Diesel Fuel Supplier Frequently Asked Questions (FAQs) - Filing Claims for Refund

  1. What records do I need to support an exemption or credit?
  2. Where do I get a First Taxpayer’s Report?
  3. What is required to claim a refund for tax paid on exported diesel fuel?
  4. Are state and local entities exempt from the excise tax on diesel fuel?

  1. What records do I need to support an exemption or credit?

    You must maintain complete records of all activities. These include rack removals, sales, imports, and exempt dispositions, including exemption certificates, self-consumed diesel fuel, inventories, purchases, receipts, and tank gauging or meter readings, of diesel fuel and transactions involving fuel that are required to be accounted for on your return. Such records include but are not limited to:

    • Pipeline tickets
    • Bills-of-Lading
    • Exemption certificates
    • Purchase orders
    • Tax returns from other states to support export claims
    • Cardlock statements
    • Calculations or formulas to support off-highway exempt usage
    • First Taxpayer Report
    • Support for claimed bad debts
    • Invoices
  2. Where do I get a First Taxpayer's Report?

    See Exhibit A of Diesel Fuel Tax Regulation 1435, Tax Paid Twice on Diesel Fuel.

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  3. What is required to claim a refund for tax paid on exported diesel fuel?

    When you export tax-paid fuel you may take a credit or claim a refund for the taxes paid when the fuel was purchased.  All claims for refund of tax paid on exported diesel fuel must be supported by documents that include the following:

    1. The total amount of diesel fuel covered by the claim
    2. A copy of the purchase invoice for the fuel showing the name, address, telephone number and permit number of the person who sold the diesel fuel to you, the date the fuel was purchased, number of gallons, a separately stated amount of tax, and a statement that the diesel fuel purchased did not contain visible evidence of dye
    3. A properly executed bill of lading showing intent to export the fuel to an out-of-state destination
    4. Your sales invoice further documenting that the fuel was sold to an out-of-state purchaser without tax
    5. Contracts of sale that cover the period of the exports

    If the invoices, bills of lading, and contracts of sale all support that a transaction is an exempt export, we generally accept the transaction as a valid export transaction.  If any of the documents indicate that an export may not have taken place, additional investigation will be warranted.   You are responsible for demonstrating that fuel actually was exported.  In addition to the above documentation, you may be asked to obtain the following to show that you exported the fuel.

    • Confirmation from the receiving state that the fuel was reported and taxes paid in the receiving state.
    • Other third-party verification, such as properly completed and authenticated Arizona Fuel Manifests stamped and signed by a port inspector.
    • Copies of the purchaser's tax return showing that the fuel was reported to the receiving state - subject to confirmation by the receiving state.
    • Carrier delivery tickets bearing the signature of the ultimate purchaser receiving the fuel.

    Instead of claiming a refund of tax for export of tax-paid diesel fuel, you may take a credit on your form BOE-501-DD, Supplier of Diesel Fuel Tax Return for tax-paid diesel fuel when:

    • The contract of sale requires the diesel fuel to be shipped and
    • The fuel is actually shipped to a point outside of this state by the supplier claiming the credit, by the means described above and in subdivision (a)(1) of Regulation 1430, Shipments Out of State.

    If you do not take the credit on a return filed within three months of the calendar month in which export occurred, you must file a claim for refund and may not take a return credit.

  4. Are state and local entities exempt from the excise tax on diesel fuel?

    No.  This state and its political subdivisions are not exempt from the excise tax on diesel fuel.  However, these entities are allowed to purchase dyed diesel fuel for on-highway use.  In order to do so, they must register with us to report and pay the excise tax on dyed diesel fuel used on public highways. 

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