Bulletin Number
VTB 88-4
Tax Type
Motor Vehicle Fuel Sales Tax
Description
Exclusion of the Federal Diesel Fuel Excise Tax from the Sales Tax Base
Topic
Basis of Tax
Date Issued
04-26-1988
Virginia Tax Bulletin
Virginia Department of Taxation
Virginia Department of Taxation
88-4
SUBJECT: Exclusion of the Federal Diesel Fuel Excise Tax from the Sales Tax Base
Effective May 1, 1988, emergency legislation was enacted by the General Assembly on April 20, 1988 to exclude the federal diesel fuel excise tax from the base for computing the Virginia sales and use tax, when separately stated on sales invoices or records. The department previously notified dealers by Virginia Tax Bulletin 88-3, dated April 1, 1988, that the federal diesel fuel excise tax would be excluded from the sales and use tax base on all sales made from April 1 through April 30, 1988. Thus, on and after April 1, 1988, the federal diesel fuel excise tax is not included in the base for computing the sales and use tax.
IMPACT ON RETAIL SALES AND USE TAX
Exclusion from Tax
Separately stated federal diesel fuel excise taxes may be excluded from the base for computing the sales and use tax on transactions occurring on and after April 1, 1988. The following example illustrates how the exclusion from tax should be calculated:
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- Example: A customer purchases diesel fuel for off-highway use at $1.101 per gallon, which includes 95¢ for the fuel itself and 15.1¢ per gallon in federal diesel fuel excise tax, which is separately stated on the invoice from the dealer. The sales or use tax will be computed as follows:
- Example: A customer purchases diesel fuel for off-highway use at $1.101 per gallon, which includes 95¢ for the fuel itself and 15.1¢ per gallon in federal diesel fuel excise tax, which is separately stated on the invoice from the dealer. The sales or use tax will be computed as follows:
Less federal diesel fuel excise tax per gallon - .151
Equals tax base $ .95
Multiplied by 4½% state and local sales tax rate x .045
Equals sales tax per gallon $ .04
Separate Statement of Federal Diesel Fuel Excise Tax
- The federal diesel fuel excise tax will be deemed to be separately stated if the dealer lists on the invoice the amount of federal diesel fuel excise tax paid on the transaction. The following example illustrates this requirement:
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- Example: A customer purchases 1000 gallons of diesel fuel for off-highway use at a price that includes the 15.1¢ federal diesel fuel excise tax. The dealer computes the amount of federal diesel fuel excise tax paid on the purchase as follows:
Number of gallons of diesel fuel sold 1000
Multiplied by the federal diesel fuel excise
tax rate per gallon x .151
Equals federal diesel fuel excise tax paid $151.00
The dealer should deduct the $151 in federal diesel fuel excise tax from the total price of the fuel (price of fuel + federal diesel fuel excise tax) when computing the sales tax. This amount must be separately listed on the invoice or other record of the sale.
- Persons who accrue and pay the use tax on their purchases of diesel fuel for off-highway use may deduct the federal diesel fuel excise tax from the cost price of the fuel in the same manner set forth in the example above.
Federal Gasoline Excise Tax
- This change does not have any impact upon the federal gasoline excise tax, which will continue to be included in the sales and use tax base. However, as set forth in Virginia Tax Bulletin 88-3, consumers will be permitted to request refunds from the department with respect to that portion of the sales and use tax attributable to the federal gasoline excise tax.
IMPACT ON MOTOR VEHICLE FUEL SALES TAX
- On and after April 1, 1988, separately stated federal diesel fuel excise taxes may also be excluded from the base for computing the 2% motor vehicle fuel sales tax imposed in the Northern Virginia and Potomac and Rappahannock Transportation Districts.
OVERCOLLECTION OF TAX (Retail Sales Tax and Motor Vehicle Sales Tax)
- All tax collected from customers must be remitted to the department. A dealer who fails to exclude the federal diesel fuel excise tax when collecting any sales tax from customers may not deduct the federal diesel fuel excise tax from his taxable sales when remitting his sales tax receipts to the department.
QUESTIONS
If you have any questions, please call the Department of Taxation at (804) 367-8037 or write: Department of Taxation, Taxpayer Assistance Section, P.O. Box 6-L, Richmond, Virginia 23282. The department's district offices, located in Bristol, Danville, Falls Church, Hampton, Harrisonburg, Norfolk, Richmond, and Roanoke are also available to answer your questions.
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