Diesel Fuel and Kerosene Excise Tax; Dye Injection, 21332-21335 [05-8236]
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Federal Register / Vol. 70, No. 79 / Tuesday, April 26, 2005 / Rules and Regulations
electronic service, in which case service
upon that recipient or of that document
18 CFR Part 385
only shall be made by:
Administrative practice and
(i) United States mail, first class or
procedure, Electric utilities, Penalties,
better; or
Pipelines, Reporting and recordkeeping
(ii) Delivery in a manner that, and to
requirements.
a place where, the person on whom
18 CFR Part 390
service is required may reasonably be
Administrative practice and
expected to obtain actual and timely
procedure, Electronic filing, Reporting
receipt.
and recordkeeping requirements.
(3) Service of a document by
By the Commission.
electronic means shall be made by the
Magalie R. Salas,
transmission of a link to that document
Secretary.
in the Commission’s eLibrary system or
by alternate means reasonably
I In consideration of the foregoing, the
calculated to make the document
Commission grants rehearing and
available to required recipients.
clarification in part, denies the request
for a stay, and amends Parts 385 and 390, Alternate means may include but are
not limited to, attachment of an
Chapter I, Title 18, Code of Federal
Regulations, as follows.
electronic copy of the document to an
e-mail or transmission of a link to an
PART 385—RULES OF PRACTICE AND Internet site containing the document. It
PROCEDURE
is the sender’s responsibility to take
reasonable steps to ensure that the
I 1. The authority citation for Part 385
means employed for service will be
continues to read as follows:
within the technological capabilities of
Authority: 5 U.S.C. 551–557; 15 U.S.C.
the recipients.
717–717z, 3301–3432; 16 U.S.C. 791a–825r,
2601–2645; 28 U.S.C. 2461; 31 U.S.C. 3701,
*
*
*
*
*
List of Subjects
9701; 42 U.S.C. 7101–7352; 49 U.S.C. 60502;
49 App. U.S.C. 1–85 (1988).
2. Amend § 385.2010 by removing the
word ‘‘written’’ from paragraph (c)(2)
and revising paragraph (f) to read as
follows:
I
§ 385.2010
Service (Rule 2010).
*
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(f) Methods of service. (1) Except as
provided in paragraph (g) of this
section, service of any document in
proceedings commenced prior to March
21, 2005, must be made by:
(i) Electronic means where the sender
and recipient agree to such means;
(ii) United States mail, first class or
better; or
(iii) Delivery in a manner that, and to
a place where, the person on whom
service is required may reasonably be
expected to obtain actual and timely
receipt.
(2) Except as provided in paragraph
(g) of this section, service of any
document in proceedings commenced
on or after March 21, 2005, must be
made by electronic means unless the
sender and recipient agree otherwise or
the recipient’s e-mail address is
unavailable from the official service list,
except in the case of a recipient who has
secured a waiver under the provisions
of § 390.3 of this chapter, or is exempt
under the provisions of § 390.4 of this
chapter, or in the case of a protected or
confidential document the security of
which might be jeopardized by
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PART 390—ELECTRONIC
REGISTRATION
3. The authority citation for Part 390
continues to read as follows:
I
Authority: 5 U.S.C. 551–557; 15 U.S.C.
717–717z, 3301–3432; 16 U.S.C. 791a–825r,
2601–2645; 28 U.S.C. 2461; 31 U.S.C. 9701;
42 U.S.C. 7101–7352; 49 U.S.C. 60502; 49
App. U.S.C. 1–85 (1988).
4. Amend § 390.3
I A. By revising paragraph (a); and
I B. By removing the phrase ‘‘using the
paper form prescribed under’’ and
adding in its place, the phrase, ‘‘pursuant
to’’.
The revision reads as follows:
I
§ 390.3
Waiver applications.
(a) A person may satisfy the
requirement of Sec. 390.1 by submitting
a written statement showing good cause
why the person is unable to register
electronically, and including the name
and address of the person serving as a
contact. The statement must be mailed
to the Secretary, Federal Energy
Regulatory Commission, 888 First
Street, NE., Washington, DC 20426, or
hand delivered to Room 1A at the same
address.
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[FR Doc. 05–8247 Filed 4–25–05; 8:45 am]
BILLING CODE 6717–01–P
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 48 and 602
[TD 9199]
RIN 1545–BE44
Diesel Fuel and Kerosene Excise Tax;
Dye Injection
Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.
AGENCY:
SUMMARY: This document contains
regulations relating to the diesel fuel
and kerosene excise tax. These
regulations reflect changes made by the
American Jobs Creation Act of 2004
regarding mechanical dye injection
systems for diesel fuel and kerosene.
