The Internal Revenue Service will not assess civil penalties for businesses that fail to file certain tax reports related to dyed diesel fuel used between Oct. 1 and Dec. 31, 2026, the agency announced.
The relief covers failures to file Form 720, which reports certain fuel excise tax liabilities, report that liability, and maintain records to substantiate the liability under section 4041(a). The IRS will not assert civil penalties or additional tax assessments for these specific failures during the relief period.
The relief applies without regard to whether filing deadlines fall after Dec. 31, 2026, and no subsequent filing, reporting, or record reconstruction will be required after that date. However, businesses must continue to file, report, and maintain records for other tax liabilities. The relief does not affect recordkeeping or reporting for other taxes or for claims for exemptions, credits, or refunds.
The IRS said it is aware of concerns about residual red dye remaining in fuel tanks after the relief period ends and is considering an appropriate grace period or other mitigation measures, with further guidance to follow.