SUBJECT: Gasoline Use Tax
SUMMARY
P.L.227-2013 provides for the imposition of a new gasoline use tax. This new gasoline use tax replaces the previous sales tax, which will no longer be imposed on the sale of gasoline. This bulletin provides guidance as to how the gasoline use tax rate is calculated, how retail merchants file their returns, and how refunds or exemptions may be claimed.
INTRODUCTION
DEFINITIONS
The term "gasoline" has the same meaning as set forth under IC 6-6-1.1-103 (g).
The term "federal gasoline tax" means the excise tax imposed on gasoline under Section 4081 of the Internal Revenue Code.
The term "Indiana gasoline tax" means the tax imposed under IC 6-6-1.1 .
The term "qualified distributor" means a distributor that:
(1) Is a licensed distributor under IC 6-6-1.1 ; and
(2) Holds an uncanceled gasoline use tax permit issued under IC 6-2.5-3.5-17 .
The term "refiner" means a person or entity who manufactures or produces gasoline by any process involving substantially more than the blending of gasoline.
The term "terminal operator" means a person or entity that:
(1) Stores gasoline in tanks and equipment used in receiving and storing gasoline from interstate or intrastate pipelines pending wholesale bulk reshipment; or
(2) Stores gasoline at a boat terminal transfer that is a dock or tank or equipment contiguous to a dock or tank, including equipment used in the unloading of gasoline from a ship or barge and used in transferring the gasoline to a tank pending wholesale bulk reshipment.
CALCULATING THE MONTHLY GASOLINE USE TAX RATE
The gasoline use tax rate is computed monthly by the department and will be published on the Indiana Department of Revenue's website no later than the 22nd day of the month prior to the tax rate becoming effective. The following is the methodology used to compute the gasoline use tax rate:
Step 1a: The gasoline use tax rate is calculated by determining the average retail price per gallon for all grades of gasoline for each day from the 16th day of the previous month to the 15th day of the current month, inclusive of federal gasoline tax, Indiana gasoline tax, and Indiana gross retail tax or gasoline use tax. The price per grade will be weighted by the percentage of all sales by grade to determine the average retail price.
Step 1b: Subtract the per-gallon federal gasoline excise tax rate and the per-gallon Indiana gasoline excise tax rate from the amounts determined in Step 1a.
Step 1c:
• For the period from May 16, 2014, to June 30, 2014, multiply the amount determined in Step 1b by 93.46% (0.9346) in order to subtract the sales tax included in the gasoline price.
• For July 1, 2014, and later, subtract the gasoline use tax in effect on that day from the amount determined in Step 1b.
Step 1d: Determine the arithmetic average of the Step 1c amounts determined for each day from the 16th day of the prior month to the 15th day of the current month. For instance, to determine the average price for July, add the average retail price minus taxes (Step 1c) for each of the 31 days from May 16 to June 15 and then divide the sum by 31.
Step 2: Multiply the amount determined in Step 1d by 7% (0.07) and round to the nearest one-tenth of one cent ($0.001). This is the gasoline use tax rate for the following month.
GASOLINE USE TAX INVENTORY REPORTING
Each retail gasoline station or unlicensed bulk plant operator will be required to file the GT-Inventory Report to report the gasoline use tax on gasoline in inventory as of July 1, 2014. This paper form is a one-time reconciliation for the gasoline use tax on gasoline in inventory as of business open on July 1, 2014. The department will mail the GT-Inventory Report to retail stations. If a station or an operator required to file the GT-Inventory Report does not receive a form, they should call (317) 615-2630 or email fetax@dor.in.gov. The GT-Inventory Report must be filed by Aug. 1, 2014, along with payment for the gasoline use tax on gasoline in inventory as of July 1, 2014.
PAYMENT OF THE GASOLINE USE TAX
Whenever a refiner, terminal operator, or qualified distributor (seller) sells gasoline to a distributor that does not meet the definition of a qualified distributor for gasoline use tax purposes as defined previously or sells to a retail merchant (buyer), that seller shall collect the gasoline use tax from the buyer.
