Did GPS proof that a truck burned fuel inside an off-highway geofence automatically qualify that fuel for an Illinois Motor Fuel Tax refund?

Plain-English summary

A trucking fleet wanted to use GPS geofences to measure time, miles, and fuel burned while waiting, loading, unloading, or traveling on dirt roads at customer locations. It requested a blanket ruling that all fuel burned inside a geofence was nontaxable.

IDOR refused blanket approval. A claim had to show with verifiable proof that fuel was used for a nontaxable purpose and that the refundable portion could be practically calculated and itemized. The necessary documentation included fuel purchases and the specific purpose of use.

Eligibility differed for gasoline and diesel. Refunds for undyed diesel were limited to circumstances listed in the law and rule. One example covered the nonhighway portion of fuel used by a commercial motor vehicle operated for both highway and nonhighway purposes.

The historical rule required claims to be filed within two years after the claimant paid the tax.

Common questions

Was being inside a geofence enough? No.

Could GPS data support a claim? Potentially, but the claim still needed verifiable proof and an itemized fuel calculation.

Were undyed diesel claims broadly allowed? No. They were limited to specified circumstances.

Citations and references

• 35 ILCS 505/13
• 86 Ill. Adm. Code 500.100 and 500.235(i)-(j)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2011.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2011/st-11-0112.pdf

Original ruling text

ST 11-0112-GIL 12/29/2011 MOTOR FUEL TAX
This letter discusses the requirements of refund claims for taxes paid on fuel which was used
for nontaxable purposes. (This is a GIL.)

December 29, 2011

Dear Xxxxx:
This letter is in response to your letter received by the Department on November 21, 2011, in
which you request information. The Department issues two types of letter rulings. Private Letter
Rulings (“PLRs”) are issued by the Department in response to specific taxpayer inquiries concerning
the application of a tax statute or rule to a particular fact situation. A PLR is binding on the
Department, but only as to the taxpayer who is the subject of the request for ruling and only to the
extent the facts recited in the PLR are correct and complete. Persons seeking PLRs must comply with
the procedures for PLRs found in the Department’s regulations at 2 Ill. Adm. Code 1200.110. The
purpose of a General Information Letter (“GIL”) is to direct taxpayers to Department regulations or
other sources of information regarding the topic about which they have inquired. A GIL is not a
statement of Department policy and is not binding on the Department. See 2 Ill. Adm. Code 1200.120.
You may access our website at www.tax.illinois.gov to review regulations, letter rulings and other
types of information relevant to your inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
COMPANY is in the process of testing GPS vendors for its fleet of power units. The
operational improvements that can be achieved with these technologies are vast.
COMPANY plans to fit the entire fleet with the vendor of choice within the next two years.
In order to approximate the return on investment of each vendor, COMPANY needs to
find out if fuel burned off highway is subject to motor fuel tax. With one vendor in
particular, COMPANY will have the capability of tracking the units as they arrive at an off
road location. Whether it be waiting to load or unload the truck, or traveling down an
unpaved dirt road to reach final destinations, the GPS can track time spent, miles traveled
and fuel burned within a particular geofence. (See the attachment)
Geofences can encompass each and every COMPANY customer location. The units do
travel by highway to get from one customer location to the next, but the fuel consumed
within the geofence is not used on highway. I am requesting a private letter ruling that
states fuel burned within a geofence is not and should not be subject to motor fuel tax in
the state of Illinois.
COMPANY is mindful of the increasing fuel prices and will comply with the rebate
application process associated with off road fuel.
Thank you for your attention to this matter.

DEPARTMENT’S RESPONSE:
We are unable to issue the ruling which you request. Claims for refund are governed by
Section 13 of the Motor Fuel Tax Law (Law) and Section 500.235 of the Department’s regulations.
We cannot issue blanket approval for refunds of all fuel used inside a geofence. The Department will
not approve claims unless they are sufficiently documented by verifiable proof. Section 500.235
details the information required to support a claim. Your letter does not indicate whether the fuel for
which the claim will be made is diesel fuel or gasoline. Eligibility for claims for each type of fuel are
slightly different. I hope that the following information is helpful.
Section 13 of the Motor Fuel Tax Law (“Law”), 35 ILCS 505/13, provides that any person other
than a distributor or supplier who uses motor fuel (upon which he has paid the amount required under
Section 2 of the Law) for any purpose other than operating a motor vehicle upon the public highways
or water shall be reimbursed and repaid the amount so paid. Claims for reimbursement must be
made to the Department on forms provided by the Department, and must include documentation
related to the purchase of the fuel, along with additional information deemed necessary by the
Department regarding the specific purpose for which it was used. The specific information required
of claimants is found at Section 500.235 of the Department’s regulations. As Section 500.235 notes,
the Department will approve claims only when they are based upon a showing that motor fuel was
used for a nontaxable purpose and that the part for which refund is claimed can, as a practical matter,
be calculated and itemized. Only claims that are supported by proof of the amount of motor fuel not
used for a taxable purpose will be approved. See Section 500.235 (i).
Claims for refunds of tax paid on the purchase of undyed diesel fuel are authorized in only
limited circumstances. These situations are enumerated in Section 13 of the Law and are more fully
detailed in Section 500.235 (j). These provisions, for instance, allow claims for undyed diesel fuel
used by a commercial motor vehicle, as defined in Section 500.100, for any purpose other than
operating the commercial motor vehicle on the public highways. These claims are authorized only for
commercial motor vehicles that are operated for both highway purposes and any purposes other than
operating such vehicles upon the public highways and are limited to the nonhighway portion of the
fuel used.
Please note that a statute of limitations applies to claims filed with the Department. Section 13
of the Law provides that claims for full reimbursement for taxes paid on or after January 1, 2000 must
be filed not later than 2 years after the date on which the tax was paid by the claimant.
The claim used to file for refunds of motor fuel tax can be found on the Department’s website
at http://tax.illinois.gov/TaxForms/Misc/Mft/RMFT-11-A.pdf.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Jerilynn Troxell Gorden
Deputy General Counsel – Sales and Excise Taxes
cc: R. Marr