Exemption for Diesel Fuel
A partial exemption from sales and use tax became available under section 6357.1 for the sale, storage, use, or other consumption of diesel fuel used in farming activities or food processing.
- The partial exemption applies only to the state sales and use tax rate portion. The exemption does not apply to any local, city, county, or district taxes. Sales and purchases of diesel fuel used in farming activities or food processing will continue to be subject to the remaining portion of the sales and use tax rate consisting of the local, city, county and any applicable district taxes.
- Partially exempt from the sales and use tax is diesel fuel consumed during the activities of a farming business or in food processing. Farming activities means a trade or business involving the cultivation of land or the raising or harvesting of an agricultural or horticultural commodity for commercial purposes. Farming activities also include the transportation and delivery of the commodity to the marketplace.
- A retailer will be relieved from the liability for the sales or use tax subject to the partial exemption if they take a partial exemption certificate timely and in good faith, from purchasers stating the property will be used in a qualifying manner as provided under section 6357.1. The partial exemption certificate should be retained for a period of not less than four (4) years.
- A purchaser who provides a partial exemption certificate to a retailer and who makes any use of the diesel fuel other than for farming activities or in food processing, will be liable for the 5.00% tax, plus interest and applicable penalties. Purchasers must maintain records supporting the use of the diesel fuel purchased under a partial exemption certificate.