Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2012
 

Diesel Fuel Tax Annotations

TRANSACTIONS INVOLVING INDIANS

Backup Tax; Imposition of Tax on Indian Retailer and Indian Customer. If an Indian or Indian tribe that operates as an on-reservation retail seller purchases or otherwise obtains diesel fuel on which the fuel tax has not been paid, the obligation to collect the backup tax is imposed when such fuel is sold and delivered into the fuel tank of a diesel-powered highway vehicle. Pursuant to section 60058, liability for the backup tax is imposed on both the retail seller (as end seller or fueler) and the customer (as a highway vehicle operator). However, liability for the backup tax may not be imposed on either the Indian or Indian tribe, as end seller/fueler, or on an Indian who resides on a reservation, as highway vehicle operator, if the diesel fuel is purchased and delivered into the fuel tank of the highway vehicle on the reservation. 9/01/06.

Backup Tax; Imposition of Tax on Indian Retailer and Non-Indian Customer. If an Indian or Indian tribe that operates as an on-reservation retail seller purchases or otherwise obtains diesel fuel on which the fuel tax has not been paid, the obligation to collect the backup tax is imposed when such fuel is sold and delivered into the fuel tank of a diesel-powered highway vehicle. Pursuant to section 60058, liability for the backup tax is imposed on both the retail seller (as end seller or fueler) and the customer (as a highway vehicle operator). Although liability for the backup tax may not be imposed on the Indian or Indian tribe, as an end seller/fueler, if the highway vehicle operator is a non-Indian or an Indian who does not reside on a reservation, the Indian or Indian tribe is required to collect the backup tax from the non-Indian highway vehicle operator, and remit the tax to the Board, when the untaxed diesel fuel is sold and delivered into the fuel tank of the highway vehicle on the reservation. 9/01/06.

Incidence of Tax; Refunds for Off-Highway Use. Under the Diesel Fuel Tax Law, liability for the tax is imposed on the supplier when the fuel is removed from the rack, imported, or sold. An Indian or Indian Tribe operating as an on-reservation retail seller of fuel only pays the tax indirectly, as a part of the cost of the diesel fuel it buys. However, the end user of the fuel, whether Indian or non-Indian, may claim a refund of diesel fuel tax that was included in the price of the fuel when the fuel was purchased, if the fuel was pumped into the fuel tank of a diesel-powered motor vehicle that was not operated on a California public highway. If applicable, a claim for refund of the diesel fuel tax may be directed to the Board, pursuant to section 60501(a)(4)(A). 9/01/06.

Legal Incidence of Tax; Fuel Purchased Directly from Supplier. The legal incidence of the diesel fuel tax is imposed on the supplier of the fuel, when, for example, the fuel is removed from the rack or when the fuel enters the state. If an Indian or Indian tribe elects to purchase the fuel directly from a supplier and, upon authorization from the supplier, the fuel is removed from the rack off the reservation, the supplier is still liable for the diesel fuel tax. The tax may be included in the cost of the fuel when the Indian or Indian tribe purchases the fuel from the supplier. 9/01/06.

Legal Incidence of Tax; Fuel Imported by Indian. The legal incidence of the motor vehicle fuel tax is imposed on the supplier of the fuel, when, for example, the fuel is removed from the rack or when the fuel enters the state. If an Indian or Indian tribe elects to import diesel fuel into the state, the Indian or Indian tribe itself becomes liable to the state for the diesel fuel taxes, where entry into the state occurs off the reservation and is, therefore, a taxable activity and subject to imposition of the diesel fuel tax. The legal incidence of the tax is imposed when and where the fuel enters California. 9/01/06.