IRS Publishes Notice re: Excise Tax Changes

Superfund Developments

Tribal Off-Spec Fuel

Tax Planning Tips

EPA Chief "Promoted"

New Energy Person at FTC

Diesel Lubricity

Clear Skies Initiative

EPA Looks at SIPs

Service Station Exemption

In the States . . .

 IRS PUBLISHES NOTICE RE: EXCISE TAX CHANGES

On Thursday, the IRS released an advance copy of IRS Notice 2005-04, which is scheduled to be formally published on Jan. 10, 2005. The notice answers a number of questions related to changes in excise taxes that were enacted in the big “Job Creation” (export tax repeal) bill just before the election. Among the changes enacted were provisions related to ethanol and biodiesel taxes and tax incentives, ultimate vendor provisions for sales of gasoline to tax-exempt entities like cities and counties, and changes in diesel tax rules for inter-city buses.

Most of the changes in the law itself are effective January 1, 2005. However, the regulations implementing them won’t be in place until after that date. For this reason, it is extremely important that marketers review this preliminary copy of the IRS Notice, to be prepared to comply even before it is formally published!

SIGMA’s attorneys have prepared a detailed legal memo outlining the most important provisions of the notice, along with a copy of the notice itself. That document can be accessed by clicking here.

Some key items to note:

~ It appears the effect of the new law as it pertains to oil company credit card sales to tax-exempt entities may be postponed until March.

~ Gasohol blended at the terminal will be taxed at 18.4 cents per gallon on the total (including the ethanol portion). Gasohol blended below the rack will have the ethanol taxed at 18.4 cents per gallon as well. Then the tax reduction will be claimed as a credit or refund by the blender.

~ It appears the electronic refunds and certification process for exempt customers will not be in place immediately, so the 20-expedited refunds likewise may not take effect immediately (mandatory 45-day refunds will apparently remain in effect, at minimum).

~ Unrelated to the new tax bill, but effective 1/1/05 anyway as a result of prior years’ legislation, the ethanol tax incentive drops from 52 cents per gallon of ethanol (5.2 cents per gallon of 10% ethanol blend) to 51 cents per gallon of ethanol.   

SUPERFUND DEVELOPMENTS

There were a couple of developments related to Superfund (CERCLA) this last week that may be pertinent to some members.

First, the U.S. Supreme Court ruled on Dec. 13 that a company which voluntarily undertakes a cleanup of property which might qualify as a Superfund site does not have the right to sue other contributory parties to share in the cleanup costs under the CERCLA law. In the 7 to 2 decision which overturned lower court rulings from 9 federal circuits, the court said the contribution provision of the superfund law do not authorize a private party to sue a potentially responsible party unless an enforcement action is filed first.

The other development is that Sen. Boxer (D-CA) indicated she will introduce legislation in the next Congress to reinstate a corporate tax to fund the Superfund Trust Fund, which has run out of money. Prospects for her bill are dim.    

TRIBAL OFF-SPEC FUEL

The issue of tribal collection of appropriate state excise taxes isn’t the only issue of fair competition facing some marketers. CIOMA, the California marketer group, has called to the attention of their state government a problem of certain tribal gas stations in the state selling Federal RFG instead of their state-mandated CARB gasoline. The problem is mostly at those close to the Oregon or Nevada borders, where loads of RFG can be picked up at out-of-state racks. CIOMA offers 3 possible solutions: 1) have the governor work into all future tribal agreements a provision requiring use of CARB gasoline only; 2) legislation to prohibit transport of non-CARB gasoline within the state if it is intended for sale to the state’s motoring public; or 3) legislation allowing Federal RFG to be sold in lieu of CARB gasoline by any retailer in such areas, provided that the area itself is in full compliance with Federal and State Air Quality Standards.    

