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Motor Vehicle 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 1. Motor Vehicle Fuel Tax

Article 3. Exemptions

• 1132 Shipments Out of the State
• 1134 Sales to the United States
• 1137 Exempt Sales of Jet Fuel

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Regulation 1132. Shipments Out of the State.

Reference: Sections 7338, 7401, 7651, 8101, 8102, 8105, 8106, 8126, 8128, 8129, 8301 and 8303, Revenue and Taxation Code.

(a) Definitions.

(1) Export. An export of motor vehicle fuel is the delivery or shipment of fuel by the supplier from a point in this state to a point outside of this state. The fuel is not exported if it is diverted in transit or for any reason is not actually delivered out of this state, regardless of documentary evidence held by the supplier respecting delivery of the fuel to a carrier for out-of-state shipment or to a vessel clearing for an out-of-state port.

(2) Carrier. A carrier means a person or firm who is regularly engaged in the business of transporting for compensation property owned by other persons and includes both common and contract carriers. The carrier may be hired by either the purchaser or the distributor.

(b) Requirements. A supplier may not claim an export exemption from motor vehicle fuel tax under Revenue and Taxation Code Section 7401(a)(3) unless the motor vehicle fuel is in fact exported and the export is accomplished in the manner specified in either (1) or (2) below:

(1) The supplier claiming the exemption from tax shows that it delivered the motor vehicle fuel to any vessel clearing from a port of this state for a port outside of this state and the fuel was actually exported from this state in the vessel; or

(2) The supplier claiming the exemption from tax shows that it exported the motor vehicle fuel from this state pursuant to a written contract requiring delivery by the supplier of the fuel to:

(A) the out-of-state point by facilities operated by the supplier,

(B) a carrier for shipment to a consignee at the out-of-state point, or

(C) a customs broker or forwarding agent for shipment to a location outside of this state.

(c) Exports of Ex-Tax Fuel. The tax does not apply to the export of ex-tax motor vehicle fuel actually exported.

A supplier must claim the exemption for the export of ex-tax fuel on the return filed for the period in which the export was made. If a supplier fails to claim the exemption on the return and tax is erroneously paid on the ex-tax export of fuel, a timely claim for refund must be filed with the Board pursuant to Section 8128 of the Motor Vehicle Fuel Tax Law in order to obtain a refund of the amount of taxes so overpaid.

(d) Exports of Tax-Paid Fuel. In lieu of claiming a refund of tax for exports of tax-paid fuel with the State Controller as provided by Section 8101(b) of the Revenue and Taxation Code, a supplier may take a credit on its return for tax-paid fuel when the fuel is exported to a point outside the state. The credit must be claimed on a return filed within three months after the close of the calendar month in which the tax-paid fuel is exported. If the credit exceeds the taxable gallons of motor vehicle fuel for the period in which the credit may be taken, refund of the tax on the excess gallonage can only be obtained by filing a claim for refund with the State Controller.

Failure to take credit on a return filed within three months after the close of a calendar month in which the tax-paid fuel is exported does not give rise to a right to file a claim for refund with the Board pursuant to Section 8126 of the Revenue and Taxation Code. Instead, claims for refund for tax-paid fuel exported must be filed with the State Controller within three years from the date of purchase of the fuel.

(e) Documentation Required for Support. All shipments of motor vehicle fuel to points outside of the state for which tax exemption or credit is claimed on a tax return shall be reported on a schedule accompanying the return for the period for which the exemption or credit is claimed.

The supplier must retain documentation to support the delivery of the fuel by the supplier at an out-of-state location for all exemptions or credits. Documentation may include, but is not limited to, contracts, bills of lading, delivery tickets, or meter readings. The supplier has the burden of providing the proper substantiation and documentation to support the exemption or credit.

History—Effective March 15, 1948.

Amended effective February 16, 1956.

Amended effective October 1, 1959.

Amended November 7, 1963, effective December 12, 1963.

Amended April 9, 1980, effective June 19, 1980. In the first paragraph, subparagraph (a)(2) deleted "as consignor" following "distributor."

Amended February 5, 1986, effective May 1, 1986. In subdivision (a) amended definition of export. In subdivision (b) added explanation of the exemption from tax of ex-tax fuel exported. In subdivision (c) added explanation of how a credit may be taken for tax-paid fuel exported. In subdivision (d) amended explanation concerning documentation required to support an export.

Amended January 8, 1991, effective March 17, 1991. Subsection (a) was divided into two subparagraphs and the definition of the term "carrier" was added as subsection (a)(2). Subsection (c) changed the time limit for taking a credit in lieu of refund and deleted reference to filing a claim if credit was not claimed on a return. Subsection (d) deleted the words "or credit" in the first paragraph.

Amended November 18, 1999, effective February 20, 2000.

