Motor Fuels Tax Minute, Episode 3

This week on the Motor Fuels Tax Minute, we discuss federal motor fuels tax payments and how best to apply tax credits when submitting your semi-monthly deposits. 


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Detailed Transcription of Weaver’s Motor Fuels Tax Minute, Episode 3


Emilda: Welcome to Weaver's Motor Fuels Tax Minute. This week we are talking about semi-monthly deposits as well as federal motor fuel excise taxes and how those are made when there are tax credits, such as biodiesel and renewable diesel mixture credits, to be offset.


Leanne: Subject to the safe harbor rule for filing taxes, taxpayers with a federal motor fuel excise tax liability are required to deposit 95% of the total amount of net tax liability incurred during the semi-monthly period. The exception is if the net liability does not exceed $2,500 for the entire quarter. When a taxpayer does have excise tax credits offsetting against its excise tax liability, that calculation becomes a little bit more complicated.


Emilda: That's right, Leanne. When determining the amount of the tax deposit, the credits for that period are offset against the tax liability. This could result in a taxpayer remitting a lesser amount of tax.

For example, if you have $1,000 of tax liability, you can offset it with $900 of credits. That leaves you with $100 of tax liability, of which the 95% tax deposit would be remitted. Again, it is subject to that total $2,500 liability rule.

There's also situations where there is no tax due. So, if you have a tax liability of $1,000 for that semi-monthly deposit and you have $1,000 of credits, then there's no federal excise tax deposit due for that period.


Leanne: That's right, Emilda. And there may even be a situation where a taxpayer has more credits to offset than it has an excise tax liability. In that case, not only is there a zero deposit, but the taxpayer should look to for an additional refund option for the excess credits.

There are a few ways for filers to claim these refunds, and we at Weaver are happy to assist in this process.


Emilda: Our key takeaway here is that semi-monthly deposits account for both the taxes owed and also the credits claimed.


Leanne: And that is this week's Motor Fuel Minute. Thank you.


Emilda: Thank you.

Weaver's Motor Fuels Tax Minute

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Leanne Sobel

Leanne Sobel

Director, Motor Fuels and Excise Tax Services


Leanne Sobel, J.D., has over 15 years of experience in legal tax matters. Her career focus includes federal and state tax and…

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