Excise Fuel Tax Refunds for Off Road Use

When you purchase un-dyed motor fuel you are paying federal and state excise tax.  The tax on this fuel is meant for vehicles and equipment used on roads and highways.  If you use this fuel to power vehicles and equipment used off-road you may qualify for a Federal and/or State refund or credit. The vehicle and equipment used off-road must not be registered or required to be registered for highway use under the laws of any state or foreign country.

In most states and for the federal government, the taxes collected are placed into a special fund designated for highway and road construction and maintenance. The federal trust fund is primarily devoted to the interstate highway system and related infrastructure maintenance and improvement. Each state administers its own highway trust fund.


Federal Refunds

To claim a credit for the federal tax, taxpayers file with their tax return Form 4136, Credit for Federal Tax Paid on Fuels. If the expense for purchasing the fuel (including the tax) is deducted as a business expense, the credit or refund must be included in gross income by the taxpayer. Taxpayers with at least $750 in credit or refund due in a quarter or any number of quarters within a year may file for a refund with Schedule 1 of Form 8849, Claim for Refund of Excise Taxes.

In order to claim this Federal refund or credit, your company must keep accurate fuel records – regardless if you buy in bulk or by the gallon.

State Refunds

The state taxes per gallon of motor fuel vary from 8 cents in Alaska to 37.5 cents in Washington. For diesel fuel, the state tax rates vary from 8 cents in Alaska to 39.6 cents in Connecticut. Each state has its own forms and rules for applying for a state motor fuel tax refund. For example, in North Carolina, a taxpayer must keep track of fuel purchased for approved uses and report the number of gallons used on the appropriate tax form, such as Form GAS 1201, Motor Fuel Claim for Refund Tax-Paid Motor Fuel Used Off-Highway. The taxpayer must also report the type of equipment using the fuel, type of fuel used in each vehicle and fuel tank capacity. For farms, the taxpayer also must report the number of acres farmed.  Many of these forms can be submitted online. (Source: MARC I. LEBOW)

As with Federal refunds, in order to claim state refunds, your company must keep accurate fuel records – regardless if you buy in bulk or by the gallon.


Faith Underground operates gasoline powered drills, generators and other equipment along with diesel-powered directional boring machines, fusing machines, and vac-trons on their job sites in North Carolina.  During 2016, Faith Underground purchased and used in the equipment 8,000 gallons of gasoline for which excise taxes were included and 9,000 gallons of un-dyed diesel. On its 2016 federal income tax return, Faith Underground claims the following federal credit or refund for off-highway business use:

Fuel Gallons Credit per gallon Amount
Gasoline 8,000 $0.183 $1,464
Diesel 9,000 $0.243 $2,187
Total federal refund/credit $3,651

Faith Underground also calculates a North Carolina state refund.

Fuel Gallons Credit per gallon Amount
Gasoline 8,000 $0.18 $1,440
Diesel 9,000 $0.18 $1,620
Total Texas state refund $3,060

Total federal and state refund/credit                            $6,711

Faith Underground reports the refund or credit as gross income on its federal income tax return. Applying a marginal corporate income tax rate of 35% makes the after-tax value of the refund or credit $4,363, less any similar effect on their corporation franchise tax liability.

If you aren’t taking advantage of this refund or credit let us help you! Provisio Circle will audit your fuel purchases to see if you are eligible to claim a Federal and/or State refund or credit.  Many of these credits can be backdated up to three or four years.  Potentially earning you thousands of dollars in refunds or credits.

Our team will gather the data, complete the proper forms, submit the claims, and keep supporting records.

Learn more about our Services or Contact Us for more information.

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