The IRS Warns, Watch Out For Dyed Fuel

Using dyed fuel will result in fines!

Beginning in the 1990s, the government mandated that some fuel be dyed red or blue in order to be easily identified as non-taxable.

This dyed fuel is something that commercial motor vehicle operators should never use. If you are caught using dyed fuel, you could be fined thousands of dollars.

Here’s what you need to know about dyed diesel fuel.

What is fuel dyed?

Clear fuel already has excise taxes applied to it at the pump. The IRS does not want anyone to dodge these taxes by using non-taxed fuel.

Red fuel is intended solely for fueling off-road vehicles like tractors, construction equipment, and generators. Red fuel can be purchased by the public, but it is not taxable. It should not be used in commercial motor vehicles. 

Blue fuel is used only by government vehicles and cannot be purchased by the general public.

What happens if you are caught using dyed fuel?

In most states, if you are caught with any evidence of using dyed fuel, you will be fined $10 per gallon or $1,000 per tank. Then, for each repeat violation, that fine goes up by another $1,000.

And if you refuse to allow an inspection, you will be fined $1,000. So, in short, be extra sure you aren’t using dyed diesel. Pay attention to labels at the pump, and make sure you are purchasing from a trustworthy source.

What if you find dyed fuel in your tank?

You should drain the fuel as soon as possible. If you purchased the fuel and paid taxes on it, you should contact the establishment where you purchased it (and probably let the IRS know).

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