Are You A Farmer Who Has Paid Too Much Fuel Excise Tax?

Are You A Farmer Who Has Paid Too Much Fuel Excise Tax?
July 19, 2019 0 Comments

If you are involved in the farming industry, it’s probably safe to say you use fuel for different applications around your farm.

Unfortunately, when you’re buying gasoline, you’re also paying a fuel excise tax you may not be aware of. The good news is the IRS knows you may not use all of the fuel for farming purposes and will reimburse you accordingly.

If you have a large fuel tank, you may use fuel for mowing your lawn, processing, or canning operations. When the federal government and different states place a tax on gasoline, they use this money for infrastructure products such as repaving roads.

If you’re not using the gasoline you purchase for transportation requirements, you’ll be able to apply for tax recovery and get your money back. The nontaxable uses you can receive a refund for will fall into these three categories:

  • Business use that’s off-highway
  • Used for farming purposes
  • Uses that don’t include fuel powering a propulsion engine

What Does the Government Recognize as a Farm?

To be recognized as a farm, you’ll need to involved with operations that deal with:

  • Poultry
  • Fish
  • Dairy
  • Livestock
  • Truck farms
  • Fur-bearing animals
  • Fruit
  • Ranches
  • Plantations
  • Orchards
  • Feed yards
  • Ranges
  • Nurseries

The government also recognizes structures such as a greenhouse, which is used to raise horticultural or agricultural commodities. Also, if your farm involves growing or raising fish, you can qualify for a credit that reimburses the excess fuel excise tax you paid.

Using Fuels For Farming

Certain types of fuels you use for farming are eligible for a credit or refund from the government. You’ll need to determine if they are for farming purposes, off-highway business use, or household use. Here are some fuel categories you can examine to see if you may be eligible to receive a credit or refund.

Aviation Use

If you’re a tenant, operator, or owner of a farm, you could be eligible to receive a credit or refund from the IRS for overpayment of fuel tax.

This will fall into several categories. In some situations, you may use an airplane to spray your crops. In this case, you are using fuel for aviation purposes.

The IRS sees this as gasoline you use for a farming purpose and will give you credit for this type of use.

Kerosene and Aviation

If you use kerosene in aviation for farming, off-highway business use, or household use, you may be eligible to receive a credit or refund.

Off-highway business use and household use (can’t be used as fuel in a propulsion engine) do not qualify as categories that allow a credit or refund.

Dyed Diesel Fuel

Dyed kerosene or dyed diesel fuel you use for farming purposes, off-highway business use, or for household use that doesn’t include fuel in a propulsion engine, are not eligible to receive a refund or credit.

Other Fuels

You are eligible to receive a credit or refund if you use any different types of fuels for farming purposes such as liquefied petroleum gas or liquefied hydrogen.

You can also receive a credit or refund if you use these alternative fuels for off-highway business use. However, household use of these fuels will not allow you to receive a credit or refund.

Defining Farming Purposes

If you’d like to receive tax recovery, farming purposes needs to be defined. Here are five categories the government allows as farming purposes.


When you use fuel to cultivate your soil or raise horticultural or agricultural commodities, the government deems this as a farming purpose.

Raising Animals

If you’re involved in caring for or raising bees, livestock, wildlife, fur-bearing animals or poultry.


Involvement in creating, storing, packing, drying or handling horticultural or agricultural commodities will allow you to qualify based on specific rules.


Cultivating, planting, cutting, or caring for trees is another area that can qualify based on specific rules.

Pesticides and Fertilizer

A fuel you use on a farm for farming purposes will include fuel s used during the application of pesticides and fertilizer. In most cases, if you’re the applicator, you can receive a credit or refund for this type of fuel use.

However, if you use fuel while you’re taking a farm truck down the highway, this type of fuel use is taxable. When you have an aerial applicator spray your ground, this is treated by the IRS as used for farming, which shouldn’t be taxed.

Fuels Not Used For Farming

In some situations, you may use fuel on your farm that isn’t associated with your farming operation. These uses can include the following:

  • Mowing the lawn for your residence
  • When you are running a canning, packaging, freezing, or processing operation
  • Off of the farm in noncommercial aviation or on the highway, this applies even if the fuel you are using is for transporting farm-related items such as equipment, livestock, crops, or feed.

Who Bought the Fuel?

It’s important to note who is purchasing the fuel to claim a credit or refund. This can become complex when there is a tenant, operator, and owner involved.

It’s essential to keep good records of the fuel purchases, so you know who actually bore the cost for any fuel. If you own a farm and equally share the cost of fuel with a tenant, you can both claim credit for gasoline.

Using All-Terrain Vehicles

All-terrain vehicle (ATV) use is commonly seen on farms today. If you have an ATV on your farm, you may qualify for tax recovery. The criteria for receiving a refund or credit of excise taxes on the fuel you use for your ATV will depend on if you use it for farming purposes.

When determining if you qualify, you need to count only the times that you use your ATV for farming purposes. If you use it for both non-farming and farming purposes, you are only eligible for the farming fuel.

Let Us Help You Receive the Funds You Deserve

As you can see, there are many ways to become eligible for receiving some funds back from the government.

At TIP, we have the expertise and ability to dig deep into all of the regulations that are involved with recovering a refund when you use fuel for the sole purpose of farming.

Thus, the process to claim your refund can be complicated. This is especially when you are dealing with fuel for farming purposes. Our team of experienced professionals is proficient with this type of task.

We’ve helped individuals receive the funds they deserve where there is eligibility for a refund or credit. If you are involved in the farming industry and believe you should receive a refund, let our team help! Contact us today for our No-Risk service!

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Are You A Farmer Who Has Paid Too Much Fuel Excise Tax?
The process to claim your fuel excise tax refund can be complicated, especially when you are dealing with fuel for farming purposes! Contact us today!