Frequently Asked Questions
Who is eligible for the Petroleum Single Tax Rule?
Taxpayer must establish that a prior section 4611 tax was imposed on the specific petroleum product.
How does the Petroleum Single Tax Rule work?
Prevents double taxation by prohibiting the imposition of the section 4611 tax if the taxpayer can prove the tax was already paid on that product.
What law authorizes the Petroleum Single Tax Rule?
The Petroleum Single Tax Rule is authorized under IRC §4612(b) of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §4612
Source: Internal Revenue Code, Title 26, United States Code
§ 4612. Definitions and special rules(a) DefinitionsFor purposes of this subchapter—(1) Crude oilThe term “crude oil” includes crude oil condensates and natural gasoline.
(2) Domestic crude oilThe term “domestic crude oil” means any crude oil produced from a well located in the United States.
(3) Petroleum productThe term “petroleum product” includes crude oil.
(4) United States(A) In generalThe term “United States” means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands.
(B) United States includes continental shelf areasThe principles of section 638 shall apply for purposes of the term “United States”.
(C) United States includes foreign trade zonesThe term “United States” includes any foreign trade zone of the United States.
(5) United States refineryThe term “United States refinery” means any facility in the United States at which crude oil is refined.
(6) Refineries which produce natural gasolineIn the case of any United States refinery which produces natural gasoline from natural gas, the gasoline so produced shall be treated as received at such refinery at the time so produced.
(7) PremisesThe term “premises” has the same meaning as when used for purposes of determining gross income from the property under section 613.
(8) BarrelThe term “barrel” means 42 United States gallons.
(9) Fractional part of barrelIn the case of a fraction of a barrel, the tax imposed by section 4611 shall be the same fraction of the amount of such tax imposed on a whole barrel.
(b) Only 1 tax imposed with respect to any productNo tax shall be imposed by section 4611 with respect to any petroleum product if the person who would be liable for such tax establishes that a prior tax imposed by such section has been imposed with respect to such product.
(c) Credit where crude oil returned to pipelineUnder regulations prescribed by the Secretary, if an operator of a United States refinery—(1) removes crude oil from a pipeline, and
(2) returns a portion of such crude oil into a stream of other crude oil in the same pipeline,
there shall be allowed as a credit against the tax imposed by section 4611 to such operator an amount equal to the product of the rate of tax imposed by section 4611 on the crude oil so removed by such operator and the number of barrels of crude oil returned by such operator to such pipeline. Any crude oil so returned shall be treated for purposes of this subchapter as crude oil on which no tax has been imposed by section 4611.
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