When the taxman comes – tell him about your fuel!

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Farm Forum

After maybe 15 years of owning and flying this old bird, an aging J-3 Piper Cub plane, a fellow dressed in a suit drove into our farm one day.

He asked: “Do you have an Avgas bulk tank here?”

I told him we did.

“I am from the Internal Revenue,” he said, “and you owe back taxes on federal excise tax on the fuel sold from that fuel tank.”

I told the fellow we never sold any airplane fuel from that tank. Didn’t matter, we owed tax on fuel we used ourselves.

I asked this fed how he found us. He said that was easy. For sort of a joke to my old navy pilot friends, we had placed our runway on the old Aeronautical WAC chart that is circulated internationally. We called it Krueger Private Field and the information associated with these charts indicated that we had fuel available. Wrong thing to do. Sooner or later, someone with nothing to do working for the federal government looked at this chart with this information on it and decided that since we listed fuel available, we were selling av-fuel.

Quite an ordeal ensued. The fed wanted to know how many years this fuel barrel had been at our farm with av-fuel in it. Then he really popped the question: How many gallons had been stored over the past 15 years?

Wow, that was a bit of bookkeeping we had never kept. All I could tell him whenever the barrel came close to empty we had a fuel truck deliver the amount of gallons needed to refill it up.

Now we argued with this fellow for a very long time. He would leave and, a while later, here he would come and ask me the same questions plus some more.

Now here is the real mystery of this narrative. This wizened fellow came up with the number of gallons we had gone through over the past 15 years, multiplied it times the tax percentage, and presented us with an overdue tax bill. And, of course, it contained late payments and fines for not reporting it. Back in the ’80s, this amounted to a considerable amount of money, which we were very reluctant to pay. He gave us a timeline to make the payment or more penalties would be applied.

It fell on deaf ears when I argued that the fuel out of this storage tank only went into my own airplane for my own use. No deal. This guy was adamant. He wanted his money and right now.

So, with much regret, I agreed to pay the fed and finally get out from under this burden. As I was writing the check, I just happened to mention that I didn’t see why I was liable for this fuel tax as it was always used for agriculture.

He immediately responded: “Well, why didn’t you say so? You don’t owe any tax if it was all used for agriculture!”

Nuff said.

Gerald “Jerry” Krueger is a retired educator, coach, commercial pilot and farmer.