On Oct. 14, 2026, the IRS announced temporary federal excise-tax penalty relief for dyed diesel fuel sold for highway use or used on highways nationwide. The relief responds to the President’s Oct. 5 executive order and applies retroactively from Oct. 1 through Dec. 31, 2026. It is available to any person who sells dyed diesel fuel or uses it for highway use. Dyed diesel is ordinarily not subject to tax because it is intended for an exempt use, such as farming. It may ordinarily be taxed when sold for highway use or used to power a vehicle on a highway. Generally, the liable party is the person selling the fuel at retail or, if it was not purchased at retail, the vehicle operator—for example, when fuel comes from a farm storage tank. During the relief period, the IRS says it will suspend ordinary collection and enforcement procedures. Fuel Compliance Officers will be assigned other duties, and there will be no federal inspections of on-road dyed-fuel use. Affected taxpayers do not need to keep records to substantiate eligibility for this relief. The IRS will not impose penalties related to the excise tax for covered highway use, including penalties for failing to make semimonthly tax deposits or maintain adequate records. Sellers and distributors do not have to investigate or document the fuel’s ultimate end use during this period. The announcement describes penalty and enforcement relief; it does not settle all questions about whether the underlying excise tax must be paid. The IRS anticipates issuing further guidance about postponing payment under the cited tax-code provisions and says it will explore ways to eliminate the obligation to pay deferred amounts. Future guidance is also expected to explain how the relief applies to Form 720, the Quarterly Federal Excise Tax Return, and other relevant forms. Anyone who believes they qualify but receives a penalty notice should follow its instructions or contact the IRS. The relief applies only to federal taxes. It does not change state fuel taxes or state penalties. The IRS notes that many, but not all, states have offered similar relief and encourages taxpayers to check with their state agencies for current state-level information.