At a glance, fuel taxes can seem relatively straightforward — particularly when you consider consumer vehicles. If a refueler is simply loading up at a convenience store to sell below the rack, there’s a good chance sales and use tax has already been bundled into the cost of gasoline and paid for up front.
But what if that initial transaction does not require taxation since the fuel is to be resold? In this scenario, taxes need to be calculated based on where each fuel delivery takes place. And those determinations are far from simple, since sales and use tax can vary from one side of the street to another. If the company is using a sales and use tax solution that determines fuel taxes based on ZIP codes alone, the risk of errors can be significant.
When a business forgoes gas stations to purchase at the rack and deliver directly to fleets, the tax ramifications become even more intricate. In this setup, the entire burden of tax determination is with the company. Spill fees, environmental fees, and countless other excise fees can come into play.
For these reasons and others like them, lawmakers are closely watching mobile refueling to determine how and when to tax this changing industry. And that means fuel delivery companies will need to closely monitor the landscape for rule and rate changes. There are thousands of different taxing jurisdictions in the U.S., and each one will be taking its own approach to where, when, and how fuel is taxed.
The question to ask is: How will your company stay compliant?
