Fuel Tax Credit: A Legitimate Benefit — and a Growing IRS Enforcement Priority
What This Video Covers
The fuel tax credit is a legitimate tax benefit for specific categories of businesses — but it has become one of the IRS’s top enforcement priorities because promoters have been selling it aggressively to businesses that do not qualify. This video explains what the credit is, who actually qualifies and what to do if you have filed a claim you are uncertain about.
Key topics addressed include:
- What the fuel tax credit is and which businesses legitimately qualify
- The specific agricultural, off-highway and marine uses that qualify
- How promoters have marketed the credit to ineligible businesses
- Why the business owner — not the promoter — pays when the claim is disallowed
- Red flags that indicate a fuel tax credit pitch is a scam
- What to do if you have already filed a fuel tax credit claim you are unsure about
Why This Matters
The fuel tax credit is designed to provide relief from federal excise taxes on fuel used for specific non-highway purposes — farming, off-road use, commercial fishing and similar activities. It is not available to most businesses. But in recent years, promoters have marketed it aggressively to ineligible businesses — often as a ‘hidden’ or ‘overlooked’ credit.
The pattern is nearly identical to what happened with the Employee Retention Credit: a legitimate credit misapplied on a massive scale, leaving businesses exposed to repayment demands, penalties and interest after the promoters have collected their fees and moved on.
About the Presenter
Benjamin A. Goldburd, Esq.
Goldburd McCone LLP
Benjamin brings focused experience in IRS collection defense, including lien and levy disputes, CDP hearings and negotiated resolutions. Our team’s combined backgrounds in accounting, business and wealth management ensure that enforcement responses account for the full scope of a client’s financial position.
Frequently Asked Questions About the Fuel Tax Credit
What is the fuel tax credit?
The fuel tax credit allows qualifying taxpayers to claim a credit for federal excise taxes paid on fuel used for certain non-taxable purposes. The most common qualifying uses include fuel used in off-highway business use (such as farming equipment, construction machinery or boats used in commercial fishing), fuel used to power stationary engines, and fuel used in certain aviation contexts. The credit is legitimate — for businesses that actually qualify.
What businesses actually qualify?
Businesses that use significant quantities of fuel in off-highway, agricultural or certain marine applications are the primary qualifying categories. This includes farms using fuel in tractors and other agricultural equipment, construction companies using fuel in off-road equipment, commercial fishing vessels, and similar operations. A restaurant, retail store, medical practice or typical service business does not qualify.
Why is the IRS targeting fuel tax credit claims?
The IRS has placed the fuel tax credit on its ‘Dirty Dozen’ list of tax scams for several consecutive years because promoters have been broadly marketing the credit to businesses that plainly do not qualify. The IRS is conducting audits of these claims at a high rate, and businesses that received improper credits face repayment demands, accuracy-related penalties and, in egregious cases, referral for criminal investigation.
A promoter told me I qualify. How do I know if that is true?
Ask the promoter to identify specifically which exception applies to your business and to show you the applicable IRS guidance. If they cannot point to a specific qualifying use — or if the analysis relies on a broad or creative interpretation rather than a clearly applicable exception — that is a significant red flag. Have an independent tax attorney review the analysis before filing anything.
I already claimed the credit. What should I do?
If you have already filed and received the credit, consult with a tax attorney as soon as possible. Depending on your situation, options may include voluntary correction through an amended return, participation in a disclosure program or building a defense if the claim was in fact legitimate. The sooner you address the issue — before an audit notice arrives — the more options you typically have.