By: Richard Ruvelson

Many tax-exempt organizations are not aware of the fact that they may be entitled to claim credits for excise taxes paid for certain on-road and off-road vehicle use. For federal purposes, gasoline and aviation gasoline purchases may qualify for the credit. Ultimate purchasers of gasoline for uses including the following qualify:

  1. Off-highway business use;
  2. School bus use;
  3. Exclusive use by a nonprofit educational organization, and
  4. Exclusive use by an aircraft museum.

For aviation gasoline, ultimate purchasers of gasoline for the uses listed above and additional uses including:

  1. Use by helicopter and fixed wing ambulance services, and
  2. Exclusive use by qualified blood collector organizations.

Purchases of undyed diesel fuel by ultimate users for uses listed above may, also, qualify for credits.

The credit may be claimed by completing Form 4136, Credit for Federal Tax Paid on fuels and claiming the credit on form 990-T.

The State of California provides a refund of motor vehicle fuel tax, if the fuel is used for certain “off-highway” purposes. For fuel purchases on or after July 1, 2012 the tax will be refunded at a rate of $.36 per gallon. The State Board of Equalization may adjust the rate of the motor vehicle fuel excise tax annually. While tax-exempt organizations are eligible for the refund, the refund is far more limited than the federal credit with respect to the fuel covered. While gasoline is covered, diesel fuel is not. Also, note that fuel used to propel an aircraft is not eligible for the refund, while fuel used to power a vessel in the ocean beyond a three mile limit qualifies, provided there is a business purpose for the usage. Refunds of California motor vehicle fuel taxes are obtained through the California State Controller’s Office at http://www.sco.ca.gov/ardtax_gas_tax.html.

The following links may be helpful with respect to federal credits:

  1. Form 4136 Instructions, Instructions for form 4136, Credit for Federal Tax Paid on Fuels, http://www.irs.gov/pub/irs-pdf/i4136.pdf
  2. Form 4136, Credit for Federal Tax Paid on Fuels, http://www.irs.gov/pub/irs-pdf/f4136.pdf.
  3. IRS Publication 510, Excise Taxes (Including fuel Tax Refunds), http://www.irs.gov/pub/irs-pdf/p510.pdf.
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Founded in 1953, Green Hasson Janks is a Los Angeles-based accounting firm that specializes in nonprofit, food and beverage, entertainment and media and health and wellness companies. Recipient of the Los Angeles Chamber of Commerce 2018 Employee Champion For Life Work Harmony Award and named a…Learn More