Can a diesel fuel distributor sell kero-jet fuel to a licensed kero-jet-only distributor (not an airline) exempt from New York prepaid sales tax?

Plain-English summary

A licensed diesel motor fuel distributor sells kero-jet (aviation) fuel to a customer that is a licensed Distributor of Kero-Jet Fuel Only (DOKJO) — not an airline. The fuel will end up in aircraft tanks, but the customer isn't an airline. The distributor asked whether it can sell exempt from prepaid sales tax and accept Form FT-1020.

The Office of Counsel said no. The aviation-fuel exemptions in Tax Law §§ 1102(b), 1115(a)(9), and (j) apply only to retail sales of fuel to an airline for use in its airplanes. Because this distributor is selling at retail to a DOKJO — and not directly to an airline — those exemptions don't apply. So the distributor cannot accept Form FT-1020 and must pass through the prepaid sales tax, providing its DOKJO purchaser with a properly completed Form FT-1000 (Certificate of Prepayment or Payment of Taxes on Diesel Motor Fuel), or a delivery invoice containing all the required information.

What this means for you

Fuel distributors selling aviation/diesel fuel

The airline fuel exemption is keyed to who buys it and how it's used — only a direct retail sale to an airline for its airplanes qualifies. Selling to an intermediary distributor (even a kero-jet-only one) doesn't, so you must pass through the prepaid tax and document it with FT-1000, not accept an FT-1020 exemption certificate.

Kero-jet-only distributors (DOKJOs) and downstream sellers

Expect to receive fuel with prepaid tax passed through (Form FT-1000); the exemption is preserved at the eventual retail sale to an airline, not at the distributor-to-distributor stage.

Accountants and tax professionals

Match the exemption to a retail sale to an airline (§§ 1102(b), 1115(a)(9), (j)); a distributor-to-DOKJO sale falls outside it. Wrong form matters: FT-1000 (prepayment pass-through), not FT-1020 (exemption).

Common questions

Q: The fuel goes into aircraft — why isn't it exempt?
A: The exemption requires a retail sale to an airline for use in its airplanes. A sale to a kero-jet-only distributor isn't a sale to an airline, so it's taxable (prepaid).

Q: Can I accept Form FT-1020 from my DOKJO customer?
A: No. You must pass through the prepaid sales tax and provide Form FT-1000 (or an equivalent delivery invoice) instead.

Q: When does the airline exemption kick in?
A: At the retail sale of the fuel to an airline for use in its airplanes.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law § 1102(b) (prepayment; airline retail exemption)
• Tax Law § 1115(a)(9) (exemption for fuel sold to an airline for use in airplanes)
• Tax Law § 1115(j) (scope of fuel exemptions, including prepaid tax)
• Form FT-1020 (exemption certificate); Form FT-1000 (Certificate of Prepayment of Taxes on Diesel Motor Fuel)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales-ao-2020.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a20-57s.pdf

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(57)S
Sales Tax
November 10, 2020

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
The Department of Taxation and Finance received a Petition for Advisory Opinion from
[ REDACTED ]. (“Petitioner”). Petitioner asks whether its sales receipts of kero-jet fuel purchased by a
licensed Distributor of Kero-Jet Fuel Only (“DOKJO”) are subject to New York State prepaid sales tax.
We conclude that sales of kero-jet fuel sold by a licensed Diesel Motor Fuel Distributor to a licensed
DOKJO are subject to New York State prepaid sales tax.
Facts
Petitioner is a licensed Diesel Motor Fuel Distributor in this State. Petitioner sells kero-jet fuel to
a licensed DOKJO. According to the facts submitted by Petitioner, the kero-jet fuel Petitioner sells to its
DOKJO customer will be placed into the tanks of aircrafts. Petitioner states its DOKJO customer is not
an airline. Petitioner asks if it can sell kero-jet fuel to its DOKJO customer exempt from prepaid sales
tax and accept Form FT-1020, Exemption Certificate for Certain Taxes Imposed on Diesel Motor Fuel
and Propane, with the first two boxes in part 1 checked in order to document the exemption.
Analysis
Petitioner states that it sells kero-jet fuel to its DOKJO customer and not directly to an airline at
retail. The sales tax exemptions in Tax Law §§ 1102(b), 1115(a)(9) and (j) apply to retail sales of fuel to
an airline for use in its airplanes. Because Petitioner is selling kero-jet fuel at retail to a DOKJO and not
directly to an airline for use in its airplanes, the exemptions provided by Tax Law §§ 1102(b),
1115(a)(9) and (j) are not applicable. Therefore, Petitioner cannot accept Form-1020 from its customer
and must pass through the prepaid sales tax. Petitioner should provide its DOKJO purchaser with a
properly completed Form FT-1000, Certificate of Prepayment or Payment of Taxes on Diesel Motor
Fuel or a delivery invoice containing all of the information required in the form’s instructions.
DATED: November 10, 2020

/S/
DEBORAH R. LIEBMAN
Deputy Counsel
NOTE:

An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts
set forth therein and is binding on the Department only with respect to the person or entity
to whom it is issued and only if the person or entity fully and accurately describes all
relevant facts. An Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific time period at issue
in the Opinion. The information provided in this document does not cover every situation
and is not intended to replace the law or change its meaning.