These regulations affect certain enterers,
refiners, terminal operators, and
throughputters. The text of the
temporary regulation also serves as the
text of the proposed regulations set forth
in the notice of proposed rulemaking on
this subject elsewhere in this issue of
the Federal Register.
DATES: Effective Date: These regulations
are effective October 24, 2005.
Applicability Dates: For dates of
applicability, see §§ 48.4082–1T(e) and
48.4101–1T(h)(3)(iv).
FOR FURTHER INFORMATION CONTACT:
William Blodgett at (202) 622–3090 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
These temporary regulations are being
issued without prior notice and public
procedure pursuant to the
Administrative Procedure Act (5 U.S.C.
553). For this reason, the collection of
information contained in these
regulations has been reviewed and,
pending receipt and evaluation of
public comments, approved by the
Office of Management and Budget under
control number 1545–1418. Responses
to this collection of information are
required to obtain a tax benefit.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid OMB control number.
For further information concerning
this collection of information, and
where to submit comments on the
collection of information and the
accuracy of the estimated burden, and
suggestions for reducing this burden,
please refer to the preamble to the crossreferencing notice of proposed
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rulemaking published in the Proposed
Rules section of this issue of the Federal
Register.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
Background
Section 4081 of the Internal Revenue
Code (Code) imposes a tax on certain
removals, entries, and sales of diesel
fuel and kerosene. However, section
4082(a) provides that the tax is not
imposed if the diesel fuel or kerosene
(1) is destined for a nontaxable use (as
defined in section 4082(b)), (2) is
indelibly dyed in accordance with
regulations that the Secretary shall
prescribe, and (3) meets such marking
requirements (if any) as may be
prescribed by the Secretary in
regulations.
Section 4082(a)(2) was amended by
the American Jobs Creation Act of 2004
(the Act) to provide that the diesel fuel
and kerosene must be indelibly dyed
‘‘by mechanical injection.’’ The Act also
requires the Secretary to issue
regulations regarding mechanical dye
injection systems and to include in the
regulations standards for making such
systems tamper resistant. The
amendments to section 4082(a)(2) are
effective on the 180th day after the date
on which the Secretary issues such
regulations.
The Act also adds new section 6715A,
which imposes a penalty on any person
that tampers with a mechanical dye
injection system and any operator of a
mechanical injection system that fails to
maintain the security standards for such
system in accordance with the
regulations.
Explanation of Provisions
Under these temporary regulations,
diesel fuel or kerosene that is removed
from a refinery, terminal, or blending
facility is exempt from tax under section
4082(a) only if the required type and
amount of dye is added to the fuel by
means of a mechanical injection system
that is approved by the IRS. Manual (or
splash) dyeing is not allowed, even in
the case of a malfunction of the
mechanical injection system.
Application for approval of
mechanical injection systems will be
made in the form and manner
prescribed by the IRS. It is anticipated
that the application process will be
similar to the process now in place for
applications for registrations under
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section 4101. It is also anticipated that
the IRS will act on such applications
within a reasonable time.
Under these temporary regulations,
the IRS will approve a mechanical
injection system only if it contains
adequate calibrated measurement
devices, shut-off devices, and security
equipment to secure these devices and
other access points.
Generally, the security equipment
must consist of either a ‘‘seal’’ system or
a ‘‘lock box’’ system. The ‘‘seal’’ system
requires that a seal be attached to each
measuring device, each shut-off device,
and any other access point to the
mechanical injection system. The seals
must secure the devices from tampering
and, if necessary, may be accompanied
by locks to ensure the necessary
security. The alternative to the ‘‘seal’’
system is the ‘‘lock box’’ system, which
allows the operator to use one secured
container, or box, to control access to
each measuring device, each shut-off
device, and any other access point to the
mechanical injection system. Such
container may be transparent for ease of
satisfying the inspection requirements.
If the ‘‘lock box’’ system is used, the
container must be secured by a seal that
satisfies all of the ‘‘seal’’ requirements.
Each seal, whether it secures a ‘‘lock
box’’ or attaches to an access point,
must be separately identifiable by a
numbering or coding system maintained
by the terminal operator. In all cases,
the type of allowable seal may be
prescribed by the IRS.
These temporary regulations also set
out ongoing duties of the operator of an
approved mechanical injection system
to maintain the system’s security
standards and to keep certain records.
However, no particular form for the
records is prescribed.
