IRS planning guidance on recovering dyed fuel excise tax

The Treasury and the Internal Revenue Service say guidance is forthcoming on a new method for recovering federal excise tax paid on dyed fuel established under the One Big Beautiful Bill Act.

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Announcement 2026-01 provides general information on claiming a payment under a new OBBBA provision related to dyed fuel. The new law allows a taxpayer to recover federal excise taxes paid on clear diesel fuel or kerosene if that taxpayer later removed the fuel from a terminal as dyed fuel for nontaxable use.

The announcement notes that absent a statutory change, the Treasury and the IRS lack the authority to pay the claims to anyone other than the person who paid the original tax on the dyed fuel to which the claim relates.

Announcement 2026-01 also addresses forthcoming guidance on submitting a dyed fuel refund claim. Taxpayers who paid tax on diesel fuel or kerosene and later removed the fuel from a terminal as eligible dyed fuel on or after this Dec. 31 can submit a claim for refund, provided:

1. The dyed fuel was previously taxed, and the tax was not credited or refunded.
2. The fuel is indelibly dyed by mechanical injection and removed from an approved terminal for a nontaxable use on or after Dec. 31, 2025.

The Treasury and the IRS anticipate issuing this guidance in early 2026 and request taxpayers to hold any claims until this guidance is issued. The IRS will not process any claims until that time.