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									                        Fuel Taxes Newsletter
                                                                                                           n Underground Storage Tank
                                                                                                           Maintenance Fee
                                                                                                           1. Tank Owner Responsibilities
                        State                                                                              Owners of underground storage tanks are
                        Board of                                                                           required to register with the Board for an under-
                                                                                                           ground storage tank account and are responsible
                        Equalization                                                                       for filing returns and paying the Underground
                                                                                                           Storage Tank Maintenance Fee, based on the
                                                                                                           number of gallons of petroleum products placed
                                                                                                           into their tanks.
                             In This Issue . . .
BOARD MEMBERS                                                                                              Since the inception of the Underground Storage
                                                                       Article Number                      Tank Maintenance Fee, we have had difficulty
Betty T. Yee                                                                                               identifying the owners of underground stor-
First District
San Francisco
                             Underground Storage Tank                                                      age tanks. To eliminate confusion in identifying
                             Maintenance Fee                                                               who is responsible for paying the fee, owners
Bill Leonard
                               Tank Owner Responsibilities. . . . . . . . . . . . .1                       and operators should maintain clear documenta-
Second District                                                                                            tion regarding ownership. For example, records
Ontario/Sacramento             Statute of Limitations is Eight Years                                       could include tank installation contracts, lease
                               for unregistered Tanks . . . . . . . . . . . . . . . . . .2                 contracts, underground storage tank permit
Michelle Steel
Third District                 What is an underground                                                      applications filed with the local agency, and
Rolling Hills Estates          Storage Tank. . . . . . . . . . . . . . . . . . . . . . . . . . . .3        any other documentation indicating ownership.
                                                                                                           Without documentation to the contrary, the
Judy Chu
Fourth District
                             Motor Vehicle Fuel Tax and Diesel Fuel                                        Board will generally presume that the owner of
Los Angeles                  Tax Programs                                                                  the real property on which the tank is located is
                               Two-Party Exchange Transaction                                              the owner of the underground storage tank.
John Chiang
State Controller               Reporting Requirements . . . . . . . . . . . . . . . .4                     2. Statute of Limitations is Eight Years for
                                                                                                           Unregistered Tanks
                             International Fuel Tax Agreement
ExECuTivE DiRECTOR                                                                                         We have discovered some unregistered tank
Ramon J. Hirsig              (IFTA) and Interstate User Diesel Fuel                                        owners as a result of information obtained
                             (DI) License                                                                  from related sales and use tax audits and when
                               Maintain Records that Support Your                                          a subsequent owner registers a tank. In the case
                               iFTA Tax Report . . . . . . . . . . . . . . . . . . . . . . . . .5          of failure to file a return, the statute of limita-
                                                                                                           tions for a notice of determination is eight years.
                             Aircraft Jet Fuel Tax                                                         Penalty and interest will also apply.
                               Attention Aircraft Jet Fuel Dealers –                                       As a reminder, owners of underground stor-
                               Exempt Sales to Air Common Carriers. . . .6                                 age tanks are responsible for filing returns and
June 2007
                                                                                                           payment of the fee. Operators who receive this
volume xii                   All Fuel Tax and Fee Programs                                                 newsletter but do not own tanks should provide
Number 1                                                                                                   a copy of this article to the owner so that the
                               As a Taxpayer, You Have Many
issued semiannually                                                                                        individual is made aware of his or her responsi-
                               Rights under the Law . . . . . . . . . . . . . . . . . . .7
by the California State                                                                                    bility to register with the Board and pay the fee.
Board of Equalization          How to Charge a Payment on the
                               internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Copies available at
                         3. What is an Underground Storage Tank?                      If  ­the ­receiving ­supplier ­fails ­to ­report ­or ­remit ­taxes ­in ­
                         An underground storage tank is defined as any                conformity ­with ­regulations ­1125 ­and ­1423, ­the ­delivering ­
                         tank (or combination of tanks) that is used to               supplier ­shall ­remain ­primarily ­liable ­for ­the ­taxes ­due ­on ­
                         store petroleum products and is located substan-             the ­removal ­of  ­the ­fuel ­from ­the ­rack.
