We refine raw sugar into crystal sugar and liquid sucrose, using an on-site power plant fueled by heating oil to generate steam and electricity for the process. Are we a 'petroleum business' subject to New York's Petroleum Business Tax just by using heating oil, and does that heating oil qualify as tax-favored 'manufacturing gallonage'?

Plain-English summary

American Sugar Holdings, Inc. produces crystal sugar and liquid sucrose from raw sugar and other materials at its Yonkers manufacturing facility, through a process the industry calls "refining." Raw sugar is melted, clarified with phosphoric acid and lime, filtered through activated carbon, and (for crystal sugar) boiled and dried in a crystallization process. To power this, the company runs an on-site plant that burns purchased heating oil and natural gas to generate steam and electricity -- the vast majority of both goes directly into the sugar-production process (melting, boiling, drying, crystallizing, and running production machinery), with the remainder used for lighting, heating, and other administrative purposes. The company doesn't import, produce, refine, manufacture, compound, or enhance heating oil itself -- it buys it at retail.

Three questions were raised. Is the company a "petroleum business" under Petroleum Business Tax (PBT) Article 13-A? No. Tax Law § 300(b)(2) defines "petroleum business" (as to diesel motor fuel/heating oil) around specific activities -- importing it into the state, producing/refining/manufacturing/compounding it, enhancing it, or reselling it -- none of which describes a company that simply buys heating oil at retail and burns it as an input to a different manufacturing process.

Does the heating oil used in production qualify as tax-favored "manufacturing gallonage"? Yes, for the portion actually used in production. Because § 315(b) joins the PBT to the sales/use tax's "directly and exclusively in production" framework by cross-reference, the Department borrowed sales/use tax case law and regulations: an on-site power plant is treated as part of an integrated production process (Niagara Mohawk Power Corp. v. Wanamaker), so heating oil burned to generate the steam and electricity that actually runs the sugar-production machinery and process steps counts as "manufacturing gallonage" under § 300(m), exempt from the PBT's measure. Heating oil used for lighting, general heating, and administrative purposes is NOT manufacturing gallonage and stays taxable.

A subtlety: manufacturing gallonage's definition specifically EXCLUDES fuel used in "refining, mining, or extracting" (as opposed to manufacturing/processing/assembling) -- and the company calls its own process "refining." The Department held that industry terminology doesn't control: the legal "refining/mining/extracting" exclusion is aimed at materials taken from the earth (fossil fuels, minerals, ores), not agricultural products like sugar. So despite the company's own "refining" label, its process legally qualifies as processing/manufacturing -- which is actually the FAVORABLE outcome here, since processing/manufacturing fuel CAN be manufacturing gallonage while refining/mining/extracting fuel specifically cannot.

Is the company liable for any unpaid PBT even though it isn't a "petroleum business" itself? Yes, for the non-production portion. Section 315(b) imports Article 12-A's excise-tax framework, including § 285-a(1)'s and § 289-c(1)'s rules making the purchaser jointly and severally liable to the extent the tax wasn't properly paid by or passed through from the distributor. So heating oil consumed for lighting, heat, and administrative purposes -- outside the manufacturing gallonage exemption -- leaves the company on the hook for the PBT if it wasn't already collected.

What this means for you

Manufacturers and food/agricultural processors using an on-site power plant

Simply purchasing heating oil or diesel fuel to run your operations does NOT make you a "petroleum business" subject to PBT registration and filing obligations -- that status is reserved for businesses actually importing, producing, or dealing in the fuel itself. But you may still owe PBT on the portion of fuel NOT used directly in production, since the manufacturing gallonage exemption is fuel-use-specific, not company-wide.

Businesses whose process is called "refining" in the industry but doesn't involve earth-extracted materials

Don't assume an industry label like "refining" excludes you from the manufacturing gallonage exemption -- the legal "refining/mining/extracting" exclusion targets minerals, ores, and fossil fuels pulled from the earth, not agricultural or other processed products, even if your own industry calls the process "refining."

Accountants and tax professionals allocating fuel between production and non-production use

This ruling underscores the documentation burden: claim the manufacturing exemption via Form FT-1012, but where only PART of the fuel goes to production, indicate the split percentage and maintain records (an engineering survey is a common substantiation method) to support the allocation between exempt manufacturing gallonage and taxable non-production use.

