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Title 26, Internal Revenue CodeRelease 119-110

§4105 Two-party Exchanges

Title 26 › Subtitle D — Miscellaneous Excise Taxes › CHAPTER 32 — MANUFACTURERS EXCISE TAXES › Subchapter A — Automotive and Related Items › PART III — PETROLEUM PRODUCTS › Subpart B — Special Provisions Applicable to Fuels Tax › § 4105

Last updated Sep 22, 2026|Official source

Summary

A delivering person in a two-party exchange is not responsible for the tax in section 4081(a)(1)(A)(ii). A two-party exchange is a non-sale transfer of taxable fuel between two people both registered under section 4101. It applies only when four things happen: the deliverer shows as holding the terminal inventory; the swap is before or when the receiver removes the fuel across the rack; the terminal reports the receiver as the remover to the Secretary; and the transfer is under a written contract.

Full Legal Text

Title 26, §4105

Internal Revenue Code, Source: USLM XML via OLRC

(a)In general
In a two-party exchange, the delivering person shall not be liable for the tax imposed under section 4081(a)(1)(A)(ii).
(b)Two-party exchange
The term “two-party exchange” means a transaction, other than a sale, in which taxable fuel is transferred from a delivering person registered under section 4101 as a taxable fuel registrant to a receiving person who is so registered where all of the following occur:
(1)The transaction includes a transfer from the delivering person, who holds the inventory position for taxable fuel in the terminal as reflected in the records of the terminal operator.
(2)The exchange transaction occurs before or contemporaneous with completion of removal across the rack from the terminal by the receiving person.
(3)The terminal operator in its books and records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction to the Secretary.
(4)The transaction is the subject of a written contract.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

Prior sections 4111 to 4113, 4121, and 4131 of this title constituted a former subchapter B of this chapter, see

Prior Provisions

note set out preceding section 4121 of this title.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 108–357, title VIII, § 866(c), Oct. 22, 2004, 118 Stat. 1622, provided that: “The amendment made by this section [enacting this section] shall take effect on the date of the enactment of this Act [Oct. 22, 2004].”

Reference

Citations & Metadata

Citation

26 U.S.C. § 4105

Title 26, Internal Revenue Code

Last Updated

Sep 22, 2026

Release point: 119-110