Colonial Pipeline Shutdown Disruptions To Fuel Supply Chain Trigger IRS To Waive Penalties On Dyed Diesel Fuel.

WASHINGTON — In response to disruptions in the fuel supply chain, the Internal Revenue Service will waive penalties for dyed diesel fuel sold for use or used on the highway in the states of Alabama, Delaware, Georgia, Florida, Louisiana, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, and Virginia, as well as the District of Columbia.

This relief is effective retroactively to May 7, 2021, and will last until May 21, 2021.

This exemption applies to anyone who sells or uses dyed diesel fuel for highway use.
The relief is available to the operator of the vehicle that uses the dyed diesel fuel only if the operator or the person selling the fuel pays the 24.4 cents per gallon tax normally applied to diesel fuel for highway use.

The IRS will not impose penalties for failure to deposit this tax on a semimonthly basis.
Publication 510 of the Internal Revenue Service, Excise Taxes, contains information on the proper method of reporting and paying the tax.

Normally, dyed diesel fuel is not taxed because it is sold to exempt customers, such as farmers for agricultural purposes, homeowners for home heating, and local governments.

The IRS is monitoring the situation closely and will provide additional assistance as necessary.