Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2019
Motor Vehicle Fuel Tax Law
Analysis of Motor Vehicle Fuel Tax Law
MOTOR VEHICLE TAXATION AND REVENUES
Nature and Rate of Tax. The tax is imposed on the removal of motor vehicle fuel in this state from a terminal if the motor vehicle fuel is removed at the rack. (Sec. 7360, 7362.) The tax is also imposed on the removal of motor vehicle fuel in this state from any refinery, and the entry of motor vehicle fuel into this state for sale, consumption, use, or warehousing as specified. (Sec. 7360, 7363.)
1. Motor Vehicle. "Motor vehicle" includes every self-propelled vehicle operated or suitable for operation on the highway, except a vehicle used exclusively upon stationary rails or tracks. (Sec. 7325.)
2. Highway. "Highway" includes a way or place, of whatever nature, publicly maintained and open to the use of the public for purposes of vehicular travel. (Sec. 7319.)
3. Motor Vehicle Fuel. "Motor vehicle fuel" means gasoline and aviation gasoline. It does not include jet fuel, diesel fuel, kerosene, liquefied petroleum gas, natural gas in liquid or gaseous form, or alcohol. (Sec. 7326.)
4. Removal. "Removal" means any physical transfer of motor vehicle fuel, and any use of motor vehicle fuel other than as a material in the production of motor vehicle fuel. However, motor vehicle fuel is not removed when it evaporates or is otherwise lost or destroyed. (Sec. 7336.)
5. Rack. "Rack" means a mechanism for delivering motor vehicle fuel from a refinery or terminal into a truck, trailer, railroad car, or other means of nonbulk transfer. (Sec. 7333.)
6. Supplier. "Supplier" includes any person who is any of the following: (a) Blender, as defined in Section 7308. (b) Enterer, as defined in Section 7311. (c) Position holder, as defined in Section 7332. (d) Refiner, as defined in Section 7334. (e) Terminal operator, as defined in Section 7340. (f) Throughputter, as defined in Section 7341. (Sec. 7338.)
7. Terminal. "Terminal" means a motor vehicle fuel storage and distribution facility that is supplied by pipeline or vessel, and from which motor vehicle fuel may be removed at a rack. (Sec. 7339.)
Exemptions. Tax does not apply to:
- Any entry or removal from a terminal or refinery of motor vehicle fuel transferred in bulk to a refinery or terminal if the persons involved (including the terminal operator) are licensed suppliers.
- The removal of motor vehicle fuel, if (i) it is removed by railroad car from an approved refinery and is received at an approved terminal, and (ii) the refinery and the terminal are operated by the same licensed supplier, and (iii) the refinery is not served by pipeline (other than a pipeline for the receipt of crude oil) or vessel.
- Motor vehicle fuel which, pursuant to the contract of sale, is required to be shipped and is shipped to a point outside of this state by a supplier by means of (i) facilities operated by the supplier, or (ii) delivery by the supplier to a carrier, customs broker, or forwarding agency, whether hired by the purchaser or not, for shipment to the out-of-state point.
- Delivery by the supplier to any vessel clearing from a port of this state for a port outside of this state and actually exported from this state in the vessel.
- Motor vehicle fuel sold by credit card certified by the United States Department of State to any consulate officer or consulate employee of a foreign government who is not engaged in any private occupation for gain within this state, who uses the motor vehicle fuel in a motor vehicle that is registered with the United States Department of State, and whose government has done either (i) entered into a treaty with the United States providing for the exemption of its representatives from national, state, and municipal taxes or (ii) Granted a similar exemption to representatives of the United States.
- Motor vehicle fuel sold to the United States armed forces for use in ships or aircraft, or for use outside this state.
- Removal or entry of gasoline blendstocks in one of the several ways specified in the law.
- Motor vehicle fuel sold by a supplier to a train operator for use in a motor vehicle fuel-powered train or for other off-highway use and the supplier has on hand an exemption certificate from the train operator.
LICENSES AND BONDS
License Requirement. A person desiring to engage in business as a supplier, industrial user, pipeline operator or vessel operator must obtain a license and post the required bond. (Secs. 7451, 7460, 7470.) A train operator that transports motor vehicle fuel, alcohol, or aircraft jet fuel into, out of, or within the state must also obtain a license. (Sec. 7470.)
Payments by Unlicensed Persons. If any person becomes a supplier without first securing a license, the tax and applicable interest and penalties become immediately due and payable on account of all motor vehicle fuel removed, sold, or entered by the supplier. The Board shall ascertain the amount of motor vehicle fuel removed, sold, or entered, shall determine the amount of tax due and add a penalty of 25 percent. The penalty may be waived if the Board determines that failure to obtain the license was due to reasonable cause. A copy of the determination shall be filed with the Controller who shall forthwith collect the tax, interest, and penalty. (Secs. 7726–7732.)
Lien of Tax. The tax together with all interest, penalties, and costs is a lien on all personal property and attaches at the time motor vehicle fuel is removed, sold, or entered. If the amount is not paid when due, the Controller may file a certificate of amount of tax, interest, and penalties with the recorder of any county, and the amount constitutes a lien upon all real property in the county then owned or thereafter acquired by the debtor. The Controller may release all or any portion of the property subject to the lien. (Sec. 7872.)