                         tially or totally beneath the ground’s surface. The          The terminal operator must report the terminal
                         definition also applies to pipes that are connected          disbursement on Schedule 15B, “Terminal ­Operator ­
                         to such tanks. Certain vaulted belowground                   Disbursement ­by ­Position ­Holder.” However, in addi-
                         tank systems can be exempted from the fee if                 tion to reporting the position holder (delivering
                         approved by the local permitting agency as a                 supplier), the terminal operator must also report
                         system which:                                                the receiving supplier as part of any two-party
                           • Provides adequate secondary containment                  exchange.
June 2007
Fuel Taxes Newsletter      • Permits visual inspection of the entire                  Failure ­to ­properly ­report ­the ­two-party ­exchange ­trans-
                             surface(s) of the tanks, including the                   action ­by ­any ­participant ­will ­void ­the ­transaction ­for ­
                             underside and all connected piping, and is               California ­fuel ­tax ­purposes ­and ­the ­tax ­liability ­will ­
                             inspected on a daily basis                               revert ­to ­the ­delivering ­supplier. ­Interest ­and ­penalty ­
                                                                                      charges ­may ­apply.
                         n Motor Vehicle Fuel Tax and                                 All Three Parties Must Report the Transaction
                         Diesel Fuel Tax Programs                                     Uniformly
                                                                                      The delivering supplier, receiving supplier, and
                         4. Two-Party Exchange Transaction                            terminal operator must all report the two-party
                         Reporting Requirements                                       exchange transaction information using the same
                         General Reporting Requirements                               document date, bill of lading number, fuel type,
                         In California, when a two-party exchange                     mode code, and gallons.
                         transaction occurs, there are actually three par-            If  ­one ­or ­more ­of  ­the ­participants ­in ­the ­two-party ­
                         ticipants in the exchange: the delivering supplier,          exchange ­transaction ­fails ­to ­report ­uniformly, ­the ­Board ­
                         the receiving supplier, and the terminal opera-              will ­deem ­the ­transaction ­as ­a ­failure ­to ­properly ­report ­the ­
                         tor. Each of these participants has a reporting              exchange ­transaction.
                         requirement that must be met before there is a
                         valid two-party exchange.                                    All Three Parties Must Report Electronically
                                                                                      The delivering supplier, receiving supplier, and
                         The delivering supplier must report the fuel for             terminal operator must all submit their motor
                         which it is the position holder in the terminal              fuels tax forms to the Board electronically to be
                         that has been disbursed in a two-party exchange              eligible to report a two-party exchange transac-
                         transaction. Compliance with this reporting                  tion. Those who intend to report two-party
                         requirement permits it to transfer the liability for         exchange activity need to verify with the Board
                         the tax on this transaction to the receiving sup-            that all other participants in their two-party
                         plier. The delivering supplier reports the ex-tax            exchange transaction are reporting electronically.
                         delivery of fuel on Schedule 6X, “Gallons ­Delivered ­       If they do not, please provide them with a copy
                         to ­Suppliers ­on ­Exchange ­Agreements.” The delivering     of this newsletter or have them contact us. We
                         supplier must also report the two-party exchange             have several electronic filing options available.
                         transaction to the terminal operator and identify
                         the receiving supplier.                                      If  ­one ­or ­more ­of  ­the ­participants ­in ­the ­two-party ­
                                                                                      exchange ­transaction ­fails ­to ­report ­electronically, ­the ­Board ­
                         The receiving supplier must report the fuel that             will ­deem ­the ­transaction ­as ­a ­failure ­to ­properly ­report.
                         was received at a terminal as part of a two-party
                         exchange transaction and report the tax liability            Electronic filing participants may view a list of
                         for that fuel. The receiving supplier reports the            eligible two-party exchange participants on the
                         ex-tax receipt of fuel on Schedule 2X, “Fuel ­               Motor Fuels Electronic Filing website. To do so,
                         Received ­from ­Suppliers ­on ­Exchange ­Agreements ­Tax ­
                          ­                                                           log onto the Motor Fuels e-Filing site and select
      Need more                                                                       the “Two-party Exchange” link from the Main
     information?        Unpaid.” In addition, the receiving supplier
  Give us a call or go   must report the disbursement of the fuel on the              Menu.
 online. See the back    appropriate disbursement schedule as if it was the           We encourage you to refer to regulations 1125
 page for telephone      position holder at the terminal making a removal             and 1423 for a complete description of all aspects
numbers and website      subject to all California motor fuels reporting              of two-party exchange activities and reporting in
      addresses.         requirements.                                                California. The regulations are available on our
                                                                                      website at
 Page 2
If you have any questions about this issue or                tax returns that have depreciation schedules
electronic filing, please contact Dan Gostage at             showing company vehicles.
