Credit for Federal Tax Paid on Fuels (Form 4136)

The government taxes gasoline, diesel fuel, kerosene, alternative fuels and some other types of fuel. However, there are certain uses of these fuels that are considered to be nontaxable. 

If you are an individual or business that purchases fuel for one of these reasons, you can claim a credit on your tax return for the tax paid. Listed below are the nontaxable uses for fuel. 

Code 01-Farm - Fuel used on a farm for farming purposes

Code 02- Vehicles specially designed for off-highway transportation -  A vehicle isn't treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicle's capability to transport a load over a public highway is substantially limited to carry over the highway.

Code 03- Export - fuel transported from the United States with the intention that the fuel remain in a foreign country or possession of the United States. Fuel isn't exported if it is in the fuel supply tank of a vehicle or aircraft.

Code 04 - In a boat engaged in commercial fishing -  fuel used in taking, catching, processing, or transporting fish, shellfish, or other aquatic life for commercial purposes, such as selling or processing the catch, on a specific trip basis. They include boats used in both fresh and salt water fishing. They don't include boats used for both sport fishing and commercial fishing on the same trip. 

Code 05- In certain intercity and local buses - fuel used in a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. The bus must be engaged in one of the following activities:

• Scheduled transportation along regular routes.
• Nonscheduled operations if the seating capacity of the bus is at least 20 adults, not including the driver. Vans and similar vehicles used for van-pooling or taxi service don't qualify.

Code 06- In a qualified local bus- fuel used in a bus meeting all the following requirements:

• is engaged in furnishing (for compensation) intracity passenger land transportation available to the general public
• operates along scheduled, regular routes
• has a seating capacity of at least 20 adults (excluding the driver)
• is under contract with (or is receiving more than a nominal subsidy from) any state or local government to furnish the transportation

Code 07- In a school bus- fuel used in a bus engaged in the transportation of students or employees of schools. A school is an educational organization with a regular faculty and curriculum and a regularly enrolled body of students who attend the place where the educational activities occur.

Code 08- For Diesel fuel and kerosene used other than as a fuel- in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train (not including off-highway business use) means undyed diesel fuel and undyed kerosene used:

• For home heating, lighting, and cooking;
• In boats;
• In stationary machines, such as generators and compressors;
• For cleaning purposes; or
• In minibikes and snowmobiles

Code 09 In foreign trade- fuel used in civil aircraft employed in foreign trade or trade between the United States and any of its possessions. The term trade includes the transportation of persons or property for hire and the making of the necessary preparations for such transportation. In the case of aircraft registered in a foreign country, the country must allow reciprocal benefits for aircraft registered in the United States.

Code 10 - Certain helicopter and fixed-wing aircraft uses - 

1. Certain Helicopter uses means fuel used by a helicopter for any of the following purposes:
2. Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas.
3. Planting, cultivating, cutting, transporting, or caring for trees (including logging operations).
4. Providing emergency medical transportation.
5. Fixed wing aircraft uses means fuel used by a fixed-wing air-craft for any of the following purposes.
6. Planting, cultivating, cutting, transporting, or caring for trees (including logging operations).
7. Providing emergency medical transportation. The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services.

Code 11- Exclusive use by a qualified blood collector organization- fuel used by the qualified blood collector organization for its exclusive use in the collection, storage, or transportation of blood. 

Code 12 - In a highway vehicle owned by the United States that isn't used on a highway -fuel used in a vehicle that wasn't used on public highways during the period covered by the claim. This use applies whether or not the vehicle is registered or required to be registered for highway use.

Code 13 - Exclusive use by a nonprofit educational organization- fuel used by an organization exempt from income tax under section 501(a) that meets both of the following requirements. 

• has a regular faculty and curriculum.
• regularly enrolled body of students who attend the place where the instruction normally occurs

Code 14- Exclusive use by a state, political subdivision of a state, or the District of Columbia- fuel purchased by the state or local government for its exclusive use

Code 15- In an aircraft or vehicle owned by an aircraft museum- fuel used in an aircraft or vehicle that is owned by an organization that meets all the following requirements. 

1. It is exempt from income tax as an organization described in section 501(c)(3).
2. It is operated as a museum under a state (or District of Columbia) charter.
3. It is operated exclusively for acquiring, exhibiting, and caring for aircraft of the type used for combat or transport in World War II.

Code 16 - In military aircraft- fuel used in an aircraft owned by the United States or any foreign nation and constituting a part of its armed forces.

For complete instructions, see Publication 510.