Michigan – Prepayment Required for Diesel Fuel

SALT Report 2016 – The Michigan State Legislature passed a bill that extends the gasoline sales tax prepayment requirement to purchasers of diesel fuel. The terms of the bill require that at the time of purchase or shipment from a refiner, pipeline terminal operator, or marine terminal operator, the purchaser must prepay a portion of the tax to the operator. However, if the purchase or receipt of diesel fuel is made outside Michigan for shipment to and sale in Michigan, the purchaser or receiver must make the prepayment directly to the Department.

Purchasers of diesel fuel may claim an estimated prepayment credit on their monthly return. The credit can be taken for prepayments made during the month for which the return is due and will be based on the difference between the prepayments made in the preceding month and the amount of prepaid tax received during the month the return is made.

For example, estimated credits claimed on the January 2013 return will be based on the taxpayer’s retail sales in December 2012.  Repayment of the credit claimed on the January 2013 return must be made by the date the taxpayer stops selling diesel fuel or July 15, 2013, whichever occurs earlier.

Additionally, the rate of prepayment will now be determined by the Department on a monthly basis. Previously, the rate was determined every three months.

The provisions set forth in HB 5817 took effect January 1, 2013.

For Further Information:

Michigan State Legislature – HB 5817, Act 509 Laws 2012