CBP Issues Administrative Message Regarding New IRS Regulations on the Entry of Taxable Fuel
On August 12, 2004, CBP issued an ABI administrative message regarding the Internal Revenue Service's (IRS') final and temporary regulations designed to ensure the collection of the appropriate amount of excise tax on imported gasoline, diesel fuel, and kerosene (HTS Chapter 27). According to CBP, the IRS' regulations are effective on September 28, 2004. (See ITT's Online Archives or today's ITT, 04082710, for BP summary of IRS final and temporary regulations.)
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According to CBP, the IRS has found that abusive situations exist with regard to the entry of taxable fuel into the U.S. For example, some enterers are not registered and are not paying the excise tax on the imported fuel. This not only gives noncompliant enterers a competitive advantage over their compliant competitors, but it also deprives the U.S. Treasury of revenue intended for the Highway Trust Fund.
IRS Can Collect Unpaid Taxes by Charging Importer of Record's Customs Bond
In its message, CBP states that the excise tax on imported fuel is paid directly to the IRS and is not collected by CBP. Under existing CBP regulations, the IRS will be able to collect any tax that is not paid by either the importer of record or the unregistered dealer by charging the importer of record's customs bond.
According to CBP, importers of record can avoid liability for the tax and the possibility of collection from their customs bond by doing business only with fuel dealers that are registered with the IRS. CBP notes that the IRS' final and temporary regulations provide a certification procedure that importers of record can use to verify a fuel dealer's registration.
CBP message (Adm: 04-1811, dated 08/12/04) available at http://www.brokerpower.com/cgi-bin/adminsearch/admmsg.view.pl?article=2004/2004-1811.ADM.
BP Note
Note that the IRS' final and temporary regulations were published in the Federal Register on July 30, 2004, rather than July 29, 2004 as stated in the administrative message.