Amended March 27, 2002, effective July 11, 2002. Regulation amended to replace references to "distributor" with references to "supplier" throughout regulation, pursuant to statutory changes to the Motor Vehicle Fuel Tax Law that became effective on January 1, 2002. In subdivisions (c) and (d), deleted language pertaining to stock transfers of ex-tax fuel to a point outside California, as the language is no longer relevant, pursuant to changes in the imposition of tax that took effect January 1, 2002.

Amended May 31, 2012, effective July 10, 2012. Replaced the reference to Revenue and Taxation Code section "8106.5" with a reference to Revenue and Taxation Code section "8106" in the reference note.

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Regulation 1134. Sales to the United States.

Reference: Sections 7401 and 8101, Revenue and Taxation Code.

Sales of motor vehicle fuel to the United States, its agencies and instrumentalities are taxable, except when the motor vehicle fuel is sold to the United States armed forces for use in ships or aircraft, or for use outside this State. "Armed forces" include the Army, Navy, Air Force, Marines, and Coast Guard.

To establish that a sale to the armed forces is exempt the seller must obtain a certificate from the agency of the armed forces purchasing the fuel that it is acquired for use (a) in ships, (b) in aircraft or (c) outside the State. This certificate may be incorporated in the purchase order or contract relating to the acquisition of the fuel by the governmental agency. All such certificates should be retained by the seller for audit purposes.

(b) Sales of Ex-Tax Motor Vehicle Fuel.

A supplier licensed under the Motor Vehicle Fuel Tax Law that makes sales of ex-tax motor vehicle fuel to the United States armed forces for use in ships or aircraft, or for use outside this State, may claim an exemption on its motor vehicle fuel tax return.

(c) Sales of Tax-Paid Motor Vehicle Fuel.

Any person who makes sales of tax-paid motor vehicle fuel to the United States armed forces for use in ships or aircraft, or for use outside this State, may file a claim for refund of the tax with the State Controller.

History—Effective September 15, 1961.

Amended November 7, 1963, effective December 12, 1963.

Amended July 8, 1971, effective July 20, 1971.

Amended April 1, 1983, effective May 2, 1983. In third paragraph added "or brokers" and changed "Section 7451 et seq." to "Sections 7486 and 7487;" changed all references to "Section 7401(e)" to "subdivision (a)(5) of Section 7401;" changed all references to "Sections 7401(c)" to "subdivision (a)(3) of Section 7401;" in last paragraph deleted "but … than $500,000" and inserted "Sections 7486 and 7487."

Amended March 27, 2002, effective July 11, 2002. First two paragraphs of former regulation designated as subdivision (a) and within (a) former references to "distribution" and "distributor" were replaced with "sales" and "seller" to conform with new Motor Vehicle Fuel Tax Law effective January 1, 2002. Subdivision (b) added to clarify that a supplier making a sale of ex-tax fuel to the United States armed forces may claim an exemption on the supplier's tax return. Subdivision (c) added to clarify that any person making a sale of tax-paid fuel to the United States armed forces shall file a claim for refund of the tax with the State Controller. Remainder of former regulation repealed since Revenue and Taxation Code Sections 7401, 7486, and 7487 (relating to exemptions for distributors and brokers and to bond requirements of distributors and brokers) were repealed pursuant to statutory changes to the Motor Vehicle Fuel Tax Law that became effective on January 1, 2002.

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Regulation 1137. Exempt Sales of Jet Fuel.

Reference: Sections 7385–7398, Revenue and Taxation Code.

(a) In General. Sales of aircraft jet fuel for propulsion of aircraft are subject to tax except sales, to the following:

(1) A common carrier by air engaged in the business of transporting persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the authority of the laws of this state, of the United States or of any foreign government.

(2) A person engaged in the business of constructing or reconstructing by manufacture or assembly of completed aircraft or modifying, overhauling, repairing, maintaining or servicing of aircraft.

(3) The armed forces of the United States.

(b) Evidence to Support Exemption.

(1) Exempt sales to common carriers and aircraft manufacturers must be supported by an exemption certificate as prescribed below.

(2) Exempt sales to the armed forces must be supported by a government purchase order or other evidence of sale to the armed forces of the United States.

(3) It is necessary to obtain only one certificate to cover all sales. The certificate is valid until revoked in writing.

(c) Liability of Person Giving Certificate. Any person who certifies in writing to a jet fuel dealer that the sale or use of the aircraft jet fuel purchased by him is not subject to the jet fuel tax and who uses such fuel as an aircraft jet fuel user is liable for the tax with respect to such fuel at the time of such use. Such person shall report and pay the tax to the board as though he were an aircraft jet fuel dealer who made a taxable sale of the fuel at the time of the use.

History—Adopted November 5, 1969, effective November 10, 1969.

Amended January 8, 1970, effective February 7, 1970.

Amended December 8, 1970, effective January 15, 1971.

Change without regulatory effect amending Note filed June 5, 2002.