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Motor Fuels Tax Audit Procedures Manual - Ch. 153
Chapter 2 - Gasoline Law
- Introduction
- Definition
- Exceptions
- Computation of Tax
- Permit Types
- Permit Lists
- Specific Permits
- Reports
- Records
- Refunds
Introduction
A tax is imposed on the first sale or use of gasoline in Texas at the rate of 20 cents per gross or volumetric gallon. The rate to a qualifying transit company is 19 cents per gallon (See Rule 3.172). (The first sale is described in an old Attorney General's Opinion as the first taxable sale.)
NOTE: See the chart in Chapter 1 for tax rates and applicable periods.
Definition
"Gasoline" means any liquid or combination of liquids blended together offered for sale, sold or used as the fuel for a gasoline-powered engine. The term includes blending agents, but excludes diesel fuel and liquefied gas. (Sec. 153.001.Definitions (10))
Exceptions
Tax does not apply to:
- Gasoline sold to another permitted distributor.
- Gasoline brought into this state in the fuel supply tank of a motor vehicle operated by a person not required to be permitted as an interstate trucker.
- Gasoline delivered to a common or contract carrier, ocean-going vessel (including ship, tanker or boat) or a barge for export from Texas. The gasoline cannot be taken to intermediate storage in Texas prior to export. NOTE: The ocean-going vessel or barge need not be a common or contract carrier. Consequently, the sale would be exempt even if made to the owner of the vessel. See Rule 3.187 for documentation required.
- Gasoline sold to the federal government for its exclusive use. (Generally, the test is who pays for the fuel? If the federal government pays for the fuel, it is exempt. However, if a contractor for the government pays for the fuel, it is not exempt. A third party contractor is responsible for paying the tax to the state if tax free fuel purchased by the federal government is used by the contractor.)
- Gasoline delivered by a permitted distributor to a permitted aviation fuel dealer, or delivered directly into aircraft or aircraft servicing equipment.
- Gasoline sold by an aviation fuel dealer to another aviation fuel dealer.
- Gasoline sold to a Texas public school district in the state for its exclusive use.
- Gasoline sold to a transportation company used exclusively for Texas public school district transportation. (Rule 3.200)
- Gasoline sold to a Texas non-profit electric or telephone cooperative. (A cooperative must pay the tax on gasoline purchased at retail service stations, but may obtain a refund of the tax from the comptroller.)
Computation of Tax
The amount of tax is based on the temperature-adjusted (net) volume for single delivery sales of 5,000 gallons or more to wholesalers, gasoline jobbers, dealers, or other persons who resell. On all other taxable sales, the tax must be based on gross gallons.
Permit Types
A distributor, interstate trucker or aviation fuel dealer must obtain a Texas Fuels Tax Permit by filing an application with the Comptroller.
There are five types of gasoline permits:
- Distributor
- Gasoline Jobber
- Interstate Trucker
- Aviation Fuel Dealer
- Trip Permit
A distributor may operate as an aviation fuel dealer without securing a separate permit. The distributor, gasoline jobber and aviation dealer permits are permanent. The interstate trucker permit and IFTA license are calendar year credentials, and automatically renewed by the Comptroller each year if the taxpayer is in good standing. The trip permit is valid for the period stated on it, as determined by the Comptroller.
Permit Lists
The statute requires that a list of permitted tax-free distributors and aviation fuel dealers who are qualified to purchase gasoline tax-free and jobbers who are qualified to purchase gasoline tax paid be mailed to each distributor by December 20 of each year. Also, a supplemental list of additions and deletions is mailed to each distributor on a monthly basis. A supplemental list for November was not always prepared because the master list is being compiled at that time and any deletions or additions are merely included or deleted on the master lists. Permit holder lists are also available on the Comptroller's website.
Specific Permits
Distributor
This permit authorizes the tax-free sales of gasoline to other distributors and aviation fuel dealers. This permit also authorizes importing, exporting, refining and blending; and, authorizes the collection and remittance of tax on sales to dealers, Gasoline Jobbers, and other persons not authorized to purchase tax free. A distributor may act as aviation fuel dealer without obtaining a separate permit.
Gasoline Jobber
This permit allows the Gasoline Jobber to purchase tax paid fuel for resale in bulk quantities. Reports are not required for this permit.
Interstate Trucker - Gasoline
This permit authorizes persons who import gasoline into Texas in the fuel supply tanks of qualified commercial motor vehicles to report and pay the tax due on the gasoline imported into this state or to claim a credit or refund of the tax paid on gasoline purchased in Texas and used outside Texas. Most Texas based Interstate Trucker - Gasoline permits were placed in inactive status on June 30, 1995, when Texas became a member of IFTA. A person traveling solely between Texas and Mexico needs an Interstate Trucker - Gasoline permit since Mexico is not a member of IFTA.
Aviation Fuel Dealer - Gasoline
Authorizes a person who is the operator of an aircraft servicing facility to deliver tax-free aviation gasoline exclusively into the fuel supply tanks of aircraft or into equipment used solely for servicing aircraft which is used exclusively off-highway. An aviation fuel dealer may not sell or distribute any gasoline on which a fuels tax is required to be collected or paid to this state.
