Did section 6353 exempt CNG delivered through a natural-gas company's distribution system to a fueling station and public dispenser?

Plain-English summary

A natural-gas company's tax manager asked the Board to confirm that compressed natural gas remained exempt when the company delivered it through its distribution system to a fueling station for resale to consumers as motor-vehicle fuel. The company supplied a flow diagram covering the route from the gas line to the public dispenser.

The Board confirmed that section 6353 applied under those circumstances and that the exemption was available to the company. The letter also records that a principal tax auditor had given the same advice to two other companies earlier in 1991.

For the addressee, the letter expressly states that it was written advice of the type contemplated by section 6596. That reliance statement is specific to the advice and circumstances described; it is not a general assurance for every CNG fueling arrangement.

Citations and references

• California Revenue and Taxation Code section 6353 (as cited)
• California Revenue and Taxation Code section 6596 (as cited)
• Redacted natural-gas company's April 29, 1991 letter seeking confirmation of its CNG exemption analysis — letter referenced and position characterized but not reproduced in the official PDF
• Natural Gas Vehicle Compressor Station Flow Diagram showing the sequence from gas line to public dispenser — diagram referenced but not reproduced in the official PDF
• Principal Tax Auditor Glenn A. Bystrom's January 11 and March 18, 1991 advice to two redacted companies concerning the same exemption — advice referenced without letters, complete circumstances, analyses, or supporting records in the official PDF
• Redacted company's CNG distribution system, fueling station, public dispenser, consumer motor-fuel sales, compression, storage, metering, title, contract, billing, and delivery evidence — route summarized; complete engineering, ownership, operating, transaction, and tax records not reproduced in the official PDF
• Official Annotation 275.0133's distribution-system-to-public-dispenser summary — annotation supplies no additional request, flow diagram, prior advice, facility, transaction, implementation, or section 6596 record
• Possible facility operation, sale, use-fuel-tax reporting, audit, assessment, refund claim, section 6596 reliance event, appeal, operational change, or other agency action — no follow-up or final outcome supplied in the official PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/275-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/275-0133.pdf

Original ruling text

275.0133

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
(916) 445-3723

May 9, 1991

Mr. T--- C. L--Manager
Tax Department
P--- Company
XX --- ----- ---, CA XXXXX
SN -- XX-XXXXXX
Dear Mr. L---:
This is in response to your letter of April 29, 1991.
You have sought our confirmation of your analysis that the sale of Compressed Natural Gas (CNG) delivered through a P--- Company distribution system to a fueling station for sale to consumers as motor vehicle fuel remains exempt under section 6353 of the Sales and Use Tax Law. You have furnished us with a Natural Gas Vehicle (NGV) Compressor Station Flow Diagram illustrating the distribution sequence from gas line to public dispenser. You note that on January 11, 1991, Principal Tax Auditor Glenn A. Bystrom confirmed to
[S-1] Company that the exemption is available under the circumstances described. On March 18, 1991, Mr. Bystrom extended the same advice to [S-2] Company. It is our opinion that the exemption in question applies under the circumstances described. The exemption would be available to P--- Company. This letter constitutes written advice of the type contemplated by section 6596 of the Sales and Use Tax Law. Very truly yours,

Gary J. Jugum
Assistant Chief Counsel
GJJ:sr
cc:

Mr. Glenn A. Bystrom