Common questions

Q: Does buying and burning heating oil make my company a "petroleum business" under the PBT?
A: No. "Petroleum business" status requires importing, producing, refining, manufacturing, compounding, or enhancing the fuel itself -- not merely purchasing and consuming it.

Q: If my process is called "refining" in my industry, does that automatically exclude my fuel from the manufacturing gallonage exemption?
A: Not necessarily. The legal refining/mining/extracting exclusion is aimed at materials extracted from the earth (fossil fuels, minerals, ores); an agricultural process like sugar production, even if colloquially called "refining," can still qualify as manufacturing/processing for exemption purposes.

Q: Is ALL of my facility's purchased fuel exempt if some of it powers production?
A: No. Only the portion used directly and exclusively in the production process is manufacturing gallonage; fuel used for lighting, heating, and administrative purposes remains taxable, and you must document the split.

Q: Can I be held liable for PBT even though I'm not a "petroleum business"?
A: Yes, as a purchaser, to the extent the tax wasn't properly paid by or passed through from your distributor for non-production fuel use -- joint-and-several liability rules imported from Article 12-A apply.

Citations and references

Statutes and regulations:

• Tax Law § 300(b)(2) (definition of "petroleum business" -- diesel motor fuel/heating oil)
• Tax Law § 300(m) (definition of "manufacturing gallonage")
• Tax Law § 301-a (imposition of PBT); § 301-b(d) (residential heating exemption); § 301-c(j) (manufacturing gallonage reimbursement)
• Tax Law § 315(b) (joint administration with Articles 12-A, 28, and 29)
• Tax Law § 285-a(1), § 289-c(1) (Article 12-A motor fuel excise tax pass-through and joint/several liability, incorporated by reference)
• Tax Law § 1115(c)(1) (sales/use tax production exemption for fuel, gas, electricity, steam)
• 20 NYCRR § 527.4(d) (definition of "processing"); § 528.13(b)(1)(ii) (definition of "production"); § 528.22(c) (directly and exclusively standard)
• TSB-M-94(5)M (Article 13-A changes effective September 1, 1994)

Case law cited:

• Niagara Mohawk Power Corp. v. Wanamaker, 286 A.D. 446 (on-site power plant is part of an integrated production process)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/petrol_bus_ao.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/misc/a06_1m.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-06(1)M
Miscellaneous Tax
February 1, 2006

Office of Tax Policy Analysis
Technical Services Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M041122A

On November 22, 2004, the Department of Taxation and Finance received a Petition for
Advisory Opinion from American Sugar Holdings, Inc., One Federal Street, Yonkers, New York
10702, c/o Christopher L. Doyle, Hodgson Russ, LLP, One M&T Plaza, Suite 2000, Buffalo, NY
14203-2391. Petitioner, American Sugar Holdings, Inc., provided additional information
pertaining to the Petition on March 21, 2005.
The issues raised by Petitioner are:

1. Whether Petitioner is a petroleum business for purposes of the Petroleum
   Business Tax (“PBT”) under Article 13-A of the Tax Law.
2. Whether unenhanced diesel motor fuel (heating oil) purchased at retail by
   Petitioner for consumption in the production of sugar for sale through a process
   known as “refining” constitutes manufacturing gallonage under the PBT.
3. Whether Petitioner may be held liable for payment of PBT on heating oil
   consumed other than as manufacturing gallonage.
   Petitioner submitted the following facts as the basis for this Advisory Opinion.
   Petitioner is engaged in the production of crystal sugar and liquid sucrose for sale. The
   production includes the conversion of raw sugar and other material into saleable products
   through a process sometimes referred to in the industry as “refining.” Petitioner purchases
   heating oil and natural gas to use in an on-site power plant to create steam and to generate
   electricity for this process.
   Raw sugar and other materials are delivered and unloaded into storage sheds at
   Petitioner’s production facility, then they are weighed, mingled with affination syrup, and
   transferred to a centrifugal station. The raw sugar is melted, clarified and treated with
   phosphoric acid and lime to create a precipitate that removes insoluble impurities. Additional
   impurities are removed by filtering the clarified liquid through activated carbon. When crystal
   sugar is the desired end-product, the crystallization process involves a boiling sequence followed
   by a drying process that greatly reduces the moisture content of the crystals.
   The power plant generates electricity and produces steam for all production, packing, and
   warehousing facilities. The vast majority of steam is used in melting, boiling, drying and
   crystallizing the sugar. The vast majority of the electricity is used to operate the machinery used
   to produce the crystal sugar and liquid sucrose from raw sugar.

