Diesel Fuel and Taxes?

[NJ H2]

What’s the story with Diesel Fuel and Taxes? Someone told me today that if you use Diesel Fuel in a non-Commercial Car or Truck you are allowed to take the Diesel Tax (that is included in the price per gallon) directly off the amount of Tax you actually owe the IRS.
EX: If you owe $1,000. in Fed Tax and you had used aprox: 1064 gallons of Diesel fuel in the course of the year, you then owe the IRS nothing because .94 cents of every gallon of Diesel Fuel is Commercial Truck Tax that regular consumers don’t have to pay. Hence the deduction! Any truth to this?
By the way, he wasn't 100% positive on the .94 cents but he said he thinks it's close.

[NJ H2]

What’s the story with Diesel Fuel and Taxes? Someone told me today that if you use Diesel Fuel in a non-Commercial Car or Truck you are allowed to take the Diesel Tax (that is included in the price per gallon) directly off the amount of Tax you actually owe the IRS.
EX: If you owe $1,000. in Fed Tax and you had used aprox: 1064 gallons of Diesel fuel in the course of the year, you then owe the IRS nothing because .94 cents of every gallon of Diesel Fuel is Commercial Truck Tax that regular consumers don’t have to pay. Hence the deduction! Any truth to this?
By the way, he wasn't 100% positive on the .94 cents but he said he thinks it's close.

[PARAGON]

I believe you are referring to Non-road diesel. Here you buy non-road diesel that has a special dye in it and it does not have any taxes added to it. It is for farming and other agricultural services. Some places do not have non-road diesel available so they buy regular taxed diesel and adjust for the taxes through their farm or agricultural business

[NJ H2]

This guy was claiming he is on his 5th Diesel car and he has been deducting the Diesel tax that he pays at the pump for every gallon during that tax year. He said that the tax is approx .94 cents a gallon and he just reduces the amount he owes by the amount of Diesel Tax he paid throughout the tax year.

[ssgharkness020147]

I have never heard of this. It sounds to good to be true, to bad I'm paying 500.00 a month to fuel the beast. I REALLY REALLY wish I could use off road diesel. That stuff is 1.80 a gallon here right now. It wasnt that long ago I was bitching about paying 1.80 a gallon, now I'd give my left nut to only pay 1.80 vs. the 2.34 I am currently paying. As for using off road diesel on road, if (key word here) you were to get caught using that in a car or truck the fine is 1,000.00 PER gallon found in you're vehicle. 1,000.00 X 42 gallons = 42,000.00. Nah, I'd rather pay 500.00 a month in diesel then 42,000 in fines.

[Dug]

nj h2 - There is offroad diesel fuel w/dye for "off road use only" and it has no tax added to it. Then there is on road diesel which has taxes added to it for the state roads. In Maine , you can credit yourself the $.55 per gal tax if the on road fuel was used for off road use. Like in a bulldozer. So if your using the diesel in a onroad vehicle you are stuck with the tax. -doug

[Suomea]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by ssgharkness020147:
I have never heard of this. It sounds to good to be true, to bad I'm paying 500.00 a month to fuel the beast. I REALLY REALLY wish I could use off road diesel. That stuff is 1.80 a gallon here right now. It wasnt that long ago I was bitching about paying 1.80 a gallon, now I'd give my left nut to only pay 1.80 vs. the 2.34 I am currently paying. As for using off road diesel on road, if (key word here) you were to get caught using that in a car or truck the fine is 1,000.00 PER gallon found in you're vehicle. 1,000.00 X 42 gallons = 42,000.00. Nah, I'd rather pay 500.00 a month in diesel then 42,000 in fines. </div></BLOCKQUOTE>

Ever considered running recycled vegetable oil? It's free, requires only minor modifications to the vehicle, and is better for your injector pump than most diesel you buy.

The biggest drawbacks? Losing some cargo space to the vegetable oil tank... This isn't an issue for me, as I removed my spare tire from under the truck, placed it on the rack, and installed a secondary extended range tank under the truck. Next drawback is having to go get the stuff from your favorite chinese restauarant.

I get mine from a friend's bar. I haul off the grease from the deep fryer in a 55 gallon drum, pump it into a second barrel in the garage, add biocide, let the particles settle, pump it thru a filter into another 55 gallon drum, let it settle some more, then pump it into a third barrel (filtering again of course) and Viola! Free diesel fuel.

The third drawback is this: having to explain it to everyone you meet. Once people notice that your exhaust fumes smell like french fries and you tell them why, you might have to take a few minutes to explain or demonstrate it.

It's great ammunition against the environmental wackos up at the college here in town... When they accuse you of murdering the earth with your Hummer (Land Cruiser in my case), you can say "my vehicle runs on recycled vegetable oil-- how about yours?"

Fred

[ssgharkness020147]

Hey Fred,
Actually yes I have been considering jumping on the Bio-diesel bandwagon. I have begun to research the process and equiptment I would need to begin making it. Did you buy you station for making bio or did you make it? How does bio work for you in the winter? I see that you're from Beloit, do you wheel you're truck, if so where do you head out to?

