Fuel Tax Issues
By: Charles L. Telk Jr., CPA, Partner | email
If your coop engages in the sale of petroleum products, the following items may be necessary.
Retail Diesel Fuel Pump Stickers: For those cooperatives that sell diesel fuel at retail pumps, each side of the pump must have a sticker indicating that the diesel fuel provided is Ultra Low Sulfur Diesel. Your petroleum marketers should have examples of stickers that will satisfy the IRS and EPA. Failure to properly display these stickers can result in fines as high as $10,000.
Acceptable payment methods for tax exempt fuel: When State and Local Governments purchase fuel that is not subject to Federal taxes, it is important that they pay for these purchases with a fleet card or with a check on account. Do not accept a typical credit card such as American Express, Visa or MasterCard. The reason for this is when a State or Local Government pays for their tax exempt fuel with a typical credit card, the cooperative technically is not entitled to recoup Federal taxes paid on these gallons. Therefore, be sure that these types of purchases are paid for with either a fleet card, or with a check on account.
Federal Fuel Exemptions: It is important that you update and maintain your Federal Fuel exemptions on an annual basis. Certificate M for gasoline and Certificate P for diesel are only valid for 1 year. You should have a valid copy of these certificates on hand for any customers for which you will claim a fuel tax credit for.
Form 637 – Application for Registration (For Certain Excise Tax Activities): It is important that your cooperative is properly registered for each type of excise tax activity that you engage in. Failure to be properly registered can result in high penalties. Your responsible managers / employees should periodically review your excise tax operations and be sure that you have properly registered for each activity. Form 637 is the appropriate form used to register any activities that are currently not registered.
We would be happy to assist you in complying with the various rules regarding excise taxes. Please contact Chuck or Cristina in our Des Moines office for assistance.
