Delay in E-Filing of Form 4136

February 22, 2008 | Roger McEowen


An individual or business can claim a credit on IRS Form 4136 for various nontaxable uses of gasoline and other fuels.  The credit can be claimed for various purposes including, mining, manufacturing, farming, mowing, aviation and home heating.  Claims can also be made for sales to state and local governments and for alternative fuels.  The taxpayer must be the one purchasing the fuel to file a claim.

Unfortunately, as a result of changes made by H.R. 4839, the Tax Technical Corrections Act (Act) of 2007 (signed into law on December 29, 2007), the IRS will not accept e-filed Form 4136 (Credit for Federal Tax Paid on Fuels for Tax Year 2007) until late on March 3, 2008.  The Act requires IRS to revise Form 4136 to add fields relating to the Leaking Underground Storage Tank (LUST) tax (see Act, §6(d)(B)).  But, there is no delay associated with paper filing by mail of federal individual tax returns that include Form 4136.  So, farm returns that are due March 1(technically, March 3 this year), and also contain Form 4136 will have to be paper-filed (unless you want to gamble that e-filing the 4136 will be a go in time on March 3).

Planning tip:  If a client qualifies for the earned income credit (EIC) or a tax
refund under the recently enacted tax bill, it is possible to e-file
the return without an associated Form 4136, receive the EIC
and/or tax refund, then later file an amended return electronically
containing the Form 4136.  In many instances, the EIC and/or tax
refund may be of greater dollar value than the amount of the fuel
credit claimed on Form 4136.

If a federal tax return has a penalty for underpayment of estimated tax and also contains Form 4136, some or all of the underpayment penalty may be due to the IRS delay in accepting e-filed returns.  A waiver of the underpayment penalty due to this delay normally could be requested on Form 2210.  However, the IRS position is that because a paper return could have been timely filed, the IRS delay in accepting e-filed returns containing Form 4136 is not the cause of any underpayment.  Thus, a waiver of the penalty will not be available.

Update:  On February 20, IRS issued a press release stating that farm returns with an attached Form 4136 that are electronically filed will be considered timely filed if e-filed on or before March 10. The extension applies to payment also.  IRS emphasizes that the one week relief does not impact farm returns that do not have an attached Form 4136.  IRS estimates that approximately 77,000 returns will be impacted. The official IRS announcement is IR2008-24, Feb. 22, 2008.

On Feb. 26, the Iowa Department of Revenue announced that it would follow the relief granted by the IRS.