How To Claim Fuel Tax Credits and Refunds You may be eligible to claim a credit on your income tax return forfederal excise tax imposed on certain fuels used for a nontaxable use.You may also be eligible to claim a quarterly refund of the fuel taxesduring the year, instead of waiting to claim a credit on your incometax return. Instead of paying the fuel tax and filing for a credit or refund,you may be able to buy certain fuel tax free. For more information,see How To Buy Fuel Tax Free, later. Nontaxable Uses This section discusses the nontaxable uses that are of particularinterest to fishermen. For information about credits and refunds forfuels used for nontaxable uses not discussed in this section, seePublication 378. Gasoline used in commercial fishing boats.You may be eligible to claim a credit or refund of excise tax ongasoline used in a boat engaged in commercial fishing. Boats engaged in commercial fishing include only watercraft used intaking, catching, processing, or transporting fish, shellfish, orother aquatic life for commercial purposes, such as selling orprocessing the catch, on a specific trip basis. They include boatsused in both fresh and salt water fishing. They do not include boatsused for both sport fishing and commercial fishing on the same trip. Caution: Fuel used in aircraft to locate fish is not fuel used in commercialfishing.    Off-highway business use.You may be eligible to claim a credit or refund of excise tax onfuel if you use the fuel in an off-highway business use. What is off-highway business use?Off-highway business use is any use of fuel in a trade or businessor in any income-producing activity. It does not include use in ahighway vehicle registered or required to be registered for use onpublic highways. Off-highway business use includes fuels used in thefollowing ways. In stationary engines to operate generators, compressors,and similar equipment. For cleaning purposes. Caution: Do not consider any use in a boat as an off-highway business use.    How To Claima Credit or Refund This section tells you when and how to claim a credit or refund ofexcise taxes on fuels you use for a nontaxable use. Credit or refund.A credit is an amount that reduces the tax on your income taxreturn when you file it at the end of the year. If you meet certainrequirements (discussed later), you can claim a refund during the yearinstead of waiting until you file your tax return. Credit only.The following taxes can only be claimed as a credit. Tax on fuels used for nontaxable uses if the total for thetax year is less than $750. Tax on fuel that was not included in any claim for refundpreviously filed for the tax year. Claiming a Credit You make a claim for credit on Form 4136 and attach itto your income tax return. Do not claim a credit for any amount forwhich you have filed a refund claim. When to claim a credit.You can claim a fuel tax credit on your income tax return for theyear you used the fuels. Also, you may be able to make a fuel taxclaim on an amended return for that year. Generally, you must file anamended return by the later of 3 years from the date youfiled your original income tax return or within 2 years from the timeyou paid the income tax. A return filed early is considered to havebeen filed on the due date. Caution: Once you have filed a Form 4136, you cannot file an amended returnto show an increase in the number of gallons of fuel reported on aline. See the following discussion for when you can file a claim on anamended return. Fuel tax claim on amended return.You can file an amended return to claim a fuel tax credit if any ofthe following apply. You did not claim any credit for fuel taxes on Form 4136 forthe tax year. Your credit is for gasohol blending, as discussed inPublication 378. Your credit is for a claim group, explained next, for whichyou did not previously file a claim on Form 4136 for the taxyear. Claims on Form 4136 (other than for gasohol blending) are separatedinto seven claim groups based on the type of fuel and theuse of that fuel. Once you file Form 4136 with a claim for a group,you cannot file an amended return with another claim for that group.However, you can file an amended return with a claim for anothergroup. Claim group table.The following table shows which claims are in each group. Thenumbers in the second column refer to the line numbers on Form 4136.The numbers in the third column are from the Type of Use Table in theForm 4136 instructions. Group Line No. Type of Use I 1b, 1d-f, 2b 1 II 1a, 1d-f, 2a 2 III 1c-f 5, 7 IV 1c-f, 2b 3, 4, 9 V 3c, 7 5, 7 VI 3a-b, 4, 5, 6 See line instructions VII 2b 10 For each tax year, you can make