This project was first undertaken in 2004, but was indefinitely placed on hold following the disruption caused by Hurricanes Katrina and Rita. Section 4081 of the Internal Revenue Code imposes a tax on certain removals, entries, and sales of diesel fuel and kerosene (fuel). Section 4082, as amended by the American Jobs Creation Act of 2004 (Pub. L. 108-357), allows a partial exemption from the tax for dyed fuel if, among other conditions, the fuel is indelibly dyed by mechanical injection in accordance with Treasury regulations. On April 26, 2005, temporary regulations (TD 9199) were published in the Federal Register (70 FR 21332) along with a notice of proposed rulemaking (REG-154000-04) cross-referencing the temporary regulations (70 FR 21361). Notice 2005-80 (2005-2 CB 953), which is available at IRS.gov, contains transition rules that modify the requirements in the temporary regulations. Written comments responding to the temporary regulations and the notice of proposed rulemaking were received and a public hearing was held on July 19, 2005. After consideration of written comments and comments made at the public hearing, we are revising the proposed regulations and reissuing them to address the concerns raised.