916-445-2869 or at
                                                             Records Retention Period
                                                             You should maintain your records in California
n International Fuel Tax                                     for a period of four years from the due date of
Agreement (IFTA) and Interstate                              your quarterly tax report or the date the report
User Diesel Fuel (DI) License                                was filed, whichever is later.
                                                             For information, please see publication 50,
5. Maintain Records That Support Your IFTA                   California ­IFTA ­Guide ­to ­the ­International ­Fuel ­Tax ­
Tax Report                                                   Agreement (June 2006). You can also download a
Fuel and mileage data that are reported on your              copy from our website at                        June 2007
IFTA tax reports must be supported by adequate               mciftamain.htm.                                                Fuel Taxes Newsletter
records. The following types of records are par-
ticularly important, especially when they are used           n Aircraft Jet Fuel Tax
to support requests for credit or refunds for tax-
paid and nontaxable uses of fuel.                            6. Attention Aircraft Jet Fuel Dealers
Distance Records                                             – Exempt Sales to Air Common Carriers
You must record miles traveled to substantiate               Sales of aircraft jet fuel to qualified air common
interstate and intrastate travel. Supporting infor-          carriers are exempt from the aircraft jet fuel tax.
mation for each ­individual ­vehicle ­trip should include:   As a jet fuel dealer, you should obtain documen-
date of the trip (starting and ending), trip origin          tation that establishes the purchaser is a qualified
and destination (including city and state), routes           air common carrier. Otherwise, you may be liable
of travel, beginning and ending odometer read-               for tax on your sales to that purchaser.
ings, total trip miles, distances by jurisdiction,           If your account is audited, the auditor will look
vehicle unit number, vehicle fleet number, and               for the following documents:
your name.                                                     • A copy of an exemption certificate, which
Retail Over the Road Fuel Purchases                              includes the statement the air common
You must maintain complete records for all fuel                  carrier has a Certificate of Public Convenience
purchased, ­received, ­and ­used in the conduct of your          and ­Necessity or an All-Cargo ­Air ­Transportation ­
business. Separate totals must be compiled for                   Certificate issued by the U.S. Department of
each fuel type by jurisdiction.                                  Transportation (DOT), or
                                                               • A copy of the purchaser’s Certificate of Public
Your fuel records must contain all the following                 Convenience ­and ­Necessity or All-Cargo ­Air ­
information: date of purchase, name and address                  Transportation Certificate issued by DOT
of the seller, number of gallons or liters pur-
chased, type of fuel purchased, price per gallon             Importance of the DOT Certificate
or liter or ­total ­amount ­of  ­sale, the unit number of    To be exempt from liability for the tax, the fuel
the vehicle into which the fuel was placed, and              purchaser must be excluded from the defini-
name of purchaser.                                           tion of “aircraft jet fuel user.” To be excluded
                                                             from the definition of aircraft jet fuel user as
Bulk Fuel
                                                             an aircraft common carrier, the purchaser must
To obtain credit for withdrawals from licensee-              hold the DOT Certificate of Public Convenience and
owned, tax-paid bulk storage, the following                   ­
                                                             Necessity ­or All-Cargo Air Transportation Certificate.
records must be maintained: date of withdrawal,              The DOT certificate is not the same as the Air ­
number of gallons or liters withdrawn, fuel type,            Carrier Certificate issued by the Federal Aviation
unit number of the vehicle into which the fuel               Administration (FAA). The FAA certificate does
was placed, and purchase and inventory records               not qualify to exclude an aircraft common carrier
showing tax was paid on your bulk fuel purchases.            from the definition of an aircraft jet fuel user.                    Need more
Other Types of Records                                       Exemption Certificate                                            Give us a call or go
You should also maintain the following records               Board Regulation 1137, Exempt ­Sales ­of  ­Jet ­Fuel,           online. See the back
to support your IFTA tax reports: equipment lists            provides that an aircraft jet fuel dealer may accept            page for telephone
that show fleet vehicles (type and model year),                                                                             numbers and website
                                                             an exemption certificate from the purchaser, stat-                   addresses.
