S. 1111 creates a new federal payment program for individuals and businesses that remove specially dyed diesel fuel or kerosene from fuel terminals. Under the bill, the Internal Revenue Service would reimburse these individuals for federal excise taxes previously paid on the fuel, as long as the fuel qualifies as "eligible indelibly dyed" fuel—meaning it was taxed when originally purchased but is now exempt from taxation under certain circumstances. The legislation introduces new section 6434 to the tax code to establish the eligibility requirements and payment process, with violations subject to civil penalties. The bill takes effect 180 days after enactment and includes conforming changes to related tax code sections to integrate this new payment mechanism into the existing fuel tax refund system.
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