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a
regulatory flexibility assessment is not
required. It also has been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations. For the
applicability of the Regulatory
Flexibility Act (5 U.S.C. chapter 6), refer
to the Special Analyses section of the
preamble to the cross-reference notice of
proposed rulemaking published in the
Proposed Rules section in this issue of
the Federal Register. Pursuant to
section 7805(f) of the Code, these
temporary regulations will be submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for
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comment on their impact on small
business.
Drafting Information
The principal author of these
regulations is William Blodgett, Office
of Associate Chief Counsel
(Passthroughs and Special Industries),
IRS. However, other personnel from the
IRS and Treasury Department
participated in their development.
List of Subjects
26 CFR Part 48
Excise taxes, Reporting and
recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping
requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 48 and 602
are amended as follows:
I
PART 48—MANUFACTURERS AND
RETAILERS EXCISE TAXES
Paragraph 1. The authority citation for
part 48 is amended by adding an entry
in numerical order to read, in part, as
follows:
I
Authority: 26 U.S.C. 7805 * * *
Section 48.4082–1T also issued under 26
U.S.C. 4082(a). * * *
I Par. 2. Section 48.4082–1 is amended
by revising paragraphs (d) and (e) to read
as follows:
§ 48.4082–1 Diesel fuel and kerosene;
exemption for dyed fuel.
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*
*
*
*
(d) [Reserved]. For further guidance,
see § 48.4082–1T(d).
(e) Effective date—(1) Except as
provided in paragraph (e)(2) of this
section, this section is applicable March
14, 1996.
(2) [Reserved] For further guidance,
see § 48.4082–1T(e)(2).
I Par. 3. Section 48.4082–1T is added to
read as follows:
§ 48.4082–1T Diesel fuel and kerosene;
exemption for dyed fuel (temporary).
(a) through (c) [Reserved]. For further
guidance, see § 48.4082–1(a) through (c).
(d) Time and method for adding
dye—(1) In general. Except as provided
by paragraph (d)(6) of this section,
diesel fuel or kerosene satisfies the
dyeing requirements of this paragraph
(d) only if the dye required by
§ 48.4082–1(b) is combined with the
diesel fuel or kerosene by means of a
mechanical injection system that is
approved by the Commissioner for use
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at the facility where the dyeing occurs.
Application for approval must be made
in the form and manner required by the
Commissioner. Rules similar to the rules
of § 48.4101–1(g) apply to the
Commissioner’s action on the
applications.
(2) Mechanical injection system;
requirements. The Commissioner will
approve a mechanical injection system
only if—
(i) The system has features that
automatically inject an amount of dye
that satisfies the concentration
requirements of § 48.4082–1(b) into
diesel fuel or kerosene as the diesel fuel
or kerosene is delivered from the bulk
transfer/terminal system into the
transport compartment of a truck,
trailer, railroad car, or other means of
nonbulk transfer;
(ii) The system has calibrated devices
that accurately measure and record the
amount of dye and the amount of diesel
fuel and kerosene that is dispensed for
each removal;
(iii) The system has automatic shut-off
devices that prevent the removal of
more than 100 gallons of undyed diesel
fuel or kerosene in the case of a system
malfunction;
(iv) The system is secured by either—
(A) Unbroken seals that are issued,
installed, and maintained by the
terminal operator and secure the
measurement devices, shut-off devices,
and other access points to the injection
system; or
(B) A secured container that controls
access to the measurement devices,
shut-off devices, and other access points
and is secured by an unbroken seal
issued, installed, and maintained by the
terminal operator;
(v) Each seal securing the system
bears a unique identifying number or
code and is produced in a manner that
provides adequate assurance against
duplication; and
(vi) The operator of the facility has
written procedures in place for
complying with its duty, described in
paragraph (d)(4) of this section, to
maintain the system’s security
standards.
(3) Mechanical injection system; basis
for approval. In determining whether to
approve a mechanical injection system,
the Commissioner will take into account
the individual circumstances of each
facility, including local fire and safety
codes, to ensure that the cost of
acquiring and maintaining the
appropriate levels of security are
reasonable for that facility.
