Rev. Rul. 81-65
1981-1 C.B. 583, 1981-8 I.R.B. 70.
Internal Revenue Service
Revenue Ruling
REFUNDS AND CREDITS; FUELS AND LUBRICATING OIL USED IN COMMERCIAL FISHING
Published: February 23, 1981
SECTION 6421.--GASOLINE USED FOR CERTAIN NONHIGHWAY PURPOSES OR BY LOCAL TRANSIT SYSTEMS, 26 CFR 48.6421(a)-1: Payments to ultimate purchaser of gasoline used for ceratin nonhighway purposes
(Also Sections 39, 4081, 4091, 6424; 48.4081-1, 48.4091-1.)
Refunds and credits; fuels and lubricating oil used in commercial fishing. Operators of commercial fishing vessels who purchased tax-paid gasoline and lubricating oil for use in their vessels after 1978 may obtain the direct payments provided by sections 6421 and 6424 of the Code; Rev. Rul. 79-48 modified.
ISSUE
May operators of commercial fishing vessels obtain the direct payments provided by sections 6421 and 6424 of the Internal Revenue Code with respect to tax-paid gasoline and lubricating oil used in their vessels?
FACTS
Rev. Rul. 79-48, 1979-1 C.B. 434, holds that as a result of section 222 of the Energy Tax Act of 1978, Pub. L. 95-618, 1978-3 C.B. (Vol. 2) 1, 12, payments previously allowed by sections 6421 and 6424 of the Code for tax-paid gasoline and lubricating oil used in commercial fishing vessels are no longer available with respect to gasoline and lubricating oils used after December 31, 1978. The Energy Act amended sections 6421(a) and 6424(a) to limit such payments to situations where there is a 'qualified business use' of gasoline and lubricating oil. Section 6421(d)(2) defined qualified business use to exclude any use in a motorboat.
LAW AND ANALYSIS
Since the publication of Rev. Rul. 79-48, section 108(c) of the Technical Corrections Act of 1979, Pub. L. 96-222, 1980-1 C.B. 499, 516, has amended section 6421(d)(2)(B) of the Code by adding at the end thereof the following new sentence: 'The preceding sentence shall not apply to use in a vessel employed in the fisheries or in the whaling business.'
Senate Report No. 96-498, 1980-1 C.B. 517, 563, accompanying the Technical Corrections Act, states:
In some circumstances, it appears that persons purchasing gasoline for use in commercial fishing vessels have been made worse off by the provisions of the Energy Tax Act, and this does not appear to be consistent with Congressional intent. This results from the elimination of the ability of the ultimate purchaser to obtain a 2-cents-a-gallon payment or credit directly from the Treasury for gasoline used in commercial fishing vessels. . . . A similar problem occurs with respect to lubricating oil; although a credit or refund can be obtained by a procedure which requires the cooperation of the seller (and the producer), the provision which provided for a direct payment to the vessel operator (Code sec. 6424(a)) was indirectly amended to preclude such a payment.
The bill provides that the 2-cent-a-gallon payment (or credit) for certain nonhighway uses can be obtained with respect to gasoline used in a vessel employed in the fisheries or in the whaling business. Also, the bill provides that a direct payment or credit of the 6-cent-a-gallon tax on lubricating oil can be obtained with respect to lubricating oil used in such vessels.
This provision applies to uses after December 31, 1978. This is the same effective date as applies to related provisions which were added by section 222 of the Energy Tax Act of 1978.
Thus, the use of gasoline and lubricating oil in commercial fishing vessels is within the term 'qualified business use.' Use of such products in other motorboats remains excluded from the term.
HOLDING
Under section 6421(d)(2) of the Code, as amended by the Technical Corrections Act of 1979, operators of commercial fishing vessels may follow the alternative method discussed in Rev. Rul. 79-48, and obtain the direct payments provided by sections 6421 and 6424 of the Code with respect to tax-paid gasoline and lubricating oil used in their vessels.
EFFECT ON OTHER REVENUE RULINGS
Rev. Rul. 79-48 is modified.
Rev. Rul. 81-65, 1981-1 C.B. 583, 1981-8 I.R.B. 70.