[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: 26CFR48.6427-6]

[Page 228]
 
                       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. 48.6427-6  Limitation on credit or refund of tax paid on fuel used 
in intercity, local or school buses after July 31, 1984.

    (a) Limitation on amount of credit or refund--(1) In general. In the 
case of fuel sold or used after July 31, 1984, on which tax was imposed 
under section 4041(a), the amount of credit or refund under section 
6427(b)(1) shall not exceed 12 cents per gallon except where fuel is 
used in a bus while such bus is being operated as a ``qualified local 
bus'' in which case the credit or refund shall be the full amount of tax 
paid under section 4041(a) on such fuel.
    (2) Qualified local bus. A bus is considered to be operated as a 
``qualified local bus'' if such bus--
    (i) Is engaged in furnishing (for compensation) intracity passenger 
land transportation that is available to the general public and is 
scheduled and along regular routes,
    (ii) Has a seating capacity of at least 20 adults (not including the 
driver), and
    (iii) Is under contract with (or is receiving more than a nominal 
subsidy from) any State or local government (as defined in section 
4221(d)(4)) to furnish such transportation.

A company that operates qualified local buses is eligible for a full 
refund or credit only with respect to fuel used while such buses are 
operating as qualified local buses. For example, a company that operates 
its buses along subsidized intracity routes and also on intercity or 
unsubsidized intracity routes may obtain a full refund or credit only 
with respect to fuel used while operating the subsidized intracity 
routes.
    (b) Meaning of terms--(1) Contract with a State or local government. 
A bus is under contract with a State or local government only if the 
contract imposes a bona fide obligation on the operator of the bus to 
furnish the transportation to which the contract relates.
    (2) More than a nominal subsidy. A subsidy is more than nominal if 
the subsidy is reasonably expected to exceed an amount equal to 3 cents 
multiplied by the number of gallons of fuel used while operating on 
subsidized routes.
    (3) Intracity passenger land transportation. The term ``intracity 
passenger land transportation'' means the land transportation of 
passengers to and from points located within the same metropolitan area. 
The term includes transportation along routes that cross State, city or 
county boundaries provided such routes remain within the metropolitan 
area.

[T.D. 8027, 50 FR 21252, May 23, 1985]