In an effort to protect taxpayers from potential litigation, jail time and other unsavory outcomes of tax fraud, the Internal Revenue Service (IRS) and the Coalition of Scam and Scheme Threats (CASST) released new measures surrounding how to claim the Fuel Tax Credit.
Why It Matters
Taxpayers have consistently misused a few key tax credits, enough to the point that the IRS released statements on potential scams related to false tax credit claims last year.
The Fuel Tax Credit is one of the more popular tax credits that is often misused. People who are misled to claim tax credits they are ineligible for, or who claim these tax credits anyway in the hopes of securing a higher refund, are at risk for serious consequences from the IRS.
These latest changes come right in time for taxpayers to prepare for the 2025 tax-filing season.
What To Know
The IRS, in partnership with the CASST, has introduced a new form that tax filers will have to fill out in order to initiate the process of claiming the Fuel Tax Credit. According to a statement from the IRS this week, the form is called the “Statement Supporting Fuel Tax Credit (FTC) Computation – 1” and is meant “to educate taxpayers on eligibility requirements for claiming the credit.”
People who are legitimately filing for the Fuel Tax Credit should include this new statement along with the other designated forms: Form 1040 and Form 4136. The information requested in this statement is designed to be used only by legitimate filers. Such information includes business information and the type of machinery used to complete eligible work.
What Is the Fuel Tax Credit
An eligible business can claim the Fuel Tax Credit as a “refundable credit for fuel used in a specific work-related activity,” per the IRS website. These kinds of eligible activities are not commonly done by most taxpayers, so few people should realistically qualify. Eligible activity includes vehicle fuel used for farming purposes, off-highway business use, commercial fishing and certain types of buses, as detailed by the IRS. Ineligible activity is fuel used for work commutes, for example.
Who Qualifies for the Fuel Tax Credit?
People who qualify for the Fuel Tax Credit are most often business owners. Farmers and people who own businesses that operate vehicles or other machinery that would use eligible fuel sources, like aviation or diesel fuel, are most likely to qualify for this business tax credit.
What People Are Saying
Danny Werfel, IRS commissioner, said in a statement: “Since its creation, this special group across the tax community has been working to take extra steps to protect taxpayers and the tax professional community. This effort includes expanding outreach and education on emerging scams, developing innovative approaches to identify potentially fraudulent returns at the point of filing and creating infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems. CASST partners have already worked together on important changes to protect taxpayers and tax professionals in the 2025 filing season, but this needs to be an ongoing effort given the continued expansion and threats from scams.”
What Happens Next
Consequences for falsely claiming the Fuel Tax Credit include fines up to $5,000 for each return. This penalty will be assessed to each spouse on a return where a married couple is filing jointly, per this week’s IRS statement.
Audits and jail time are also on the table if you are found culpable of tax fraud. Taxpayers should seek help from a reputable tax professional to ensure all of their information is filed correctly. Anyone who believes they may be a victim of a scam or who unintentionally files an incorrect return should notify the IRS immediately.
