To amend the Internal Revenue Code of 1986 to provide refunds with respect to certain dyed fuels that are exempt from tax and with respect to which tax was previously paid.

This bill creates a new refundable provision in the Internal Revenue Code for a category of dyed fuels called “eligible indelibly dyed diesel fuel or kerosene.” If a person can show to the Treasury Secretary that they removed such eligible dyed fuel from a terminal and that tax was previously paid under the diesel fuel tax but the fuel is exempt from tax (under the dyeing exemption), the government must pay the taxpayer a refund equal to the tax that was previously paid. The refund is paid without interest and is treated as a refund under the federal credit/refund framework. The bill also makes several conforming edits to cross-reference this new provision and defines the scope and effective date. The new rules apply to eligible fuel removed on or after 180 days after the date of enactment. In short, the bill establishes a mechanism for taxpayers to recover excise tax paid on certain indelibly dyed fuels that are later exempt from tax, with the refund expected from the Treasury and the process integrated into existing refund/credit rules.