Diesel Fuel Tax – Frequently Asked Questions (FAQs)Open All Close All
About the Diesel Fuel Tax
The diesel fuel tax is paid by the person (supplier) who owns the diesel fuel when it is removed from a refinery or terminal rack in California or entered (imported) into California.
The tax is imposed upon each gallon of diesel fuel when it is:
- Removed from the terminal rack,
- Removed from the refinery rack,
- Removed from the refinery via pipeline or vessel when the owner does not hold a valid diesel fuel supplier license with the CDTFA,
- Imported into California via pipeline or vessel and the importer does not have a valid diesel fuel supplier license with the CDTFA, or the import is not via pipeline or vessel,
- Removed or sold to a person who does not hold a valid diesel fuel supplier license with the CDTFA, and the diesel fuel was untaxed,
- Blended diesel fuel removed or sold by the blender. The number of gallons of blended diesel fuel subject to the tax is the difference between the total number of gallons of blended diesel fuel removed or sold and the number of previously taxed diesel fuel gallons used to produce the blended diesel fuel.
The Diesel Fuel Tax Law also contains a backup tax imposed on diesel fuel when the tax was not previously paid, or has been refunded. The backup tax is imposed on any diesel fuel that contains dye, and any liquid on which tax has not been imposed, that is placed into the fuel tank of a diesel-powered highway vehicle, including diesel fuel for which a claim for refund has been allowed.
The diesel fuel tax revenue is deposited into the State Transportation Fund. Revenues from this program are used to construct and maintain public roads and mass transit systems.
The Governor's Office of Business and Economic Development (GO-Biz) offers extensive information on local, state, and federal permit requirements. Visit their website for a listing of its assistance centers.
Visit Calgold for help with permit and licensing requirements for other local, state, and federal authorities (for example, you may need to be registered with the Franchise Tax Board or the Employment Development Department).
Also, visit California's Tax Service Center. You may also want to consult a tax professional for assistance on other agencies’ requirements.
You should notify the CDTFA of any change of mailing or email address, phone or fax number to ensure that information from the CDTFA is received timely. Log in to our online services system with a username and password to maintain your contact information, add or close a location, or update your mailing address. You can also use CDTFA-345-SP, Notice of Business Change, Special Taxes and Fees Accounts, to notify the CDTFA of changes.
If you have questions contact the CDTFA Customer Service Center at 1-800-400-7115 (CRS: 711) Monday through Friday (except state holidays) 8:00 a.m. to 5:00 p.m. (Pacific time), and select the option for "Special Taxes and Fees" or Email Your Tax Questions.
Collecting the Tax
No. Do not include the diesel fuel tax amount in the calculation of your gross receipts.
Exemptions for diesel fuel tax are provided in the Diesel Fuel Tax Law Chapter 3 of the Revenue and Taxation Code.
In general, the provisions requiring the payment of diesel fuel taxes do not apply to the following:
- Sales or removals of dyed diesel fuel
- Exports of diesel fuel (pursuant to a contract of sale)
- Fuel sold by credit card to a consulate officer or employee
- Fuel sold to a farmer for farming purposes when the supplier has CDTFA-608, Certificate of Farming Use, from the farmer
- Fuel sold to an exempt bus operator for use in an exempt bus operation and the supplier has CDTFA-231-DB – Certificate of Exempt Bus Operation, from the exempt bus operator
- Fuel sold by a supplier to the United States and its agencies and instrumentalities.
- Fuel sold to a train operator for use in a diesel fuel powered train or other off-highway use and the supplier has CDTFA-231-PT, Fuel Tax Exemption Certificate for Diesel Fuel And Motor Vehicle Fuel Train Operators, from the train operator
For more detail on the specifics of each of the exemptions listed above, view the Diesel Fuel Tax Law, Chapter 3.
Are there any special requirements for exempt bus operators and government entities for the use of diesel fuel?
All diesel fuel used in an exempt bus operation is exempt from the diesel fuel tax. However, exempt bus operators must pay a tax of one cent for each gallon of exempt diesel fuel used in an exempt bus operation on their CDTFA-501-DB, Exempt Bus Operator Diesel Fuel Tax Return, for the privilege of operating buses on state highways and freeways. (Revenue and Taxation Code section 60502.2 and section 60205).
A public school district licensed as an exempt bus operator may purchase ex-tax, undyed diesel fuel under a CDTFA-231-DB, Certificate of Exempt Bus Operation, or dyed diesel fuel, for use in its exempt bus operation.
A government entity must apply for a license to operate a diesel-powered highway vehicle upon California's highways, unless all diesel fuel is purchased tax-paid from a supplier or retail vendor, and the tax-paid fuel is used solely to operate a diesel-powered highway vehicle within California. As a licensed government entity, you are allowed to use dyed diesel fuel on the highway in your California registered highway vehicles. You must pay the diesel fuel tax directly to your supplier on purchases of undyed diesel and must report on your CDTFA-501-DG, Government Entity Diesel Fuel Tax Return, tax due on the use of dyed diesel fuel used on the highway. A government entity that has paid diesel fuel tax to a retail vendor shall be allowed a credit on its tax return for the tax paid to the retail vendor. (Revenue and Taxation Code section 60146, section 60108, and section 60205.5)
No. This state and its political subdivisions are not exempt from the excise tax on diesel fuel. However, these entities are allowed to purchase dyed diesel fuel for on-highway use. In order to do so, they must register with us to report and pay the excise tax on dyed diesel fuel used on public highways.