Records. Every highway vehicle operator/fueler, industrial user, pipeline operator, supplier, train operator, vessel operator, and every person dealing in, removing, transporting, or storing motor vehicle fuel in this state must maintain full and accurate records as the Board requires, and make those records available for inspection. (Secs. 8301–8304.)
Deposit of Taxes. The Controller shall transmit all payments to the State Treasurer who shall deposit them in the Motor Vehicle Fuel Account in the Transportation Tax Fund. (Sec. 8351.)
Returns and Payment. Each supplier must file a return with the Board for each calendar month. The returns are due on or before the last day of the month following the monthly period to which they relate and must be accompanied by a remittance, payable for the Controller of the amount of tax due. (Sec. 7651.) Terminal operators, pipeline operators, vessel operators, and train operators must file reports containing specified information with the Board for each calendar month or other period set by the Board. The reports are due on or before the last day of the month following the monthly period to which they relate. (Secs. 7652.5, 7652.7, 7652.8.)
If a return is not filed or payment made within the time required, a penalty of 10 percent of the amount of tax is imposed and interest accrues from the due date until paid. (Sec. 7655.) An extension of time for filing or payment will be granted upon request and a showing of good cause. The granting of the request does not prevent the accrual of interest. (Sec. 7656.)
If a supplier's estimated tax liability averages $900,000 or more per month, the supplier shall make prepayments. The prepayments are credited against the taxes due for the monthly period for which the prepayments are made. Failure to make a prepayment will result in a 6 percent penalty. The penalty is 10 percent if failure to pay is due to negligence on intentional disregard. (Secs. 7659–7659.8.)
Refunds on Certain Sales. (Sec. 8101.) Persons who have paid the tax on motor vehicle fuel either directly or indirectly to the vendor from whom it was purchased may file a claim for refund with the Controller for the tax with respect to fuel used for other than operating motor vehicles upon the highway. Refund of tax also will be made if:
1. The fuel is purchased and used for purposes other than operating motor vehicles upon the public highways of the state.
2. The fuel is exported for use outside the state.
3. The fuel is sold to the armed forces of the United States for use in ships or aircraft or for use outside the state.
4. The fuel is used in certain construction equipment.
5. The fuel is used by certain consulate officers or employees of foreign governments.
6. The fuel is removed at a rack and tax is paid on that removal, or the fuel is purchased tax-paid outside the bulk transfer/terminal system and then delivered to another approved terminal from which the tax paid fuel is subsequently removed.
7. The fuel is purchased tax-paid in the bulk transfer/terminal system and subsequently removed at the terminal rack. This applies only to those purchases made on or after January 1, 2002.
8. The fuel is used in an operation of a motor vehicle on highways under the jurisdiction of the United States Department of Agriculture when the user pays or contributes to the cost or construction or maintenance of the highway.
9. The fuel is used in propelling passenger carrying vehicles for public transit purposes (this refund is limited to 6¢ per gallon).
10. The fuel is used in operating a vessel on water located on private property owned or controlled by the operator of the vessel. (Secs. 8101–8101.7.)
Claims for refund mentioned above shall be filed within 3 years from the date of the purchase of the motor vehicle fuel. (Sec. 8105.)
No refund shall be granted for losses in handling, transporting, or storing motor vehicle fuel. (Sec. 8107.)
Aircraft Jet Fuel Tax
Nature and Rate of Tax. The tax is imposed for the privilege of using or selling aircraft jet fuel. The tax is imposed on every aircraft jet fuel dealer and is at the rate of 2 cents per gallon of fuel sold to an aircraft jet fuel user or used by an aircraft jet fuel dealer. (Sec. 7392.)
Aircraft Jet Fuel. "Aircraft jet fuel" is any inflammable liquid used to propel an aircraft operated by a jet or turbine type engine. (Sec. 7387.)
Aircraft Jet Fuel Dealer. An aircraft jet fuel dealer is a person who sells to an aircraft jet fuel user aircraft jet fuel delivered into the fuel tanks of an aircraft or into storage from which the fuel is withdrawn for use in an aircraft. (Sec. 7388.)
Aircraft Jet Fuel User. An aircraft jet fuel user is a person who uses aircraft jet fuel to propel an aircraft in this state except:
1. A certificated common carrier by air.
2. Certain manufacturers or repairers of aircraft.
3. The armed forces of the United States. (Sec. 7389.)
Dealer's Permit. Each person desiring to become an aircraft jet fuel dealer must obtain a permit from the Board and post the required bond. (Sec. 7395.) The permit is valid until canceled, suspended, or revoked. (Sec. 7396.)
Administration. The administrative provisions relating to motor vehicle fuel apply to aircraft jet fuel tax. (Sec. 7397.)
Deposit of taxes. The proceeds of this tax are deposited in the Motor Vehicle Fuel Account in the Transportation Tax Fund and after payment of refunds, the balance is transferred to the Aeronautics Account in the State Transportation Fund. (Sec. 7398.)