IR-2026-59, April 30, 2026

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued temporary regulations and the accompanying notice of proposed rulemaking on a new method for recovering federal excise tax paid on dyed fuel established under the One, Big, Beautiful Bill.

These temporary regulations provide the procedures by which a taxpayer may recover federal excise taxes paid on clear diesel fuel or kerosene if that taxpayer later removed the fuel from a terminal as dyed fuel for nontaxable use. They also limit the claimants to taxpayers that paid to the IRS the original tax on the dyed fuel to which the claim relates.

Submitting a dyed fuel refund claim

The temporary regulations provide guidance to determine eligibility and rules for filing a claim for a dyed fuel refund. Taxpayers who paid tax on diesel fuel or kerosene and later removed the fuel from a terminal as eligible dyed fuel on or after Dec. 31, 2025, can submit a claim for refund, provided the following requirements are met:

1. The dyed fuel was previously taxed, and the tax was not credited or refunded.
2. The fuel is indelibly dyed by mechanical injection and removed from an approved terminal for a nontaxable use on or after Dec. 31, 2025.
3. The claimant must be the taxpayer that paid the prior fuel excise tax imposed on such fuel.
4. The claimant meets the reporting requirements as described in today’s guidance.
5. The claimant uses updated Form 8849, Claim for Refund of Excise Taxes PDF and Schedule 5 (Form 8849), Section 4081(e) and 6435 Claims PDF, including all information and documentation required by the forms and form instructions.
6. The claimant follows all other procedures listed in the guidance. 

Treasury and IRS recognize the importance of providing clarity to taxpayers through guidance that can be relied on to file claims and structure business arrangements as soon as possible. To enable this, the temporary regulations are effective immediately. They will expire no later than 3 years from today’s effective date and will be replaced with permanent regulations. Treasury and IRS also note that absent a statutory change, they currently lack the authority to pay the claims to anyone other than the person that paid the prior fuel excise tax to the IRS. 

Treasury and IRS welcome public comments

The notice of proposed rulemaking invites comments and requests for a public hearing on the proposed regulations.

For more information, see One, Big, Beautiful Bill Provisions on IRS.gov.