Can an interstate trucking company get a refund of New York diesel motor fuel tax on the fuel its trucks burn while idling to load and unload cargo or to drop and hook trailers on private or restricted property?

Plain-English summary

Yellow Freight System Inc., an interstate motor carrier, burns millions of gallons of diesel motor fuel a year, a large share of it in New York. A "considerable amount" of that New York fuel is consumed not while driving, but while the trucks idle — keeping the motors warm while cargo is loaded and unloaded on customers' premises or the company's own terminal grounds, and while dropping full trailers and hooking up empty ones between trips at its terminals. Yellow Freight argued that these places are private property or access-restricted (like airport grounds), so the idling fuel should count as refundable non-highway use under New York's diesel fuel tax.

The answer: no — this fuel is not refundable.

• New York's diesel motor fuel excise tax (Tax Law § 282-a, plus the additional taxes in § 282-b and § 282-c) is imposed on the first non-exempt sale or use of the fuel.
• A refund is allowed under § 289-c(3) only for fuel "consumed in any manner except in the operation of a motor vehicle upon or over the highways of this state."
• The phrase "operation of a motor vehicle" is not limited to actually driving it. In Matter of Central Greyhound Lines, Inc. v. Graves (274 App. Div. 679), fuel used to air-condition buses counted as used in their operation, while fuel used to warm the motors of buses stored out of service to keep them from freezing did not.
• Yellow Freight's idling is different from the stored-out-of-service buses: it keeps the trucks ready for imminent service and is operationally interconnected with their street and highway use. Under 1940 Op. Att'y Gen. 195, fuel used to warm up a vehicle in winter before its actual street use is an essential incident of that highway use.
• So the idling here is incidental to operating the trucks on the highways. The fuel is treated the same as fuel used for actual propulsion, is deemed used on the highways, and does not qualify for the § 289-c(3) reimbursement.

What this means for you

"Off-highway use" refunds for diesel fuel tax are narrower than they sound. The test is not simply where the truck is sitting (private lot, restricted airport property, your own terminal) — it is whether the fuel use is part of, or incidental to, operating the vehicle on the highways. Fuel burned to keep a truck warmed up and ready to roll is tied to its highway operation, so it stays taxed even if the engine never leaves a private yard.

Compare truly off-highway consumption. The refund provision is aimed at fuel consumed in a manner genuinely divorced from highway travel. New York courts and the Department have drawn the line at fuel that powers a vehicle's on-road mission (propulsion, and things incidental to being ready to drive) versus fuel used for a separate, non-transportation purpose. Idling to stay service-ready falls on the taxable, highway-use side.

Practical takeaway for fleets: Before assuming diesel burned in a private terminal or at a customer's dock is refundable, ask whether that consumption is an incident of getting the truck onto the road. If it is, a § 289-c(3) refund claim will likely be denied. Keep this distinction in mind when designing fuel-tax recovery programs across states, because New York treats "ready-to-run" idling as highway use.

Common questions

Q: We idle our trucks on private property, not public roads. Doesn't that make the fuel off-highway?
A: Not by itself. New York looks at whether the fuel use is incidental to operating the vehicle on the highways, not only at the physical location. Idling to keep a truck ready for imminent highway service is treated as highway use.

Q: What kind of diesel fuel use actually qualifies for a § 289-c(3) refund?
A: Fuel "consumed in any manner except in the operation of a motor vehicle upon or over the highways of this state." The reimbursement targets consumption genuinely separate from a vehicle's highway operation, not fuel that keeps a road vehicle ready to drive.

Q: Does "operation of a motor vehicle" mean only propulsion?
A: No. Under Central Greyhound Lines v. Graves, fuel used to air-condition buses was part of their operation; only fuel warming buses stored out of service was not. Warming a truck about to be driven is an essential incident of highway use.

