Diesel Fuel and Motor Vehicle Fuel Tax
Ultimate Vendor

Diesel Fuel Ultimate Vendor

You are an ultimate vendor if you sell tax-paid undyed diesel fuel without charging tax to ultimate purchasers (farmers who use diesel fuel on a farm for farming purposes and exempt bus operators who use diesel fuel in exempt bus operations) who provide an exemption certificate.

For more information on who qualifies as an exempt bus operator, please see the Exempt Bus Operator & Government Entity page.

Please see the Getting Started page for more information regarding Licenses Required.

Separate Accounts Not Needed for Ultimate Vendors and Suppliers

If you are both an ultimate vendor and a supplier, you will only need a supplier account. You can take a credit for refunds due to you as an ultimate vendor on your supplier return, CDTFA-501-DD, Supplier of Diesel Fuel Tax Return.

Farmers

Farmers cannot file a claim for refund with us, but may provide CDTFA-608, Certificate of Farming Use, to their vendor to purchase undyed diesel fuel without the state excise tax.

The term used on a farm for farming purposes applies only to diesel fuel which is used:

  • In carrying on a trade or business of farming,
  • On a farm in California, and
  • For farming purposes.

It does not apply to farming activities to the transportation and delivery of the commodity to the marketplace.

For more detailed information please see Regulation 1431, Diesel Fuel Used on a Farm for Farming Purposes.

Partial Exemption

Only diesel fuel used on a farm for farming purposes is exempt. Diesel fuel used by farmers in on-road vehicles on public highways is subject to tax. Tax is due when you purchase diesel fuel for on-road use.

Penalties For Purchasing Untaxed Diesel Fuel Under an Exemption Certificate

Any person, who provides an exemption certificate for diesel fuel that they know at the time of purchase will not be used in an exempt manner, is liable for the tax that would be due if they had not provided the exemption certificate.

The person is also subject to a penalty of twenty-five percent of the tax or one thousand dollars, whichever is greater, for each certificate issued for personal gain or to evade payment of taxes.

Exemption Certificates—Applicable to Ultimate Vendor Customers

When you take a timely exemption certificate in the proper form and in good faith, the exemption certificate relieves you from the liability for the diesel fuel tax. You must maintain valid exemption certificates from ultimate purchasers to support exempt sales.

An exemption certificate must be completed in full to be valid. If some information cannot be obtained, please email the Appeals and Data Analysis Branch (ADAB). If you do not provide the necessary exemption certification when requested, we may deny your claim for refund.

Exemption certificates applicable to ultimate vendor customers include:

  • CDFTA-231-DB, Certificate of Exempt Bus Operation.
    • Exempt Bus Operators must provide their supplier with a new Certificate of Exempt Bus Operation annually or whenever the information on the certificate changes.
  • CDTFA-608, Certificate of Farming Use.
    • Farmers must provide a new Certificate of Farming Use annually or whenever the information on the certificate changes.
    • The farmer must provide their Federal Employer Identification Number (federal EIN)/social security number (SSN) on the Certificate of Farming Use. The federal EIN/SSN is used by us to enter the farmer into our database as a person claiming exempt use of diesel fuel.
    • If you accept an exemption certificate timely and in good faith from a farmer and do not collect tax and the certificate is later found to be fraudulent, we will still issue the refund to you. The farmer issuing the fraudulent certificate will become liable for the tax, interest, and possibly penalties.
    • Calculating Usage—Unless changes to the farmer's usage are expected in the coming year, a calculation based on the previous year's actual usage is acceptable. Records supporting the farming use calculation should be retained for approximately three years and provide them to us if requested .

In some instances, an ultimate purchaser will purchase diesel fuel for both exempt and nonexempt uses. Generally, the purchaser's exemption certificate must show the percentage to be used for an exempt purpose. You must ensure that the amounts included in your claims for refund reflect your customer's exempt percentage, as reflected on the exemption certificate signed by your customer under penalty of perjury.

