To amend the Internal Revenue Code of 1986 to provide refunds with respect to certain dyed fuels that are exempt from tax and with respect to which tax was previously paid.
- Bill Number
- H.R. 2146
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-03-14: Referred to the House Committee on Ways and Means.
- Last Updated
- 2025-05-09T14:06:40Z
AI-Generated Summary
Purpose
This legislation, H.R. 2146, aims to allow refunds of excise taxes previously paid on certain dyed diesel fuel or kerosene that is exempt from taxation because it is intended for non-highway uses (like farming or off-road equipment). It addresses situations where taxes were mistakenly or previously applied to these exempt fuels.
Key Provisions
- New Refund Section (Section 6434): Adds a provision to the Internal Revenue Code (IRC) allowing the Secretary of the Treasury to refund the excise tax paid under IRC Section 4081 on "eligible indelibly dyed diesel fuel or kerosene."
- Eligibility: The fuel must have been removed from a fuel terminal, had the tax previously paid (without prior credit or refund), and be exempt under IRC Section 4082(a) due to being dyed for non-taxable (non-highway) uses.
- Refunds are paid without interest to the person who can prove removal of the fuel.
- Treatment of Payments: Refunds are handled like other fuel tax credits under federal law (31 U.S.C. Section 1324), ensuring consistent government accounting.
- Conforming Amendments: Updates related IRC sections (6206, 6430, 6675) to include these refunds in rules for assessments, prohibitions on certain claims, and penalties for improper claims.
- Effective Date: Applies to fuel removed from terminals starting 180 days after the bill's enactment.
Significant Changes to Existing Law
- Introduces a new standalone refund mechanism (Section 6434) specifically for dyed, exempt fuels where taxes were overpaid, separate from general fuel tax refunds (e.g., under Sections 6420 or 6421 for off-highway or agricultural uses).
- Expands IRS authority to process these refunds while integrating them into existing enforcement and penalty frameworks, preventing abuse like duplicate claims.
- No changes to the underlying tax exemptions for dyed fuels, but it provides a direct remedy for prior tax payments on them.
Potential Impacts
- On Government Agencies: The IRS will need to verify claims and process refunds, potentially increasing administrative workload but reducing disputes over overpaid taxes. This could lead to a minor decrease in federal revenue from excise taxes.
- On Citizens: Benefits individuals or businesses (e.g., farmers, construction firms) using dyed fuels for non-highway purposes by reimbursing unintended taxes, lowering costs for off-road operations.
- On International Relations: Minimal impact, as this is a domestic tax refund focused on U.S. fuel distribution; it does not affect imports/exports directly.
Main Stakeholders Affected
- Fuel Suppliers and Distributors: Those who remove dyed diesel or kerosene from terminals and paid the initial tax; they can claim refunds, easing financial burdens.
- End Users: Farmers, off-road vehicle operators, and industries relying on exempt dyed fuels, who may see indirect cost savings if passed on by suppliers.
- U.S. Treasury and IRS: Responsible for refund approvals, verifications, and enforcement to prevent fraud.
- Taxpayers Generally: Slight offset to federal fuel tax revenue, potentially affecting broader budget allocations.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens tax equity by correcting overpayments on exempt fuels, aligning with IRC principles that dyed fuels (marked with indelible dye to indicate non-highway use) should not be taxed. It includes anti-fraud measures (e.g., penalties under amended Section 6675) to ensure claims are legitimate.
- Constitutional: No apparent issues; it operates within Congress's taxing and spending powers under Article I, providing a standard administrative refund process without retroactivity beyond the effective date.
- Political: Bipartisan support evident from cosponsors across parties, suggesting appeal to agricultural and rural interests. Could set precedent for simplifying fuel tax refunds, but may face scrutiny over revenue loss in budget debates.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (8)
Rep. Wied, Tony [R-WI-8], Rep. Steil, Bryan [R-WI-1], Rep. Pocan, Mark [D-WI-2], Rep. Van Orden, Derrick [R-WI-3], Rep. Fitzgerald, Scott [R-WI-5], Rep. Grothman, Glenn [R-WI-6], Rep. Tiffany, Thomas P. [R-WI-7], Rep. Van Duyne, Beth [R-TX-24]
Recent Actions
- 2025-03-14: Referred to the House Committee on Ways and Means.
- 2025-03-14: Introduced in House
- 2025-03-14: Introduced in House
Bill Versions
- To amend the Internal Revenue Code of 1986 to provide refunds with respect to certain dyed fuels that are exempt from tax and with respect to which tax was previously paid. — issued 2025-03-14 — PDF (4 pages)