Information Release

PAT 2014-07 - Petroleum Activity Tax: Transfers in the Distribution System – Issued September 2014; Updated June, 2015

The purpose of this information release is to provide guidance to suppliers who have calculated gross receipts from a sale of motor fuel back into the distribution system.

The incidence of the petroleum activity tax (PAT) occurs when the supplier makes an initial sale of motor fuel to a point outside the distribution system in this state. When this occurs, a supplier must include such gallons of motor fuel sold when determining its calculated gross receipts for the PAT. The statute defines “in the distribution system” as a bulk transfer or terminal system for the distribution of motor fuel consisting of refineries, pipelines, marine vessels, and terminals. The statute further describes a location that is “outside the distribution system” as a fuel storage facility, including, but not limited to, a bulk plant that is not part of a refinery or terminal, the fuel supply tank of an engine or motor vehicle, a marine vessel transporting motor fuel to a fuel storage facility that is not in a distribution system, or a tank car, rail car, trailer, truck, or other equipment suitable for ground transportation. Once a product has left a refinery, pipeline, marine vessel or terminal, the product will be “outside the distribution system”.

Many additives or blend stocks, such as ethanol, are transported from the production facility of the product (i.e., refinery) and delivered back to a terminal or another refinery for blending purposes. A sale of motor fuel to a point in the distribution system is not considered by the Department to be a sale outside of the distribution system. Consequently, the additives or blend stocks sold in this manner are not included in the supplier’s calculated gross receipts until it is initially sold to a destination outside the distribution system in this state. Any facts and circumstances surrounding the sale may impact this analysis.

Effective July 1, 2015, the definition of “distribution system” found in R.C. 5736.01(B) is modified to the following:

(B) "Distribution system" means a bulk transfer or terminal system for the distribution of motor fuel consisting of refineries, pipelines, marine vessels, and terminals. For the purposes of this section, motor fuel that is in a refinery, pipeline, terminal, or marine vessel or that is en route to a refinery, pipeline, or terminal via any method of transportation is in a "distribution system." [Emphasis added]. Motor fuel is "outside of a distribution system" if the fuel is in a fuel storage facility, including, but not limited to, a bulk plant that is not part of a refinery or terminal, is in the fuel supply tank of an engine or motor vehicle, or is being transported by a marine vessel, tank car, rail car, trailer, truck, or other suitable equipment to a fuel storage facility that is not in a distribution system.

Although this form is not mandatory, the completed document will assist the supplier with their burden of documenting that the sale of blend stocks or additives back into the distribution system should not be included in its PAT base. It is recommended that both the transferring (supplying) supplier and the receiving supplier retain a copy of this completed document in their records. Please do not submit this form to the Department.

Please contact the Business Tax Division at 1-888-722-8829 with any questions.

Petroleum Activity Tax

Notice of Delivery of Motor Fuel into a Distribution System

 

Receiving Terminal/Refinery Name:

 

Terminal/Refinery Address:

 

Terminal/Refinery Number (TCN):

 

PAT Account Number:

 

Contact Name:

 

Phone Number:

 

 

          

Supplying Terminal/Refinery Name:

 

Terminal/Refinery Address:

 

Terminal/Refinery Number (TCN):

 

PAT Account Number:

 

Contact Name:

 

Phone Number:

 

 

 

 

Product

Bill of Lading (BOL) #

Bill of Lading (BOL) Date

Ship Date

Carrier of Product

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           

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Name of Receiving Supplier                                  Title

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Signature of Receiving Supplier                          Date