(4) Mechanical injection system; duty
of the operator of a mechanical
injection system to maintain the
system’s security standards. Each
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operator of a mechanical injection
system must—
(i) Maintain a record for each seal,
including its identifying number or
code, the location of the seal, the date(s)
on which the seal was issued and
installed, and the reason for the
installation;
(ii) Visually inspect each installed
seal not less than once during every 24
hour period to ascertain that each seal
and lock mechanism, if applicable, has
not been physically altered;
(iii) Check the identifying number or
code for each seal against the records
maintained by the terminal operator no
less frequently than once during each
seven day period and record each
inspection and verification;
(iv) Promptly notify the
Commissioner if inspection of a seal
reveals any inconsistency in the records
pertaining to that seal, or if the seal has
been damaged or removed (other than a
removal authorized by the operator for
testing or maintenance);
(v) Maintain a record of each seal that
has been replaced to include the seal
number or code, the date the seal was
issued, the location of the seal, the date
the seal was replaced, and the reason
the seal was replaced;
(vi) Promptly destroy and replace
seals that have been removed from the
system;
(vii) Restrict access to unused seal
inventory to individuals specifically
designated by the operator and maintain
a record of such individuals;
(viii) Maintain a record of each
installation, inspection, and destruction
described in this paragraph (d)(4),
including the name of the individual
who conducts the installation,
inspection, or destruction;
(ix) Make available for the
Commissioner’s immediate inspection
the seals and records described in this
paragraph (d)(4); and
(x) Promptly notify the Commissioner
if, and when, the dye injection system
is placed out of service.
(5) Mechanical injection system;
revocation or suspension of approval.
The Commissioner may revoke or
suspend its approval of a dye injection
system if the Commissioner determines
that the system does not meet the
standards of paragraph (d)(2) of this
section or if the operator of the system
has not complied with the requirements
of paragraph (d)(4) of this section.
(6) Sales and entries. For purposes of
determining whether tax is imposed by
section 4081 on a sale or entry of diesel
fuel or kerosene, such fuel satisfies the
dyeing requirements of this paragraph
(d) only if the dye required by
§ 48.4082–1(b) is combined with the
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fuel before the sale or entry and the
seller or enterer has in its records
evidence (such as a certificate from the
terminal operator providing the fuel)
establishing that the dye was combined
with the fuel by means of a mechanical
injection system. Thus, for example,
diesel fuel or kerosene that is entered
into the United States by means of
nonbulk transfer (such as a railroad car)
does not satisfy the requirements of this
paragraph (d) if the required dye and
marker are combined with diesel fuel or
kerosene after the diesel fuel or
kerosene has been entered into the
United States.
(7) Cross reference. For the penalty
relating to mechanical dye injection
systems, see section 6715A.
(e) and (e)(1) [Reserved]. For further
guidance, see § 48.4082–1(e) and (e)(1).
(2) This section is applicable on
October 24, 2005.
I Par. 4. Section 48.4101–1 is amended
by revising paragraph (h)(3)(iv) to read as
follows:
§ 48.4101–1
Taxable fuel; registration.
*
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*
(h) * * *
(3) * * *
(iv) [Reserved]. For further guidance,
see § 48.4101–1T(h)(3)(iv).
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*
I Par. 5. Section 48.4101–1T is added to
read as follows:
§ 48.4101–1T
(temporary).
Taxable fuel; registration
(a) through (h)(3)(iii) [Reserved]. For
further guidance, see § 48.4101–1(a)
through (h)(3)(iii).
(iv) Retention of information. In
addition to any other requirement
relating to the retention of records, the
terminal operator must—
(A) Maintain the information
described in § 48.4101–1(h)(3)(ii) at the
terminal from which the removal
occurred for at least 3 months after the
removal to which it relates in the case
of information relating to removals
before January 1, 2006, and at least 12
months after the removal to which it
relates in the case of information
relating to removals after December 31,
2005; and
(B) Maintain the information
described in § 48.4101–1(h)(3)(iii) at the
terminal where the dye was received for
at least 3 months after the receipt in the
case of receipts before January 1, 2006,
and at least 12 months after the receipt
in the case of receipts after December
31, 2005.
(h)(3)(v) through (l) [Reserved] For
further guidance see § 48.4101–
1(h)(3)(v) through (l).
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PART 602—OMB CONTROL NUMBERS
UNDER THE PAPERWORK
REDUCTION ACT
I Par. 6. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 7. In § 602.101, paragraph (b) is
amended by adding entries in numerical
order to the table to read as follows:
I
§ 602.101
*
OMB Control numbers.
*
*
(b) * * *
*
*
Current
OMB control
No.
CFR part or section where
identified and described
*
*
*
*
48.4082–1T ...............................
*
*
*
*
*
48.4101–1T ...............................
*
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*
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1545–1418
1545–1418
*
Cono R. Namorato,
Acting Deputy Commissioner for Services and
Enforcement.
Approved: April 15, 2005.
Eric Solomon,
Acting Deputy Assistant Secretary of the
Treasury.
[FR Doc. 05–8236 Filed 4–25–05; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
Dated: April 11, 2005.
Ben R. Thomason, III,
Rear Admiral, U.S. Coast Guard, Acting
Commander, Fifth Coast Guard District.