Exemption Certificates Received for Periods Previously Filed

You must file a separate claim for refund, and the amount may not be claimed on a current return. The claim for refund can be filed through our online services webpage and should be accompanied by supporting documentation, including the original invoices, the exemption certificate, and evidence to show you credited or refunded the tax to your exempt purchaser. This claim must be filed within three years of the month following the month in which you sold the fuel.

Credit Card Company

Credit card companies are the ultimate vendor when:

  • A credit card company contracts with a supplier and independent dealers,
  • The contract specifically states that title to the fuel will pass from the supplier and independent dealers to the credit card company, and
  • The fuel is delivered into the vehicle of the fleet customer.

Suppliers or independent dealers are selling the fuel for resale and the credit card company is the retail seller of the fuel. Therefore, the credit card company is the ultimate vendor when the fuel is sold using the credit card for use in a farm for farming purposes or in an exempt bus operation.

Record Retention

You must keep required records for at least four years from the time the tax is due unless we authorize, in writing, their destruction sooner. You must maintain complete records of:

  • All sales.
    Record examples include:
    • exemption certificates
      • Copies of United States Government purchase orders or United States Government credit card receipts.
    • purchases
      • Purchase invoices for dyed ex-tax diesel fuel.
      • Purchase invoices for undyed tax-paid diesel fuel.
    • receipts
      • Cardlock statements.
  • Exports.
    Record examples include:
    • Tax returns from other states to support diesel fuel export claims.
    • Delivery tickets for diesel fuel exported.
  • Other distributions of tax-paid diesel fuel.
    Record examples include:
    • self-consumed fuel
      • Calculations or formulas to support off-highway exempt usage of diesel fuel.
    • Inventories.
    • tank gaugings or meter readings of diesel fuel.
    • any other fuel reported in the ultimate vendor's claim for refund.

Ultimate Vendor Sales Invoices

The ultimate vendor shall prepare a serially numbered invoice for each sale of diesel fuel.

  • A single invoice or a single cardlock statement covering multiple deliveries of diesel fuel made during a period of time not to exceed a calendar month shall constitute an invoice for each sale.
  • If the multiple delivery invoice or cardlock statement includes both tax-exempt deliveries with respect to which the ultimate vendor is excused from collecting the tax and deliveries upon which the tax is required to be collected, the invoice or cardlock statement shall contain or be accompanied by a statement showing separately the deliveries and gallonage upon which the tax is collected and the tax-exempt deliveries and gallonage.
  • The invoice or cardlock statement shall be delivered to the purchaser, and a copy thereof shall be retained by the ultimate vendor.

Sales Invoices or Cardlock Statements Must Contain the Following Information:

  • The name and address of the ultimate vendor.
  • The name of the purchaser.
  • The date of sale.
  • The number of gallons of diesel fuel sold.
  • The price per gallon.
  • The total amount of the sale.
  • The amount of the diesel fuel tax collected; however, the amount of the tax collected need not be separately stated if the invoice bears the notation that the price includes the tax.
  • A statement that there is no evidence of dye in the undyed diesel fuel included in the invoice or cardlock statement. For example, “clear or undyed”.
  • The dyed diesel fuel notice for dyed diesel fuel included in the invoice or cardlock statement.

Receipt for Tax Paid to a Retail Vendor

The sales invoice shall upon payment by the purchaser constitute a receipt for diesel fuel tax collected by the retail vendor.

Diesel Fuel Exempt Sellers

If you export or sell tax-paid diesel fuel to exempt customers but are not licensed as an ultimate vendor or supplier of diesel fuel, you may register with us as an exempt seller and file claims for refund of the diesel fuel tax you paid but did not collect reimbursement. Examples of exempt customers include the U.S. government and train operators.

For further information see Diesel Fuel Exempt Seller—Nontaxable Sales and Exports Refund Claims in the Refund Claims page.