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Business Taxes Law Guide—Revision 2024
Use Fuel Tax Annotations
Bus Operations—Regulation 1323
Local Public Transit System Operated by a County. A local public transit system operated by a county does not qualify for exemption under section 8655(b)(1), because it is a county, not a transit district, transit authority, or city. Likewise, a local public transit system operated by a county does not qualify for exemption under section 8655(b)(2), because it is a public entity providing transportation services, not a private entity providing such services. In other words, a local public transit system operated by a county does not clearly fall within the terms of the exemptions. 9/05/06.
Private Entity Bus Operator Under Contract to Broker. Transportation services provided by a bus operator, a private entity, under contract with a broker that is wholly responsible for the manner in which the bus operator performs the services and work requested by the municipality, with which the broker has contracted, do not qualify for exemption under section 8655(b). Section 8655(b)(2) specifies that, to qualify for exemption, a "private entity" must provide transportation services "under contract or agreement … with a public agency." California courts have consistently held that "statutes granting exemption from taxation are strictly construed to the end that such concession will be neither enlarged nor extended beyond the plain meaning of the language employed." Under the agreement, the bus operator does not have contractual privity with a "public agency," the municipality. To conclude that the bus operator qualifies for an exemption, because it provides transportation services pursuant to a contract with a broker that has entered into a contract with the municipality, a public agency, to provide transportation services, would enlarge or extend the exemption "beyond the meaning of the language employed." 8/21/06.
Private Entity Bus Operator Under Contract to Regional Center. Where a private entity bus operator is providing transportation services for the transportation of developmentally disabled persons and their support persons under contract with a regional center, which is deemed to be a public agency authorized to provide public transportation services, the bus operator is, pursuant to section 8655(b)(2) of the Use Fuel Tax Law, exempt from paying the use fuel tax imposed under sections 8651-8651.8 on use fuel consumed while providing such transportation. 2/25/09.
Private Entity Rendering Service as Contract Carriage. Under an agreement with a city, a bus operator is providing shuttle service between local train stations and specific locations in the city, pursuant to a shuttle schedule and route map that are incorporated as part of the agreement. Under the terms of the agreement, shuttle service is provided only for persons employed by a designated group of employers that have executed a consortium agreement with the city to financially and otherwise support the employer-based shuttle program. Thus, under this agreement, the bus operator is providing services as a "charter-party carrier of passengers." The shuttle service being provided under this agreement does not qualify for exemption under section 8655(b) because it is a "charter-party carrier of passengers" rendering service as contract carriage and not as common carriage, pursuant to section 8655(d). 8/21/06.
Private Entity Under Contract to Public Agency. Where a private entity has contracted with a public agency authorized to provide public transportation services for the transportation of people, the private entity qualifies for exemption under section 8655(b)(2). However, the exemption is applicable only to the fuels consumed while providing services under such contract. 9/05/06.
Private Entity Under Contract to School District. Transportation services provided by a bus operator under contract with a school district qualify for exemption pursuant to section 8655(b)(6). The bus operator is a "private entity providing transportation services"; it provides these services under agreement with a school district, pursuant to the terms and conditions set out in a purchase order issued by the school district. Pursuant to section 8655(b)(5), the purpose of the services provided, in this instance, is to provide transportation for special education students to and from home and school (i.e., "door-to-door"). This exemption is applicable only to the "fuels consumed while providing services under" this agreement. 8/21/06.
Private Entity Under Contract to Transit District. Transportation services provided by a bus operator under contract with a transit district qualify for exemption under section 8655(b)(2). The bus operator is a "private entity" that is "providing transportation services for the transportation of people" under a contract with the transit district. The transit district is a "public agency" which is "authorized to provide public transportation services." This exemption is applicable only to the "fuels consumed while providing services under" this contract. 8/21/06.
Transporting Students. When a private entity contracts with a school district to transport adult students to adult school or job club programs which are offered by the school district, adult students qualify as pupils and therefore the private entity qualifies for the exemption under Section 8655(b)(6). 8/13/97.