TRANSITIONAL RULES ON GASOHOL BLENDS WILL REMAIN IN EFFECT THROUGH SEPTEMBER 1989.

Notice 89-2

The purpose of this notice is to inform gasohol blenders and sellers of gasoline that the transitional rules for registered gasohol blenders provided in Notice 88-2, 1988-2 I.R.B. 26, Notice 88-34, 1988-13 I.R.B. 26, and Notice 88-69, 1988-27 I.R.B. 12, for 1988 will continue in effect through September 30, 1989. Under the rules provided by Notices 88-2, 88-34 and 88-69 and all the conditions provided therein, the reduced rate of tax under section 4081(c)(1) of the Internal Revenue Code applies to all sales or removals of gasoline to registered gasohol blenders if the gasoline is, or will be, blended with alcohol to produce gasohol.

Registered gasohol blenders are reminded that they must file a Quarterly Federal Excise Tax Return, Form 720, for each of the first three quarters of 1989 (as was required for 1988) and maintain certain records if they purchase gasoline at the reduced rate of tax for blending with alcohol to produce gasohol. The retention of these records is necessary to enable taxpayers to establish that the gasoline purchased at the reduced rate of tax has been blended with alcohol. Registered gasohol blenders are reminded that use of a registration to buy gasoline that is not to be used to blend with alcohol to produce gasohol is a misuse of the registration and may lead to revocation or suspension of the registration.

Section 6104 of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647 ("1988 Act"), modifies section 4081(c)(1) of the Code effective October 1, 1989. Before that date, the Service will issue rules implementing the changes made by the 1988 Act.

ADMINISTRATIVE PRONOUNCEMENT

This document serves as an "administrative pronouncement" as that term is described in section 1.6661-3(b)(2) of the Income Tax Regulations and may be relied upon to the same extent as a revenue ruling or revenue procedure.

DRAFTING INFORMATION

The principal author of this notice is Frank Boland of Passthroughs and Special Industries of Chief Counsel. For further information, contact Mr. Boland on (202)566-4077 (not a toll-free call).