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48.6435-1T Dyed fuel refund.
(a) Overview. This section provides guidance related to section 6435 of the Internal Revenue Code (Code), including definitions, rules, conditions, filing instructions, and reporting requirements governing claims. Paragraph (h) of this section provides an example illustrating the provisions of this section.
(b) Definitions. For purposes of section 6435 and this § 48.6435-1T:
(1) Approved terminal. The term approved terminal has the same meaning as provided in § 48.4081-1(b).
(2) Eligible dyed fuel. The term eligible dyed fuel means diesel fuel or kerosene with respect to which a tax under section 4081 of the Code (section 4081 tax) was previously paid (and not credited or refunded), and that is exempt from taxation under section 4082(a) of the Code.
(3) Section 6435 refund. The term section 6435 refund means a payment made under section 6435(a) to the person that paid the section 4081 tax to the Internal Revenue Service (IRS) with respect to eligible dyed fuel. Under paragraph (c) of this section, such a payment is a refund of an overpayment (without interest) under section 6402 to the taxpayer equal to the amount of section 4081 tax previously paid by the taxpayer with respect to such fuel.
(c) Refund of overpayment. If a person satisfies the requirements of paragraphs (d) through (g) of this section with respect to eligible dyed fuel, then pursuant to section 6435, an amount equal to the section 4081 tax paid to the IRS (including any tax paid at the Leaking Underground Storage Tank Trust Fund financing rate (LUST tax) under section 4081(a)(2)(B)) with respect to such fuel is allowed as a refund (without interest) to such person as an overpayment of such tax under section 6402.
(d) Conditions to allowance of refund. A claim for refund is allowed under section 6435 and this § 48.6435-1T only if each of the following conditions is satisfied:
(1) Section 4081 tax was imposed with respect to diesel fuel or kerosene;
(2) The taxpayer was liable for and paid such tax to the IRS and the tax has not been credited or refunded;
(3) The taxpayer removes from an approved terminal the diesel fuel or kerosene, which has been dyed as provided in section 4082(a); and
(4) The taxpayer meets the reporting requirements of paragraph (e) of this section.
(e) Reporting requirements—(1) In general. A taxpayer must file a report with respect to the tax described in paragraph (d)(2) of this section that is in substantially the same form as the model report provided in paragraph (e)(2) of this section (or such other model report as the Commissioner of Internal Revenue (Commissioner) may prescribe) and contains all information necessary to complete such report (section 6435 taxpayer's report). A section 6435 taxpayer's report must be filed with the section 6435 claim to which it relates (or at such other time, or in such other manner, as prescribed by the Commissioner).
(2) Model section 6435 taxpayer's report.
Section 6435 Taxpayer's Report
1.
Taxpayer's name, address, and employer identification number
2.
Date and location of taxable event
3.
Volume and type of taxable fuel
4. Check type of taxable event:
____Removal at the terminal rack
____Entry into United States
____ Other:________________
Description
5.
Amount of federal excise tax paid on the taxable event
6. [ ] Check the box if Taxpayer previously filed a First Taxpayer's Report under § 48.4081-7 relating to the same fuel described in this statement.
Year and quarter First Taxpayer's Report filed
Taxpayer hereby revokes such report with respect to the fuel described in this statement.
Except for the section 6435 claim to which this report relates, the undersigned taxpayer (the “Taxpayer”) has not received, and will not claim, a credit with respect to, or a refund of, the tax to which this form relates.
Under penalties of perjury, Taxpayer declares that Taxpayer has examined this statement, including any accompanying schedules and statements, and to the best of Taxpayer's knowledge and belief, such statements are true, correct, and complete.
Signature and date signed
Printed or typed name of person signing this report
Title
(f) Filing instructions for a section 6435 claim—(1) Form of claim. A taxpayer must submit a section 6435 claim on Form 8849, Claim for Refund of Excise Taxes, that includes the section 6435 taxpayer's report and a completed Schedule 5 (Form 8849), Section 4081(e) and 6435 Claims, or any successor form(s). Both the Form 8849 and the included Schedule 5 (Form 8849) must include all information and documentation required by the forms, form instructions, and this section. A taxpayer cannot make a section 6435 claim on the same Form 8849 as any other claims besides another section 6435 claim. Therefore, no other schedules or types of claims may be included with the Form 8849 on which a section 6435 claim is made. For example, if a taxpayer making a section 6435 claim also wishes to make section 4081(e) claims, the taxpayer must submit a separate Form 8849, and include a separate Schedule 5 (Form 8849), for those section 4081(e) claims.
(2) Content of claim. A section 6435 claim must contain the following information with respect to the eligible dyed fuel covered by the claim:
(i) Volume and type of fuel removed.
(ii) Date of removal of fuel.
(iii) Amount of section 4081 tax previously paid with respect to such fuel.
(iv) The section 6435 taxpayer's report that relates to such fuel.
(g) Time for filing claim. A section 6435 claim may be filed any time after the removal of the eligible dyed fuel and before the end of the period prescribed by section 6511 of the Code for the filing of a claim for a refund of an overpayment of the section 4081 tax paid with respect to such fuel.
(h) Example. The following example illustrates the provisions of this section: On June 25, 2026, X, a taxable fuel registrant, removes 10,000 gallons of undyed diesel fuel from an approved terminal at the rack. The diesel fuel is then transported to and entered into a second approved terminal via tank trucks. X, as the position holder of the diesel fuel at the time of this first removal, is liable for the $2,440 section 4081 tax imposed on the removal, which includes the LUST tax. On July 31, 2026, X timely files its Form 720 for the quarterly tax period ending June 30, 2026, on which it reports the section 4081 tax imposed on the removal, and pays the section 4081 tax to the IRS. Pursuant to § 48.4081-7(c)(3), X also files a first taxpayer's report with its Form 720 with respect to the removal of the 10,000 gallons of diesel fuel. On August 10, 2026, X dyes 5,000 gallons of the diesel fuel and removes the dyed diesel fuel from the second approved terminal. The dyed diesel fuel is intended for use on a farm, which is a nontaxable use. After X has removed the dyed diesel fuel from the second approved terminal, X files a Form 8849 that only covers a section 6435 claim, and includes a completed Schedule 5 (Form 8849) and the required section 6435 taxpayer's report, to claim a refund in the amount of the $1,220 section 4081 tax paid with respect to such fuel. X's section 6435 taxpayer's report uses the model report provided in paragraph (e)(2) of this section. X checks the box in line 6 of its section 6435 taxpayer's report and identifies the corresponding first taxpayer's report it filed for the quarterly tax period ending June 30, 2026, thereby revoking the first taxpayer's report to the extent of the 5,000 gallons of dyed diesel fuel. Because X has met the conditions under paragraph (d) of this section and filed a claim for refund in accordance with paragraph (f) of this section, X is allowed a refund of the section 4081 tax (including the LUST tax) that it paid to the IRS on the June 25, 2026, removal of the 5,000 gallons of diesel fuel that it later reentered, dyed, and removed.
(i) Applicability date. This section applies to removals of eligible dyed fuel occurring on or after December 31, 2025.
(j) Expiration date. This section expires on the earlier of May 1, 2029, or the date of any statutory change that would appropriate funds for the payment of claims under section 6435 to persons other than the taxpayer that paid the section 4081 tax to which the claim relates.
[T.D. 10047, 91 FR 23367, May 1, 2026]
Effective Date Note:
Effective Date Note:At 91 FR 23367, May 1, 2026, § 48.6435-1T was added, effective May 1, 2026, through May 1, 2029.