Georgia – Motor Fuel Exemption for Public School Systems

SALT Report 2826 – The Georgia Department of Revenue issued a bulletin that discusses the exemption from the motor fuel excise tax and the prepaid state tax for public school systems.

The new exemption applies to the state Excise Tax of 7.5 cents per gallon and the 3% prepaid state tax on the sale of motor fuels to public school systems. Because public school systems are already exempt from the state sales tax and the prepaid local tax on motor fuels pursuant to O.C.G.A. §48-8-3(1) the result of the new exemption is that public school systems will be able to purchase motor fuel with a full Georgia state motor fuel tax exemption.

All public school systems in Georgia are qualified to receive the exemption so long as the motor fuel is purchased and paid for by the school system and the fuel is used exclusively by the school system to operate their school buses.

When purchasing motor fuel from a distributor, the public school system should provide a letter or statement on official letterhead indicating that they are exempt from motor fuel taxes. The school system should also continue to submit form ST-5 to the distributor if they wish to receive the exemption for state and local sales taxes.

If the school system is purchasing motor fuel that will only be used by the school to operate school busses, then the entire purchase will be exempt. However, if the school system is purchasing motor fuel that will also be used for non-exempt purposes then the school system must provide a good faith estimate to the distributor at the time of purchase indicating the amount of fuel that the public school system estimates will be used to operate the school buses and the amount that will be used for other taxable purposes.  This estimate can be used for all future purchases, unless the usage changes.

The motor fuel distributor should report all exempt sales on Line 10 on Form MFD-4 Motor Fuel Tax. For any gasoline sales, the distributor should report these on Line 8, which is typically used for US Government sales, or the distributor can make a return adjustment to reflect the exempt sales.

The exemption was effective July 1, 2013 and will expire on June 30, 2015.

For Further Information

Georgia Department of Revenue – Motor Fuel Bulletin

Georgia General Assembly – House Bill 211