Use Fuel Tax – Frequently Asked Questions (FAQs)

The use fuel tax is a tax imposed on the use of certain fuels to propel motor vehicles.

In general, fuel is subject to the use fuel tax if it is:

• Used in an internal combustion engine to propel a motor vehicle on a highway in California (except fuel subject to either the motor vehicle fuel tax or the diesel fuel tax); or
• Placed in a container on the vehicle, such as a fuel tank, from which fuel is supplied to run the vehicle on a highway. Fuel placed into containers not connected to the fuel system (for example, auxiliary tanks, drums, or jerry cans) may be subject to tax if the fuel is intended for operating the vehicle on a highway.

Exclusions: Fuel types specifically excluded from the use fuel tax are:

• Those fuels (primarily gasoline) subject to the motor vehicle fuel tax
• Diesel fuel, which is subject to the diesel fuel tax
• Fuel manufactured and used for racing vehicles on racetracks

The following types of fuel are subject to use fuel tax:

• Liquefied petroleum gas (LPG, Propane, Butane)
• Liquid and compressed natural gas (LNG, CNG)
• Kerosene
• Alcohol fuels (ethanol, methanol)
• Blended alcohol fuels containing 15%, or less, gasoline by volume
• Distillate
• Stove oil

Users of the fuel are ultimately responsible for paying the use fuel tax. The different classifications of persons who pay the tax are as follows:

• Exempt Bus Operators (see "Transit Operator," Regulation 1323(a)(2))
• Flat Rate/Private Vehicles (see "Annual Flat Rate Fuel Tax," Regulation 1325)
• Flat Rate/Commercial Trucks (see "Annual Flat Rate Fuel Tax," Regulation 1325)
• Users
• Vendors

Use fuel taxes provide revenue for planning, constructing and maintaining California's publicly funded roadways and public mass transit systems.

The California Department of Tax and Fee Administration (CDTFA) transmits all tax money received, except the amounts of overpayments of the fees required by Use Fuel Tax Law sections 8707 and 8714, to the State Treasurer to be credited to the Motor Vehicle Fuel Account in the Transportation Tax Fund (fund). CDTFA's fuel tax administration and enforcement functions are supported by the fund.

These categories of persons are required to collect and/or pay the tax:

• Vendor
  • A vendor is defined as any person who sells and delivers fuel into the fuel tank of a motor vehicle.
  • A vendor is required to obtain a vendor permit
  • A vendor is required to collect tax from the user on the sale and delivery of fuel into the fuel tank and pay the tax to CDTFA
  • A vendor is required to provide the user with a receipt indicating the fuel includes all applicable taxes
  • Examples of vendors include:
    • Wholesalers
    • Retailers (service station operators)
    • Users selling fuel to other users
    • Persons selling through a key or card lock facility or self-service pump
• User
  • A user is any person who uses fuel to propel a motor vehicle.
  • A User does not include the United States Government when the fuel is purchased with a credit card belonging to the US Government
  • With specific exceptions, users are generally required to obtain a permit, report all taxable use of fuel, and, if necessary, pay the use fuel tax to CDTFA.
  • Exceptions to the registration and reporting requirements include (to qualify the fuel used must be purchased and delivered into the fuel tank of the vehicle by a vendor):
    • A user whose sole use of fuel in this state is for the propulsion of a privately operated passenger vehicle, a commercial vehicle with unladen weight of less than 7,000 pounds, or a privately operated two-axle truck which the user has rented for a period of 30 days or less
    • An interstate user whose sole use of fuel in this state is for the propulsion of a motor vehicle that is not a qualified motor vehicle, i.e., interstate trucker, and is operated in connection with an interstate trip
  • Examples of users include:
    • Owners, operators, lessors, or lessees of any vehicle that is operated on a highway
    • Persons who use construction equipment and farm equipment (fuel used in construction equipment and farm equipment is exempt from tax only if used off-highway)

It is possible to be both a vendor and a user. For example, if you are a wholesaler of fuel and you make bulk sales to end users, retail sales to truck drivers, and also use fuel in your own delivery trucks, you are required to obtain separate permits and file separate returns as both a vendor and a user. If you do not obtain the appropriate permits and report and pay the tax, you will be subject to interest and penalties on any unpaid tax. To ensure you are correctly registered, you should carefully review your sales or purchases to determine which permits you may need to obtain. You may also contact the Motor Carrier Office by telephone at 1-800-400-7115 or email your tax questions.