In addition, if a refiner, terminal operator, or qualified distributor transfers gasoline to a location for purposes of the retail sale of that gasoline, that refiner, terminal operator, or qualified distributor is subject to gasoline use tax upon the transfer of the gasoline. The consumer of gasoline (i.e., the retail customer) shall have no liability for the Indiana gross retail or use taxes on any gasoline purchases.
A refiner, terminal operator, qualified distributor, or distributor responsible for remitting the gasoline use tax shall file its returns and remit its taxes via the department's online tax filing system (INtax). Payments are due on the 25th day of the month for all gasoline sold from the 1st day of the month to the 15th day of the month (i.e., tax on sales from July 1 to July 15 are due on July 25). Payments are due on the 10th day of the following month for all gasoline sold from the 16th day of the month to the last day of the month (i.e., tax on sales from July 16 to July 31 are due on August 10).
A refiner, terminal operator, or qualified distributor must also file a monthly report reporting gallons sold and the tax paid by each purchaser or recipient. This report is due at the end of the month after the gallons of gasoline are sold (for instance, the July monthly report is due August 31).
BONDING AND FINANCIAL REPORTING
A refiner, terminal operator, or qualified distributor that has a surety bond for gasoline tax as provided under IC 6-6-1.1-406 et seq. will also be required to have a surety bond for the payment of gasoline use tax. The department shall determine the amount of the bond; however, any bond shall not be less than $2,000 and not greater than an amount equal to a three-month gasoline use tax liability for the refiner, terminal operator, or qualified distributor, as estimated by the department.
A refiner, terminal operator, or qualified distributor may be asked to provide financial records sufficient to demonstrate their revenues, expenses, assets, and liabilities for purposes of determining bonding requirements. A current financial statement, beginning balance sheet, or year-end report, similar to what is required by the department for fuel tax license applications (Form FT-1) will be sufficient to meet the financial reporting requirements.
EXEMPT TRANSACTIONS AND REFUNDS
If a purchase or shipment of gasoline is made within Indiana for shipment and subsequent sale outside Indiana, the purchase or shipment is exempt from the gasoline use tax. In such a case, if the gasoline use tax has already been paid, a distributor (including a qualified distributor) may claim a refund for the gasoline use tax paid on the gallons purchased. This refund may be claimed by completing Form GA-110L and providing all supporting documentation.
A qualified distributor may be allowed to make an adjustment on Form GT-103 when they are notified by a retail merchant that the retail merchant was not fully reimbursed by a customer's credit card company. For example, the retail merchant sold gasoline to an exempt customer, as defined by IC 6-2.5-5 , who paid using a credit card. Due to the agreement by the credit card company, the retail merchant was not fully reimbursed for the gasoline use tax when the gasoline was sold to an exempt customer. The tax that was paid by the retail merchant but not collected from the exempt customer can be claimed by a qualified distributor on the "Adjustments" line on Form GT-103. However, the qualified distributor must have a copy of all exemption certificates (Form ST-105) provided to the retail merchant available upon request by the department. Furthermore, the department will request proof that the distributor reimbursed the retail merchant for the gasoline use tax paid by the retail merchant. A copy of the credit card statement showing the difference in reimbursement to the retail merchant due to the gasoline use tax exemptions must also be provided.
In addition, a qualified distributor shall be allowed to make an adjustment on Form GT-103 to reflect any gasoline use tax imposed on purchases by the qualified distributor when the qualified distributor purchases gasoline from another distributor who has previously paid gasoline use tax on the gallons sold to the qualified distributor. Any information related to the payment of the gasoline use tax on gasoline purchased by the qualified distributor must be provided to the department upon request.
A customer who has paid the gasoline use tax on gasoline that is used for an exempt purpose, as defined by IC 6-2.5-5 , may request a refund. The refund may be claimed by completing Form GA-110L and providing all supporting documentation.
