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Dyed Diesel Penalty Relief Clarification
On September 2, 2005, the Internal Revenue Service (IRS) announced it would not impose its dyed diesel penalty on fuel consumers who used dyed diesel in a registered vehicle on the highway, for a limited period of time (see attachments). The IRS announcement was in response to undyed diesel shortages in various sections of the country, which were caused by hurricanes Katrina and Rita. Fortunately, Idaho did not experience any type of a diesel fuel shortage during this period of hurricane disasters in the South.
When the IRS announcements regarding the dyed diesel penalty relief were released to the public, many Idaho diesel fuel consumers interpreted the IRS announcements to mean the IRS and the state of Idaho had created a "fuels tax holiday". The "tax holiday" interpretation of the IRS announcements is incorrect. The IRS announcements clearly state the dyed diesel penalty relief was available to the vehicle's operator, if the federal fuels tax (24.4 cents per gal.) was paid on the dyed diesel consumed on the highway. In addition to the federal fuels tax, the Idaho fuels tax (25 cents per gal.) is also due on the dyed diesel consumed on the highway.
If you have questions regarding dyed diesel usage or need assistance with the tax reporting requirements for the dyed diesel used on the highway, please call
Andy Boydston at (208) 334-7536;
Steve Holbrook at (208) 334-7601;
Dar Walters at (208) 334-7702.
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