Use Fuel User
User
A user is any person who uses fuel subject to use fuel tax to propel a motor vehicle on a highway.
Except in specific circumstances, users are generally required to obtain a permit, report all taxable use of fuel, and, if necessary, pay the use fuel tax to us. People who use fuel to propel construction equipment and farm equipment on a highway, such as a forklift or tractor, are also considered users.
A user does not include a person who uses fuel subject to use fuel tax exclusively for non-vehicular uses such as heating, lighting, or cooking.
User Exceptions
You are not required to register as a user if your only use of the fuels subject to use fuel tax in California is to operate a:
- Vehicle licensed under the International Fuel Tax Agreement (IFTA).
- Vehicle registered outside California, if the vehicle has less than three axles and does not have a gross vehicle weight, or when used in combination does not have a combined or registered gross vehicle weight, over 26,000 pounds (11,797 kilograms) and if the fuel is purchased from and delivered into the fuel tank of the vehicle by a vendor.
- Privately-operated passenger motor vehicle. Included in this class of vehicles are pickup trucks when used like an automobile for the private transportation of people.
- Recreational vehicle. Recreational vehicles include motor homes, pickup trucks with attached campers, and buses when used exclusively for recreational purposes.
- Commercial vehicle, including a pickup truck, with an unladen weight of less than 7,000 pounds.
- Privately operated two-axle truck that you have rented or leased for a period of 30 days or less.
User Exemptions
The following sections contain information on the exempt uses of fuel subject to use fuel tax in a vehicle.
Off-highway
Fuel used to operate vehicles off-highway is exempt from the use fuel tax. Off-highway includes private property, any road or area which is closed to public use, or any place which does not fall within the definition of a highway.
Outside California
If you purchase fuel in California for use both inside and outside the state, you are not liable for tax on the fuel used outside California. You may claim a credit for the fuel used outside California on your User Use Fuel Tax Return.
U.S. Department of Agriculture Highways
Fuel used in motor vehicles operating on highways under the jurisdiction of the U.S. Department of Agriculture (USDA) is exempt from tax provided the user pays or contributes to the cost of constructing or maintaining the highway under an agreement with the USDA. An example of such a highway is a logging road within a national forest.
If you are a user eligible for this exemption, you are required to pay the use fuel tax when you purchase the fuel and can claim a credit on your User Use Fuel Tax Return. To support your claim, you must keep records that describe the highway, the route traveled, the amounts paid for construction or maintenance of the highway, and the gallons of fuel used while traveling on the highway. You must also keep a copy of your USDA agreement.
Power Take-off Equipment
Fuel used in a vehicle for a purpose other than propelling it on a highway is exempt from the use fuel tax. This includes fuel used to operate power take-off equipment. Power take-off equipment is generally defined as an accessory which is mounted onto a transmission allowing power to be transferred outside the transmission to a shaft or driveline. The accessory is usually either a small gearbox with an external shaft, or a short shaft with a driveline yoke assembly for attaching an external driveline. The vehicle's transmission must be specially designed for a power take-off.
If you operate vehicles that have power take-off equipment, you may claim a deduction on your User Use Fuel Tax Return for the fuel used to operate the equipment.
Agricultural and Construction Equipment
Fuel used in agricultural vehicles or construction equipment is exempt from the use fuel tax when the equipment is:
- Exempt from registration under the Motor Vehicle Code, and
- Operated only incidentally on a highway (Please note: Incidental operation means operated on a highway only when moving between farms or construction sites located close to one another).
Examples of such equipment are tractors, swathers, and graders with rubber tires.
Equipment running on tracks, such as bulldozers, does not qualify as a motor vehicle. Therefore, you should not report fuel used in this type of equipment on your User Use Fuel Tax Return.
Public Agencies on Military Reservations
Fuel used in any motor vehicles owned by a county, city, district, or other political subdivision or public agency is exempt from use fuel tax when the vehicle is operated within a military reservation on roads that are constructed and maintained by the U.S. government. When any such vehicle is also operated on a public highway in a continuous trip, use fuel tax is due on the portion of fuel used on the public highway.
Certain Users Can Potentially Reduce their Amount of Use Fuel Tax
You may qualify for a reduced rate of use fuel tax or to pay the annual flat rate fuel tax as the operator of:
- A public or private transit company that provides transportation services to students or the public, or
- A vehicle powered by LPG, DME, DME-LPG blends, LNG, or CNG, and you have elected to pay the annual flat rate fuel tax.