TAX PLANNING TIPS

As the end of the year approaches, it may be time to consider whether to shift some expenses into 2004 rather than waiting until 2005. If your company’s situation makes such decisions advisable, here are two suggestions that might fit the bill:

Register NOW for SIGMA meetings you plan to attend in 2005. Not only will you get the expense into 2004, you’ll actually save on registration fees by getting early discounts. For the 2005 NPN/SIGMA Winter Management Conference,  click here. To save $100 on the Spring Convention in Amelia Island, FL, go to click here . Save even more on the Annual Meeting in Philadelphia, PA, by clicking here. If you’re not sure what meetings you or your spouse are already signed up for, call the office and we’ll help you, or e-mail to mselvitelle@sigma.org.

Pay some or all of your 2005 SIGMA dues in advance. Members are on different dues schedules, so the best way to do this would be to contact Marilyn Selvitelle at the SIGMA office and discuss what options are available. She can be reached at 703-375-0486, or mselvitelle@sigma.org.   

EPA CHIEF “PROMOTED”

Last Monday, President Bush nominated EPA Administrator Leavitt to be Secretary of Health and Human Services. His replacement at EPA has not been named yet.    

NEW ENERGY PERSON AT FTC

A new position at the Federal Trade Commission has been created by chairman Deborah Majoras, following through on her commitments made during confirmation hearings last summer. John Seesel will be Special Energy Counsel, instructed to examine refinery capacity, assess the reasons for refinery closures, and investigate why no new investments are made in the refinery sector.    

DIESEL LUBRICITY

States continue to wrestle with the impending ASTM diesel lubricity standard. Efforts to postpone the standard have reportedly failed, meaning it will go into effect in early 2005. In California, the Air Resources Board (CARB) is authorized to postpone the effective date by 120 days, but the state Div. of Weights and Measures doesn’t have similar authority. Efforts are underway to resolve that issue. In Illinois, a regulation creating an “enforcement discretion” of the lubricity standard was filed on 12/1/04 and will be valid through 9/30/05. Others states have other approaches.    

CLEAR SKIES INITIATIVE

President Bush is asking Congress to act on a “Clear Skies Initiative”, which would call for 70% reductions in nitrogen oxide (NOx), Sulfur dioxide (SOx2) and mercury by 2018. EPA, which had planned to complete action in an “Interstate Rule” that would reduce the pollutants by 2015, will now delay action on the rule until Congress has had time to act on the clear skies initiative. The issue deals with power plant emissions, but could affect state SIPs in other industries.    

EPA LOOKS AT SIPS

As you know, many states are now revising their State Implementation Plans (SIPs) under the Clean Air Act to accommodate reclassifications under the new ozone standard. At the same time, EPA has an advisory committee looking at ways to improve the SIP process. A preliminary draft of the ad hoc groups recommendations includes the suggestion that states consider multipollutant impacts of various controls, rather than look at each pollutant separately. It also recommends new controls on several specific industrial sectors, including: heavy-duty diesel engines, ships, locomotives, and aircraft. Presumably those controls would include fuels as well as engines themselves.    

SERVICE STATION EXEMPTION

EPA has finalized its model application for exemption from Superfund for Service Stations that handle used oil. For a detailed memo on the subject from our attorneys,  click here. An earlier memo referenced in that document can be accessed by clicking here.   

IN THE STATES . . .

CIOMA is opposing any changes to the California Water Board’s Interstitial Liquid Level Monitoring requirements. Issues involve the question of pressurized systems . . . The Oregon Environmental Quality Commission has voted to continue requiring oxygenated gasoline in the Portland area for at least 2 more years, despite a recommendation from the Dept. of Environmental Quality (staff) that the requirement was no longer needed . . . The Minnesota Association of Counties is calling for a 10-cent per-gallon increase in the state’s gasoline tax, phased in over 2 years, going from 20 cents to 30 cents per gallon . . . EPA has agreed to changes in a consent decree with Shell to allow operation of its Bakersfield, California refinery beyond 1/1/05, to allow time to find a buyer. That process is moving forward.      

 
SIGMA Weekly Report December 20, 2004 © Copyright SIGMA, 2005