Michigan – Diesel Fuel Pre-payment Requirement Takes Effect in April

SALT Report 2266 -The Michigan State Legislature recently enacted legislation that requires the purchaser or receiver of gasoline to prepay a portion of the sales tax has been extended to purchasers or receivers of diesel fuel effective April 1, 2013.

Specifically, House Bill 4153 requires 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 tax at the rate set by the Department of Treasury to the refiner, pipeline terminal operator, or marine terminal operator. If the purchase or receipt occurs outside Michigan but is for subsequent shipment to and sale within the state, the purchaser must make the prepayment of tax directly to the Department.

Purchasers of diesel fuel may claim an estimated pre-payment credit on their monthly return. The credit is for the pre-payments that are made during the month in which the return is required. The amount due will be based on the difference between the pre-payments made in the preceding month and the total amount of prepaid tax received during the month for which the return is made.

A taxpayer that does not, typically sell diesel fuel every month of the year may, upon approval by the Department, base the initial pre-payment deduction in each tax year on pre-payments made in a month other than the immediately preceding month.

Estimated credits claimed with the return due in April 2013 will be based on the taxpayer’s retail sales in March 2013. Repayment of the credit claimed on the April 2013 return must be made by the date the taxpayer stops selling diesel fuel or October 15, 2013, whichever occurs earlier.

Additionally, beginning April 1, 2013, the rates of pre-payment for both diesel fuel and gasoline will be determined by the Department on a monthly basis.

For Further Information

Michigan State Legislature – House Bill 4153, Laws 2013