Refund for Nontaxable Fuel Uses

§ 6427. Fuels not used for taxable purposes(a) Nontaxable usesExcept as provided in subsection (k), if tax has been imposed under paragraph (2) or (3) of section 4041(a) or section 4041(c) on the sale of any fuel and the purchaser uses such fuel other than for the use for which sold, or resells such fuel, the Secretary shall pay (without interest) to him an amount equal to—(1) the amount of tax imposed on the sale of the fuel to him, reduced by (2) if he uses the fuel, the amount of tax which would have been imposed under section 4041 on such use if no tax under section 4041 had been imposed on the sale of the fuel. (b) Intercity, local, or school buses(1) AllowanceExcept as otherwise provided in this subsection and subsection (k), if any fuel other than gasoline (as defined in section 4083(a)) on the sale of which tax was imposed by section 4041(a) or 4081 is used in an automobile bus while engaged in—(A) furnishing (for compensation) passenger land transportation available to the general public, or (B) the transportation of students and employees of schools (as defined in the last sentence of section 4221(d)(7)(C)), the Secretary shall pay (without interest) to the ultimate purchaser of such fuel an amount equal to the product of the number of gallons of such fuel so used multiplied by the rate at which tax was imposed on such fuel by section 4041(a) or 4081, as the case may be. (2) Reduction in refund in certain cases(A) In generalExcept as provided in subparagraphs (B) and (C), the rate of tax taken into account under paragraph (1) shall be 7.4 cents per gallon less than the aggregate rate at which tax was imposed on such fuel by section 4041(a) or 4081, as the case may be. (B) Exception for school bus transportationSubparagraph (A) shall not apply to fuel used in an automobile bus while engaged in the transportation described in paragraph (1)(B). (C) Exception for certain intracity transportationSubparagraph (A) shall not apply to fuel used in any automobile bus while engaged in furnishing (for compensation) intracity passenger land transportation—(i) which is available to the general public, and (ii) which is scheduled and along regular routes, but only if such bus is a qualified local bus. (D) Qualified local busFor purposes of this paragraph, the term “qualified local bus” means any local bus—(i) which has a seating capacity of at least 20 adults (not including the driver), and (ii) which is under contract (or is receiving more than a nominal subsidy) from any State or local government (as defined in section 4221(d)) to furnish such transportation. (3) Limitation in case of nonscheduled intercity or local busesParagraph (1)(A) shall not apply in respect of fuel used in any automobile bus while engaged in furnishing transportation which is not scheduled and not along regular routes unless the seating capacity of such bus is at least 20 adults (not including the driver).