No. 40974 (5-year Review): Rule R865-13G. Motor Fuel Tax

DAR File No.: 40974
Filed: 11/10/2016 09:51:35 AM

NOTICE OF REVIEW AND STATEMENT OF CONTINUATION

Concise explanation of the particular statutory provisions under which the rule is enacted and how these provisions authorize or require the rule:

Section 59-13-201 imposes a motor fuel tax at the rate of 12% of the statewide average rack price of a gallon of motor fuel on all motor fuel sold, used, or received for sale in the state and provides tax exemptions for motor fuel distilled from coal, oil shale, rock asphalt, bituminous sand, or hydrocarbons located in this state; deliveries to government agencies; and for exports. The section also provides instructions for the distribution of funds. Section 59-13-202 entitles any person who purchases motor fuel for the use of stationary or self-propelled machinery used for nonhighway farm operation to a refund of motor fuel tax paid and provides methods for obtaining the refund. Section 59-13-203.1 requires that any individual desiring to distribute motor fuel in the state of Utah obtain a license from the Tax Commission; sets forth requirements of the form of the license application; requires bonding as a prerequisite for a license; indicates how the amount of the bond shall be determined; and provides that a motor fuels tax license is valid until the person ceases to do business or changes the person�s business address. Section 59-13-204 states that licensed distributors who receive motor fuel are liable for motor fuel tax and shall compute the tax on the total taxable amount of motor fuels received. Also provides a method for distributors to sell motor fuel tax exempt to other distributors. Section 59-13-208 requires that every carrier delivering fuel within the state of Utah from outside the state shall report in writing all deliveries made during the past month. Section 59-13-210 allows the Tax Commission to create rules to enforce the motor fuel laws; and requires the Commission to examine returns and recompute monthly reports of sales as necessary; estimate the amount of tax due, collect delinquent tax, refund overpayments, and provide for judicial review of dissatisfied taxpayer claims.

Summary of written comments received during and since the last five-year review of the rule from interested persons supporting or opposing the rule:

No written comments have been received.

Reasoned justification for continuation of the rule, including reasons why the agency disagrees with comments in opposition to the rule, if any:

Section R865-13G-1 defines "carrier" with regard to motor fuel deliveries and requires that every carrier delivering motor fuels within this state submit written reports concerning all deliveries from outside Utah. Section R865-13G-3 provides criteria for determining whether a sale of motor fuel meets the export exemption from motor fuels tax. This section also requires that each export sale of motor fuel be supported by records. Section R865-13G-5 allows motor fuel dealers that sell motor fuel in wholesale quantities to become a licensed distributor. This section also allows licensed distributors to purchase motor fuel tax exempt if they satisfy certain conditions. Section R865-13G-6, upon Tax Commission approval, exempts from motor fuel tax volatile or inflammable liquids that qualify as motor fuels, but are not useable in their present state in internal combustion engines. Section R865-13G-8 clarifies the definition of "agricultural purposes" for purposes of allowing tax refund for persons engaged in commercial agricultural work. Section R865-13G-9 clarifies exemption from motor fuel tax for motor fuels refined in Utah from solid hydrocarbons. Section R865-13G-10 provides procedures for distributors that make sales to government agencies to claim the fuel tax exemption for sales to government agencies. This section also clarifies the exemption from motor fuel tax for sale of motor fuel to Indian tribes and government agencies. Section R865-13G-11 defines "gross gallon" and "net gallon" for use in calculating motor fuel tax liability. This section also requires that all licensed distributors calculate motor fuel tax using either gross gallon or net gallon basis and requires distributors to inform the Tax Commission of choice then exclusively use this basis of calculation for 12 months without alternating. Section R865-13G-13 sets procedure for government entities to apply for a refund for motor fuel taxes paid and lists the records required to be maintained for purchases on which the refund is claimed. Section R865-13G-15 provides procedures for administering the reduction of motor fuel tax authorized under Section 59-13-201. Section R865-13G-17 sets forth the parameters under which a motor fuels tax licensee will be considered to have changed the licensee's business address or ceased to do business. Section R865-13G-18 defines the statewide average rack price of a gallon of motor fuel as the average of the Salt Lake City and Cedar City terminal prices of the average daily average net closing price of a gallon of branded regular, 10% ethanol, 9.0 Reid Vapor Pressure unleaded motor fuel for each terminal. Therefore, this rule should be continued.

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Tax Commission
Auditing
210 N 1950 W
SALT LAKE CITY, UT 84134

Direct questions regarding this rule to:

• Christa Johnson at the above address, by phone at 801-297-3901, by FAX at 801-297-3907, or by Internet E-mail at [e-mail]

Effective:

11/10/2016

Authorized by:

Rebecca Rockwell, Commissioner

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