No Form 720 Needed for Dyed Diesel Used on Highways This Fall
The IRS expanded its October relief: no excise tax return, reporting or records solely for dyed diesel used on highways from October 1 through December 31.
The IRS said October 21 that it will not challenge failures to file, report or keep records that arise solely from tax owed on dyed diesel used in highway vehicles between October 1 and December 31, 2026, and will not assert civil penalties for them. It builds on the penalty relief we reported October 21, which followed the October 5 executive order on diesel fuel.
In practice, that means a farmer, contractor or other business that puts dyed diesel in a highway vehicle during the relief period does not need to file Form 720, the quarterly federal excise tax return, just to report that use, or keep records just to prove it. The relief applies even if a filing deadline falls after December 31, and nothing has to be filed or reconstructed later.
Businesses that file Form 720 for other excise taxes must still file and keep records for those. The relief also does not change records needed for other taxes or for fuel tax credit and refund claims.
One open question: what happens to red dye left in fuel tanks after December 31. The IRS says it is considering a grace period or other measures and will issue more guidance. State fuel tax rules are separate.
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