Blog Details

Introduction
Federal fuel excise taxes fund roads, transit, and infrastructure, but not all fuel uses support those systems. When fuel is used for exempt, non-transportation purposes, the law allows taxpayers to reclaim excise tax either as a credit or a refund. This blog breaks down how fuel tax credits and refunds work, and which forms to use.

• Off-road business use: Fuel used for non-road machinery, generators, construction equipment, forklifts, etc.
• Farming and agricultural use: Tractors, harvesters, irrigation pumps, farm vehicles (if not used on public roads).
• Exports and non-U.S. consumption: Fuel sold for export or used outside the U.S. (with proof of export).
• Use by tax-exempt organizations, government agencies, schools, etc. when fuel is used for exempt purposes.

• For annual credit claims using Form 4136, the taxpayer must complete a “Statement Supporting Fuel Tax Credit Computation” describing the fuel use, quantity, and use type.
• Credits/refunds must not duplicate claims: you cannot claim the same fuel use on multiple forms (e.g., Form 720 and Form 4136 or Form 8849).
• Maintain accurate records of gallons used, purchase dates, seller information, equipment type, and purpose for at least 3 years after the return is filed.

Conclusion
Understanding fuel excise tax and the difference between taxable and non-taxable fuel use is key to reclaiming money that rightfully belongs to you. Whether you file quarterly via Form 720, annually using Form 4136, or request a refund with Form 8849, make sure to document fuel use accurately, choose the correct form, and comply with IRS requirements. Get in the habit of reviewing fuel usage regularly. You may find you’ve been missing out on refunds or credits for years.