Thursday, January 23, 2014

Revenue Publishes Statutory Calculation of Prepayment Rate

DEPARTMENT OF STATE REVENUE
 
Departmental Notice #2
December 2013

SUBJECT: Prepayment of Sales Tax on Gasoline

Statutory Calculation of Prepayment Rate
 
The prepayment rate is defined by IC 6-2.5-7-1 and IC 6-2.5-7-14 as the product of:
 
Step 1
1) The statewide average retail price per gallon of gasoline (excluding the Indiana gasoline tax, the federal gasoline tax, and the Indiana gross retail tax); multiplied by
2) The state gross retail tax rate (7%); multiplied by
3) Eighty percent (80%); rounded to
4) The nearest one-tenth of one cent ($0.001)
Step 2
1) Determine the lesser of the results in Step 1 or
2) The product of:
(i) The prepayment rate in effect on the day immediately preceding the day on which the prepayment rate is redetermined; multiplied by
(ii) One hundred twenty-five percent (125%); rounded to
3) The nearest one-tenth of one cent ($0.001)
 
Using the most recent retail price of gasoline available (as required by IC 6-2.5-7-14(b)), the department has determined the statewide average retail price per gallon of gasoline to be two dollars ninety-nine and four-tenths cents ($2.994) for the month of August 2013. The data is derived from www.IndianaGasPrices.com.
 
Based on the provisions of Step 1 and Step 2, the calculations are as follows:
Step 1   
Statewide average retail price per gallon: 2.994  
Multiplied by the state retail tax: x .07  
 0.20958  
Multiplied by 80%: x 0.8  
 0.16766  
   
Rounded to the nearest one-tenth of one cent: 0.168  
   
Step 2   
Previous 6-month prepayment rate: 0.177  
Multiplied by 125%: x 1.25  
 0.22125  
   
Rounded to the nearest $0.001: 0.221  
 

Prepayment Rate
 
Based on the previous calculations, Step 1 will be used to determine the prepayment rate. The prepayment rate of sales tax on gasoline for the 6-month period beginning January 1, 2014, is sixteen and eight-tenths cents ($0.168) per gallon.