Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 79-48

1979-1 C.B. 434

Section 39

IRS Headnote

Refunds and credits; fuels and lubricating oil used in commercial fishing. Operators of commercial fishing boats who purchase tax-paid fuels and lubricating oil for exclusive use in commercial fishing prior to January 1, 1979 may claim a credit or refund of all or a portion of such tax. As an alternative, the retail dealer and producer may claim a credit or refund of the tax paid by them provided they reimburse the operator for the amount of the tax or obtain the written consent of the operator to their filing the claim. For gasoline and lubricating oil used after December 31, 1978, no credit or refund may be claimed by the operator.

Full Text

Rev. Rul. 79-48

ISSUE

What credits or refunds may be claimed for federal excise tax paid on fuels and lubricating oil used as supplies for boats while employed in commercial fishing.

FACTS

Under the law, operators of commercial fishing boats may purchase taxable fuels and lubricating oils tax free as boat supplies for exclusive use in commercial fishing. See Rev. Rul. 78-312, 1978-2 C.B. 265. Some retail dealers and producers, however, may not choose to sell such liquids tax free, since the law does not require them to do so. In such case the operators purchase the supplies tax paid and seek available methods for tax relief.

LAW AND ANALYSIS

The specific sections of the Internal Revenue Code of 1954 that are applicable are 4041(b), taxing special motor fuel, 4081(a), taxing gasoline, 4091, taxing lubricating oil, 6416(b)(2)(B), providing for a tax credit or refund to the retail dealer or producer who paid the tax, 6421, providing for payment by the Secretary to the ultimate purchaser of a portion of the tax paid on gasoline used for certain nonhighway purposes, 6424, providing for payment to the ultimate purchaser of tax-paid lubricating oil used other than in a highway motor vehicle, and 6427, providing for payment to the purchaser who uses tax-paid special motor fuel other than for the use for which sold.

HOLDING

The law provides two alternative procedures whereby the operator of a vessel employed in the fisheries may recover the amounts of tax paid on fuels and lubricating oils used as supplies for such vessel.

As one alternative, the operator of a vessel employed in the fisheries who uses tax-paid fuels or lubricating oil as supplies for the vessel may claim the payments under section 6421 of the Code for a portion (currently two cents per gallon) of the excise tax paid on gasoline, 6424 for the total tax on lubricating oil, and 6427 for the total tax on special motor fuels.

As the other alternative, under section 6416(b)(2)(B) of the Code, the retail dealer and the producer may claim credit or refund of the tax paid by them to the Government on special motor fuel (the dealer) and gasoline and lubricating oil (the producer), provided they reimburse the operator for the amount of the tax or obtain the written consents of the operator to their filing claim.

Because section 6421 of the Code provides for payment of only a portion of the gasoline tax, full recovery may only be obtained by making a claim under section 6416(b)(2)(B).

Section 222 of the Energy Tax Act of 1978 amended sections 6421 and 6424 of the Code to limit payments under those sections for gasoline and lubricating oils used after December 31, 1978. Under amended sections 6421(a) and 6424(a), such payments are allowed for qualified business use, which is defined in section 6421(d)(3) to exclude any use in a motorboat. The term "motorboat" for this purpose includes commercial fishing vessels. Therefore, the payments previously allowed under sections 6421 and 6424 for commercial fishing vessel use are not available where gasoline and lubricating oils are so used after December 31, 1978.