Transit Operators (Exempt Bus Operator)
Eligible transit operators who operate certain local transit services and school bus transit may be eligible for a reduced rate of use fuel tax. Section 8655 of the Revenue and Taxation Code imposes a tax of one cent ($0.01) per gallon or unit on the fuel used in an exempt manner for qualifying operators.
Qualifying operators and services include any:
- School or community college district, or county superintendent of schools that owns, leases, or operates buses to transport students to and from school or for school related activities.
- Private entity providing transportation for students under contract with a school or community college district, or county superintendent of schools. The contract must have been entered into after October 1, 1984, and the partial exemption applies only to the fuel used to provide services covered by the contract.
- Transit district, transit authority, or city that owns and operates a transit system and engages in transit services itself or through a wholly owned nonprofit corporation.
- Private entity providing transportation service under a contract with a public agency authorized to provide public transportation services. To qualify, the contract must have been entered into after September 26, 1978, and cannot be a general franchise agreement. The reduced rate applies only to that fuel used to provide the contract services.
- Passenger stage corporation engaging in certain local transit service that is subject to the jurisdiction of the Public Utilities Commission. According to section 226 of the Public Utilities Code defines a passenger stage corporation as “every person engaged as a common carrier for compensation, in the ownership, control, operation or management of a passenger stage over any public highway in this state between fixed terminals or over a regular route,” unless otherwise excepted. To qualify, the corporation must be providing the service for the transportation of persons for hire, compensation, or profit. The service must be exclusively operated in urban or suburban areas or between cities in close proximity. In addition, one-way route mileage cannot exceed 50 miles.
- Common carrier of passengers not qualifying as a passenger stage corporation that operates exclusively within the limits of a single city between fixed terminals or over a regular route. To qualify, 98 percent of the total route mileage must be located within the limits of a single city.
Charter-party carriers of passengers, as defined in section 5360 of the Public Utilities Code, are not considered transit operators and do not qualify for the reduced use fuel tax rate described above. Nor does the reduced rate apply to carriers that provide the transportation services described in subdivisions (a) and (e) of section 5353 of the Public Utility Code, if such transportation service is rendered as a contract carrier and not as a common carrier of passengers.
Qualifying transit operators are required to pay the reduced fuel tax rate by filing an Exempt Bus Operator Use Fuel Tax Return instead of a User Use Fuel Tax Return. Transit operators qualifying for the exemption must keep all contracts and other relevant documents that will support their claimed exemption. Operators who provide both nonexempt and exempt services must keep records detailed enough to support any claimed exempt fuel use.
Flat Rate Fuel Tax Decal Program
As an alternative to paying use fuel tax to vendors, an operator of a vehicle powered by LPG, DME, DME-LPG blends, LNG, and CNG may pay an annual flat rate. The tax is based on the type and weight of the vehicle. Please see the Getting Started page for annual flat rate fees.
To qualify for the annual Flat Rate Fuel Tax Decal Program, users must first obtain a User Use Fuel Tax Permit from us and make payments as an annual flat rate taxpayer. Operators of private passenger vehicles and vehicles with automobile license plates may elect to register for the flat rate fuel tax decal program without obtaining a User Use Fuel Tax Permit.
After you have registered online and paid the tax, we will issue a decal that you must affix to your vehicle for which you have prepaid fuel taxes. This decal covers a twelve-month period, and you will be required to renew online each year.
The decal cannot be transferred to another vehicle, but you may add additional vehicles to your account. We prorate the tax due on a vehicle added during the annual period so that all vehicles have the same annual period.
As a flat rate fuel tax decal holder, you are required to provide to your fuel vendors a written representation that you have prepaid the annual flat rate fuel tax. Providing the vendor with a copy of the letter we sent to you with your decals will satisfy this requirement. When you provide written notice to a vendor that you have prepaid the annual flat rate fuel tax, you will be solely responsible for any taxes due, and the seller will not be liable for collecting and remitting the use fuel taxes.
Registration of a vehicle for the annual flat rate tax is not transferable. If you sell or transfer a vehicle to a new owner, you must inform us within ten days of the transfer date.
If you have questions about whether your fuel use is exempt from use fuel tax, please contact our Motor Carrier Office.