Leaded fuel and unleaded fuel are not taxed the same under the Internal Revenue Code. The distinction between the two types of fuel, particularly in their tax treatment, is evident in the definitions and specific provisions related to gasoline and other fuels.
- Leaded Fuel: Racing Fuels #1, which are leaded fuels with an octane rating of 100 or higher and contain between 1.0 gram of lead per gallon to 6.0 grams of lead per gallon, do not meet the ASTM specification (D 4814) for gasoline and do not have the detergent additives required by the EPA for gasoline. These fuels are not considered gasoline because they do not meet the prescribed standards for gasoline commercially sold for use in registered highway vehicles. Consequently, the sale or removal of Racing Fuels #1 is not liable for the tax imposed by section 4081, as these products are not classified as gasoline, diesel fuel, or kerosene.
- Unleaded Fuel: Racing Fuels #2, which are unleaded and meet the ASTM specification (D 4814) for gasoline as well as EPA requirements, are considered gasoline. These fuels are available for consumer use in registered highway vehicles, and thus, their sale or removal is liable for the tax imposed by section 4081.
The tax implications for leaded and unleaded fuels are primarily based on their classification and whether they meet specific standards for gasoline. Leaded fuels, which do not meet these standards, are not subject to the same tax provisions as unleaded fuels that are classified as gasoline under the Internal Revenue Code.
Sources:
§ 4041. Imposition of tax
§ 4081. Imposition of tax
FAA 20151001F https://app.askbluej.com/source?ref=document/8NKq4Djb
Rev. Rul. 2018-2 https://app.askbluej.com/source?ref=document/ACtqgAFv
Rev. Rul. 89-8
TAM 199933018
