Fuel Blending and the Excise Tax

Keeping fuel blending companies updated with the latest excise tax news.

Taylor Cortright

Taylor Cortright

Managing Director & Co-Leader, Federal Excise Tax, KPMG US

+1 202-533-6188
Deborah Gordon

Deborah Gordon

Managing Director and Co-Leader, Fed Excise Tax, KPMG US

+1 202-533-5965

KPMG LLP (KPMG) professionals provide the latest insight on possible excise tax incentives that might be available for companies engaged in qualifying fuel blending activities.

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.

The alternative fuel mixture credit found in Internal Revenue Code section 6426(e) may be available if the company:

  • Owns LPG (such as butane) and gasoline;
  • Blends LPG and gasoline in the “bulk system;”
  • Sells the LPG/gasoline product for use as a fuel (not for further downstream processing); and
  • Is registered by the Internal Revenue Service as an alternative fuel mixture producer (“AM Registrant”) (or obtains such registration prior to submitting a refund claim).

Even if the excise taxes were not related to this product, companies satisfying these requirements that paid fuel excise taxes in 2014, 2015, or 2016 may qualify for an excise tax refund equal to 50 cents per gallon of LPG used, up to the amount of fuel excise taxes actually paid. Although currently unavailable for years after 2016, the credit may be claimed for prior open quarters through the filing of an amended federal excise tax return (and obtaining AM Registrant status if necessary).

Depending on a company’s facts, the potential excise tax refunds may be significant.  KPMG LLP (KPMG) offers the assistance of partners and professionals who have specialized knowledge in this area that can work with your company to:

  • Help identify, quantify, and document your company’s entitlement to the excise tax credit;
  • Work with your company to obtain AM Registration as necessary; and
  • Assist in preparing amended excise tax returns supporting the refund request.

This potential refund may be available for any company owning and blending LPG (including butane) with gasoline, including not only traditional refiners, but also commodity traders and entities owning portfolio companies engaged in the qualifying fuel activities.

Do you qualify for excise tax refunds ?
Companies engaged in fuel blending may be entitled for a tax refund.
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