Filing and Making a Payment
We highly encourage you to file your motor fuels tax forms online. For more information on filing online, visit the Motor Fuels Online Filing page.
No. If you are a supplier of both motor vehicle fuel and diesel fuel, you must file separate tax returns. The motor vehicle fuel tax and diesel fuel tax are administered under two separate programs. If you file informational reports as a pipeline, vessel, train, or terminal operator, you may report both motor vehicle fuel and diesel fuel on your informational report(s).
How you make a payment depends on the payment method you have selected. Visit the CDTFA’s Online Services webpage and view the Payments tab for further information. A payment may be made by an online transmission separate from the return transmission, or it may be included in the online file. See our Electronic Funds Transfer (EFT) page for complete information on making electronic payments and the payment methods available.
If your estimated average monthly tax payment will be $20,000 or more, you will be required to pay the tax by Electronic Funds Transfer (EFT).
In addition to paying the diesel fuel tax by EFT by the due date, you must also file the return by the due date. If no amount is owed, a return must still be submitted timely. A delinquent return, failure to pay by EFT, or a late transfer will result in penalty charges. For more information on the EFT program, visit the CDTFA’s Electronic Funds Transfer (EFT) webpage.
Records are required to be retained for a period of not less than four years from the time the tax is due unless the CDTFA authorizes in writing their destruction sooner.
Filing a Claim for Refund
See our Diesel Fuel Tax – Filing Claims for Refund page for special rules for filing diesel fuel tax claims for refund.
See our Summary of Diesel Fuel Claim for Refund Statutes and Time Frames webpage for refund statutes and time frames.
You must maintain complete records of all activities. These include rack removals, sales, imports, and exempt dispositions, including exemption certificates, self-consumed diesel fuel, inventories, purchases, receipts, and tank gauging or meter readings, of diesel fuel and transactions involving fuel that are required to be accounted for on your return. Such records include but are not limited to:
- Pipeline tickets
- Exemption certificates
- Purchase orders
- Tax returns from other states to support export claims
- Cardlock statements
- Calculations or formulas to support off-highway exempt usage
- First Taxpayer Report
- Support for claimed bad debts
When you export tax-paid fuel you may take a credit or claim a refund for the taxes paid when the fuel was purchased. All claims for refund of tax paid on exported diesel fuel must be supported by documents that include the following:
- The total amount of diesel fuel covered by the claim
- A copy of the purchase invoice for the fuel showing the name, address, telephone number and permit number of the person who sold the diesel fuel to you, the date the fuel was purchased, number of gallons, a separately stated amount of tax, and a statement that the diesel fuel purchased did not contain visible evidence of dye
- A properly executed bill of lading showing intent to export the fuel to an out-of-state destination
- Your sales invoice further documenting that the fuel was sold to an out-of-state purchaser without tax
- Contracts of sale that cover the period of the exports
If the invoices, bills of lading, and contracts of sale all support that a transaction is an exempt export, we generally accept the transaction as a valid export transaction. If any of the documents indicate that an export may not have taken place, additional investigation will be warranted. You are responsible for demonstrating that fuel actually was exported. In addition to the above documentation, you may be asked to obtain the following to show that you exported the fuel.
- Confirmation from the receiving state that the fuel was reported and taxes paid in the receiving state.
- Other third-party verification, such as properly completed and authenticated Arizona Fuel Manifests stamped and signed by a port inspector.
- Copies of the purchaser’s tax return showing that the fuel was reported to the receiving state – subject to confirmation by the receiving state.
- Carrier delivery tickets bearing the signature of the ultimate purchaser receiving the fuel.
Instead of claiming a refund of tax for export of tax-paid diesel fuel, you may take a credit on your form CDTFA-501-DD, Supplier of Diesel Fuel Tax Return for tax-paid diesel fuel when:
- The contract of sale requires the diesel fuel to be shipped and
- The fuel is actually shipped to a point outside of this state by the supplier claiming the credit, by the means described above and in subdivision (a)(1) of Diesel Fuel Tax Regulation 1430, Shipments Out of State.
If you do not take the credit on a return filed within three months of the calendar month in which export occurred, you must file a claim for refund and may not take a return credit.
Can I claim a refund for the use of tax-paid diesel fuel in a diesel particulate filter regeneration process?
No. Although Revenue and Taxation Code section 60501 (a)(4)(A) provides a refund for taxes paid on diesel fuel used for purposes other than operating motor vehicles upon the public highways of this state, diesel fuel used in the regeneration process is considered an operational use.
For transactions occurring on and after April 1, 2016, safe-harbor percentages are presumed to be the percentages of diesel fuel used in the operation of auxiliary equipment on diesel power motor vehicles. Safe-harbor percentages must be applied to diesel fuel consumption by auxiliary equipment type. Off-highway use is included in the safe-harbor percentages. See Diesel Fuel Tax Regulation 1432 for a list of safe-harbor percentages.