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Petitioner accepts title and delivery of heating oil at its manufacturing site in Yonkers,
New York. Petitioner is not a business formed for, engaged in, or conducting the business, trade,
or occupation of importing petroleum into New York for sale in New York, or of extracting,
producing, refining, manufacturing, or compounding petroleum. Petitioner does not designate an
agent for importing heating oil into New York for its account.
Applicable law and regulations
Section 285-a(1) of Article 12-A of the Tax Law provides, in part:
No person shall purchase motor fuel in this state, excluding a purchase at retail,
unless the taxes imposed by this article have been assumed by a distributor registered
under this article in accordance with a certification under subdivision three of this section
or paid by such distributor, and, in each of such instances, are passed through to such
purchaser. In addition to any other civil and criminal penalties which may apply, any
person who purchases motor fuel without having received a certification from the seller
in accordance with subdivision three of this section shall be jointly and severally liable to
pay the taxes imposed by this article with respect to such motor fuel.
Section 289-c(1) of Article 12-A of the Tax Law provides, in part:
The tax imposed by this article though payable by the distributor, shall be borne
by the purchaser and when paid by the distributor shall be deemed to have been so paid
for the account of the purchaser. . . .
Section 300 of Article 13-A of the Tax Law provides, in part:
(b) The term “petroleum business” means:
*

*

*

(2) With respect to diesel motor fuel, every corporation and unincorporated
business (i) importing diesel motor fuel or causing diesel motor fuel to be imported into
the state for use, distribution, storage or sale in the state, (ii) producing, refining,
manufacturing or compounding diesel motor fuel within the state, (iii) engaging in the
enhancement of diesel motor fuel within the state, (iv) making a sale or use of diesel
motor fuel in the state, other than a retail sale not in bulk or self-use of diesel motor fuel
which has been the subject of a retail sale to such corporation or unincorporated
business, . . .
*

*

*

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(m) “Manufacturing gallonage” means residual petroleum product or diesel motor
fuel (which is not enhanced diesel motor fuel) used and consumed directly and
exclusively in the production of tangible personal property for sale by manufacturing,
processing or assembly, but only if all of such fuel or product is delivered on the
manufacturing site and is consumed other than on the highways of this state.
“Manufacturing gallonage” shall in no event include diesel motor fuel delivered at a
filling station or into a repository which is equipped with a hose or other apparatus by
which such fuel can be dispensed into the fuel tank of a motor vehicle. The
commissioner shall require such documentary proof to substantiate the classification of
product as “manufacturing gallonage” as the commissioner deems appropriate.
Section 301-a of Article 13-A of the Tax Law provides, in part:
(a) General. Notwithstanding any other provision of this chapter, or of any other
law, for taxable months commencing on or after the first day of September, nineteen
hundred ninety, there is hereby imposed upon every petroleum business for the privilege
of engaging in business, doing business, employing capital, owning or leasing property,
or maintaining an office in this state, a monthly tax for each or any part of a taxable
month equal to the sum of the motor fuel component determined pursuant to subdivision
(b) of this section, the automotive-type diesel motor fuel component determined pursuant
to paragraph one of subdivision (c) of this section, the nonautomotive-type diesel motor
fuel component determined pursuant to paragraph two of subdivision (c) of this section
and the residual petroleum product component determined pursuant to subdivision (d) of
this section.
*

*

*

(c)(2) Nonautomotive-type diesel motor fuel component. The nonautomotive-type
diesel fuel component shall be determined by multiplying the nonautomotive-type diesel
motor fuel rate times the number of gallons of nonautomotive-type diesel motor fuel sold
or used by a petroleum business in this state during the month covered by the return
under this section. Provided, however, that no diesel motor fuel shall be included in the
measure of the tax unless it shall have previously come to rest within the meaning of
federal decisional law interpreting the United States constitution, nor shall any
nonautomotive-type diesel motor fuel be included in the measure of the tax imposed by
this article more than once.
*

*

*

(f)(4) Notwithstanding any other provision of this article, commencing January
first, nineteen hundred ninety-eight, nonautomotive-type diesel motor fuel which is
“manufacturing gallonage,” as such term is defined in subdivision (m) of section three

