15 AAC 40.300. Fuel subject to tax; incidence of tax

(a) The motor fuel tax is imposed under AS 43.40 at the earlier of

(1) the sale or transfer of motor fuel in the state; or

(2) the use of motor fuel in the state.

(b) A sale or transfer of fuel is a taxable event, unless

(1) to a person who uses fuel that is exempt under 15 AAC 40.310;

(2) the fuel being sold or transferred is excluded from being "motor fuel" under AS 43.40.100 (2); or

(3) between qualified dealers.

(c) If a sale or transfer of fuel was exempt from tax under (b) of this section, but the fuel is later sold, transferred, or used in a manner that does not meet the requirements for the exemption from tax under (b) of this section, the applicable tax is imposed at the time of the first taxable sale, transfer, or use. The person who sells, transfers, or uses the fuel that is taxable under AS 43.40 shall file a tax return under 15 AAC 40.400 and pay the applicable tax to the department. If a subsequent sale or transfer is subject to a higher tax rate under AS 43.40 than the tax rate imposed on the first sale, the higher rate applies.

(d) A sale or transfer of fuel to a person eligible for a refund for non-highway use under AS 43.40.030 (a) is taxed at the rate under AS 43.40.010 (a). The person who uses the fuel may file a claim with the department for any available refund.

(e) The following examples illustrate the application of this section:

EXAMPLE 1

Cannery A is not licensed as a qualified dealer. Cannery A purchases diesel at a tax rate of five cents per gallon. Cannery A sells its excess diesel to Dealer X who picks up the diesel and sells it to a person who uses it for heating. Cannery A must collect tax at the general tax rate of eight cents per gallon on all sales of diesel to Dealer X because Dealer X is not a person exempt under AS 43.40. Cannery A must file a tax return to report the sale of diesel to Dealer X and pay the applicable tax to the department. Dealer X may file a claim for refund for any sales exempt under AS 43.40, including sales to customers who use the diesel for heating purposes.

EXAMPLE 2

Taxpayer A purchases diesel without paying the tax, with the intention of using the diesel for heating purposes. Taxpayer A later uses the diesel for a purpose that is not exempt, such as use in a licensed motor vehicle. Taxpayer A must file a tax return to report the taxable use of the diesel and pay the applicable tax.

EXAMPLE 3

Municipality A purchases diesel without paying tax, in accordance with 15 AAC 40.320(c) , intending to use a portion of the diesel, and to sell the remainder to residents of the community for heating purposes. Municipality A later sells some of the diesel to a contractor for use in non-highway equipment. Municipality A must collect tax of eight cents per gallon on the diesel sold to the contractor and file a tax return to report those sales. The contractor may file a claim for a partial refund on the diesel used in non-highway equipment under AS 43.40.030 (a).

History: Eff. 4/1/2001, Register 157

Authority: AS 43.05.080

AS 43.40.010

AS 43.40.100

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