Could an unlicensed carrier recover tax on fuel later used by refrigerated trailer units?

Subject

Refunds to Unlicensed Dual Users

Plain-English summary

The unlicensed carrier could not obtain a refund or credit for tax-paid fuel used by its refrigerated trailer units. It also could not register retroactively as a special-fuel dealer or carry the disputed amount forward against future assessments or deficiencies.

The carrier bought all fuel tax-paid in Florida and placed it in bulk storage before using some in separate reefer tanks. The Department explained that the statutory limited exemption depended on licensing and qualifying delivery and use conditions; an unlicensed purchaser receiving fuel into bulk storage did not satisfy them.

What this means for you

The ruling treated the special-fuel dealer license as a substantive condition, not a minor filing defect that could be corrected retroactively. It also distinguished bulk-storage purchases from qualifying transfers into a motor vehicle's supply tank.

Common questions

Could the carrier be treated as a de facto licensed dealer? No.

Could it obtain a dealer license retroactively? No.

Could a new license support credits for the earlier period? No. The Department said no refund or credit was available for the precompliance period.

Citations and references

• Fla. Stat. §§ 206.87(3)(g), (4), 206.425(4)(b), 213.21, and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94B-001

Original ruling text

TAA 94B5001
[[September 8, 1994]]

Re:Technical Assistance Advisement 94(B)-001
Motor Fuels Tax; <>
Chapter 206, F.S.
XXXX (hereinafter referred to as Company)
Dear :
Your letter requesting a Technical Assistance Advisement on refund or credit provisions allowed to licensed special
fuel dealers has been received in this office for a response.
Statement of Facts
1.Company has never been licensed as a dealer of special fuel. Company has Interstate Commerce Authority and
files Fuel Use Tax returns with the Department of Highway Safety and Motor Vehicles.
2.All fuel purchased by Company is purchased tax-paid in Florida and placed in Company's underground fuel storage
tank.
3.All reefer fuel used by Company is pumped into a separate tank on each refrigerated trailer. Company maintains
records which indicate the number of gallons of fuel used by the reefer units.
4.Company became incorporated as a separate corporation in May 1992 and owned wholly by the same parent
corporation. Prior to 1992, Company was operating as a division of the parent corporation without its separate legal
identity.
5.The vehicles owned by Company are engaged in interstate commerce.
6.Company is not currently under audit.
Taxpayer's Statement
The following statements are taken verbatim from your letter of June 13, 1994.
"If we had registered as a dealer, we would unquestionably be entitled to claim a refund for the reefer fuel. This is a
technical requirement which would have cost us $5/year. Since all taxes were paid by us at the time of purchase, the
State has not lost any money or suffered any harm as a result of our failure to register as a dealer. While the State
should not suffer harm as a consequence of tax payer oversight, neither should the State unduly prosper as a result of
the same oversight.
"Further, the issue at hand addresses the very issue of fairness, i.e. equity between the parties. This issue was raised
by the Florida Supreme Court in McKesso[n] Corp v. Division of Alcoholic Beverages & Tobacco, Dept. of Business
Regulations et al, No. 70.368 Feb. 18, 1988, 524 So 2nd 1000, when it considered "equitable considerations" in ruling