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hundred of this article, shall be exempt from the measure of the nonautomotive-type
diesel motor fuel component of the tax imposed under this section. (Emphasis added)
Section 301-c (j) of Article 13-A of the Tax Law provides:
Reimbursement for manufacturing gallonage. Commencing January first,
nineteen hundred ninety-eight, a subsequent purchaser shall be eligible for
reimbursement of any taxes imposed under this article with respect to gallonage of
residual petroleum product and diesel motor fuel (which is not enhanced diesel motor
fuel), subsequently sold by such purchaser to a consumer as “manufacturing gallonage.”
This reimbursement may be claimed only where (1) any tax imposed pursuant to this
article has been paid with respect to such gallonage and the entire amount of such tax has
been absorbed by such purchaser, and (2) such purchaser possesses documentary proof
satisfactory to the commissioner evidencing the absorption by it of the entire amount of
such tax. Provided, however, that the commissioner shall require such documentary
proof to qualify for any reimbursement of tax provided by this subdivision as the
commissioner deems appropriate including a certificate by the consumer that such
product is to be used and consumed exclusively as “manufacturing gallonage”.
(Emphasis added)
Section 315(b) of Article 13-A of the Tax Law provides, in part:
Joint administration of taxes. In addition to the powers granted to the
commissioner in this chapter, the commissioner is hereby authorized to make provisions
for the joint administration, in whole or in part, of the taxes imposed by articles twelve-A
and twenty-eight and pursuant to the authority of article twenty-nine of this chapter upon
automotive fuel and the taxes imposed by this article, including the joint reporting,
assessment, collection, determination and refund of such taxes, and for that purpose to
prescribe that any of the commissioner's functions under such articles, and any returns,
forms, statements, documents or information to be submitted to the commissioner under
such articles, any books and records to be kept for purposes of the taxes imposed or
authorized to be imposed by such articles, any schedules of amounts to be collected under
such articles, any registration required under such articles, and the payment of taxes
under such articles, shall be on a joint basis with respect to the taxes imposed by or
pursuant to such articles. Provided, notwithstanding any provision of this article to the
contrary, in the furtherance of joint administration, the provisions of subdivision one of
section two hundred eighty-five-a and subdivision one of section two hundred eighty­
nine-c of this chapter shall apply to the taxes imposed under this article with the same
force and effect as if those provisions specifically referred to the taxes imposed hereunder
and all the products with respect to which the taxes are imposed under this article . . .
Also, the commissioner may require . . . (ii) a certification that particular gallonage of
motor fuel, diesel motor fuel or residual petroleum product has been included in the
measure of the tax imposed by this article and such tax has been paid, and (iii) that the

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certification required pursuant to section two hundred eighty-five-a or two hundred
eighty-five-b of this chapter be expanded to include the tax imposed by this article.
(Emphasis added)
Section 1115(c)(1) of Article 28 of the Tax Law provides:
Fuel, gas, electricity, refrigeration and steam, and gas, electric, refrigeration and
steam service of whatever nature for use or consumption directly and exclusively in the
production of tangible personal property, gas, electricity, refrigeration or steam, for sale,
by manufacturing, processing, assembling, generating, refining, mining or extracting
shall be exempt from the taxes imposed under subdivisions (a) and (b) of section eleven
hundred five and the compensating use tax imposed under section eleven hundred ten of
this article.
Section 527.4(d) of the Sales and Use Tax Regulations provides, in part:
Processing. Processing is the performance of any service on tangible personal
property for the owner which effects a change in the nature, shape, or form of the
property.
Section 528.13(b)(1)(ii) of the Sales and Use Tax Regulations provides:
Production includes the production line of the plant starting with the handling and
storage of raw materials at the plant site and continuing through the last step of
production where the product is finished and packaged for sale.
Section 528.22(c) of the Sales and Use Tax Regulations provides, in part:
Directly and exclusively.
(1) Directly means the fuel, gas, electricity,
refrigeration and steam and like services, and must during the production phase of a
process, either:
(i)
(ii)
(iii)

operate exempt production machinery or equipment; or
create conditions necessary for production; or
perform an actual part of the production process.
*

*

*

(3)(i) Exclusively means that the fuel, gas, electricity, refrigeration and steam and
like services are used in total (100%) in the production process.
*

