Prepaid Sales Tax and Sales of Fuel (Publication 82)
Registration and Reporting Requirements

Suppliers and wholesalers making only sales for resale

You must obtain a Motor Vehicle Fuel (MVF) Pre-Collection permit if you qualify as a wholesaler or supplier and:

• Remove fuel from the terminal rack,
• Sell fuel to wholesalers, suppliers, or retailers, or
• Sell fuel as a member in a cardlock network

You must have an MVF Pre-Collection permit in addition to your regular sales tax permit. You can register for a regular seller's permit on our website at www.cdtfa.ca.gov by selecting Register, and then selecting Register a New Business Activity. You can also apply for the MVF Pre-Collection permit at your local CDTFA office, which will determine whether or not an MVF Pre-Collection permit is necessary.

After you have registered for an MVF Pre-Collection permit, you will electronically file an MVF Pre-Collection return, which has a Schedule A for reporting your taxable removals, entries, or sales of fuel, and a Schedule B for reporting any prepaid sales taxes you have paid to other wholesalers or suppliers. The MVF Pre-Collection return is due on or before the last day of the month following the period for which it relates. Instructions on how to electronically file your tax return and accompanying schedules are available on our website. If you need assistance, please contact our Customer Service Center at 1-800-400-7115 (TTY:711). Customer service representatives are available Monday through Friday from 7:30 a.m. to 5:00 p.m. (Pacific time), except state holidays.

Sellers making sales through cardlock networks

If you make sales through a cardlock network, you are required to have an MVF Pre-Collection permit. Your sales to other fuel distributors are considered sales for resale and should be reported on your MVF Pre-Collection and your regular sales and use tax returns. However, if the other fuel distributor is located out-of-state and not required to have a California seller's permit, you are making a retail sale* that should be reported on your MVF Pre-Collection and your regular sales and use tax returns.

*See Revenue and Taxation Code section 6007.

Suppliers and wholesalers also making retail sales of fuel

If you qualify for an MVF Pre-Collection permit and you also make retail sales of fuel to consumers, you are required to file two separate returns: an MVF Pre-Collection return to report your removals, entries, and wholesale sales of fuel, and a regular sales and use tax return to report your retail fuel sales. On Schedule A of your MVF Pre-Collection return, you must list your seller's permit number and report prepaid tax on any fuel that you have taken from your inventory to sell at retail. (You must also list removals, entries, and sales to other sellers or retailers.) When you report the retail sales of this fuel on your regular sales and use tax return, you can claim a credit for the prepaid tax by including the transaction on Schedule G and listing your MVF Pre-Collection permit as the source of supply.

Sales tax prepayments for fuel in two-party exchanges

Two-party exchange reporting is allowed in California effective January 1, 2007. Sales tax prepayments for motor vehicle fuel and diesel fuel that are the subject of a two-party exchange must be paid by the receiving supplier.*

Please note: A two–party exchange has three participants in the transaction: the delivering supplier, the receiving supplier, and the terminal operator.

*See Regulation 1125, Two–Party Exchange.

Sellers making only retail sales

Service station operators or other persons who purchase fuel to resell to users or consumers are considered retailers. If you make only retail sales, you are not required to obtain an MVF Pre-Collection permit. Instead, you can charge the full applicable sales tax rate on fuel sold to your customer and claim credit for the precollected sales tax you paid to your suppliers on Schedule G of your sales and use tax return.