The IRS has extended until December 7 the diesel fuel penalty waiver for New Jersey and parts of New York.

The extension is based on an extended fuel waiver granted to these areas by the EPA in response to shortages of clear diesel fuel caused by the Hurricane Sandy.

The IRS will not impose a tax penalty when dyed diesel fuel is sold for use or used on the highway. This relief applies beginning Oct. 30, 2012, to all of New Jersey and to the five boroughs of New York City and to the New York counties of Nassau, Suffolk, Rockland and Westchester.

This relief is available to any person that sells or uses dyed fuel for highway use. In the case of the operator of the vehicle in which the dyed fuel is used, the relief is available only if the operator or the person selling the fuel pays the 24.4-cent-per-gallon tax that normally applies to diesel fuel for on-road use. The IRS will not impose penalties for failure to make semimonthly deposits of this tax. Publication 510 has information on the proper method for reporting and paying the tax.

Also, the IRS will not impose the tax penalty on a failure to meet the requirements of EPA highway diesel fuel sulfur content regulations if the EPA has waived those requirements.

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