against the plaintiff. While the ruling of the Florida Supreme Court was overturned by the United States Supreme
Court, the U.S. Supreme Court did not overturn the principle that equitable considerations was a valid matter to be
considered in any ruling regarding taxes.
"Section 206.425(4)(b) states: If a person or licensee can establish to the satisfaction of the department that the tax
assessed has been remitted to the state or that no tax was due because the special or alternative fuel was sold for a
use other than for use in a motor vehicle, that person or licensee may seek relief from the department pursuant to s.
213.21. It appears to us that the legislative intent of this paragraph of the statute is that the substance of the
transaction, not the form, determines the taxability of the transaction. The substance here is that we have functioned
as a dealer for the past five years; and therefore, we should be allowed to claim any refund due us as a dealer."
Discussion of Law
Section 206.87(4), F.S., establishes that:
"(4) All special fuel sold, transferred, or delivered by a licensed dealer of special fuel to any person who does not hold
a valid dealer's license is taxable, except as provided by subsection (3)."
Subsection (3) of the referenced statute above allows an exemption in paragraph (g) which states in pertinent part:
"(3) The following sales are not subject to the tax herein imposed:
(a) Sales by a dealer when the special fuel is delivered by him into the purchaser's storage facilities, which are located
at the purchaser's premises, place of business, or job site, and when the special fuel is to be used for...
"... g) Transfers or deliveries of special fuel into the fuel supply tank of a motor vehicle regularly engaged in interstate
travel when such fuel is used on the highways of another state, provided:
"1. The transfer or delivery occurs within this state and is executed by a duly licensed dealer who is regularly engaged
in interstate travel;
"2. A tax similar to taxes paid pursuant to this part and chapter 212 is paid in another state; and
"3. The tax is paid to this state on all special fuel brought into the state and used in this state."
Florida law mandates through s. 206.87(4), F.S., that licensed special fuel dealers in this state must collect full tax on
special fuel sold to an unlicensed dealer except when the fuel is exempt from tax by statute. The sale of special fuel
to an unlicensed dealer which is placed in bulk storage by the selling dealer is not exempt from tax. If, however, a
licensed special fuel dealer sells fuel to another licensed dealer, the sale is specifically exempt from tax.
A limited exemption is provided through (3)(g) above on special fuel which is transferred into the supply tank of a
motor vehicle engaged in interstate travel only when such transfer is executed by a licensed dealer who is likewise
engaged in interstate travel. The intent is to allow persons operating as commercial carriers to prorate and pay tax
based on the number of gallons of fuel actually used in the state of Florida but only when such carriers are also
licensed as a special fuel dealers.
Collectively, the sections cited provide that a licensed motor carrier is allowed a limited exemption on gallons of fuel

used by the carrier for purposes other than to propel the carrier's vehicles over the roads of this state. The exemption
is allowed only if the carrier is also licensed as a special fuel dealer.
Department's Determination
The determinations rendered on your specific issues will be provided in the order of the questions which were
enumerated in your letter dated June 13, 1994.
"1.Regardless of our failure to follow the correct procedures, can we apply for a refund or a credit for reefer fuel as a
de facto dealer?"
Answer:
The answer to this question is negative. If Company was in compliance with licensing requirements imposed under
the fuel tax law, a refund or credit would not be available. The correct amount of tax would have been paid to the
state by Company based on the use of the special fuel purchased.
"2.If we cannot apply for a refund or credit under 1 above, can we register retroactively as a dealer and then apply for
a refund or credit."
Answer:
This question is answered in the negative. Since Company will not be considered a de facto dealer during the period
in question, then Company, likewise, can not be licensed retroactively as a dealer for the same period.
"3.If we cannot file for a refund or credit, can we now register as a dealer, and use the tax credit from the reefer fuel
against future assessments or deficiencies?"

Answer:
This question is also answered in the negative. Without being licensed, a refund or credit is not available to a newly
licensed dealer for a period of time prior to compliance with licensing requirements imposed by law. If the fuel was
actually placed into the supply tanks of the reefer units by the selling dealer, the dealer would have collected the
appropriate tax. Since Company was not licensed and fuel was placed into bulk storage to be used by Company for
varying purposes, the selling dealer was required by law to collect full tax, and again, the law does not provide for a
refund or credit except through the process of informal conferences as outlined in s. 213.21, F.S., copy attached.
This response constitutes a Technical Assistance Advisement under s.213.22, F.S., which is binding on the
Department only under the facts and circumstances described in the request for this advice as specified in s.213.22,
F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that
subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this
advice is based may subject similar future transactions to a different treatment than expressed in this response.
You are further advised that this response and your request are public records under Chapter 119, F.S., which are
subject to disclosure to the public under the conditions of s.212.22, F.S. Private or Confidential Information, such as

the names, addresses, and taxpayer identifying numbers will be deleted from the public records.
Sincerely,

Lynwood Taylor
Tax Audit Specialist III
Division of Taxpayer Assistance
Technical Assistance Section B
LNT/kk
TAA 16369/94(B5-001)