New York – Changes Regarding the Exemption for Interdistributor Sales of Highway Diesel Motor Fuel

SALT Report 2713 – The New York Department of Taxation and Finance issued a tax advisory regarding recent amendments to the excise tax, petroleum business tax, and prepaid sales tax requirements for distributors of diesel motor fuel and terminal operators who store diesel motor fuel.

The advisory states that all sales of previously untaxed highway diesel motor fuel by a registered distributor of diesel motor fuel to another registered distributor of diesel motor fuel are exempt from excise tax, petroleum business tax, and prepaid sales tax. Qualified fuel sales must be delivered via pipeline, railcar, barge, tanker or other similar type of vessel to the terminal of a licensed or registered operator, or sold in the diesel fuel terminal where it was delivered.

Additionally, any person who has the use or control of a diesel motor fuel storage facility with a storage capacity of 50,000 gallons or more is required to be licensed and registered as a terminal operator by August 1, 2013.  The 50,000 gallon threshold does not apply to a facility where fuel is stored solely for retail sale at that particular facility, or if the fuel is for the person’s own use or consumption.

Terminal operators are required to keep records of their inventory and file the following returns to report the amount of diesel motor fuel and motor fuel stored at the facility:

  • Form FT-941 – Terminal Operator’s Monthly Report of Diesel Motor Fuel and Motor Fuel Inventory, and
  • Form FT-941.1 – Terminal Operator’s Individual Account Reconciliation

Finally, the Department states that Form FT-1001, Exemption Certificate for Diesel Motor Fuel Interdistributor Transactions, is currently under revision so that registered distributors of diesel motor fuel will be able to claim the interdistributor exemption for highway diesel motor fuel.

These provisions are effective August 1, 2013.

For Further Information

New York Department of Taxation and Finance – TSB-M-13(7)M, TSB-M-13(5)S