Increase in Minnesota Motor Fuel (Gas) & Biofuel Tax Rates

Cars burning fuel
This post has been adopted from a Minnesota Department of Revenue Fact Sheet.

INCREASE IN MOTOR FUEL TAX RATES

Laws passed during the 2008 Legislative Session increases the Motor Fuel Tax rate from 20 cents per gallon to 22 cents, effective April 1, 2008. This new rate applies to all gasoline, undyed diesel fuel and special fuel. The rate on E85 increases from $0.142 per gallon to $0.1562 per gallon. The two-cent increase (and the $0.0142 cent increase on E85) will be assessed against petroleum products held by the distributor in bulk storage, tank wagons or in compartments of delivery trucks on April 1, 2008.

Following are the new rate increases that apply to alternative fuels: LPG from $0.15 to $0.165, LNG from $0.12 to $0.132, and CNG from $0.001739 to $0.001913 (per cubic foot).

Effective October 1, 2008, the Motor Fuel Tax rate will increase from 22 cents to 25 cents per gallon. This new rate applies to all gasoline, undyed diesel fuel and special fuel. The rate on E85 will increase from $0.1562 per gallon to $0.1775 per gallon. The three- cent increase (and the $0.0213 cent increase on E85) will be assessed against petroleum products held by the distributor in bulk storage, tank wagons or in compartments of delivery trucks on October 1, 2008.

Effective October 1, 2008, the following rates will apply to the following alternative fuels: LPG $0.1875, LNG $0.15, and CNG $0.002174 (per cubic foot).

SURCHARGE ON MOTOR FUELS

The Transportation Finance Bill, Section 296A.083, imposes a surcharge on all motor fuels. Effective August 1, 2008, a surcharge of one-half cent (.005) will be assessed on all motor fuels in Minnesota. There will also be a proportional surcharge assessed on alternative fuels. This surcharge will be updated annually effective on the first day of July.

DISTRIBUTOR STORAGE TAX RETURN

You will receive a “Distributor Storage Tax Return” by U.S. Mail and a printable version will be available on our web site:

www.revenue.state.mn.us/businesses/petroleum/

All distributors are required to file this return.

The return for inventory balances as of April 1, 2008 will be due on or before May 23, 2008.

The return for inventory balances as of October 1, 2008 will be due on or before November 24, 2008.

Payments must be submitted electronically by selecting “Make a payment only” for petroleum tax. You are required to maintain inventory records for a minimum of 3 ½ years and make them available for audit upon our request.

SOFTWARE OR PROGRAM CHANGES

It is your responsibility to contact your software vendor to request any program changes necessary to accommodate the new legislative changes.

QUESTIONS

More information will be distributed via U.S. Mail and posted on our website: www.revenue.state.mn.us

If you have any questions or concerns, please contact
Brin Rauscher at 651-556-6350.

BIOFUEL

Effective July 1, 2007, biodiesel fuel defined as a petroleum product

Effective July 1, 2007, the 2007 Legislature amended the Minnesota Statutes to define biodiesel fuel as a petroleum product. As a result, the following changes in procedures have been made.

All B100 or B99 will be considered undyed diesel fuel and taxed as such. Anyone purchasing B100 or B99 will have a tax liability to their supplier, to the biodiesel producer or on their Minnesota tax return. If the B100 or B99 is blended with dyed diesel fuel or used for off-road purposes, you may apply for a refund using Form PDR-1.

If you are purchasing B100 or B99 from a subjobber or nonlicensed petroleum company Regardless of your tax status, all taxes are due to the supplier. If you blend B100 or B99 with dyed diesel fuel or use B100 or B99 for off-road purposes, you may apply for a refund on Form PDR-1. Please check the “other” box and write in “soy.” You must attach the original invoices showing tax paid to your supplier and include details of how B100 or B99 was blended or used.

If you are purchasing B100 or B99 from a biodiesel producer Nonlicensed companies. All taxes and fees are due to the producer. If you blend B100 or B99 with dyed diesel fuel or use B100 or B99 for off-road purposes, you may apply for a refund on Form PDR-1. Please check the “other” box and write in “soy.” You must attach original invoices showing tax paid to the biodiesel producer and include details of Licensed distributors. No tax would be due to the producer. All B100 or B99 should be included on your gas tax return and special fuel return. Please use schedule code 2A or 2C depending on origin and use product code 284 for undyed biodiesel. This will calculate inspection fee, excise tax and cleanup when applicable. If you blend B100 or B99 with dyed diesel fuel or use B100 or B99 for off-road purposes, you may apply for a refund on Form PDR-1. Please check the “other” box and write in “soy.” Do not send any documentation when applying for a refund; your assigned auditor will verify this refund during your regular audit.

Special fuel dealers. All taxes and fees will be due to the producer. If you blend B100 or B99 with dyed diesel fuel or use B100 or B99 for off-road purposes, you may apply for a refund on Form PDR-1. Please check the “other” box and write in “soy.” You must attach original invoices showing tax paid to the biodiesel producer and list the equip- ment the product was used in.

Biodiesel producers

You must become licensed with the department’s Petroleum Tax Unit.

If you sell B100 or B99 to a:

  • refinery or terminal, no taxes or fees will be due to Minnesota.
  • licensed distributor, no taxes or fees will be due to Minnesota.
  • special fuel dealer or a nonlicensed customer, all taxes and fees would be due to Minnesota on your gas tax return and special fuel return.

Questions?

If you have any questions or need additional information, please call Brin Rauscher at 651-556-6350.