[FR Doc. 05–8260 Filed 4–25–05; 8:45 am]
33 CFR Part 100
[CGD05–05–024]
RIN 1625–AA08
Special Local Regulations for Marine
Events; Approaches to Annapolis
Harbor, Spa Creek and Severn River,
Annapolis, MD
Coast Guard, DHS.
Notice of enforcement.
AGENCY:
ACTION:
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BILLING CODE 4910–15–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
SUMMARY: The Coast Guard is
implementing the special local
regulations at 33 CFR 100.511 during
the Annapolis Yacht Club boat parade,
a marine event to be held May 8, 2005,
on the waters of Spa Creek and the
Severn River at Annapolis, Maryland.
These special local regulations are
necessary to control vessel traffic due to
the confined nature of the waterway and
expected vessel congestion during the
event. The effect will be to restrict
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general navigation in the regulated area
for the safety of event participants,
spectators and vessels transiting the
event area.
DATES: 33 CFR 100.511 will be enforced
from 10:30 a.m. to 1 p.m. on May 8,
2005.
FOR FURTHER INFORMATION CONTACT:
Ronald Houck, Marine Events
Coordinator, Commander, Coast Guard
Sector Baltimore, 2401 Hawkins Point
Road, Baltimore, MD 21226–1971, and
(410) 576–2674.
SUPPLEMENTARY INFORMATION: The
Annapolis Yacht Club will sponsor a
boat parade on the waters of Spa Creek
and the Severn River at Annapolis,
Maryland. The event will consist of
approximately 60 boats traveling at slow
speed along two separate parade routes
in Annapolis Harbor. In order to ensure
the safety of participants, spectators and
transiting vessels, 33 CFR 100.511 will
be enforced for the duration of the
event. Under the provisions of 33 CFR
100.511, from 10:30 a.m. to 1 p.m. on
May 8, 2005 vessels may not enter the
regulated area without permission from
the Coast Guard Patrol Commander.
Spectator vessels may anchor outside
the regulated area but may not block a
navigable channel. Because these
restrictions will be in effect for a limited
period, they should not result in a
significant disruption of maritime
traffic.
In addition to this notice, the
maritime community will be provided
extensive advance notification via the
Local Notice to Mariners, marine
information broadcasts, and area
newspapers, so mariners can adjust
their plans accordingly.
33 CFR Part 100
[CGD05–05–023]
RIN 1625–AA08
Special Local Regulation for Marine
Events; Severn River, College Creek,
Weems Creek and Carr Creek,
Annapolis, MD
Coast Guard, DHS.
Temporary final rule.
AGENCY:
ACTION:
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21335
SUMMARY: The Coast Guard is
establishing temporary special local
regulations during the ‘‘U.S. Naval
Academy crew races’’, a marine event to
be held on the waters of the Severn
River at Annapolis, Maryland on May 8
and 29, 2005. These special local
regulations are necessary to provide for
the safety of life on navigable waters
during the event. This action is
intended to restrict vessel traffic on the
Severn River during the event.
DATES: This rule is effective from 5 a.m.
on May 8, 2005 to 8 a.m. on May 29,
2005.
ADDRESSES: Comments and material
received from the public, as well as
documents indicated in this preamble as
being available in the docket, are part of
docket CGD05–05–023 and are available
for inspection or copying at Commander
(oax), Fifth Coast Guard District, 431
Crawford Street, Portsmouth, Virginia
23704–5004, between 9 a.m. and 2 p.m.,
Monday through Friday, except Federal
holidays.
FOR FURTHER INFORMATION CONTACT:
Dennis Sens, Project Manager, Auxiliary
and Recreational Boating Safety Branch,
at (757) 398–6204.
SUPPLEMENTARY INFORMATION:
Regulatory Information
We did not publish a notice of
proposed rulemaking (NPRM) for this
regulation. Under 5 U.S.C. 553(b)(B), the
Coast Guard finds that good cause exists
for not publishing an NPRM. Publishing
an NPRM would be impracticable and
contrary to public interest because the
event will take place before the
comment period would end. For the
safety concerns noted, it is in the public
interest to have these regulations in
effect during the event.
Under 5 U.S.C. 553(d)(3), the Coast
Guard finds that good cause exists for
making this rule effective less than 30
days after publication in the Federal
Register. Delaying the effective date
would be contrary to the public interest,
since immediate action is needed to
ensure the safety of the event
participants, spectator craft and other
vessels transiting the event area.
However advance notifications will be
made to affected waterway users via
marine information broadcasts and area
newspapers.
Background and Purpose
On May 8 and 29, 2005, the U.S.
