Excise Fuel Tax & Construction Companies  

orange bulldozer
August 2, 2022 0 Comments

The initial shock of rising fuel prices has faded, but the sting at the pump has remained steady. Fuel inflation has pushed many of us to reevaluate our budget, get creative with our resources, and make some major adjustments. The world is feeling the ripple effect of this new reality that is affecting global industries. 

 Some industries have been impacted more severely than others. The construction industry, for example, relies heavily on fuel to power necessary equipment and transport supplies and materials. Fuel costs are a major expense. The good news is that the government has provided a way to recover some of this fuel expense in the form of a federal excise tax credit. Unfortunately, not many people know about this fuel tax credit and many are missing out on claiming thousands of dollars every year. 

 TiP Excise is Your Ultimate Solution  

TiP Excise has a standard mission, and that’s to help taxpayers recover their excise fuel tax credit. The process of claiming this tax credit can be a bit challenging, if not overwhelming, for taxpayers to manage on their own. This is why we’ve built a team of professional tax consultants that specialize in excise tax credit. We have worked with companies across the industrial sector, and we know firsthand how much taxpayers in the construction industry can benefit from maximizing their fuel tax credit. 

What is a Federal Excise Tax? 

 So, what is excise tax? This term is new to most taxpayers because it’s not something the average consumer is aware of, let alone understood. Excise taxes are different from general taxes. These special taxes are imposed on specific goods, services, or activities. Depending on the specific tax, they are required for the manufacturer, retailer, or consumer. The final price of the product or service can include excise taxes. It’s surprising to know that the average consumer is unaware of this. One major good that carries an excise tax is fuel.  

What Fuel Expenses are Eligible for Tax Credit? 

 Federal fuel excise taxes are used to fund highway and road maintenance programs. Some would argue that this is fair if you use the fuel on the roads that are funded by it. However, what happens when fuel is not used on the roads the tax is funding? In other words, why should purchasers of taxable fuel pay excise tax if the fuel is used for nontaxable purposes?  To address this, the IRS offers a tax credit to corporate taxpayers who purchase fuel for off-highway purposes.  

 For the construction industry, this means that all the gasoline, diesel, and kerosene used to power any equipment used off-road is eligible for the fuel excise tax credit.

The following equipment are eligible for excise fuel tax credit when used off-road: 

  • bulldozers
  • cranes
  • power saw
  • air compressors
  • generators
  • heaters 
  • front loaders

How Much Money Can the Excise Fuel Credit Save You? 

 Calculating the fuel tax credit is straightforward. You multiply the number of gallons used for nontaxable purposes times the applicable rate. Currently, the federal tax per gallon is $0.184 for gasoline and $0.244 for diesel and kerosene.  

 Don’t be discouraged if you’re part of a small construction company and don’t think the recovery process is worth the effort. Regardless of the size of your company, the percentage of the expenses you filter into your fuel needs is the same. This may not seem like a large credit at one time, but it could have a significant impact on your bottom line in the long run.  

How Can Construction Companies Benefit from this Tax Credit? 

Fuel plays a major role in the construction industry from start to finish. Initially, there are sites that need clearing up, most likely gas-powered mowers or landscaping equipment. Then, you use stationary machinery like saws and generators to provide off-the-grid power to the construction site. Next, it’s time to get those bulldozers and forklifts to transport materials back and forth between projects.  

Surely, rising fuel prices have directly impacted day-to-day operations tremendously. There is no way around fuel expenses for contractors. Fuel plays an integral role in every aspect of the job. This makes construction a leading industry for excise fuel tax recovery. There is a lot of potential for recovering tax credit. It is surprising to find out the amount of money you can obtain with excise fuel tax credit. 

Claim Your Fuel Tax Credit 

 There are several ways to claim your fuel tax credit. TiP Excise can help you decide the best way for your business to claim your money.  

  •  Form 4136 is used to claim your fuel tax credit with your annual tax return. 
  •  Form 8849 is used to obtain periodic fuel tax refunds if you don’t want to wait until the end of the year. 
  •  Form 720 is used quarterly to claim a fuel tax credit against your excise tax liability.  

TiP Excise Can Help You Recover Your Excise Fuel Refund 

 You shouldn’t have to pay taxes that you don’t owe, and that’s exactly why construction industry workers should claim excise fuel tax credit. The process is not simple, but it is worth pursuing. The criteria that make you eligible for excise tax is constantly changing. Therefore, it’s important to have a professional tax consultant experienced in excise tax recovery to lead the way.  

The knowledgeable team at TiP Excise focuses solely on recovering excise fuel tax. We’ve made it our business to alleviate the burden and take over the entire process. You an start this process today with minimal effort on your end.  Additionally, we begin by evaluating your situation and work to get the maximum refund possible.  

Get the Refund You Deserve with TiP Excise  

 At TiP Excise, we don’t require any upfront fees to get started. We get paid when you get paid, so our success depends on your success. Schedule a free consultation. We look forward to hearing about your business and seeing if you qualify. Our team is confident that we can help uncover significant savings for your construction company.  Contact us today.