Publication 12, California Use Fuel Tax: A Guide for Vendors and Users
Vendors

Vendors who use fuel in motor vehicles may also be required to obtain a user permit. This section discusses how tax applies to your transactions, and your responsibilities as a vendor. It also discusses how to claim a credit for bad debts.

Vendor responsibilities

As the holder of a Vendor Use Fuel Tax Permit, you are responsible for:

Collecting use fuel tax from your customers on sales of fuel pumped into the tanks of their motor vehicles, or when you sell it through card or key-lock facilities. You are liable for the tax due even if you fail to collect it from your customers.
Filing returns through our online services. Returns are due on or before the last day of the calendar month following each reporting period and must be filed even if you have had no sales.
Paying tax to us. You are considered to have collected the tax at the time of sale. The proper amount of tax due must be submitted with your tax return. You may pay the amount due online by selecting the Make a Payment option.
Giving receipts to your customers. The receipt must have your name and address, the date of the sale, the gallons and price of the fuel sold, the amount of use fuel tax collected, and the total amount of the sale.
Obtaining from your customer a properly completed CDTFA-108, Authorization to Sell Fuel Without Collecting Use Fuel Tax (CDTFA authorization), in which the customer certifies that they are entitled to purchase fuel without paying use fuel tax at the time of purchase. CDTFA authorization must be signed by an authorized CDTFA representative to be valid. You may check the status of a CDTFA authorization you submitted to us for processing by contacting our Customer Service Center.
Keeping adequate records.

Recordkeeping

As a vendor, you must keep complete records of all purchases, inventories, sales, or other dispositions of fuel, including fuel inventory you used for business or personal reasons. You must keep and maintain these records for four years unless we authorize their destruction.

Your records must include all of the following:

Purchase invoices and sales receipts.
Tank gaugings, meter readings, and inventories.
Contracts, purchase orders, and CDTFA authorizations.
Records of nontaxable sales not covered by CDTFA authorizations such as sales for non-vehicular use, sales to the U.S. government, and sales to users who have paid the annual flat rate fuel tax.

Sales tax

If you sell any type of fuel to customers, your sales are generally subject to the sales tax, and you would qualify as a retailer. As a retailer, you must obtain a seller's permit in addition to your use fuel tax permit, and you must report your sales and pay sales tax to us. You can apply online for permits, accounts, and licenses by selecting Login or Register. Online services are also available through our convenient computer kiosks located in our offices.

Prepaid sales tax

Wholesalers and suppliers of gasoline and diesel fuels are required to pre-collect sales tax from their customers and pay it to us. However, fuels subject to the use fuel tax are not subject to the sales tax pre-collection provision.

For more information on prepaid sales tax, see publication 82, Prepaid Sales Tax and Sales of Fuel.

Making sales without collecting the use fuel tax

Generally, you must collect the use fuel tax on fuel you deliver directly into the fuel tanks of motor vehicles, regardless of their location. However, you are not required to collect the use fuel tax on the following transactions:

Sales of fuel to a user who provides you with a certificate which indicates that the user may purchase fuel without paying tax (see CDTFA authorizations below).
Sales of fuel pumped into containers other than fuel tanks of motor vehicles, including bulk storage tanks, equipment not considered to be motor vehicles, and containers such as fuel cans, drums, or barbecue propane tanks.
Sales to the U.S. government.
Sales to users who have paid the annual flat rate fuel tax.

CDTFA authorizations

You are not required to collect use fuel tax from users who present you with a CDTFA-108, Authorization to Sell Fuel Without Collecting Use Fuel Tax. Such authorizations are issued to those whose vehicles are used:

Both inside and outside the state, when the user would consistently pay more tax to vendors than is due on the vehicle's overall use.
Exclusively off-highway. The fuel must be delivered directly into the users' vehicle fuel tanks at the location where the vehicles are operated.
To provide eligible transit services.

You must retain all CDTFA authorizations in your records and list sales made to users holding CDTFA authorizations on your Vendor Use Fuel Tax Return.

U.S. Government Sales

Fuel sold for use by the U.S. government or one of its agencies or instrumentalities is not subject to use fuel tax. Fuel pumped into the tank of a U.S. government vehicle is exempt only if purchased with a credit card belonging to the government. If the purchaser pays for the fuel with cash or uses a personal credit card, the fuel is subject to tax.

You must report these exempt sales on your Vendor Use Fuel Tax Return.

Annual Flat Rate Fuel Tax

You may make nontaxable sales of LPG, DME, DME-LPG blends, LNG, and CNG to users who have paid the annual flat rate tax, provided the vehicle has a current flat rate decal attached. You should document all such sales on your receipt by recording the taxpayer's permit and decal numbers, the vehicle license numbers, and the number of gallons sold. You are required to list the total number of tax-exempt gallons sold on your Vendor Use Fuel Tax Return.

Reporting and documenting nontaxable sales

You are required to report all nontaxable sales on your Vendor Use Fuel Tax Return.

To support nontaxable sales reported on your returns, you should retain the following documents:

Copies of the sales receipts issued to the customers.
Certificates provided to you by your customers for the purchase of tax-exempt fuel.

The receipts should include:

Your name and address,
The name of the purchaser,
Date of sale,
Gallons or units of fuel sold,
Price per gallon or unit,
Amount of use fuel tax collected,
Total amount of the sale, and
A statement or code indicating the reason the sale is not taxable.

For fuel sales of less than 250 gallons that you pump into containers other than motor vehicle fuel tanks, you should note the type of container into which you place the fuel (for example, storage tank, bulldozer fuel tank, drum). The notation may be either a description or a machine code.

If a receipt covers multiple deliveries of fuel when only some were taxable, you must indicate the exempt deliveries.

Bad debts

You must report and pay tax to us on all taxable sales of fuel. However, you may claim a credit for an account that qualifies as a bad debt if you have previously reported use fuel tax from the sale and written off the account as a bad debt for income tax purposes. You can claim a credit only for tax that applies to the unpaid portion of the account.

To take this credit, you must notify us of the delinquency by listing it on Schedule D of your Vendor Use Fuel Tax Return and attaching a completed CDTFA-120, Notice of Credit for Bad Debt Losses.

If you have notified us of the delinquency and have written off the account as a bad debt for income tax purposes, you can claim a credit for the tax paid on Schedule B of your Vendor Use Fuel Tax Return.

Generally, you may claim your credit on a return filed after you have notified us of the bad debt. However, you can notify us of the delinquency and claim a bad debt credit on the same return. You must claim your credit within three years of the due date of the return for the period in which the original sale occurred.

If you collect any of the tax due on the original sale after claiming a credit for tax paid on a bad debt, you must report that amount to us. It must be listed on Schedule C of the first return you file after collecting the tax.

Revision August 2026

Publication 12, California Use Fuel Tax: A Guide for Vendors and Users Vendors