Q: Which taxes were at issue?
A: The Article 12-A diesel motor fuel excise tax under Tax Law § 282-a, plus the additional per-gallon taxes imposed by § 282-b (three cents) and § 282-c (one cent). The refund the carrier sought was the § 289-c(3) reimbursement for non-highway use.

Citations and references

Statutes:

• Tax Law § 282-a — Article 12-A diesel motor fuel excise tax imposed on the first non-exempt sale or use
• Tax Law § 282-b and § 282-c — additional diesel motor fuel taxes (three cents and one cent per gallon)
• Tax Law § 289-c(3) — reimbursement of tax for fuel consumed in any manner except operating a motor vehicle on the highways of the state
• Tax Law § 289-c(4) — defines "highway" (a highway, street, avenue, road, alley, boulevard, parkway, or similar thoroughfare)

Authorities relied on:

• Matter of Central Greyhound Lines, Inc. v. Graves, 274 App. Div. 679 — "operation of a motor vehicle" is not limited to propulsion
• 1940 Op. Att'y Gen. 195 — fuel used to warm a vehicle before highway use is an essential incident of that highway use

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/gasoline_ao.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/misc/a03_1m.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-03(1)M
Miscellaneous Tax
May 8, 2003

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M020924A

On September 24, 2002, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Yellow Freight System Inc., 10990 Roe Ave., Overland Park, Kansas 66211.
Petitioner, Yellow Freight System Inc., provided additional information pertaining to the Petition
on October 29, 2002.
The issue raised by Petitioner is whether it is entitled to a refund of Diesel motor fuel taxes
paid on its purchases of Diesel motor fuel consumed in idling motor vehicles while:
1) loading and unloading cargo on its customers’ premises or its own terminal grounds; and
2) dropping and hooking trailers at its wholly owned terminals.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is an interstate motor carrier with headquarters in Overland Park, Kansas.
Petitioner consumes millions of gallons of Diesel motor fuel annually in its operations. Several
million gallons of fuel are consumed in the State of New York. A considerable amount of the fuel
consumed in New York is consumed while Petitioner is idling its vehicles in order to keep the
motors warm while loading and unloading cargo either on its customers’ premises or on its own
terminal grounds. Fuel is also consumed while idling at Petitioner’s terminal when dropping full
trailers and hooking up empty ones between trips.
Petitioner is seeking a refund of Diesel motor fuel taxes paid on its purchases of Diesel motor
fuel used for the above described purposes. Petitioner claims these areas are private property or
publicly owned property with restricted access (e.g., airport property). While access to such areas
can be made available to the public, it is only through the discretion of the business owner and solely
restricted to business activities. Therefore, Petitioner claims such use of the Diesel motor fuel
should qualify as refundable non-highway use.
Applicable Law and Regulations
Section 282-a of Article 12-A of the Tax Law provides, in part:

1. There is hereby levied and imposed with respect to Diesel motor fuel an
   excise tax of four cents per gallon upon the sale or use of Diesel motor fuel in this
   state.

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Miscellaneous Tax
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The excise tax is imposed on the first sale or use of Diesel motor fuel to occur
which is not exempt from tax under this article. Provided, however, if the tax has not
been imposed prior thereto, it shall be imposed on the delivery of Diesel motor fuel
to a filling station or into the fuel tank connecting with the engine of a motor vehicle
for use in the operation thereof whichever event shall be first to occur. The tax shall
be computed based upon the number of gallons of Diesel motor fuel sold or used or
the number of gallons of Diesel fuel delivered into the fuel tank of a motor vehicle,
as the case may be. . . .
*

