Was federal gasoline excise tax passed through in the consumer price included in Louisiana corporation income- and franchise-tax sales ratios?

Plain-English summary

Federal gasoline excise tax included in the consumer sales price belonged in Louisiana's corporation income- and franchise-tax sales ratios.

The key distinction was who legally owed the tax. A tax collected from a customer on a government's behalf was not the taxpayer's sale. But the federal gasoline excise tax was imposed on the producer itself.

When the producer recovered that expense through the customer price—even by separately itemizing the amount—the recovery was sales revenue rather than tax collected for the government.

Common questions

Q: Was the federal excise amount included in the income-tax sales ratio?

A: Yes.

Q: Was it included in the franchise-tax sales ratio?

A: Yes.

Q: Did separate itemization change the result?

A: No. Passing through the producer's own expense remained revenue from the sale.

Q: Why was this different from sales tax collected from a customer?

A: The producer bore the federal gasoline excise tax's legal incidence rather than collecting it for the government from the purchaser.

Citations and references

• La. R.S. 47:287.95(F)(1)(c) — income-tax sales ratio
• La. R.S. 47:606(A) — franchise-tax sales ratio
• Gurley, DBA Gurley Oil Co. v. Rhoden, 421 U.S. 200 (1975)
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 03-005

Original ruling text

evenue RevenueRRRRevenue Information Bulletin No 01-xxxx

Revenue Ruling
No. 03- 005
August 22, 2003
Corporation Income and Franchise Tax
Inclusion of the Federal Excise Tax on Gasoline in the Sales Ratio
Purpose: This Revenue Ruling addresses whether or not the excise tax amount included in the
sales price of gasoline is also included in the income and franchise tax sales ratios.
Analysis/Discussion: For franchise tax, La. Rev. Stat. Ann. § 47:606(A)(West 2003), provides
in pertinent part that:
“For the purpose of ascertaining the tax imposed in this Chapter, every
corporation subject to the tax is deemed to have employed in this state the
proportion of its entire issued and outstanding capital stock, surplus, undivided
profits, and borrowed capital, computed on the basis of the ratio obtained by
taking the arithmetical average of the following ratios: (1) The ratio that the net
sales made to customers in the regular course of business and other revenue
attributable to Louisiana bears to the total net sales made to customers in the
regular course of business and other revenue.”
The income tax sales ratio provided by La. Rev. Stat. Ann. § 47:287.95(F)(1)(c)(West
2003), is “The ratio of net sales made in the regular course of business and other gross
apportionable income attributable to this state to the total net sales made in the regular course of
business and other gross apportionable income of the taxpayer.”
If a taxpayer is required to collect a tax, such as a sales tax, from its customer on behalf
of a government the amount so collected is not a sale by the taxpayer. In this case the taxpayer
would not include the tax collected in the ratio. On the other hand, if a tax is imposed upon the
taxpayer itself, such as an income tax, and the taxpayer chooses to itemize a portion of the tax on
its invoice to its customer, the itemized amount collected is revenue from a sale.
In Gurley, DBA Gurley Oil Co. v. Rhoden, Chairman, Tax Commission of Mississippi,
421 U.S. 200, 95 S.Ct. 1605, 44 L.Ed.2d 110 (1975), the Supreme Court stated “A majority of
courts that have considered the question have held … that the legal incidence of the federal
excise tax (on gasoline) is upon the statutory ‘producer’ … and not upon his purchaserconsumer.” The Court goes on to state “Our independent examination … persuades us also that
the legal incidence … falls upon the statutory ‘producer’ …”
The federal excise tax on gasoline is imposed on the product itself and is imposed only
once regardless of how many times the product changes hands. If a taxpayer pays the excise tax,
it could recoup the associated expenses by passing on the cost to the purchaser-consumer in the
form of an itemized amount. However, this pass on of the expense is not a collection of excise
tax on behalf of the government.

guidance to the public and to Department of Revenue employees. It is a written statement issued to apply principles
of law to a specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on
the public. It is a statement of the department's position and is binding on the department until superseded or
modified by a subsequent change in statute, regulation, declaratory ruling, or court decision.

Revenue Ruling No. 03-005
Page 2 of 2

Conclusion: In compliance with La. Rev. Stat. Ann. § 47:606(A)(West 2003) and La. Rev. Stat.
Ann. § 47:287.95(F)(1)(c)(West 2003), since the excise tax is included in the sales price of
gasoline sold to consumers in the regular course of business, it should properly be included in the
income and franchise tax sales ratios.
Cynthia Bridges
Secretary
By:

William (Mac) E. Little
Attorney
Policy Services Division