Department of Transportation log books, short-               ing that the jet fuel purchased from the dealer
and long-term lease contracts, and federal income
                                 is exempt from the aircraft jet fuel tax as a sale               For more information, order publication 70,
                                 to an air common carrier holding a Certificate of                Understanding ­Your ­Rights ­As ­a ­California ­Taxpayer.
                                 Convenience ­and ­Necessity ­or an All-Cargo ­Air ­Trans-
                                 portation Certificate, issued by DOT.                            Credit Card Payment Program
                                 Regulation 1137 contains a model exemption                       We now offer you the option of charging your
                                 certificate which air carriers may complete to                   tax and fee payments using a credit card issued
                                 obtain the exemption. To read or make a copy                     by Discover Network, MasterCard, Visa, or
                                 of Regulation 1137, go to              American Express. Our credit card program is
                                 sptaxregs.htm.                                                   another way for you to conveniently pay the taxes
                                                                                                  and fees. You can make your payments by call-
                                 An aircraft jet fuel dealer may accept a                         ing 1-800-2PAY-TAX (800-272-9829), or you can
June 2007                        purchaser’s written certification that the fuel                  make a payment over the Internet. You will be
Fuel Taxes Newsletter            purchased is exempt from taxes as a sale to an air               charged a convenience fee of 2.5 percent of the
                                 common carrier holding a DOT certificate. The                    transaction amount by the credit card processing
                                 certification is valid and may be relied upon by                 vendor. This convenience fee is retained by the
                                 the aircraft jet fuel dealer until revoked in writing            vendor and is not revenue to the Board. The mini-
                                 by the purchaser. An aircraft jet fuel dealer who                mum fee is $1.
                                 relies on the purchaser’s certification in good
                                 faith is relieved of liability for the tax if the certi-         8. How to Charge a Payment on the Internet
                                 fication is erroneous.                                           Go to and click on the tab
                                 DOT Certificates                                                 “E-Services” at the top of the screen or on the
                                                                                                  left-hand side of the page under “Featured Ser-
                                 In place of the exemption certificate described
                                                                                                  vices” click on “Make a Payment,” then Credit
                                 above, you may keep on file a copy of the pur-
                                                                                                  Card Payments, “Payment using a Touch Tone
                                 chaser’s Certificate ­of  ­Public ­Convenience ­and ­Necessity
                                                                                                  Phone” or “Payment over the Internet”—
                                 or an All-Cargo ­Air ­Transportation ­Certificate issued
                                                                                                  whichever is applicable. If “Payment over the
                                 to domestic carriers by DOT
                                                                                                  Internet” is selected, you then will click on “con-
                                 Verification of the DOT Certificate                              tinue.” When you enter the area for making a
                                 Even though you have a copy of the DOT                           payment, you will be asked to provide the follow-
                                 certificate, you should verify that it is valid. You             ing information:
                                 can check by going online. DOT maintains a list                    • Payment type
                                 of certificated domestic air carriers at                           • Tax amount
                                                                                                    • Penalty amount, if any
                                                                                                    • Interest amount, if any
                                 n All Fuel Tax and Fee Programs                                    • Tax period ending date
                                                                                                    • BOE Account number
                                 Know Your Rights
    Fuel Taxes Division                                                                             • Daytime phone number
        916-322-9669             7. As a Taxpayer, You Have Many Rights                             • Zip code for the address where your credit
 Board of Equalization, MiC:30   Under the Law                                                        card bills are mailed
       P.O. Box 942879
 Sacramento, CA 94279-0030       They include the right to:                                       At the end of your transaction, you will be given a
Board website and Member           • Receive information and assistance to help                   confirmation number that you should retain.
   contact information:               you comply with the law                                     After making your payment, check the box on              • Be treated fairly and courteously and receive                your return indicating you have paid with your
   Tax Evasion Hotline                prompt service                                              credit card.
        888-334-3300                • Appeal a decision or claim a refund as                      To learn more about the credit card payment
        Legislation                   allowed by law                                              program, visit the Board’s website at         Of course, along with those rights, you have cer-       or contact our Information Center
     Taxpayers’ Rights           tain responsibilities, including the responsibility              at 800-400-7115.
        Advocate                 to:
      888-324-2798        • Keep informed about tax laws and
                                   • Report and pay taxes and fees when due
                                   • Maintain adequate records
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