Laws, Regulations and Annotations
Business Taxes Law Guide – Revision 2023
Diesel Fuel Tax Regulations
Title 18. Public Revenues
Division 2. California Department of Tax and Fee Administration — Business Taxes (State Board of Equalization — Business Taxes — See Chapters 6 and 9.9)
Chapter 3. Diesel Fuel Tax
Article 3. Exemptions and Refunds
Regulation 1436. Returned Sales.
Reference: Sections 60025, 60501, and 60508, Revenue and Taxation Code.
(a) When diesel fuel included in a supplier's taxable removals, entries or sales is returned to the supplier by the customer to whom it was sold and is delivered into a refinery or an approved terminal's storage tank, the supplier may either file a claim for refund with the Board or in lieu of the refund take a credit on its tax return. The credit memorandum covering the return of the diesel fuel shall identify the gallonage returned as either volumetric gallons or temperature corrected gallons based upon how the tax was originally invoiced to the customer and shall separately state the diesel fuel tax.
(b) It shall be presumed that the supplier purchased the diesel fuel that was returned as tax-paid diesel fuel if the credit memorandum includes diesel fuel tax. For the purpose of a refund or credit, it also shall be presumed that the subsequent removal of the diesel fuel from a terminal rack by the supplier that received the returned diesel fuel is made in the month that the diesel fuel was returned.
(c) Conditions to Allow a Credit on a Tax Return.
The credit will be allowed only if:
(1) The returned diesel fuel was delivered into a refinery or an approved terminal storage tank.
(2) The credit is taken on a tax return filed within three months after the close of the calendar month in which the diesel fuel is returned.
(3) The supplier prepares a first taxpayer's report (as identified in Regulation 1435) when the diesel fuel is returned.
(4) A copy of the first taxpayer's report and the credit memorandum must be retained for inspection by the Board with the tax return on which the credit is claimed.
(d) If the supplier fails to take a credit on a tax return filed within three months after the close of the calendar month in which the diesel fuel was returned, the supplier may only file a claim for refund with the Board to recover the tax.
Each claim for a refund must contain the following information with respect to the diesel fuel covered by the claim:
(1) The information required in Revenue and Taxation Code Section 60501.
(2) Volume and type of diesel fuel.
(3) Date on which the claimant received the returned diesel fuel.
(4) A copy of the first taxpayer's report that relates to the diesel fuel covered by the claim.
(5) A copy of the credit memorandum that returned the diesel fuel.
History—Adopted March 27, 2002, effective July 11, 2002.
Amended May 31, 2012, effective July 10, 2012. Replaced the reference to Revenue and Taxation Code section "60508.4" with a reference to Revenue and Taxation Code section "60508" in the reference note.