Motor Fuels Tax Minute, Episode 55: Tax Controversies

In this week’s episode of Motor Fuels Tax Minute, our hosts cover tax controversy and the fuels space with Dawn Rhea, Weaver’s tax services partner.

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Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 55

00:00:08
Leanne: Welcome to Weaver’s “Motor Fuels Tax Minute,” the vlog where we talk all things motor fuel. Today, Kelly and I are joined by our tax controversy partner, Dawn Rhea. And for those of you that watch our “Energy Evolution” vlogs, you will recognize Dawn from when she wears her inflation reduction hat. But not only is she knowledgable on all those energy tax credits, she stands up our tax controversy practice here at Weaver and has a wealth of experience with fuels. So we had to bring her on to talk about what it is that she is seeing when it comes to controversy and the fuels tax space. Dawn?

00:00:35
Dawn: I love this topic. Just like energy, our motor fuels see exams, they just do. These credits are interesting. They’re super valuable, incredibly rich credits. So we see them across the board. I think hopefully we can talk about two that are just really seeing exams at the moment.

The first I want to talk about is, with the July 1st, 2022, reinstatement of the Superfund Tax, we’re seeing a lot of those 720s and 8849s getting pulled, right? I think what I’ve been surprised about since these are getting pulled and since the numbers can be very large with respect to the Superfund Tax, it’s amazing to me the quickness and speed at which the service is sending not only what you think is going to be a correspondence exam, but also putting boots on the ground from their excise tax group to audit in person. And when they’re doing that, this is what surprised me. We need all the invoices back to back to back that show Superfund Tax paid by our exporter, and where they’re exporting it to. And my favorite is the waiver certificate.

I’m going to ask both of you, how often do you actually see parties that don’t have the waiver language from those subsequent up-the-chain suppliers actually bother to get one?

00:02:06
Leanne: It’s becoming less common since we started to see the exams, but certainly, way back at the start and definitely prior to the proposed regs from the IRS, we weren’t seeing a lot of that language. Now that we have the proposed regs, we’re seeing it either on the invoice and if it’s not on the invoice, we’ve instructed our clients to go get a certificate. We’re certainly seeing some situations where our client will have it from their supplier, but there may not be one further up the chain because that person hasn’t gone to get it. Well, we’d love to represent the entire industry, we understand that we don’t.

00:02:42
Kelly: Yeah, absolutely.

00:02:43
Dawn: Yeah, it’s been wild.

00:02:46
Kelly: On top of that, on the invoice, even if you don’t see it there, I have seen it in the description. Some companies will send a little bit of contract language on the second page of the invoice, and they’ll have it deep in there. So just another place to look. If our clients are not seeing it, we always have them check there as well.

00:03:04
Dawn: And I think the other thing is proof that these 150+ chemicals were actually exported. We were in an exam where we had to show point to point to point. The service is very well aware of what is needed to prove to get these Superfund taxes refunded. And I think they’re definitely looking rather stringently, but what do y’all see that’s any different?

Click play above to hear the rest of the conversation.