[NJ H2]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by Dug3x3:
nj h2 - There is offroad diesel fuel w/dye for "off road use only" and it has no tax added to it. Then there is on road diesel which has taxes added to it for the state roads. In Maine , you can credit yourself the $.55 per gal tax if the on road fuel was used for off road use. Like in a bulldozer. So if your using the diesel in a onroad vehicle you are stuck with the tax. -doug </div></BLOCKQUOTE>

I understand what you are saying but what he was saying is that the on road Diesel fuel incorporates a tax made for Commercial trucks that consumers don't need to pay. However we do pay it at the pump. Sin ce we pay it at the pump he said we are allowed to directly write it off our taxes. That was my question. Off road Diesel with the red dye in it is not a part of what he was saying.

[Dug]

NJH2- Thats a good question. I called my diesel fuel supplier and asked them. They said (in Maine) there is no discount/refund for on road diesel , whether its in a commercial truck or just a car. I looked up in the states website and diesel is only taxed $.01 more than gas is. So if there were any refund it would only be $.01 per gallon. But thats not saying that the federal tax cannot be refunded. - Doug

[PARAGON]

If this were true, it would stand to reason that some stations would have installed diesel pumps in the gasoline lanes (where many are already are) that have the tax removed for the consumer. It would be a very effective marketing point to get personal diesel vehicles into those stations.

[PARAGON]

I got the following from here:
http://www.irs.gov/publications/p378/ch01.html#d0e530

Nontaxable Uses
The following are the uses of undyed diesel fuel and undyed kerosene for which a credit or refund may be allowable to an ultimate purchaser.

<UL TYPE=SQUARE>Off-highway business use.

Export.

In certain intercity and local buses.

In a qualified local bus.

In a school bus.

Used other than as a fuel.

In a train (undyed diesel fuel only).

In a highway vehicle owned by the United States that is not used on a highway.

Exclusive use by a nonprofit educational organization.

In a vehicle owned by an aircraft museum.[/list]


No credit or refund is allowable for any use of dyed diesel fuel and dyed kerosene. You buy these fuels excise tax free. See Publication 510 for more information about dyed fuels.

[ratesguy]

There are new forms that have to be filled out if you want to claim the tax refund available per Paragons post. If you file a false form it is a felony. There is no such thing as a 94cent credit for buying regular diesel fuel for non commercial highway use. I represent a bio-diesel company and bio-diesel is treated the same way. Only problem is collecting the tax if it is privately produced. There are significant tax incentives available to bio producers, but none related to use as a fuel.

[Suomea]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by ssgharkness020147:
Hey Fred,
Actually yes I have been considering jumping on the Bio-diesel bandwagon. I have begun to research the process and equiptment I would need to begin making it. Did you buy you station for making bio or did you make it? How does bio work for you in the winter? I see that you're from Beloit, do you wheel you're truck, if so where do you head out to? </div></BLOCKQUOTE>

I made my distillery. Four 55 gallon drums, some hose and an electric transfer pump from Harbor Freight, and a water strainer, a 10 micron filter and a 5 micron filter. The barrels you can get at a scrap metal yard, the rest at harbor freight or a Home Depot type place.

The harder part was fabricating the tank for the land cruiser-- which comes to your other question-- winter. Commercial Biodiesel that you buy has better cold weather properties than the home made stuff, and to my knowledge is just liek regular diesel... The homemade stuff will congeal at room temperature. SO what you do is you weld a copper or aluminum coil into the tank you use for the grease diesel. You then run antifreeze from the engine thru that coil to preheat the fuel and make it nice and free flowing. You need to start the truck on regular diesel fuel until it warms up to operating temperature, then switch over to the grease. 5 minutes before you get where you're going, switch back to Dino diesel to flush out the system.

I bought the seperate extended range fuel tank for the Land Cruiser that was common on non-US vehicles and goes where the spare tire did on US models (under the truck in front of the rear bumper). I had a skilled welder cut the tank in half, weld in the coils and weld the tank back together. This was more costly than buying a pre made kit, but I did not lose any cargo space, since the tank was factory fitted to my truck.

Clearly, you will want to have a good water strainer with a indicator light on the line in case the heating coil breaks one day... Also, a good 10 and maybe a 5 micron filter in the line as well.

I have about 30 gallons of plain Diesel fuel in the main tank, and then another 20 of grease in the extended tank.

I do wheel, and I don't. THis year I don't cause my truck is finally undergoing frame off rebuild. After 22 years, the rust has gotten to it. No surprise there, the Land Cruisers were notorius rust buckets...

A friend of mine who owns two jeeps has 25 acres of forest land that we use as a "test track" of sorts to play around, test out new mods, etc... My uncle is a logger in the UP of Michigan and I oft times will go up there and drive around some logging trails.

My wife and I are both in the scientific field, and we are planing on doing lots of field work, thus, our cruiser is outfitted as a long-range expedition truck-- We enjoy our long trips along the Al-Can Highway, and are planning a trip to Costa Rica once the Cruiser is back in one piece. We chose the cruiser specifically since it is big enough for our equipment and gear, tough enough to take whatever you can dish out, a very capable off roader, and parts are readily available in most countries to affect any repairs necessary. So we aren't "recreational" off roaders strictly speaking, we just end up doing a lot of it as part of our trips. http://www.elcova.com/infopop/emoticons/icon_smile.gif

Anytime you're around Beloit though, drop me a line and if the Cruiser is back together, we can do some wheeling.

Fred