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Ext. PublicationFor the Second Year in a Row, False Claims for Fuel Tax Credits Make the IRS’ Dirty Dozen List
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For the second year in a row, improper claims for off-highway fuel tax credits have made the annual IRS Dirty Dozen list of tax scams.
This Federal Fuel Tax Credit applies to gasoline or diesel used for an off-highway business purpose or farming. Off-highway business use includes fuels used in stationary machines such as generators, compressors, power saws and similar equipment, for cleaning purposes, and in forklift trucks, bulldozers and earthmovers. It generally does not include nonbusiness use, such as fuel for minibikes, snowmobiles, personal power lawn mowers, chain saws and other personal yard equipment. Farming use of fuel includes carrying on a trade or business of farming on a farm in the U.S.
Improper or fictitious claims primarily are made on Form 4136, Credit for Federal Tax Paid on Fuels, which is attached to a federal income tax filing. In these scams, promoters or tax return preparers charge taxpayers inflated fees for making credit claims. They make misleading claims on fuel use and create fictitious documents or receipts for fuel, leaving taxpayers subject to tax liability that could result in civil and criminal penalties.
To combat this continued activity, the IRS announced filing changes. Taxpayers are now required to attach a statement to Form 4136, filed with the Form 1040, that includes name and employer identification number (EIN) if applicable, as well as the make, model and type of machinery or vehicle for which the fuel was purchased. Taxpayers will also be required to complete a table to show the relationship between the estimated purchase price of the fuel compared to the actual cost and gallons reported as being purchased on Form 4136.
Taxpayers are advised to work with reputable tax professionals for assistance in filing Form 4136, Credit for Federal Tax Paid on Fuels, and in providing proper substantiation for the credits. Weaver’s tax professionals are here to help. Contact us for assistance in claiming the Fuel Tax Credit.
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