Go to our online registration system, and select "Register a business activity with CDTFA." The system is convenient, secure, and available 24 hours a day. Visit our "Online Services" webpage for help completing your application.

You may also register in person at one of our field office locations by use of a kiosk. If you have questions, please contact our Customer Service Center at 1-800-400-7115, Monday through Friday, 7:30 a.m. – 5:00 p.m. Pacific time, excluding state holidays.

A California Fuel Trip (CFT) Permit allows out-of-state registered commercial carriers to enter and travel into California for four consecutive days without obtaining a license for fuel tax purposes. The CFT permit must be obtained and completed prior to entering California.

You may obtain a CFT permit online using CDTFA's online registration.

The permit costs $30 and is issued for specific dates. It is not valid before or after the specified dates.

A retailer of fuel must obtain a Seller's Permit from CDTFA. A seller's permit is required because in addition to the use fuel tax, a retailer is also required to collect and submit the sales tax on its fuel sales. You can register for both the seller's permit and use fuel tax account using CDTFA's online registration system.

The Governor's Office of Business and Economic Development (GO-Biz) offers extensive information on state, local, and federal permit requirements. For a listing of its assistance centers, visit the Governor's Office of Business and Economic Development website.

Visit the CalGold website for help with permit and licensing requirements for other state, federal, and local authorities (for example, you may need to be registered with the Franchise Tax Board or the Employment Development Department).

Visit California's Tax Service Center for additional tax information.

You may also want to consult with a tax professional for assistance about other agency requirements.

Taxpayers should notify CDTFA of any change of business ownership, email address, mailing address or business location, phone or fax number, to ensure that returns and information about the tax program are received timely. Use form CDTFA-345-SP, Notice of Business Change, Property and Special Taxes to notify CDTFA of changes.

You may also contact the CDTFA Customer Service Center at 1-800-400-7115 (TTY: 711) and select the option for "Special Taxes and Fees" or send a message through our website through Email Your Tax Questions.

The applicable tax rate depends on the type of fuel. Current and historical use fuel tax rates are available on our rate page. It is important to keep your account current with CDTFA as you will be notified if rates change.

No. Do not include the use fuel tax amount in your sales and use tax calculation.

• Used off-highway (includes private property, an area closed to public use for vehicular travel, etc.) [See Revenue and Taxation Code Section 8653].
• Used outside California [Revenue and Taxation Code Section 8732].
• Used on U.S. Department of Agriculture highways [Revenue and Taxation Code Section 8653.1].
• Used in power take-off equipment [Regulation 1316].
• Used in agricultural and construction equipment [Revenue and Taxation Code Section 8652].
• Used by public agencies on military reservations [Revenue and Taxation Code Section 8654].
• Used by transit operators [Revenue and Taxation Code Section 8655].
  • Transit operators 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.
    • Any private company providing transportation for students under contract with a school or community college district, or county superintendent of schools.
    • Any public entity such as a transit district or authority of a city that owns and operates a transit system.
    • Any private entity providing transportation service under a contract with a public agency authorized to provide public transportation services.
    • Any passenger stage corporation engaging in certain local transit service that is subject to the jurisdiction of the Public Utilities Commission.
    • Any 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.

