Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
295.0000 GROSS RECEIPTS
(g) SERVICE CHARGES GENERALLY
295.1585 Miscellaneous Charges Made in Conjunction with Sales of Jet Fuel. A retailer sells jet fuel to air carriers at a municipal airport. The separately stated charges by the retailer on sales of jet fuel to purchasing airlines and its tax application are set forth below:
(1) Throughput Fees—These are fees charged to the retailer by the airport agent. The retailer arranges verbally with an "into plane agent" at the airport to store and deliver fuel as needed to its customers. The retailer delivers or causes to be delivered sufficient fuel to the airport agent's storage to cover its sales. The retailer owns the fuel.
The throughput fees, if for temporary storage of the retailer fuel, would be subject to tax since there is no exclusion from the measure of tax for storage fees. The contrary argument is that a throughput fee is a nontaxable transportation charge, as with the "into plane fees" in (2) below, on the ground that all carriers sometimes incidentally store goods temporarily in the course of moving goods from one point to another, and ordinarily an allocation is not made between storage and transportation. For example, if the retailer placed fuel with the airport agent with explicit instructions that the fuel was needed immediately by an air carrier and should be transported as quickly as possible to the air carrier's plane, the same throughput charge would nevertheless apply, and it would be difficult to show more than storage incidental to transportation. A storage fee would increase as the period of storage increased; throughput fees are a fixed amount per gallon.
Accordingly it is concluded that a separately stated throughput fee is a nontaxable transportation charge.
(2) Into Plane Fees—"Into plane fees" may be used to describe local tax charges, service fees or commissions.
"Into plane fees" which represent a charge to a retailer by an airport agent to deliver or cause fuel to be delivered into a purchaser's aircraft from a storage facility at the airport may be excluded from the measure of tax as transportation charges pursuant to section 6012(c)(7) provided that the charge is separately stated to the retailer's customer.
Such charges may relate to deliveries both by fueling trucks and through fuel distribution systems at the airport.
"Into plane fees" which represent a charge by the airport authority as a retailer would not qualify as a transportation charge since it represents a charge for movement within the retailer's place of business. Likewise, such a charge from an airport authority which wholesales fuel to retailers is not a transportation charge which is excludable from the measure of tax but rather a service prior to the retail sale by the retailer. In essence, it is a charge by the wholesaler for movement of goods within the wholesaler's "place of business."
"Into plane fees" which represent a local tax charge or commissions represent a cost of doing business for the retailer and such charges are not excludable from the measure of tax.
(3) Ground Power Unit Fees—These are charges to the retailer by the airport agent to reimburse the agent or delivery party for ground equipment used in fueling and servicing the aircraft, i.e., engine starter, generator, pushtruck, etc. These charges appear to be primarily for the rendering of services not related to sale of tangible personal property (with the exception of ground equipment used in refueling—e.g., hydrant truck/cart). Such services include the providing of electrical power, air pressure for engine starts, washing of windows, pushing of the aircraft from parking stalls, etc. These services are not contingent upon the purchase of fuel.
With the exception of the charge for ground equipment used in refueling, i.e., the hydrant cart, the remainder of this charge is unrelated to the sale of tangible personal property and is, therefore, nontaxable. If the charge for the hydrant cart was separately stated, it too would be nontaxable. This latter charge is minor in relation to the total charge and it is impractical for the retailer to separately state the charge for the hydrant cart. Therefore, the retailer ground power unit fee should be treated as a nontaxable service charge.
(4) Flowage Fee and/or Airport Delivery Fee—This is a charge to the retailer by the airport and is subsequently passed on to the purchasing air carrier. The municipal airport charges oil companies and others supplying petroleum products to tenants and users at the municipal airport a gallonage fee for the right to conduct business at the airport.
This fee charged to the retailer and passed along by the retailer to the purchaser is another cost of doing business and, accordingly, is included in the measure of tax. The fact that the retailer may choose to separately state such charges on its billings has no effect on the application of tax. 7/20/73; 4/3/75; 11/18/86. (Am. 2000–1).