— the Bipartisan Budget Act of 2018—to H.R. 1892. (published February 8, 2018)
• Potential Excise Tax Refunds for Fuel Blenders: Companies engaged in producing mixtures of liquefied petroleum gas (LPG), including butane, and gasoline for sale as a fuel may be entitled to refunds for federal fuel excise taxes paid in 2014, 2015, and 2016.  Certain fuel blenders may be entitled to potentially significant excise tax refunds, depending on the volume of LPG used. (published May 12, 2017)
• Claiming renewable fuel credits for 2015: With the retroactive reinstatement of certain renewable fuel credits for 2015 and issuance of Notice 2016-5, taxpayers may now claim a one-time excise tax payment for alternative fuel sold for use or used in a motor vehicle or motorboat or used in aviation during 2015. Examples include propane or liquefied hydrogen used in forklifts, and compressed natural gas (CNG) or liquified natural gas (LNG) sold for use in delivery trucks or buses. Taxpayers may also claim a one-time excise tax payment for production of qualifying biodiesel and renewable diesel mixtures in 2015. (published February 29, 2016)
• Notice 2016-5: One-time claim for 2015 biodiesel, alternative fuel excise tax incentives: The IRS today released an advance version of Notice 2016-5 providing rules for claimants to make a one-time claim for credits and payments for biodiesel (including renewable diesel) mixtures and alternative fuels sold or used during calendar year 2015.  These incentives were retroactively extended by the tax legislation enacted on December 18, 2015.   Notice 2016-5 [PDF 29 KB] also provides guidance for claiming the alternative fuel mixture excise tax credit for 2015.  Provisions in the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act, enacted December 18, 2015) extend for two years—from January 1, 2015, through December 31, 2016—excise tax credits, income tax credits, and excise tax payments with respect to biodiesel and alternative fuel incentives. The PATH Act also includes a provision directing that guidance be issued to provide for a one-time claim for biodiesel mixtures and alternative fuel incentives and further provides that taxpayers be allowed a 180-day period to file these claims. Today’s notice sets forth procedures for making a one-time claim for the 2015 biodiesel mixture and alternative fuel incentives. This one-time claim can be filed as early as January 15, 2016.  All one-time claims must be filed on or before August 8, 2016. The notice does not affect 2015 claims for the nonrefundable income taxes credits for second generation biofuel producers, biodiesel mixtures, biodiesel (unmixed), or small agri-biodiesel producers or 2015 claims for the refundable income tax credit for biodiesel mixtures or alternative fuel. (published January 14, 2016)

Other excise tax news

• Excise taxes under section 4972, nondeductible contributions to plan: The U.S. Tax Court today issued an opinion concerning a defined benefit plan and the taxpayer’s failure to report and pay excise taxes under section 4972 for nondeductible contributions to the plan. The Tax Court found that the taxpayer neglected to apply the correct method to reduce the maximum benefits under section 415(b)(2)(C) for a retirement age before age 62 under its plan, when the plan did not provide for forfeiture of the participant’s benefits at death. Because of this error, portions of the taxpayer’s contributions to the plan during tax years 2002 through 2006 were nondeductible, resulting in liability for section 4972 excise taxes. (published November 17, 2016)
• Tax committee leaders identify technical correction to research credit: A letter to the Secretary of the Treasury and the IRS Commissioner, from the chairmen and ranking members of the Senate Finance Committee and the House Ways and Means Committee, identify a technical correction for the research credit provision, enacted in late December 2015. In their letter (dated January 27, 2016), the tax committee leaders wrote of their concern that Treasury and the IRS carry out the congressional intent with respect to the research tax credit provision enacted as part of the "Protecting Americans from Tax Hikes Act of 2015" (PATH Act). The subject provision permanently extended and modified the research credit. However, as noted in the letter, the provision could be read as “…having reinstated the alternative incremental research credit of section 41(c)(4)” which was terminated for tax years beginning after 2008. By making the present-law research credit permanent, Congress did not intend to reinstate the previously terminated alternative incremental research credit. We intend to introduce technical corrections legislation to strike section 41(c)(4) and the last sentence of section 41(c)(5), effective as if included in the PATH Act. Until such technical correction is enacted, we strongly encourage you to be mindful of the fact that there was no Congressional intent to reinstate the alternative incremental research credit. (published February 10, 2016)
• FY 2017 budget: Green Book—Treasury’s  explanation of tax proposals:  The U.S. Treasury Department this afternoon released the “Green Book”—a 283-page explanation of the tax proposals in the administration’s FY 2017 budget. The title of the Green Book [PDF 1.85 MB] is “General Explanation of the Administration’s Fiscal Year 2017 Revenue Proposals.” KPMG will shortly provide a discussion of initial impressions of the tax proposals in the FY 2017 budget, to be followed by a more detailed discussion of the tax provisions in the budget. (published February 9, 2016)