Eligible transit operators must register as an exempt bus operator for use fuel tax purposes. For the privilege of operating vehicles on state highways and freeways, the transit operator must make a payment of one cent ($0.01) for each gallon or unit of exempt fuel used. The required payments are treated as a tax, and must be reported by the transit operator on its Exempt Bus Operator Use Fuel Tax Return.

As an alternative to paying use fuel tax to vendors, an operator of a vehicle powered by LPG, LNG, or CNG may pay an annual flat rate fuel tax. The tax is based on the type and weight of the vehicle. Current rates for the annual flat rate fuel tax are available at our rates page.

If you qualify for the annual flat rate fuel tax, you must obtain a use fuel permit from CDTFA and then make payments as an annual flat rate taxpayer. After you have registered online and paid the tax, CDTFA will issue a decal that you must affix to your vehicle for which you have prepaid fuel taxes.

You may obtain additional decals by requesting them through our online registration system.

Certain annual flat rate taxpayers—for example those who make bulk purchases of fuel—may be required to file annual returns with CDTFA.

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 CDTFA within ten days of the transfer date.

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 CDTFA sent to you with your decals will satisfy this requirement.

When you provide written notice to a fuel 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.

The use fuel tax returns and/or payments are due on or before the last day of the calendar month following each reporting period. Your reporting period will be either monthly, quarterly, or yearly. Your filing frequency will be determined at the time you register.

Returns and payments must be postmarked by the due date to be considered timely. You are required to file a return even if you did not have any reportable activity during the reporting period. If the due date falls on a Saturday, Sunday or state holiday, returns and/or payments postmarked or received by the next business day will be considered timely.

Several options are available to make a payment including: Electronic Fund Transfer (EFT), credit card, check, or money order. Taxpayers with an estimated average monthly tax payment of $20,000 or more are required to pay by EFT. Please note: if you are making a payment via credit card a vendor charge of 2.3% will be added as a processing fee. This service fee is retained by the vendor and is not revenue to CDTFA. The minimum fee is $1.00.

You may also submit your payment with your return. Make your check or money order payable to "California Department of Tax and Fee Administration." Always write your account number on your check or money order and make a copy for your records. Payments must be postmarked by the due date to be considered timely. If the due date falls on a Saturday, Sunday or state holiday, payments postmarked or received by the next business day will be considered timely.

If the amount of taxes you pay average $20,000 or more per month, you will be required to pay by an electronic funds transfer (EFT). CDTFA will notify you in writing if you are required to remit your taxes electronically. Voluntary or mandatory EFT payments can be made on our website at "Make a Payment."

In addition to paying the taxes by EFT by the due date, you must also file the return by the due date. If no amount is owed, a return must also be submitted timely. A delinquent return, failure to pay by EFT, or a late payment will result in penalty charges. More information about EFT payments can be found on our website at "Make a Payment."

Records must be retained for at least four years unless CDTFA authorizes you in writing to destroy them sooner. For additional information regarding record retention, please view Regulation 1332 and Regulation 4901.

If you have overpaid the tax to CDTFA, you may file a claim by using form CDTFA-101, Claim for Refund or Credit or by filing an amended return(s) stating the specific reason(s) for the overpayment. Claims for refund must be in writing and should specify the period for which you are making the claim and the amount of the refund. Additional refund details are on the CDTFA website.

Mail claims to:
California Department of Tax and Fee Administration
Business Tax and Fee Division
Motor Carrier Office, MIC: 65
P.O. Box 942879
Sacramento, CA 94279-0065

Whichever of the following dates occurs last is your filing deadline:

• Three years from the last day of the month following the reporting period for which the overpayment was made
• Six months from the date of overpayment
• Six months from the date a determination (billing) became final
• Three years from the date CDTFA collected an involuntary payment, such as from a levy or lien

Be sure to file your claim for refund by the applicable deadline. If you don't file on time, CDTFA cannot consider your claim, even if you overpaid the tax. If you have questions about your deadline to file a refund claim, contact our Customer Service Center at 1-800-400-7115.