*

*

Section 282-b of Article 12-A of the Tax Law provides, in part:
In addition to the tax imposed by section two hundred eighty-two-a of this
chapter, a like tax shall be imposed at the rate of three cents per gallon upon sale or
use within the state of Diesel motor fuel or upon the delivery of Diesel motor fuel
to a filling station or into the fuel tank of a motor vehicle for use in the operation
thereof. . . . (Emphasis added)
Section 282-c of the Tax Law provides, in part:
In addition to the taxes imposed by sections two hundred eighty-two-a and
two hundred eighty-two-b of this chapter, a like tax shall be imposed at the rate of
one cent per gallon upon the sale or use within the state of Diesel motor fuel or upon
the delivery of Diesel motor fuel to a filling station or into the fuel tank of a motor
vehicle for use in the operation thereof. . . . (Emphasis added)
Section 289-c of the Tax Law provides, in part:
*

*

*

2. . . . the intention of this article is to place the ultimate burden resulting
   from such tax, so far as possible, on persons who use the public highways of the state
   for operating motor vehicles thereon . . . and the following refunds are provided to
   that end, subject to the provisions of subdivision five of this section.
3. (a) Except as otherwise provided in paragraph (b) of this section, any
   person who shall buy any motor fuel or diesel motor fuel, on which the tax imposed
   by this article shall have been paid, and shall consume the same in any manner
   except in the operation of a motor vehicle upon or over the highways of this state .
   . . shall be reimbursed the amount of such tax in the manner and subject to the
   conditions herein provided. . . . (Emphasis added)

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May 8, 2003

*

*

*

(c) All claims for reimbursement shall be in such form and contain such
information, and be presented within such time as the state tax commission, by rules
and regulations, shall prescribe . . . The claimant shall satisfy the department of
taxation and finance that he has borne the tax and that the motor fuel has been
consumed by him in a manner other than the operation of a motor vehicle upon or
over the highways of this state. . . .
*

*

*

4. “Highway,” within the meaning of this section, means a highway, street,
   avenue, road, alley, boulevard, parkway, or other similar thoroughfare.
   Opinion
   The Diesel motor fuel tax is imposed on the first sale or use of Diesel motor fuel to occur
   which is not exempt from tax under Article 12-A of the Tax Law. See Sections 282-a, 282-b, and
   282-c of the Tax Law. A refund of the Diesel motor fuel tax paid is allowed for any fuel consumed
   “in any manner except in the operation of a motor vehicle upon or over the highways of this state.”
   See Section 289-c(3) of the Tax Law. Petitioner is seeking a refund of the Diesel motor fuel tax paid
   on its purchases of fuel used in idling its vehicles to load and unload cargo and to drop off and hook
   up its trailers between trips.
   The statute’s reference to fuel used in the “operation of a motor vehicle” is not restricted to
   the vehicle’s actual propulsion. See Matter of Central Greyhound Lines, Inc., v. Mark Graves et
   al, 274 AD 679. In that case, the court held that fuel used to air condition buses was considered used
   in their operation while fuel used for the purpose of warming the motors of buses stored out of
   service to keep them from freezing was not. Unlike the fuel used in idling the bus motors in Central
   Greyhound Lines, Inc., supra, the fuel used in idling Petitioner’s vehicles is to keep them ready for
   service prior to their actual street or highway use, and there exists an operational interrelationship
   between the two. Moreover, in 1940 Op. Atty. Gen 195 it was opined that fuel used to warm up
   vehicles in winter before their actual street or highway use is within the meaning of its taxable use,
   because it is an essential incident to such use of the highways.
   Therefore, the idling of Petitioner’s vehicles is incidental to the operation of the vehicles
   upon or over the public highways. The Diesel motor fuel consumed by such idling is considered the
   same as the fuel used for the actual propulsion of the vehicle and is consumed for use on the
   highways of New York State. Such consumption does not qualify under Section 289-c(3) of the Tax
   Law for reimbursement of Diesel motor fuel tax paid. 1940 Op. Atty. Gen 195, supra. Accordingly,

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Miscellaneous Tax
May 8, 2003

Petitioner is not entitled to a refund of the excise taxes paid on its purchases of Diesel motor fuel
consumed in such manner.

DATED: May 8, 2003

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.