*

*

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(iv) The user must maintain adequate records with respect to the allocation of
fuel, gas, electricity, refrigeration and steam used directly and exclusively in production
and for nonexempt purposes.
(v) For the purpose of substantiating the allocation of fuel, gas, electricity,
refrigeration and steam and like services used directly and exclusively in production from
that used for nonexempt purposes, the user must, when claiming a refund or credit,
submit an engineering survey or the formulae used in arriving at the amounts used in an
exempt manner.
Example 2: A producer of electricity purchases fuel oil in bulk. The oil is used
both to create steam to operate turbines which produce electricity and to heat buildings.
The oil used for steam to operate the turbines is used directly in production while the oil
used to heat buildings is not used in production.
Publication 852, entitled Sales Tax Information For: Manufacturers, Processors,
Generators, Assemblers, Refiners, Miners and Extractors, and Other Producers of Goods
and Merchandise (12/97) provides, in part, the following definitions:
Production is the means by which products are created using one or more of the
following operations (or production processes):
�
�
�
�
�
�
�

manufacturing
processing
generating
assembling
refining
mining
extracting
*

*

*

Processing generally results in a change in the nature, shape, or form of materials.
*

*

*

Refining is the operation by which impurities or unwanted elements are removed
from a product.
*

*

*

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Mining is the operation by which minerals are removed from the earth through
either surface excavations (such as open-pit mines and strip mines) or underground
excavations. Mining includes any activities involved in the removal of the minerals from
their original location. The preparation, washing, cleaning, or other processing of the
minerals at the mine location is also part of the mining operation.
*

*

*

Extracting is a manufacturing operation, or an adjunct to a manufacturing
operation, in which oil, gas, or mineral deposits are removed from their natural
underground reservoirs.
Opinion
Petitioner is engaged in the production of crystal sugar and liquid sucrose for sale. The
process includes the conversion of raw sugar and other material into saleable products, a process
referred to in the industry as “refining.” Petitioner purchases heating oil to use in an on-site
power plant to create steam and to generate electricity. The vast majority of the steam created is
used in the production process and the vast majority of the electricity created is used to operate
machinery used in the production process.
In Issue 1, Petitioner asks if it is a petroleum business for purposes of the petroleum
business tax (PBT) imposed by Article 13-A of the Tax Law. Petitioner does not import diesel
motor fuel (heating oil) or cause heating oil to be imported into New York State, produce, refine,
manufacture or compound heating oil within New York, or engage in the enhancement of
heating oil within New York. Petitioner purchases heating oil at retail and uses it to create steam
and to generate electricity. Accordingly, Petitioner is not a petroleum business for purposes of
section 300(b)(2) of Article 13-A of the Tax Law.
In Issue 2, Petitioner asks whether the heating oil it purchases qualifies as manufacturing
gallonage for purposes of the PBT imposed by Article 13-A of the Tax Law. Manufacturing
gallonage is petroleum product or diesel motor fuel (heating oil) used and consumed directly and
exclusively in the production of tangible personal property for sale by manufacturing, processing
or assembly but only if the fuel is delivered on the manufacturing site and is not consumed on
New York State highways. See section 300(m) of the Tax Law.
Section 315(b) of Article 13-A of the Tax Law provides that the PBT may be jointly
administered with the sales and compensating use tax imposed by Article 28 of the Tax Law and
with the excise tax on gasoline and similar motor fuel imposed by Article 12-A of the Tax Law.
Therefore, pursuant to section 315(b), it is appropriate to look at the sales and use tax regulations
and publications concerning the meaning of the terms production, processing, refining, and
directly and exclusively, since there are no provisions in the PBT dictating contrary definitions or
results.

