Ezel / Tax Rulings / CA

How much recycled drain oil did a blended industrial fuel need to contain for the entire blend to qualify under section 6358.1?

Short answer At least 90 percent. California concluded that a blend containing 90 percent or more recycled drain oil was significantly a waste by-product, so sales for the described alternative industrial-fuel use qualified for exemption.
State
CA
Ruling
Annotation 596.0125
Tax type
Sales and Use Tax
Issued
1997-08-06
Issued by
California State Board of Equalization
Requested by
The president of a redacted consulting firm developing blended fuel
Topics
blended fuel industrial facilities waste byproducts
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1997. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1997
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an August 6, 1997 California State Board of Equalization assistant-chief-counsel letter published by CDTFA as support for a sales and use tax annotation. It addresses a consulting firm's project blending recycled drain oil with virgin fuel oil for use as an alternative fuel at industrial facilities. The 90-percent conclusion applies section 6358.1 to those stated facts. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A consulting firm planned to blend recycled drain oil with virgin fuel oil and sell the blend as an alternative fuel for industrial facilities.

The firm knew recycled drain oil used for that purpose qualified under section 6358.1 and asked how much recycled content was needed for the entire blended product.

California set the line at 90 percent. A blend containing at least 90 percent recycled drain oil was significantly a waste by-product and qualified for exemption.

What this means for you

Recycled-fuel producers, industrial facilities, and tax advisers

Document the blend ratio for each product and connect the sale to the described industrial-fuel use. A lower recycled-oil percentage was not approved by this letter.

Common questions

Q: What recycled-content threshold applied?

A: 90 percent or more recycled drain oil.

Q: Could the remaining portion be virgin fuel oil?

A: Yes, on the described blend.

Q: Did the letter approve blends below 90 percent?

A: No.

Citations and references

  • California Revenue and Taxation Code § 6358.1

Source

Original ruling text

596.0125
STATE OF CALIFORNIA
JOHAN KLEHS
First District, Hayward

STATE BOARD OF EQUALIZATION

450 N STREET - SACRAMENTO, CALIFORNIA
(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082) TELEPHONE: (916) 445-3723 FAX: (916) 323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
KATHLEEN CONNELL
Controller, Sacramento
_______

August 6, 1997

JOHN CHIANG
Acting Member
Fourth District, Los Angeles
_______

Mr. REDACTED TEXT, President
REDACTED TEXT, Inc.

E. L. SORENSEN, JR.
Executive Director

Dear Mr. REDACTED TEXT:
This is in reply to one of two letters you sent us dated July 25, 1997. We understand that REDACTED TEXT, Inc., is a consulting firm engaged in a project to blend recycled drain oil and virgin fuel oil. This blended oil would then be used as an alternative fuel source by industrial facilities. You are aware that sales of recycled drain oil to be used for the described purpose qualifies for exemption from sales tax pursuant to Revenue and Taxation Code section 6358.1. You inquire as to application of this exemption to sales of blended products, and ask “at what ratio does the blend have to be for the entire blend to be exempt?” It is our opinion that sales of the blended product will qualify for exemption if the product contains 90 percent or more recycled drain oil. A product containing 90 percent or more recycled drain oil is significantly a waste by-product. Very truly yours,

Gary J. Jugum
Assistant Chief Counsel
GJJ:sr
Enc.
bc:

Mr. David H. Levine
Mr. Ronald L. Dick
Ms. Candice McCanne

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