Trip Permit
Allows a trucker, who makes infrequent trips into Texas, to bring a qualified commercial motor vehicle into Texas for one trip. This license is in lieu of an interstate trucker's permit or an IFTA license. Only five such trips are allowed in a calendar year.
Reports
The following are reporting requirements of gasoline permit holders:
Distributors
- Monthly on or before 25th day of each month for the previous month.*
- Beginning September 1, 2000, reports cover the entire calendar month. Tax-free purchases, sales, imports and exports must be reported in the month that the fuel is removed from the terminal rack or bulk plant rack; not according to the invoice date, billing date or the date the fuel is received.
Gasoline Jobber
- No report required.
Interstate Trucker
- Quarterly on or before the 25th day of the month following the end of the quarter.* May file annually if average quarterly liability is $600 or less. Annual reports are due January 25.*
Aviation Fuel Dealer
- No report required.
Trip Permit
- No report required.
* If the 25th falls on a weekend or federal holiday, the next working day becomes the due date. Use terminal inquiry DUEDAY (on CICS) for the specific month, quarter, or year due date.
Report discounts or allowances:
Distributor
- 2 % handling allowance for report periods through 08/30/2000 (timely payment not a requirement)
- 2 % timely payment discount for report periods beginning 09/01/2000
Interstate Trucker
- ½ % of taxable gallons handling allowance for report periods through 09/30/2001(timely payment not a requirement)
- ½ % of taxable gallons timely payment discount for report periods beginning 10/01/2001
Records
Sec.153.117.
Text of subsec. (a) effective until September 1, 2000
| (a) | A distributor shall keep a record showing the number of gallons of:
|
History: Amendment effective October 1, 1999
Text of subsec. (a) effective September 1, 2000
| (a) | A distributor shall keep:
|
||||||||||||||||||||
| (b) | A dealer shall keep a record showing the number of gallons of:
|
History: Amendment effective October 1, 1999
| (c) | An interstate trucker shall keep a record of:
|
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| (d) | An aviation fuel dealer shall keep a record showing the number of gallons of:
|
History: Amendment effective October 1, 1999
| (e) | The records of an aviation fuel dealer made under Subsection (d)(3) of this section must show:
|
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| (f) | The comptroller may require selective schedules from a distributor, dealer, aviation fuel dealer, interstate trucker, gasoline jobber, or common or contract carrier for any purchases, sales, or deliveries of gasoline when the schedules are not inconsistent with the requirements of this Chapter. | ||||||||
| (g) | The records required must be kept for four years and are open to inspection at all times by the comptroller and the attorney general. | ||||||||
| (h) | A gasoline jobber shall keep a record showing the number of gallons of:
|
History: Amendment effective October 1, 1999
Refunds
Introduction
A person may claim a refund of taxes paid on gasoline for the following reasons:
- exports of gasoline from this state (100 gallons or more),
- sales to the federal government for its exclusive use,
- sales to or uses by a Texas public school district,
- sales to a commercial transportation company that has paid the tax imposed on gasoline used by the company exclusively to provide transportation services to a Texas public school district,
- losses by fire, theft, or accident (100 gallons or more),
- uses of gasoline in the operation of a motorboat,
- uses of gasoline in tractors for agricultural purposes or for mowing a right-of-way,
- uses of gasoline in aircraft and aircraft servicing equipment,
- uses of gasoline in a stationary engine, and
- any use of gasoline except in a vehicle operated or intended to be operated on the public highways of this state.
- uses of gasoline by a Texas non-profit electric or telephone cooperative.
Claims are on Texas Claim for Refund of Gasoline or Diesel Fuel Taxes form 06-106.
Distributors who have previously remitted tax on inventory withdrawals and then used the gasoline for a non-taxable use must file refund claims.
Credit gallons or overpayments reported on the monthly tax return are automatically refunded.
Interstate truckers that report credit gallons on their quarterly or annual tax return automatically receive a refund. (See Limitations on Refunds in this section for additional information.)
Supporting Documentation
Records must be maintained for four years to support claims. However, the records do not need to be attached to the claim for refund.
Invoice Requirements
Each original invoice must be stamped or preprinted with the name and address of the seller and contain the following information.
- name of the purchaser
- date of delivery of the gasoline
- date of issuance of the invoice
- number of gallons delivered
- amount of tax stated separately from the selling price or a notation that the selling price includes tax, and
- type of vehicle or equipment, such as motor boats, railway engines, highway vehicles, off-highway equipment, refrigeration units or stationary engines into which gasoline is delivered.
The invoice must be made in duplicate. For tax purposes, the original invoice must be delivered to the purchaser no later than 30 days after the date of delivery of the gasoline.
A distribution log may be used in lieu of invoices, but must contain the same invoice requirement information.
NOTES:
- If delivery is through an automated method whereby the purchase is automatically applied to the purchaser's account, one invoice may be issued at the time of billing covering multiple purchases during the 30-day billing cycle.
- Copies of invoices complying with Rule 3.173 may be used as refund documentation.
Motor Fuels Tax Audit Procedures Manual - Table of Contents
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(Revised 02/2004)