[Code of Federal Regulations]
[Title 26, Volume 16]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR48.6421-1]

[Page 214-216]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 48_MANUFACTURERS AND RETAILERS EXCISE TAXES--Table of Contents
 
    Subpart O_Refunds and Other Administrative Provisions of Special 
            Application to Retailers and Manufacturers Taxes
 
Sec. 48.6421-1  Credits or payments to ultimate purchaser of gasoline 
used for certain nonhighway purposes.

    (a) In general. (1) If gasoline is used in a qualified business use 
or as fuel in an aircraft (other than aircraft in noncommercial 
aviation), a credit (under the circumstances described in paragraph (b) 
of this section) or a payment (under the circumstances described in 
paragraph (c) of this section) in respect of the gasoline shall be 
allowed or made to the ultimate purchaser of the

[[Page 215]]

gasoline. For gasoline used in a qualified business use prior to April 
1, 1983, the credit or payment under this section shall be an amount 
equal to 1 cent for each gallon of gasoline so used on which the tax was 
paid at the rate of 3 cents a gallon, and 2 cents for each gallon of 
gasoline so used on which the tax was paid at the rate of 4 cents a 
gallon. For gasoline used in an off-highway business use after March 31, 
1983, the credit or payment under this section shall be an amount equal 
to the amount determined by multiplying the number of gallons so used by 
the rate at which tax was imposed on such gasoline under section 4081. 
For gasoline used as a fuel in an aircraft (other than aircraft in 
noncommercial aviation) the credit or payment under this section shall 
be an amount equal to the amount determined by multiplying the number of 
gallons so used by the rate at which tax was imposed on the gasoline 
under section 4081. No interest shall be paid on any payment allowed 
under paragraph (c) of this section. However, interest may be paid on 
any overpayment (as defined by section 6401) arising from a credit 
allowed under paragraph (b) of this section. See section 34(a), relating 
to credit for certain uses of gasoline and special fuels (and 
lubricating oil used prior to January 7, 1983). See Sec. 48.6421-3 for 
the time within which a claim for credit or payment must be made under 
this section. See Sec. 48.6421-4 for the meaning of the terms 
``gasoline,'' ``qualified business use,'' ``noncommercial aviation,'' 
and ``taxable year.''
    (2) For purposes of determining the allowable credit or payment in 
respect of gasoline used in a qualified business use or as fuel in an 
aircraft (other than aircraft in noncommercial aviation), gasoline on 
hand shall be considered used in the order in which it was purchased. 
Thus, if the ultimate purchaser has on hand gasoline acquired in two 
purchases made at different times and subject to different rates of tax, 
in determining credit or payment for the gasoline used in a qualified 
business use or as fuel in an aircraft (other than aircraft in 
noncommercial aviation), it will be assumed that the gasoline first 
purchased was the first gasoline used, and the rate applicable to that 
purchase will apply in determining the credit or payment, until all that 
gasoline is accounted for.
    (b) Allowance of income tax credit in lieu of payment. Except as 
provided in paragraph (c) of this section, repayment under this section 
of the tax paid under section 4081 on gasoline used in a qualified 
business use or as a fuel in an aircraft (other than aircraft in 
noncommercial aviation) by a person subject to income tax may be 
obtained only by claiming a credit for the amount of this tax against 
the tax imposed by subtitle A of the Code. The amount of the credit 
shall be an amount equal to the payment which would be made under 
section 6421 with respect to gasoline used during the taxable year in a 
qualified business use or as a fuel in an aircraft (other than aircraft 
in noncommercial aviation) if section 6421(i) and paragraph (c) of this 
section did not apply. See section 34(a)(2).
    (c) Allowance of payment. Payments in respect of gasoline upon which 
tax was paid under section 4081 that is used in a qualified business use 
or as a fuel in an aircraft (other than aircraft in noncommercial 
aviation) shall be made only to--
    (1) The United States or any agency or instrumentality thereof, a 
State, a political subdivision of a State, or an agency or 
instrumentality of one or more State political subdivisions of a State, 
or the District of Columbia,
    (2) An organization which is exempt from tax under section 501(a) 
and is not required to make a return of the income tax imposed under 
subtitle A for its taxable year, or
    (3) A person described in section 6421(c)(2) to whom $1,000 or more 
is payable (without regard to paragraph (b) of this section) under this 
section with respect to gasoline used during any of the first three 
quarters of the person's taxable year.
    (d) Dual use of gasoline. (1) No credit or payment may be claimed in 
respect of gasoline used in a highway vehicle used in a trade or 
business or for the production of income solely by reason of the fact 
that the propulsion motor in the vehicle is also used for a purpose 
other than the propulsion of the vehicle. Thus, if the propulsion motor 
of a

[[Page 216]]

highway vehicle (used in a trade or business or for the production of 
income) also operates special equipment, such as a mixing unit on a 
concrete mixer truck or a pump for discharging fuel from a tank truck, 
by means of a power takeoff or power transfer, no credit or payment may 
be claimed in respect of the gasoline used to operate the special 
equipment, even though the special equipment is mounted on the highway 
vehicle.
    (2) If a highway vehicle is equipped with a separate motor to 
operate the special equipment used in a trade or business or for the 
production of income, such as a refrigeration unit, pump, generator, or 
mixing unit, credit or payment may be claimed in respect of the gasoline 
used in the separate motor.
    (3) If gasoline used in a separate motor is drawn from the same tank 
as the one which supplies gasoline for the propulsion of the highway 
vehicle, the determination as to the quantity of gasoline used in the 
separate motor operating the special equipment must be based on 
operating experience and supported by records.
    (4) Devices to measure the number of miles the highway vehicle has 
traveled, such as hubometers, may be used in making a preliminary 
determination of the number of gallons of gasoline used to propel the 
vehicle. In order to make a final determination of the number of gallons 
of gasoline used to propel the vehicle, there must be added to this 
preliminary determination the number of gallons of gasoline consumed 
while idling or warming up the motor preparatory to propelling the 
vehicle.
    (e) Gasoline lost or destroyed. Gasoline lost or destroyed through 
spillage, fire, or other casualty is not considered to have been 
``used'' in a qualified business use or as fuel in an aircraft (other 
than aircraft in noncommercial aviation) and, accordingly, credit or 
payment in respect of the gasoline may not be claimed.
    (f) Supporting evidence required. Each claim under this section for 
credit or payment must include a statement showing--
    (1) The total number of gallons of gasoline purchased and used 
during the period covered by the claim in a qualified business use 
multiplied by the rate of payment allowable in respect of the gasoline. 
(For the rate of payment allowable, see paragraph (a)(1) of this 
section.)
    (2) The total number of gallons of gasoline purchased and used 
during the period covered by the claim for use as fuel in an aircraft 
(other than aircraft in noncommercial aviation) multiplied by the rate 
of payment allowable in respect of the gasoline.
    (3) The purpose or purposes for which the gasoline was used, 
determined by reference to general categories, and the amount used for 
each purpose; and
    (4) If a claim on Form 843 is being filed, the internal revenue 
district or service center with which the claimant last filed an income 
tax return (if any).

[T.D. 8043, 50 FR 32039, Aug. 8, 1985]