Information Release

XT 2000-03 - Motor Fuel Tax Information Release - House Bill 612 Information For All Licensed Motor Fuel Dealers - September 8, 2000

The 123rd General Assembly enacted House Bill 612. This legislation will be effective September 29, 2000. The following changes are effective starting with the October 2000 motor fuel tax returns and schedules.

TRANSMIX

Prior to House Bill 612 transmix was defined as gasoline. It is our understanding that transmix is regularly mixed with diesel fuel. Section 5735.01 (D) will now define transmix as diesel fuel when it is mixed with diesel fuel and Section 5735.01 (E) (3) will now define transmix as gasoline when it is mixed with gasoline. In essence, transmix takes on the identity of the product in which it is blended (diesel fuel or gasoline). This change eliminates many problems in the proper reporting of transmix.

ETHANOL

Prior to this legislation, ethanol was taxed at the same point as diesel fuel, i.e. when it was used or sold for use as a motor fuel. This legislation changed Section 5735.01 (E) (2) to include ethanol in the definition of gasoline. As such, ethanol will be reported and tax paid the same as gasoline under Section 5735.01 (J). You have been required to report ethanol and gasoline separately when filing your monthly motor fuel tax return. This was necessary because of the qualified fuel credit on ethanol mixed with gasoline. The qualified fuel credit, however, expired on June 30, 1997. With this change, it will no longer be necessary for you to report and inventory ethanol separately. Effective October 1, 2000, any gasoline/ethanol blend that you buy or sell should be reported only as gasoline, product code 65. For example, if you sell a gasoline/ethanol blend of 7,000 gallons of gasoline and 700 gallons of ethanol (7,700 total) to another dealer, instead of reporting each product separately you must report a sale of 7,700 gallons of gasoline.

If you maintain an inventory of ethanol in bulk storage outside of a terminal, it will be necessary for you to do the following:

  1. Make a book adjustment (BA) disbursement of ethanol (product code 241) in inventory at the close of business on September 30, 2000 and a corresponding book adjustment receipt of those same gallons as gasoline (product 65).
  2. You will no longer file an ethanol recap (MF-2E) starting with the October 2000 return.

DIESEL FUEL

Clear diesel fuel sold in bulk lot loads for use in certain vessels will be exempt from the motor fuel tax. Section 5735.05 (A) (10) has been enacted to allow a "…sale to a consumer of diesel fuel, by a motor fuel dealer for delivery from a bulk lot vehicle, for consumption in operating a vessel when the use of such fuel in a vessel would otherwise qualify for a refund under Section 5735.14 of the Revised Code…". The sale must be made directly by a motor fuel dealer to the user of the fuel in order to qualify for this exemption. These sales should be supported by a signed statement from the purchaser stating that the fuel will be used only in a vessel and that such use qualifies for exemption under section 5735.14. Retain the statements for four years from when your tax return was filed or should have been filed. Report the sales on schedule 10 of your monthly disbursement schedule. This exemption does not pertain to gasoline.

The following changes are effective September 29, 2000.

KEROSENE

The term "water clear" has been removed from the definition of motor fuel and kerosene in sections 5735.01 (B) and (C), 5735.023 (A) and 5735.05(A)(2). Both "waterclear" and "dyed" K-1 kerosene may be sold tax free at retail service stations (provided the kerosene isn’t pumped into a motor vehicle fuel tank). This change does not affect the requirement that dyed diesel fuel is prohibited from being sold at retail service stations.

REFUNDS

The time for filing motor fuel shrinkage refund claims is increased from 60 days to 120 days after June 30 and December 31 of each year. The time for filing other motor fuel refund claims (off road usage or used outside Ohio, mass transit and sales by non-dealers outside this state or to the U.S. government) has been increased from 180 days to 365 days.

We are in the process of reprinting the motor fuel tax law booklet. The revised booklet will contain all the changes mentioned above and will be sent to you in the near future. If you have any questions about this release, please contact the Motor Fuel Tax Compliance Unit at (855) 466-3921.