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TREAS/IRS RIN: 1545-BQ24 Publication ID: Fall 2022 
Title: Dual Use of Fuel in a Single Engine of a Motor Vehicle 

The Internal Revenue Code imposes an excise tax on fuel, such as diesel fuel, that is used in a diesel-powered highway vehicle. Treas. Reg. 48.4041-7, which was finalized in 1986, provides that tax applies to all liquid fuel sold for use or used to propel a diesel-powered vehicle or in a motor used to propel a motor vehicle, motorboat or aircraft, even though the motor is also used for a purpose other than propulsion, such as operating special equipment by means of a power-take off (PTO) or similar device. The regulations allow a taxpayer to treat taxable fuel used in an auxiliary power unit (APU) as nontaxable. However, some industries have shifted away from APUs in favor of PTOs to power special equipment installed on trucks.

In 2019, the IRS and the Treasury Department issued Notice 2019-10, which requested comments on how the provisions of Treas. Reg. 48.4041-7 could be revised to expand the exemption to fuel used in the propulsion motor of a vehicle to power auxiliary equipment unrelated to the propulsion of the vehicle by means of a PTO. 

Agency: Department of the Treasury(TREAS)  Priority: Substantive, Nonsignificant 
RIN Status: Previously published in the Unified Agenda Agenda Stage of Rulemaking: Proposed Rule Stage 
Major: No  Unfunded Mandates: No 
CFR Citation: 26 CFR 48   
Legal Authority: 26 U.S.C. 7805    26 U.S.C. 4041   
Legal Deadline:  None
Action Date FR Cite
NPRM  11/00/2023 
Additional Information: REG-119083-21 (NPRM) Drafter attorney: Elisabeth Shellan (202) 317-5110 Reviewer attorney: Amanda Dunlap (202) 317-5261 Treasury attorney: Kimberly Wojcik (202) 819-5365 CC:PSI
Regulatory Flexibility Analysis Required: Undetermined  Government Levels Affected: None 
Federalism: No 
Included in the Regulatory Plan: No 
RIN Data Printed in the FR: No 
Agency Contact:
Elisabeth S. Shellan
General Attorney
Department of the Treasury
Internal Revenue Service
1111 Constitution Avenue NW, Room 5314,
Washington, DC 20224
Phone:202 317-6855