United States

Fuel Blending and the Excise Tax

Keeping fuel blending companies updated with the latest excise tax news

KPMG LLP (KPMG) professionals provide the latest insight on possible excise tax incentives that might be available for companies engaged in qualifying fuel blending activities.

Potential Excise Tax Refunds for Fuel Blenders

Companies engaged in producing mixtures of liquefied petroleum gas (LPG), including butane, and gasoline for sale as a fuel may be entitled to refunds for federal fuel excise taxes paid in 2014, 2015, and 2016.  Certain fuel blenders may be entitled to potentially significant excise tax refunds, depending on the volume of LPG used.

The alternative fuel mixture credit found in Internal Revenue Code section 6426(e) may be available if the company:

  • Owns LPG (such as butane) and gasoline;
  • Blends LPG and gasoline in the “bulk system;”
  • Sells the LPG/gasoline product for use as a fuel (not for further downstream processing); and
  • Is registered by the Internal Revenue Service as an alternative fuel mixture producer (“AM Registrant”) (or obtains such registration prior to submitting a refund claim).

Even if the excise taxes were not related to this product, companies satisfying these requirements that paid fuel excise taxes in 2014, 2015, or 2016 may qualify for an excise tax refund equal to 50 cents per gallon of LPG used, up to the amount of fuel excise taxes actually paid. Although currently unavailable for years after 2016, the credit may be claimed for prior open quarters through the filing of an amended federal excise tax return (and obtaining AM Registrant status if necessary).

Depending on a company’s facts, the potential excise tax refunds may be significant.  KPMG LLP (KPMG) offers the assistance of partners and professionals who have specialized knowledge in this area that can work with your company to:

  • Help identify, quantify, and document your company’s entitlement to the excise tax credit;
  • Work with your company to obtain AM Registration as necessary; and
  • Assist in preparing amended excise tax returns supporting the refund request.

This potential refund may be available for any company owning and blending LPG (including butane) with gasoline, including not only traditional refiners, but also commodity traders and entities owning portfolio companies engaged in the qualifying fuel activities.

To explore your company’s potential entitlement to an excise tax refund, please contact:

cortright-taylor2

Taylor Cortright
Managing Director, Washington National Tax, KPMG LLP
P: 202 533 6188
E: tcortright@kpmg.com

jordan-keith

Keith Jordan
Managing Director, Business Tax Services, KPMG LLP
P: 713 319 2519
E: kjordan@kpmg.com

titus-toon

Titus Toon
Managing Director, Business Tax Services, KPMG LLP
P: 713 319 3168
E: tttoon@kpmg.com

Other Resources

469440234

Fuel Blending Revisited

Domestic production deduction opportunities and excise tax considerations for companies that engage in qualifying fuel blending activities. Discover More.

man-holding-newspaper

Excise Tax News

Stay informed on excise tax developments by visiting KPMG's news archive. Click Here.

transportation-truck-prairie-road

KPMG's Excise Tax Services

Guiding clients across all affected industries through a wide range of complex excise tax issues. Learn More.

Follow KPMG U.S. Tax on Twitter