Information Release

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PAT 2015-01 – Petroleum Activity Tax “Calculated Gross Receipts” – Issued June, 2015

The purpose of this information release is to notify petroleum activity tax (PAT) taxpayers of changes made to the method of determining a supplier’s PAT liability. For all tax periods between July 1, 2014 and June 30, 2015, the PAT is measured by the supplier’s actual gross receipts from the first sale of motor fuel within the state outside the distribution system (see Information Release PAT 2013-01). As a result of the enactment of Am. Sub. H.B. 492 passed by the 130th General Assembly, beginning July 1, 2015, PAT taxpayers are to report and pay the PAT measured by their “calculated gross receipts” instead of actual gross receipts.

This new methodology will require taxpayers to calculate their gross receipts based on the number of gallons of gasoline and non-gasoline motor fuel sold, and multiply those numbers by average wholesale prices posted on the Department’s website at www.tax.ohio.gov/PetroleumActivityTax/spotprices.aspx. The Tax Commissioner will post the average wholesale price of one gallon of unleaded regular gasoline and one gallon of diesel fuel at least fifteen (15) days prior to the start of the calendar quarter to which those prices apply. The average wholesale prices do not include federal or state excise taxes.

Example 1: ABC is a supplier that is subject to the PAT. From July 1, 2015 through September 30, 2015, ABC is responsible for the first sale of 100,000 gallons of gasoline, 25,000 gallons of diesel fuel, and 25,000 gallons of liquid natural gas. For this example, please assume the average wholesale price of a gallon of gasoline is $G and the average wholesale price of a gallon of diesel fuel is $D for the purpose of determining the third quarter 2015 calculated gross receipts. ABC’s calculated gross receipts would be determined using the calculation below:

(gallons of gasoline X $G) + (gallons of other fuels X $D) = calculated gross receipts

(100,000 ×$G)+((25,000+25,000)×$D)=calculated gross receipts

ABC must report the 100,000 gallons of gasoline as gasoline sold for use on public highways and waterways.* The average wholesale price of a gallon of gasoline is applied to the total gallons of gasoline sold, or 100,000 gallons. ABC must report the gallons of all other motor fuels that are not gasoline. ABC sold 25,000 gallons of diesel and 25,000 gallons of liquid natural gas. The average wholesale price of a gallon of diesel fuel is applied to the total gallons of motor fuel that is not gasoline sold, or 50,000 gallons. ABC will report the 25,000 gallons of diesel fuel as motor fuel sold for use on public highways and waterways.* Finally, ABC will report the 25,000 gallons of liquid natural gas as motor fuel not sold for use on public highways and waterways.*

ABC must report the total calculated gross receipts on the third quarter 2015 PAT return.  The applicable tax rate would then be applied to ABC’s calculated gross receipts to determine the PAT liability for the tax period.

Example 2: DEF is a supplier that is subject to the PAT. From October 1, 2015 through December 31, 2015, DEF is responsible for the first sale of 500,000 gallons of gasoline. DEF is also responsible for the first sale of 45,000 gallons of dyed diesel fuel and 55,000 gallons of regular diesel fuel. For this example, please assume the average wholesale price of a gallon of gasoline is $G and the average wholesale price of a gallon of diesel fuel is $D for the purpose of determining the fourth quarter 2015 calculated gross receipts. When filing the fourth quarter PAT return, DEF must separately account for motor fuel that is used to propel motor vehicles on public highways and waterways and motor fuel that is not used to propel motor vehicles on public highways and waterways (including dyed diesel).* DEF would determine its total calculated gross receipts as follows:

(500,000 x $G) + (55,000 x $D) = calculated gross receipts for public highway/waterway use

(45,000 x $D) = calculated gross receipts for non-highway/non-waterway use

DEF must report the separate subtotals in the appropriate fields on the fourth quarter 2015 PAT return. DEF must also verify that the sum of the highway and non-highway calculated gross receipts equals DEF’s total calculated gross receipts for the period prior to submitting the return.

*All gasoline and diesel fuel, except dyed diesel fuel, as those terms are defined in R.C. 5736.01 and R.C. 5735.01 first sold into this state is presumed to be sold for use or used to propel motor vehicles on public highways and waterways in this state.

Please contact the Business Tax Division at 1-888-722-8829 with questions regarding this release.