only one claim for each group. Example.You file your income tax return and claim a fuel tax credit. YourForm 4136 shows an amount on line 1c for use of gasoline in a boatengaged in commercial fishing. This is a Group IV claim. You cannotamend your return to claim a credit for an amount on line 1d for useof gasohol in a boat engaged in commercial fishing (Type of Use 4),since that is also a Group IV claim. However, if you used the gasoholin an off-highway business use, you can amend your return to claim thecredit for that fuel tax because that would be a Group II claimreported on line 1d, Type of Use 2. How to claim a credit.As an individual, you claim the credit on line 63 of Form 1040.Check box "b" on line 63. If you would not otherwise have to filean income tax return, you must do so to get a fuel tax credit. Claiming a Refund You can file a claim for refund for any quarter of your tax yearfor which you can claim $750 or more. This amount is the excise tax onall fuels used for any nontaxable use during that quarter or any priorquarter (for which no other claim has been filed) during the tax year. If you cannot claim at least $750 at the end of a quarter, youcarry the amount over to the next quarter of your tax year todetermine if you can claim at least $750 for that quarter. If youcannot claim at least $750 at the end of the fourth quarter of yourtax year, you must claim a credit on your income tax return. Form 8849.You make a claim for a refund Form 8849. File the claim by fillingout Schedule 1 (Form 8849) and attaching it to Form 8849. Send it tothe address shown in the instructions. When to file a quarterly claim.You must file a quarterly claim by the last day of the firstquarter following the last quarter included in the claim. If you donot file a timely refund claim for the fourth quarter of your taxyear, you will have to claim a credit for that amount on your incometax return, as discussed earlier. Including the Creditor Refund in Income Include any credit or refund of excise taxes on fuels in your grossincome if you included the cost of the fuel as an expense deductionthat reduced your income tax liability. If you use the cash method of accounting and file a claim forrefund, include the refund in your gross income for the taxyear in which you receive the refund. If you claim a crediton your income tax return, include the credit in gross incomefor the tax year in which you file Form 4136. If you file anamended return and claim a credit, include the credit ingross income for the tax year in which you receive it. Example.Ed Brown, a cash basis fisherman, filed his 1998 Form 1040 on March2, 1999. On his Schedule C, Ed deducted the total cost of gasoline(including $110 of excise taxes) used in his commercial fishingvessel. Then, on Form 4136, Ed claimed the $110 as a credit. Edreports the $110 as additional income on his 1999 Schedule C. How To Buy Fuel Tax Free Instead of paying the fuel tax and filing a claim for credit orrefund when the fuel is used for a nontaxable use, you may be eligibleto buy it tax free. Gasoline.Your supplier may be able to sell you gasoline at a tax-free priceonly for use in a boat engaged in commercial fishing. Your supplier may be eligible to claim a credit or refund of theexcise tax on the gasoline sold to you at a tax-free price. Refer yoursupplier to Credits and Refunds under Fuel Taxesin Publication 510 for details. To buy gasoline at a tax-free price, give your supplier a signedcertificate identifying you and stating how you will use the gasoline.You do not need to renew the certificate as long as the information itcontains continues to be correct. Exemption certificate.The following is an acceptable exemption certificate. Date_____________________ The undersigned ("Buyer") hereby certifies that Buyer boughtor will buy for use in a boat engaged in commercial fishing (Check the applicable type of certificate) ______The (quantity)_____ of gasoline, or ___ALL the gasoline it buys at a price that does not include the excise tax from: Name of seller:_______________ Address of seller: ________________________ If the gasoline is not used as specified above, Buyer will sonotify the person to whom Buyer gives this certificate. Buyer has notand will not claim a refund or credit under section 6421 of theInternal Revenue Code for the excise tax on this gasoline. Buyer understands that Buyer or any other party may, for fraudulentuse of this certificate, be subject to a fine or imprisonment,together with the costs of prosecution. Name____________________ Title_____________________ TIN_____________________ Address___________________ Signature__________________