IRS Continues to Levy Hefty Fines for Failure to Display Dispenser Tax Labels

IRS fines for incorrect or missing labels are significant. The IRS requires all dyed diesel and dyed kerosene dispensers to have a specific label indicating that the fuel is for nontaxable use only. The labeling requirement has been in place for diesel dyed diesel dispensers since 1993 and for dyed and clear kerosene dispensers since 1998. The IRS has recently stepped up enforcement of the dispenser label requirements nationwide. Please note that the EPA’s LSD and ULSD dispenser labels – which also provide notice on nontaxable uses of these fuels – are NOT a replacement for the IRS labels. Both the IRS and EPA labels are required, despite their apparent redundancy.  If you need a dyed diesel label for your pump, let us know.

The following IRS labels must be posted on any retail dispenser or other delivery facility (skid tank, consumer dispensers at bulk plants or card locks) where dyed diesel fuel and/or dyed kerosene are dispensed for use by a purchaser/consumer:

“DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR
TAXABLE USE”

or

“DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR
TAXABLE USE”
.

In addition, the following label must be posted on all blocked pumps that sell clear, untaxed kerosene:

“UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY”.


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