Sponsors (2)
The bill lets affected taxpayers recover section 4081 taxes paid on dyed diesel/kerosene, but refunds come without interest and expand enforcement exposure for claimants, trading prompt tax recovery against lost interest compensation and higher penalty risk.
Entities that paid the section 4081 tax on dyed diesel or kerosene (e.g., fuel distributors and other affected taxpayers) can recover those taxes because Treasury must pay an amount equal to the tax for qualifying removals after the effective date.
Taxpayers making refund claims face greater IRS enforcement and potential civil penalties because the bill broadens refund/credit categories and ties them to excessive-claim penalties.
Taxpayers who receive refunds will not be paid interest, so they get no compensation for the time value of money between when they paid the tax and when the refund is issued.
Based on analysis of 2 sections of legislative text.
Requires Treasury to pay (without interest) an amount equal to the section 4081 excise tax for certain indelibly dyed diesel fuel or kerosene removed from terminals and later exempt under section 4082(a).
Creates a new Internal Revenue Code provision requiring the Treasury to pay, without interest, an amount equal to the section 4081 excise tax for persons who remove from a terminal “eligible indelibly dyed diesel fuel or kerosene.” "Eligible" means fuel for which the section 4081 tax was previously paid (not credited or refunded) and that is later exempt from tax under section 4082(a). The bill also updates related Code cross-references for refund procedures, collection of excessive claims, and civil penalties. The rule applies to fuel removed from a terminal on or after 180 days after enactment.
Official title: Amend the Internal Revenue Code of 1986 to allow for payments to certain individuals who dye fuel, and for other purposes.
Introduced March 25, 2025 by Ron Johnson · Last progress March 25, 2025