Diesel Fuel Retailers May Shift Liability for Diesel Fuel Excise Tax to Manufacturers -- Final Regs Under Section 4081

 ACTION: Final regulations.

 SUMMARY: This document adopts as final regulations temporary regulations published in the Federal Register on March 1, 1988, relating to the collection of excise taxes on diesel fuel under an election provided by section 4041(n) of the Code. Changes to the applicable law were made by the Tax Reform Act of 1986.

 EFFECTIVE DATES: The regulations are effective April 1, 1987, and apply to sales of diesel fuel for use in diesel-powered highway vehicles made after March 31, 1987, and before April 1, 1988, with the exception of the following provisions, which are effective as of March 1, 1988: Section 48.4041-21(g);

 Section 48.4041-21(h)(1) following "section 4041(a)(1),";

 Section 48.4041-21(h)(2);

 Section 48.4041-21(i)(3); and

 Section 48.4041-21(k)(1).

 FOR FURTHER INFORMATION CONTACT: Frank Boland, Office of Assistant Chief Counsel (Passthroughs and Special Industries), Internal Revenue Service, 1111 Constitution Ave., N.W., Washington, D.C. 20224, Attention: CC:P&SI:8 (202-566-4077, not a toll-free call).

SUPPLEMENTARY INFORMATION:

PAPERWORK REDUCTION ACT

The collection of information requirements contained in this final regulation have been reviewed and approved by the Office of Management and Budget in accordance with the requirements of the Paperwork Reduction Act (44 U.S.C. 3504(h)) under control number 1545-0977. The estimated average burden associated with the collection of information requirements in this final rule is 19 minutes per respondent/recordkeeper.

 These estimates are an approximation of the average time expected to be necessary for a collection of information. They are based on such information as is available to the Internal Revenue Service. Individual respondents/recordkeepers may require greater or less time, depending on their particular circumstances.

 Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Internal Revenue Service, Washington, D.C. 20224, Attention: IRS Reports Clearance Officer TR:FP, and to the Office of Management and Budget, Paperwork Reduction Project, (RIN: 1545-AJ13), Washington, D.C. 20503.

BACKGROUND

 On March 1, 1988, the Federal Register published temporary regulations [T.D. 8181] (53 FR 6518) [1988-1 C.B. 344] under section 4041(n) of the Internal Revenue Code relating to the collection of excise taxes on diesel fuel under an election provided by section 4041(n) of the Code. The text of those temporary regulations also served as a notice of proposed rulemaking published in the Federal Register for the same day [LR-114-86] (50 FR 6524) [1988-1 C.B. 925]. No written comments were received. A public hearing was not requested. Accordingly, the notice of proposed rulemaking is withdrawn, and the temporary regulations are adopted as redesignated by this Treasury decision.

IN GENERAL

 Section 1702 of the Tax Reform Act of 1986 (Pub. L. No. 99-514, 100 Stat. 2773) added section 4041(n) to the Code effective for sales of diesel fuel on or after April 1, 1987. Section 4041(n) allowed a qualified diesel fuel retailer to elect to shift the liability for the tax imposed by section 4041(a)(1) to the seller of the fuel to that retailer. A qualified retailer was not required to make the election with respect to all its sellers in order for the electron to become effective. The qualified retailer remained liable, however, for any tax imposed on the subsequent sale of diesel fuel purchased tax-free from a seller not covered by a valid election. Section 4041(n) was subsequently repealed by section 10502(b)(4) of the Omnibus Budget Reconciliation Act of 1987 (Pub. L. No. 100-203, 101 Stat. 1330), effective for sales of diesel fuel on or after April 1, 1988. These regulations therefore do not reflect changes made to the diesel fuel excise tax by the Omnibus Budget Reconciliation Act of 1987.

SPECIAL ANALYSES

 Although a notice of proposed rulemaking that solicited public comment was issued, the Internal Revenue Service concluded when the notice was issued that the regulations are interpretative and that the notice and public procedure requirements of 5 U.S.C. 553 did not apply. Accordingly, the final regulations do not constitute regulations subject to the Regulatory Flexibility Act (5 U.S.C. chapter 6).

 The Commissioner of Internal Revenue has determined that this final rule is not a major rule as defined in Executive Order 12291 and that a regulatory impact analysis therefore is not required.

DRAFTING INFORMATION

 The principal author of these regulations is Lauren G. Shaw, Office of Assistant Chief Counsel (Financial Institutions and Products), Internal Revenue Service. However, personnel from other offices of the Internal Revenue Service and Treasury Department participated in developing the regulations, both on matters of substance and style.

LIST OF SUBJECTS

26 CFR Part 48

Agriculture, Arms and munitions, Coal, Excise taxes, Gasohol, Gasoline, Motor vehicles, Petroleum, Sporting goods, Tires.

26 CFR Part 602

Reporting and recordkeeping requirements.

Treasury Decision 8303

ADOPTION OF AMENDMENTS TO THE REGULATIONS

Accordingly, 26 CFR Parts 48 and 602 are amended as follows:

Paragraph 1. The authority for Part 48 is amended:

(a) by removing the following citation:

"Section 48.4041-21T is also issued under 26 U.S.C. 4041(n)."; and

(b) by adding the following citation:

"Section 48.4041-21 is also issued under 26 U.S.C. 4041(n)."

Par. 2. 26 C.F.R. part 48 is amended by redesignating section 48.4041-21T as section 48.4041-21, and removing the word "(Temporary)" from the end of the section heading.

Par. 3. The authority for Part 602 continues to read as follows:

"Authority: 26 U.S.C. 7805".

Par. 4. The table of OMB control numbers in section 602.101(c) is amended as follows.

The entry reading:

"48.4041-21T . . . 1545-0977"

is revised to read:

"48.4041-21 . . . 1545-0977".