PAT 2014-06 - Petroleum Activity Tax: Blended Gallons – Issued July, 2014; Updated June, 2015
The purpose of this information release is to provide guidance to suppliers on the timing of the application of the petroleum activity tax (PAT) when the supplier blends fuel for which the PAT has already been accounted with fuel that has not yet been reported.
The PAT is imposed on a “supplier”. For purposes of the PAT, a “supplier” is any person that meets either of the following:
(1) Sells, transfers, or otherwise distributes motor fuel from a terminal or refinery rack to a location in this state and that point is outside the distribution system; or
(2) Imports or causes the importation of motor fuel for sale, exchange, transfer or other distribution by the person to a location in this state and that point is outside of a distribution system.
Some suppliers act as importers of motor fuel such that the imported motor fuel is commingled with motor fuel first received outside of the distribution system in Ohio. (See information release PAT 2014-05 - Petroleum Activity Tax: Who Is a Supplier that Is Liable for the Tax – Issued February, 2014 for more information.) A supplier in this situation would need to ensure that motor fuel that relates to the supplier’s calculated gross receipts from the first sale of motor fuel outside the distribution system is reported prior to any motor fuel that it purchased from another supplier liable for the PAT.
Example: ABC is a supplier that has a business model wherein it receives motor fuel from several motor fuel dealers, including those registered as suppliers for purposes of the PAT. ABC receives 1,000 gallons of motor fuel from XYZ terminal in Ohio and delivers the motor fuel to its bulk storage facility in Ohio. XYZ (the selling terminal), not ABC, is subject to the PAT and includes in XYZ’s calculated gross receipts the amount attributable to this sale to ABC.
Subsequently, ABC purchases 750 gallons of motor fuel from a motor fuel wholesaler in Kentucky and brings it into Ohio for storage in its bulk storage facility. In this situation, ABC is responsible for including in its calculated gross receipts the amount attributable to the 750 gallons of motor fuel it purchased and imported from Kentucky when that motor fuel is sold to a location in Ohio.
Continuing with the example, assume that ABC sells 1,250 gallons of motor fuel to a retail location in Ohio. For purposes of the PAT return, ABC would report its calculated gross receipts from the sale of the 750 gallons of motor fuel – not 250 gallons, or an amount in excess of the original 1,000 gallons purchased from XYZ, because it has to first report any calculated gross receipts from the motor fuel it received from the Kentucky wholesaler before accounting for the motor fuel received from the terminal in Ohio.
In sum, for this example, ABC’s calculated gross receipts from the sale of the 1,250 gallons are comprised of the following amounts:
- 750 gallons of fuel that needs to be reported on the PAT return (originating from the Kentucky wholesaler and not already included in another PAT taxpayer’s calculated gross receipts); and
- 500 gallons of fuel that does not need to be reported on the PAT return (originating from the sale between ABC and XYZ).
Please contact the Business Tax Division at 1-888-722-8829 with any questions.