26 U.S.C. § 4041: Imposition of tax

sold by any person to an owner, lessee, or other operator of a diesel-powered highway vehicle or a diesel-powered train for use as a fuel in such vehicle or train, or used by any person as a fuel in a diesel-powered highway vehicle or a diesel-powered train unless there was a taxable sale of such fuel under clause (i). No tax shall be imposed by this paragraph on the sale or use of any liquid if tax was imposed on such liquid under section 4081 (other than such tax at the Leaking Underground Storage Tank Trust Fund financing rate) and the tax thereon was not credited or refunded. Except as otherwise provided in this subparagraph, the rate of the tax imposed by this paragraph shall be the rate of tax specified in section 4081(a)(2)(A) on diesel fuel which is in effect at the time of such sale or use. 3.3 cents per gallon after December 31, 2004 , and before July 1, 2005 , 2.3 cents per gallon after June 30, 2005 , and before January 1, 2007 , and 0 after December 31, 2006 . Except as provided in subclause (II), in the case of fuel sold for use or used in a use described in section 6427(b)(1) (after the application of section 6427(b)(3)), the rate of tax imposed by this paragraph shall be 7.3 cents per gallon (4.3 cents per gallon after September 30, 2028 ). No tax shall be imposed by this paragraph on any sale for use, or use, described in subparagraph (B) or (C) of section 6427(b)(2). sold by any person to an owner, lessee, or other operator of a motor vehicle or motorboat for use as a fuel in such motor vehicle or motorboat, or used by any person as a fuel in a motor vehicle or motorboat unless there was a taxable sale of such liquid under clause (i). except as otherwise provided in this subparagraph, the rate of tax specified in section 4081(a)(2)(A)(i) which is in effect at the time of such sale or use, in the case of liquefied petroleum gas, 18.3 cents per energy equivalent of a gallon of gasoline, in the case of any liquid fuel (other than ethanol and methanol) derived from coal (including peat) and liquid hydrocarbons derived from biomass (as defined in section 45K(c)(3)), 24.3 cents per gallon, and in the case of liquefied natural gas, 24.3 cents per energy equivalent of a gallon of diesel. For purposes of this paragraph, the term “energy equivalent of a gallon of gasoline” means, with respect to a liquefied petroleum gas fuel, the amount of such fuel having a Btu content of 115,400 (lower heating value). For purposes of the preceding sentence, a Btu content of 115,400 (lower heating value) is equal to 5.75 pounds of liquefied petroleum gas. For purposes of this paragraph, the term “energy equivalent of a gallon of diesel” means, with respect to a liquefied natural gas fuel, the amount of such fuel having a Btu content of 128,700 (lower heating value). For purposes of the preceding sentence, a Btu content of 128,700 (lower heating value) is equal to 6.06 pounds of liquefied natural gas. sold by any person to an owner, lessee, or other operator of a motor vehicle or motorboat for use as a fuel in such motor vehicle or motorboat, or used by any person as a fuel in a motor vehicle or motorboat unless there was a taxable sale of such gas under clause (i). No tax shall be imposed by this paragraph on any sale for use, or use, described in subparagraph (B) or (C) of section 6427(b)(2) (relating to school bus and intracity transportation). For purposes of applying this title with respect to the taxes imposed by this subsection, references to any liquid subject to tax under this subsection shall be treated as including references to compressed natural gas subject to tax under this paragraph, and references to gallons shall be treated as including references to energy equivalent of a gallon of gasoline with respect to such gas. For purposes of this paragraph, the term “energy equivalent of a gallon of gasoline” means 5.66 pounds of compressed natural gas. No tax shall be imposed by subsection (a) on liquids sold for use or used in an off-highway business use. If a liquid on which no tax was imposed by reason of subparagraph (A) is used otherwise than in an off-highway business use, a tax shall be imposed by paragraph (1)(B), (2)(B), or (3)(A)(ii) of subsection (a) (whichever is appropriate) and by the corresponding provision of subsection (d)(1) (if any). For purposes of this subsection, the term “off-highway business use” has the meaning given to such term by section 6421(e)(2); except that such term shall not, for purposes of subsection (a)(1), include use in a diesel-powered train. the rate applicable under subsection (a)(2) shall be the applicable blender rate per gallon less than the otherwise applicable rate (6 cents per gallon in the case of a mixture none of the alcohol in which consists of ethanol), and subsection (d)(1) shall be applied by substituting “0.05 cent” for “0.1 cent” with respect to the sales and uses