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Section 1115(c)(1) of Article 28 of the Tax Law exempts fuel used directly and
exclusively in the production of tangible personal property, for sale, by manufacturing,
processing, assembling, generating, refining, mining or extracting from sales and use tax.
Section 528.13(b)(1)(ii) of the Sales and Use Tax Regulations states that “Production
includes the production line of the plant starting with the handling and storage of raw materials at
the plant site and continuing through the last step of production where the product is finished and
packaged for sale.”
Publication 852, entitled Sales Tax Information For: Manufacturers, Processors,
Generators, Assemblers, Refiners, Miners and Extractors, and Other Producers of Goods and
Merchandise (12/97) states that “Processing generally results in a change in the nature, shape or
form of materials.” Section 527.4(d) of the Sales and Use Tax Regulations defines processing as
“the performance of any service on tangible personal property for the owner which effects a
change in the nature, shape, or form of the property.”
For the purpose of the sales and use tax production exemption, the courts have viewed the
production process as an integrated whole. From this perspective, the on-site power plant would
be viewed as part of an integrated whole. See Niagara Mohawk Power Corp. v Wanamaker, 286
AD 446. Therefore, the heating oil which is used in Petitioner’s on-site power plant to provide
electricity to power equipment used in the production process is used directly in the production
process for purposes of the sales and use tax production exemption, and for purposes of the PBT.
The heating oil which is used in Petitioner’s on-site power plant to provide steam used for the
process of melting, boiling, drying, and crystallizing sugar is also used directly in the production
process. The remaining heating oil which is used for lights, heat and other administrative
purposes is not used directly in production. See section 528.22(c) of the Sales and Use Tax
Regulations. Heating oil used for such purposes, therefore, is not manufacturing gallonage and
is subject to the PBT.
Petitioner begins by mingling raw sugar with affination syrup and converting the sugar
into a liquid form by melting. The liquid is then subject to further treatment to remove
impurities. If crystal sugar is the desired end-product, Petitioner continues its production with a
crystallization process in which the liquid sugar is boiled and then dried to produce crystal sugar.
Petitioner then sells the purified liquid sucrose or the crystal sugar. Petitioner starts with the
handling of raw materials at the plant site and continues through the last step of production
where the product is finished. Petitioner changes the nature, shape or form of the raw material.
Therefore, for purposes of both the sales tax and the petroleum business tax, Petitioner is
engaged in the production of tangible personal property for sale by processing. Accordingly, the
heating oil used by Petitioner directly and exclusively in the production of sugar is
manufacturing gallonage for purposes of section 300(m) of the Tax Law.

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It should be noted that manufacturing gallonage does not include petroleum product or
Diesel motor fuel which is used and consumed directly and exclusively in the production of
tangible personal property for sale by refining, mining or extracting. The sales tax exemption set
forth in section 1115(c)(1) of the Tax Law does exempt fuel which is used and consumed
directly and exclusively in the production of tangible personal property for sale by, among other
things, refining, mining or extracting.
Publication 852, supra, defines refining as the operation by which impurities or unwanted
elements are removed from a product. It defines mining as the operation by which minerals are
removed from the earth through either surface excavations (such as open-pit mines and strip
mines) or underground excavations. It defines extracting as a manufacturing operation, in which
oil, gas, or mineral deposits are removed from their natural underground reservoirs.
Though the processes used by Petitioner to produce its sugar products are referred to in
the industry as “refining,” the terms refining, mining and extracting as they are used in section
1115 of Article 28 of the Tax Law appear to generally relate more to activities relating to
materials mined or extracted from the earth, such as fossil fuels, minerals and ores, than to
agricultural products. Therefore, for purposes of Articles 13-A and 28 of the Tax Law,
Petitioner’s activities do not constitute refining.
In claiming the manufacturing exemption, Petitioner may provide the seller a Form
FT-1012, Manufacturing Certification for Diesel Motor Fuel and Residual Petroleum Product.
However, since a portion of the fuel purchased may be consumed other than in the production
process, Petitioner must indicate on the exemption document the percentage of fuel used in
qualified manufacturing and the percentage used for other purposes. Petitioner must maintain
adequate records to substantiate the percentage attributed to manufacturing. (For example,
Petitioner may want to obtain an engineering survey to substantiate its allocation formula.) See
Technical Services Bureau Memorandum entitled Article 13-A Changes Effective September 1,
1994, August 26, 1994, TSB-M-94(5)M.
Although Petitioner is not a petroleum business as defined pursuant to section 300(b) of
Article 13-A of the Tax Law, heating oil purchased by Petitioner for purposes other than
production (e.g., lighting and heating Petitioner’s production facility) is subject to the PBT.
Under section 315(b) of Article 13-A of the Tax Law, the provisions of section 285-a(1) of
Article 12-A of the Tax Law respecting joint and several liability of purchasers of motor fuel for
the Article 12-A tax apply to the PBT with the same force and effect as if those provisions
specifically referred to the PBT and all the products with respect to which the PBT is imposed
under Article 13-A. Likewise, under section 315(b), the provisions of section 289-c(1) of Article
12-A providing that the tax is “borne by the purchaser and when paid by the distributor shall
be deemed to have been so paid for the account of the purchaser” apply to the PBT. Thus, to
the extent the PBT has not been paid or passed through to Petitioner with respect to heating oil

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purchased by Petitioner and consumed other than in production, the provisions of section 315(b)
of the Tax Law make Petitioner jointly and severally liable to pay the PBT due on such heating
oil.

DATED: February 1, 2006

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.