The IRS and the Department of the Treasury have issued guidance on how business taxpayers can recover federal excise taxes paid on dyed fuel, a provision established under the One Big Beautiful Bill Act, the tax agency said in an April 30 statement.
Fuels into which dyes are added to indicate they are exempt from federal or state taxes are only legally allowed to be used in vehicles for non-highway purposes, such as tractors and farm equipment, construction equipment, marine vessels, and stationary engines such as generators or welders.