Naval Academy will host crew races on
the waters of the Severn River at
Annapolis, Maryland. The event will
consist of intercollegiate crew rowing
teams racing along a 2000 meter course
on the waters of the Severn River. A
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]]>Agencies
[Federal Register Volume 70, Number 79 (Tuesday, April 26, 2005)]
[Rules and Regulations]
[Pages 21332-21335]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-8236]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 48 and 602
[TD 9199]
RIN 1545-BE44
Diesel Fuel and Kerosene Excise Tax; Dye Injection
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
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SUMMARY: This document contains regulations relating to the diesel fuel
and kerosene excise tax. These regulations reflect changes made by the
American Jobs Creation Act of 2004 regarding mechanical dye injection
systems for diesel fuel and kerosene. These regulations affect certain
enterers, refiners, terminal operators, and throughputters. The text of
the temporary regulation also serves as the text of the proposed
regulations set forth in the notice of proposed rulemaking on this
subject elsewhere in this issue of the Federal Register.
DATES: Effective Date: These regulations are effective October 24,
2005.
Applicability Dates: For dates of applicability, see Sec. Sec.
48.4082-1T(e) and 48.4101-1T(h)(3)(iv).
FOR FURTHER INFORMATION CONTACT: William Blodgett at (202) 622-3090
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
These temporary regulations are being issued without prior notice
and public procedure pursuant to the Administrative Procedure Act (5
U.S.C. 553). For this reason, the collection of information contained
in these regulations has been reviewed and, pending receipt and
evaluation of public comments, approved by the Office of Management and
Budget under control number 1545-1418. Responses to this collection of
information are required to obtain a tax benefit.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid OMB control number.
For further information concerning this collection of information,
and where to submit comments on the collection of information and the
accuracy of the estimated burden, and suggestions for reducing this
burden, please refer to the preamble to the cross-referencing notice of
proposed
[[Page 21333]]
rulemaking published in the Proposed Rules section of this issue of the
Federal Register.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Background
Section 4081 of the Internal Revenue Code (Code) imposes a tax on
certain removals, entries, and sales of diesel fuel and kerosene.
However, section 4082(a) provides that the tax is not imposed if the
diesel fuel or kerosene (1) is destined for a nontaxable use (as
defined in section 4082(b)), (2) is indelibly dyed in accordance with
regulations that the Secretary shall prescribe, and (3) meets such
marking requirements (if any) as may be prescribed by the Secretary in
regulations.
Section 4082(a)(2) was amended by the American Jobs Creation Act of
2004 (the Act) to provide that the diesel fuel and kerosene must be
indelibly dyed ``by mechanical injection.'' The Act also requires the
Secretary to issue regulations regarding mechanical dye injection
systems and to include in the regulations standards for making such
systems tamper resistant. The amendments to section 4082(a)(2) are
effective on the 180th day after the date on which the Secretary issues
such regulations.
The Act also adds new section 6715A, which imposes a penalty on any
person that tampers with a mechanical dye injection system and any
operator of a mechanical injection system that fails to maintain the
security standards for such system in accordance with the regulations.
Explanation of Provisions
Under these temporary regulations, diesel fuel or kerosene that is
removed from a refinery, terminal, or blending facility is exempt from
tax under section 4082(a) only if the required type and amount of dye
is added to the fuel by means of a mechanical injection system that is
approved by the IRS. Manual (or splash) dyeing is not allowed, even in
the case of a malfunction of the mechanical injection system.
Application for approval of mechanical injection systems will be
made in the form and manner prescribed by the IRS. It is anticipated
that the application process will be similar to the process now in
place for applications for registrations under section 4101. It is also
anticipated that the IRS will act on such applications within a
reasonable time.
Under these temporary regulations, the IRS will approve a
mechanical injection system only if it contains adequate calibrated
measurement devices, shut-off devices, and security equipment to secure
these devices and other access points.
Generally, the security equipment must consist of either a ``seal''
system or a ``lock box'' system. The ``seal'' system requires that a
seal be attached to each measuring device, each shut-off device, and
any other access point to the mechanical injection system. The seals
must secure the devices from tampering and, if necessary, may be
accompanied by locks to ensure the necessary security. The alternative
to the ``seal'' system is the ``lock box'' system, which allows the
operator to use one secured container, or box, to control access to
each measuring device, each shut-off device, and any other access point
to the mechanical injection system. Such container may be transparent
for ease of satisfying the inspection requirements. If the ``lock box''
system is used, the container must be secured by a seal that satisfies
all of the ``seal'' requirements. Each seal, whether it secures a
``lock box'' or attaches to an access point, must be separately
identifiable by a numbering or coding system maintained by the terminal
operator. In all cases, the type of allowable seal may be prescribed by
the IRS.
