TREASURY AND IRS ISSUE NEW GUIDANCE ON RECOVERING EXCISE TAX PAID ON DYED FUEL UNDER THE ONE, BIG, BEAUTIFUL BILL

THE PRESS CENTER | BREAKING NEWS | IRS | TAX

MAY 2 2026 AT 5:17 PM

IR‑2026‑59, April 30, 2026

WASHINGTON — The Department of the Treasury and the Internal Revenue Service have released temporary regulations, along with a notice of proposed rulemaking, establishing a new process for recovering federal excise tax previously paid on dyed fuel. This framework implements provisions enacted under the One, Big, Beautiful Bill.

The temporary regulations outline how taxpayers may claim refunds of excise tax paid on clear diesel fuel or kerosene when that fuel is later removed from a terminal as dyed fuel for qualifying nontaxable uses. The rules also clarify that only the taxpayer who originally remitted the excise tax to the IRS may file a claim.

Submitting a Dyed Fuel Refund Claim

Taxpayers who paid excise tax on diesel fuel or kerosene and subsequently removed that fuel from a terminal as eligible dyed fuel on or after December 31, 2025, may file a refund claim if all of the following conditions are met:

1. The fuel was previously taxed, and no credit or refund has already been claimed.
2. The fuel is indelibly dyed by mechanical injection and removed from an approved terminal for a nontaxable use on or after December 31, 2025.
3. The claimant is the taxpayer who originally paid the excise tax on the fuel.
4. All reporting requirements outlined in the new guidance are satisfied.
5. Updated Form 8849 (Claim for Refund of Excise Taxes) and Schedule 5 (Form 8849) (Section 4081(e) and 6435 Claims) are used, with all required information and supporting documentation.
6. All additional procedures in the temporary regulations are followed.

Treasury and the IRS emphasized the need for immediate clarity so taxpayers can rely on the rules when filing claims and structuring business arrangements. The temporary regulations take effect immediately and will remain in place for up to three years, at which point they will be replaced by permanent regulations.

The agencies also noted that, without further statutory changes, they are not authorized to pay refunds to anyone other than the taxpayer who originally paid the excise tax.

Public Comments Invited

The notice of proposed rulemaking formally invites public comments and requests for a public hearing on the proposed regulations.

For additional details, visit One, Big, Beautiful Bill Provisions on IRS.gov.

Source: IRS Newsroom — www.irs.gov/newsroom