Dyed Diesel Penalty Relief Granted Due to Texas Wildfires

The IRS will not impose a penalty when dyed diesel fuel with a sulfur content that does not exceed 15 parts-per-million is sold for use or used by diesel-powered vehicles on the highway in Texas between February 23, 2024, through March 22, 2024. The IRS has provided this penalty relief in response to disruptions to the supply of diesel fuel for highway vehicles resulting from the wildfires in Texas. (IR 2024-67, 3/7/2024)

This penalty relief applies to the following Texas counties: Archer, Armstrong, Bailey, Baylor, Briscoe, Carson, Castro, Childress, Cochran, Collingsworth, Cottle, Crosby, Dallam, Deaf Smith, Dickens, Donley, Fannin, Floyd, Foard, Garza, Gray, Gregg, Hale, Hall, Hansford, Hardeman, Harrison, Hartley, Haskell, Hemphill, Hockley, Hutchinson, Kent, King, Knox, Lamb, Lipscomb, Lubbock, Lynn, Moore, Motley, Nacogdoches, Newton, Ochiltree, Oldham, Parmer, Potter, Randall, Roberts, Sherman, Stonewall, Swisher, Terry, Throckmorton, Upshur, Wheeler, Wichita, Wilbarger, Yoakum, and Young counties.

Any person that sells or uses dyed diesel fuel in vehicles suitable for highway use qualifies for this penalty relief. However, for a highway vehicle operator who uses dyed diesel fuel, the relief is available only if the operator or the person selling such fuel pays the 24.4 cents-per-gallon tax that is normally applied to undyed diesel fuel for highway use.

In addition, the IRS will not impose penalties for failure to make semimonthly deposits of tax for dyed diesel fuel sold for use or used in diesel powered vehicles on the highway in the Texas counties listed above during the relief period.

Note. IRS Publication 510, Excise Taxes, has information on the proper method for reporting and paying the tax.

For more information about the excise-tax-related penalty for improper use or sale of dyed diesel fuel, see Checkpoint’s Federal Tax Coordinator ¶ V-2733.