These temporary regulations also set out ongoing duties of the
operator of an approved mechanical injection system to maintain the
system's security standards and to keep certain records. However, no
particular form for the records is prescribed.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory flexibility assessment is not required. It also
has been determined that section 553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply to these regulations. For the
applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6),
refer to the Special Analyses section of the preamble to the cross-
reference notice of proposed rulemaking published in the Proposed Rules
section in this issue of the Federal Register. Pursuant to section
7805(f) of the Code, these temporary regulations will be submitted to
the Chief Counsel for Advocacy of the Small Business Administration for
comment on their impact on small business.
Drafting Information
The principal author of these regulations is William Blodgett,
Office of Associate Chief Counsel (Passthroughs and Special
Industries), IRS. However, other personnel from the IRS and Treasury
Department participated in their development.
List of Subjects
26 CFR Part 48
Excise taxes, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR parts 48 and 602 are amended as follows:
PART 48--MANUFACTURERS AND RETAILERS EXCISE TAXES
0
Paragraph 1. The authority citation for part 48 is amended by adding an
entry in numerical order to read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Section 48.4082-1T also issued under 26 U.S.C. 4082(a). * * *
0
Par. 2. Section 48.4082-1 is amended by revising paragraphs (d) and (e)
to read as follows:
Sec. 48.4082-1 Diesel fuel and kerosene; exemption for dyed fuel.
* * * * *
(d) [Reserved]. For further guidance, see Sec. 48.4082-1T(d).
(e) Effective date--(1) Except as provided in paragraph (e)(2) of
this section, this section is applicable March 14, 1996.
(2) [Reserved] For further guidance, see Sec. 48.4082-1T(e)(2).
0
Par. 3. Section 48.4082-1T is added to read as follows:
Sec. 48.4082-1T Diesel fuel and kerosene; exemption for dyed fuel
(temporary).
(a) through (c) [Reserved]. For further guidance, see Sec.
48.4082-1(a) through (c).
(d) Time and method for adding dye--(1) In general. Except as
provided by paragraph (d)(6) of this section, diesel fuel or kerosene
satisfies the dyeing requirements of this paragraph (d) only if the dye
required by Sec. 48.4082-1(b) is combined with the diesel fuel or
kerosene by means of a mechanical injection system that is approved by
the Commissioner for use
[[Page 21334]]
at the facility where the dyeing occurs. Application for approval must
be made in the form and manner required by the Commissioner. Rules
similar to the rules of Sec. 48.4101-1(g) apply to the Commissioner's
action on the applications.
(2) Mechanical injection system; requirements. The Commissioner
will approve a mechanical injection system only if--
(i) The system has features that automatically inject an amount of
dye that satisfies the concentration requirements of Sec. 48.4082-1(b)
into diesel fuel or kerosene as the diesel fuel or kerosene is
delivered from the bulk transfer/terminal system into the transport
compartment of a truck, trailer, railroad car, or other means of
nonbulk transfer;
(ii) The system has calibrated devices that accurately measure and
record the amount of dye and the amount of diesel fuel and kerosene
that is dispensed for each removal;
(iii) The system has automatic shut-off devices that prevent the
removal of more than 100 gallons of undyed diesel fuel or kerosene in
the case of a system malfunction;
(iv) The system is secured by either--
(A) Unbroken seals that are issued, installed, and maintained by
the terminal operator and secure the measurement devices, shut-off
devices, and other access points to the injection system; or
(B) A secured container that controls access to the measurement
devices, shut-off devices, and other access points and is secured by an
unbroken seal issued, installed, and maintained by the terminal
operator;
(v) Each seal securing the system bears a unique identifying number
or code and is produced in a manner that provides adequate assurance
against duplication; and
(vi) The operator of the facility has written procedures in place
for complying with its duty, described in paragraph (d)(4) of this
section, to maintain the system's security standards.
(3) Mechanical injection system; basis for approval. In determining
whether to approve a mechanical injection system, the Commissioner will
take into account the individual circumstances of each facility,
including local fire and safety codes, to ensure that the cost of
acquiring and maintaining the appropriate levels of security are
reasonable for that facility.
