American company owners know that paying taxes is a non-negotiable part of the financial obligations that come with operating a profitable business. Most companies know just enough about taxes to fulfill their duty to pay, but few fully understand all the ins and outs of tax regulations. Just as industries can vary greatly, so too can the tax implications for each industry. Unfortunately, not all taxpaying companies are aware of all the tax advantages available to them.
One major category that is overlooked is the tax recovery that allows for excise taxes paid on fuel. Every year, excise taxes on fuel are left unclaimed, and TiP Excise is here to let you know that you can be entitled to a tax credit if your company fuels machinery for off-road operations!
Everything You Need to Know About Excise Tax
If we lost you at excise, you’re not alone. This is one of the most misunderstood taxing concepts, especially when recovering excise taxes. The excise tax only applies to specific industries. Therefore, an extensive understanding of fuel tax regulations is required to evaluate the eligibility of an excise fuel tax credit. Even the best tax and accounting professionals are unaware that you can recover your excise fuel tax.
Professional fuel tax experts can certainly help clarify any questions you have about excise fuel tax and how to know if you’re eligible for a credit or refund. The TiP Excise team has over 20 years of experience related to fuel excise taxes. We’re ready to help you recover the excise fuel taxes you’ve already paid to run your business. With a little bit of record collecting on your part, we can confidently take over the process of submitting claims. We also monitor your progress and contact tax authorities directly to avoid any delays.
What is Excise Tax?
Excise tax and sales tax are similar in that they are both indirect taxes, passed on to the consumer at the point of sale. The difference is that sales tax applies to just about all goods, while excise taxes apply only to specific goods, services, or activities. Depending on the item, the excise tax might be calculated as a percentage of the final cost, such as 7.5% charged on airfare, or as a flat dollar amount per unit, like 18.4 cents charged per gallon of gasoline.
Since excise tax is added on top of state tax, most items with excise tax are taxed twice. Most consumers never realize they are absorbing this excise tax because it is built into the purchase price of the good or service.
Examples of excise taxes that the federal government imposes include:
Per Unit Excise Tax
- Tobacco products
- Firearms and ammunition
- Gasoline and diesel
Percentage of Price Excise Tax
- Sport fishing equipment
- Airline tickets
- Indoor tanning services
Excise Fuel Tax
The federal gasoline excise tax is implemented to fund transportation that is related infrastructure needs, funding road and transit projects, such as repair and maintenance. It started in 1932 and was set at $0.01 per gallon. Since then, the rate has increased ten times but has held steady since 1997. Today, federal excise fuel taxes are just above $0.18 per gallon for gas and $0.24 per gallon for diesel.
Despite the fact the federal excise fuel tax is fixed at a standard rate, the total amount the consumers pay for fuel varies. This is because states add their own fuel excise taxes to every gallon purchased, effectively raising the overall tax rate.
Fuels that Carry Excise Tax
- Alternative fuels
- Compressed natural gas
- Fuels used in aviation
Tax Advantages for Vehicles Exempt from Fuel Excise Tax
Excise fuel taxes generally applies to fuels that power highway vehicles, motor vehicles, trains, motorboats, and aircraft. The tax advantage comes when vehicles use fuel to operate vehicles and equipment off-road. In this case, taxpayers are eligible for a refund or credit on the excise tax paid since the fuel is not used on the road.
Nontaxable Uses of Fuel
The following uses of fuels are considered nontaxable for excise tax purposes:
- Off-highway business use, such as fuel used to power a generator for a business
- Farms for farming purposes, such as powering farming equipment
- Exported fuels
- Intercity, schools, and local buses
- By a qualified blood collector organization
- An aircraft or vehicle owned by an aircraft museum
- Fuels exclusively for use by a nonprofit educational organization
- Fuels exclusively for use by a state, a political subdivision of a state, or the District of Columbia
Special Fuels Eligible for Excise Tax Credit
The following fuel types generally entitle a taxpayer to a credit against the excise taxes imposed:
- Alcohol fuel mixtures
- Biodiesel mixtures
- Alternative fuel mixtures
- Alternative fuels
Trust Your Fuel Tax Recovery to TiP Excise
Not many companies realize the tax advantages of fuel consumption used for static operations and off-road applications. At TiP Excise, we’ve made it our mission to get the word out and help taxpayers recover money owed to them from the IRS.
The fuel tax recovery process can be confusing and full of misinformation, so the TiP Excise team is ready to guide you every step of the way. We are up to date on all fuel tax regulations and experts at tax reporting. Let’s work together to maximize your excise tax recovery and get back every dollar you are owed.