to which clause (i) applies. The term “qualified methanol or ethanol fuel” means any liquid at least 85 percent of which consists of methanol, ethanol, or other alcohol produced from coal (including peat). except as provided in clause (ii), 5.4 cents, and for sales or uses during calendar years 2001 through 2008, ⅒ of the blender amount applicable under section 40(h)(2) for the calendar year in which the sale or use occurs. On and after January 1, 2009 , subparagraph (A) shall not apply. sold by any person to an owner, lessee, or other operator of an aircraft for use in such aircraft, or used by any person in an aircraft unless there was a taxable sale of such fuel under subparagraph (A). No tax shall be imposed by this subsection on the sale or use of any liquid for use as a fuel other than aviation gasoline if tax was imposed on such liquid under section 4081 (other than such tax at the Leaking Underground Storage Tank Trust Fund financing rate) and the tax thereon was not credited or refunded. The rate of tax imposed by this subsection shall be 21.8 cents per gallon (4.3 cents per gallon with respect to any sale or use for commercial aviation). In addition to the taxes imposed by subsection (a), there is hereby imposed a tax of 0.1 cent a gallon on the sale or use of any liquid (other than liquefied petroleum gas and other than liquefied natural gas) if tax is imposed by subsection (a)(1) or (2) on such sale or use. No tax shall be imposed under the preceding sentence on the sale or use of any liquid if tax was imposed with respect to such liquid under section 4081 at the Leaking Underground Storage Tank Trust Fund financing rate. sold by any person to an owner, lessee, or other operator of an aircraft for use as a fuel in such aircraft, or used by any person as a fuel in an aircraft unless there was a taxable sale of such liquid under subparagraph (A). sold by any person to an owner, lessee, or other operator of a diesel-powered train for use as a fuel in such train, or used by any person as a fuel in a diesel-powered train unless there was a taxable sale of such fuel under subparagraph (A). The taxes imposed by this subsection shall not apply during any period during which the Leaking Underground Storage Tank Trust Fund financing rate under section 4081 does not apply. For purposes of this section, the tax imposed under this subsection shall be determined without regard to subsections (b)(1)(A), (f), (g), (h), and ( l ). The preceding sentence shall not apply with respect to subsection (g)(3) and so much of subsection (g)(1) as relates to vessels (within the meaning of section 4221(d)(3)) employed in foreign trade or trade between the United States and any of its possessions. Under regulations prescribed by the Secretary, no tax shall be imposed under this section on any liquid sold for use or used on a farm for farming purposes. For purposes of paragraph (1) of this subsection, use on a farm for farming purposes shall be determined in accordance with paragraphs (1), (2), and (3) of section 6420(c). on any liquid sold for use or used as supplies for vessels or aircraft (within the meaning of section 4221(d)(3)); with respect to the sale of any liquid for the exclusive use of any State, any political subdivision of a State, or the District of Columbia, or with respect to the use by any of the foregoing of any liquid as a fuel; upon the sale of any liquid for export, or for shipment to a possession of the United States, and in due course so exported or shipped; with respect to the sale of any liquid to a nonprofit educational organization for its exclusive use, or with respect to the use by a nonprofit educational organization of any liquid as a fuel; and with respect to the sale of any liquid to a qualified blood collector organization (as defined in section 7701(a)(49)) for such organization’s exclusive use in the collection, storage, or transportation of blood. Under regulations prescribed by the Secretary, no tax shall be imposed under this section on any liquid sold for use or used by an aircraft museum in an aircraft or vehicle owned by such museum and used exclusively for purposes set forth in paragraph (2)(C). described in section 501(c)(3) which is exempt from income tax under section 501(a), operated as a museum under charter by a State or the District of Columbia, and operated exclusively for the procurement, care, and exhibition of aircraft of the type used for combat or transport in World War II. The taxes imposed by this section shall apply with respect to liquids sold at retail by the United States, or by any agency or instrumentality of the United States, unless sales by such agency or instrumentality are by statute specifically exempted from such taxes. No tax shall be imposed under this section on any liquid sold for use in, or used in, a helicopter or a fixed-wing aircraft for purposes of providing transportation with respect to which