(4) Mechanical injection system; duty of the operator of a
mechanical injection system to maintain the system's security
standards. Each operator of a mechanical injection system must--
(i) Maintain a record for each seal, including its identifying
number or code, the location of the seal, the date(s) on which the seal
was issued and installed, and the reason for the installation;
(ii) Visually inspect each installed seal not less than once during
every 24 hour period to ascertain that each seal and lock mechanism, if
applicable, has not been physically altered;
(iii) Check the identifying number or code for each seal against
the records maintained by the terminal operator no less frequently than
once during each seven day period and record each inspection and
verification;
(iv) Promptly notify the Commissioner if inspection of a seal
reveals any inconsistency in the records pertaining to that seal, or if
the seal has been damaged or removed (other than a removal authorized
by the operator for testing or maintenance);
(v) Maintain a record of each seal that has been replaced to
include the seal number or code, the date the seal was issued, the
location of the seal, the date the seal was replaced, and the reason
the seal was replaced;
(vi) Promptly destroy and replace seals that have been removed from
the system;
(vii) Restrict access to unused seal inventory to individuals
specifically designated by the operator and maintain a record of such
individuals;
(viii) Maintain a record of each installation, inspection, and
destruction described in this paragraph (d)(4), including the name of
the individual who conducts the installation, inspection, or
destruction;
(ix) Make available for the Commissioner's immediate inspection the
seals and records described in this paragraph (d)(4); and
(x) Promptly notify the Commissioner if, and when, the dye
injection system is placed out of service.
(5) Mechanical injection system; revocation or suspension of
approval. The Commissioner may revoke or suspend its approval of a dye
injection system if the Commissioner determines that the system does
not meet the standards of paragraph (d)(2) of this section or if the
operator of the system has not complied with the requirements of
paragraph (d)(4) of this section.
(6) Sales and entries. For purposes of determining whether tax is
imposed by section 4081 on a sale or entry of diesel fuel or kerosene,
such fuel satisfies the dyeing requirements of this paragraph (d) only
if the dye required by Sec. 48.4082-1(b) is combined with the fuel
before the sale or entry and the seller or enterer has in its records
evidence (such as a certificate from the terminal operator providing
the fuel) establishing that the dye was combined with the fuel by means
of a mechanical injection system. Thus, for example, diesel fuel or
kerosene that is entered into the United States by means of nonbulk
transfer (such as a railroad car) does not satisfy the requirements of
this paragraph (d) if the required dye and marker are combined with
diesel fuel or kerosene after the diesel fuel or kerosene has been
entered into the United States.
(7) Cross reference. For the penalty relating to mechanical dye
injection systems, see section 6715A.
(e) and (e)(1) [Reserved]. For further guidance, see Sec. 48.4082-
1(e) and (e)(1).
(2) This section is applicable on October 24, 2005.
0
Par. 4. Section 48.4101-1 is amended by revising paragraph (h)(3)(iv)
to read as follows:
Sec. 48.4101-1 Taxable fuel; registration.
* * * * *
(h) * * *
(3) * * *
(iv) [Reserved]. For further guidance, see Sec. 48.4101-
1T(h)(3)(iv).
* * * * *
0
Par. 5. Section 48.4101-1T is added to read as follows:
Sec. 48.4101-1T Taxable fuel; registration (temporary).
(a) through (h)(3)(iii) [Reserved]. For further guidance, see Sec.
48.4101-1(a) through (h)(3)(iii).
(iv) Retention of information. In addition to any other requirement
relating to the retention of records, the terminal operator must--
(A) Maintain the information described in Sec. 48.4101-1(h)(3)(ii)
at the terminal from which the removal occurred for at least 3 months
after the removal to which it relates in the case of information
relating to removals before January 1, 2006, and at least 12 months
after the removal to which it relates in the case of information
relating to removals after December 31, 2005; and
(B) Maintain the information described in Sec. 48.4101-
1(h)(3)(iii) at the terminal where the dye was received for at least 3
months after the receipt in the case of receipts before January 1,
2006, and at least 12 months after the receipt in the case of receipts
after December 31, 2005.
(h)(3)(v) through (l) [Reserved] For further guidance see Sec.
48.4101-1(h)(3)(v) through (l).
[[Page 21335]]
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
0
Par. 6. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
0
Par. 7. In Sec. 602.101, paragraph (b) is amended by adding entries in
numerical order to the table to read as follows:
Sec. 602.101 OMB Control numbers.
* * * * *
(b) * * *
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Current OMB
CFR part or section where identified and described control No.
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* * * * *
48.4082-1T................................................. 1545-1418
* * * * *
48.4101-1T................................................. 1545-1418
* * * * *
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Cono R. Namorato,
Acting Deputy Commissioner for Services and Enforcement.
Approved: April 15, 2005.
Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 05-8236 Filed 4-25-05; 8:45 am]
BILLING CODE 4830-01-P
