Claims for Refund of Excise Taxes – Form 8849

The IRS has recently added fraud involving the fuel tax credit to the list of frivolous tax claims being put forth by individuals and businesses. The credit has very defined criteria and applies generally to farmers and fisherman who use fuel for off-highway business purposes. There are some individuals who are trying to claim the credit when in fact their occupation or income level makes the claim unreasonable. If you attempt to claim a tax credit or refund, and it is not justified, you can be liable for up to $5,000 in penalties.

The tax credit is a possibility under the right, and narrowly defined circumstances. Basically, it works like this:

A federal excise tax is imposed on gasoline ($.184 per gallon), clear diesel fuel ($.244 per gallon), and clear kerosene ($.244 per gallon). The amount of these taxes may be credited or refunded if these fuels are used in many types of off-road uses. Common off-road uses include use as heating oil, use in stationary engines, use in non-highway vehicles, and use in separate engines mounted on highway vehicles. Continue reading →

What if My Form 2290 not filed in time to the IRS?

A 2290 can be filed with the IRS at any time after the deadline [August 31st] has passed but the tax due may be subject to penalties and interest. Other points to remember about the 2290 Heavy Use Tax, the 2290 tax is due the next month after the truck is put in service. For trucks on the road in July 2010, the tax is due by August 31, 2010.
For trucks that aren’t put into service until sometime in the month of August, 2010, the tax is due by Sept 30, 2010. And So forth. Also, the tax is pro-rated for trucks that are not in service for the full tax period. The details on the pro-rated tax are in the 2290 instructions. Continue reading →

Tax Credit for Form 2290 Heavy Vehicle Use Tax payers

If you are paying the Heavy Use Tax (IRS Form 2290) and plan to sell your truck during the tax period, you can apply for a credit – meaning you’ll get a pro-rated portion of the tax back.

Sold Truck Credit:

In previous years, you had to pay the $550 tax and if you sold your truck during the tax period, you did not get anything back. You could provide the form to the person you sold the truck to so that they didn’t have to pay the tax in addition to what you already paid. But once you paid the tax, your money was gone. Continue reading →

Tax credits for Hydrogen fuel from IRS.

IRS Updates Alternative Fuel Excise Tax Forms

The Internal Revenue Service (IRS) has updated several tax forms used to claim the Alternative Fuel Excise Tax Credit. As a result of these updates, taxpayers claiming a rebate or payment for the $0.50 per gallon credit mustfile Form 8849, Schedule 3 (PDF 189 KB). Additionally, corporations and businesses may use Form 8849, Schedule 3 to claim a quarterly credit instead of using Form 4136 (PDF 263 KB) to claim an annual credit. According to the IRS, claimants that intend to file Form 8849, Schedule 3 must file no later than the end of the quarter following the quarter in which the fuel was used or sold.

Do You Need to Make the Switch to EFTPS?

IRS has issued proposed regs designed to expand the making of electronic tax deposits. The regs would eliminate the use of paper-based federal tax deposit (FTD) coupons after 2010. The existing rules for making electronic deposits would otherwise generally remain unchanged.

Currently, taxpayers whose aggregate annual deposits of certain taxes exceed $200,000 are generally required to use Electronic Funds Transfer (EFT) to make FTDs. Taxes taken into account in determining whether the $200,000 threshold has been met include withheld income and FICA taxes, corporate income and estimated taxes, certain taxes imposed on tax-exempt organizations, taxes withheld on nonresident aliens and foreign corporations, estimated taxes of certain trusts, FUTA taxes, and excise taxes, as well as others. Once taxpayers exceed the $200,000 threshold, they have a one–year grace period before being required to use EFT, and then they are required to use EFT in all later years even if their deposits fall below the threshold. The Electronic Federal Tax Payment System (EFTPS) is the EFT system currently used by IRS to collect FTDs. Continue reading →