the requirements of subsection (f) or (g) of section 4261 are met. in the case of fuel none of the alcohol in which consists of ethanol, 9.15 cents per gallon, and in any other case, 11.3 cents per gallon, and in the case of fuel none of the alcohol in which consists of ethanol, 2.15 cents per gallon, and in any other case, 4.3 cents per gallon. The term “partially exempt methanol or ethanol fuel” means any liquid at least 85 percent of which consists of methanol, ethanol, or other alcohol produced from natural gas. Except as provided in paragraph (2), the amendments made by this section [amending this section, sections 4051, 4071, 4081, 4221, 4482, 4483, 6412, and 9503 of this title, and former section 460 l –11 of Title 16, Conservation] shall take effect on July 1, 2012 . The amendment made by subsection (e) [amending section 4482 of this title ] shall take effect as if included in section 402 of the Surface Transportation Extension Act of 2012 [ Pub. L. 112–102 ].” The amendments made by this section [amending this section and sections 4221, 4253, 4483, 6416, 6421, and 7701 of this title] shall take effect on January 1, 2007 . The amendment made by subsection (d) [amending section 4483 of this title ] shall apply to taxable periods beginning on or after July 1, 2007 .” Except as provided in paragraph (2), the amendments made by this section [enacting section 6430 of this title and amending this section and sections 4081, 4082, and 9508 of this title] shall take effect on October 1, 2005 . The amendments made by subsection (b) [enacting section 6430 of this title and amending this section and section 4082 of this title ] shall apply to fuel entered, removed, or sold after September 30, 2005 .” Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 4081 to 4083, 4093, 4101, 6416, 6427, 6715, 7232, 9503, and 9508 of this title] shall take effect on July 1, 1998 . The amendment made by subsection (d) [amending section 4101 of this title ] shall take effect on January 1, 2002 .” Except as otherwise provided in this subsection, the amendments made by this section [amending this section and sections 44E, 4081, 6416, 6420, 6421, and 6427 of this title] shall take effect on April 1, 1983 . The amendment made by subsection (d)(5) [amending item 901.50 of the Tariff Schedules, which are not set out in the Code] shall apply with respect to articles entered, or withdrawn from warehouse for consumption, after March 31, 1983 . The amendment made by subsection (e)(2) [amending section 6427 of this title ] shall take effect on January 1, 1983 . The amendment made by subsection (e)(3) [amending section 6427 of this title ] shall apply with respect to fuel purchased after December 31, 1982 , and before January 1, 1984 .” Except as provided in subsection (b), the amendments made by this title [see Short Title of 1970 Amendment note below] shall take effect on July 1, 1970 . The amendments made by sections 203 [enacting section 7275 and amending sections 4261 and 4262 of this title] and 204 [enacting sections 4271 and 4272 of this title] shall apply to transportation beginning after June 30, 1970 . The amendments made by subsections (a), (b), and (c) of section 207 [enacting section 6427 and amending sections 39, 6420, 6421, and 6424] shall apply with respect to taxable years ending after June 30, 1970 .” Except as provided in subsection (b), the amendments made by this title [enacting section 6156 of this title , amending this section and sections 4061, 4071, 4081, 4218, 4221, 4226, 4481, 4482, 6412, 6416, 6421, and 6601 of this title, and amending section 209 of The Highway Revenue Act of 1956, set out as a note under section 120 of Title 23 , Highways] shall take effect on the date of the enactment of this Act [ June 29, 1961 ]. The amendments made by sections 201, 202, and 203 [enacting section 6156 of this title and amending this section and sections 4071, 4081, 4481, 4482, 6421, and 6601 of this title] shall take effect on July 1, 1961 . The amendments made by section 205(a), (c), and (d) [amending sections 4221 and 6416 of this title] shall apply only in the case of gasoline sold on or after October 1, 1961 . The amendment made by section 205(b) [amending section 4218 of this title ] shall apply only in the case of gasoline used on or after October 1, 1961 .” a description of the firms engaged in the alcohol fuel industry, the amount of alcohol fuel sold in each State, and the amount of gasoline saved in each State by reason of the use of alcohol fuels, the revenue loss resulting from the exemptions from tax for alcohol fuels under sections 4041(k) and 4081(c) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] and the credit allowable under section 44E [now 40] of such Code and the impact of such revenue loss on the Highway Trust Fund, and the cost of production and the retail cost of alcohol fuels as compared to gasoline and special fuels not mixed with alcohol.”