A corporation sells lubricating oils and grease at retail. New York's oil company franchise tax was amended three times in a single year, at one point taxing anyone who merely SOLD petroleum. Do lubricating oils and grease count as 'petroleum,' making a retail seller of them subject to the oil company tax?

Plain-English summary

Bitterman's Automotive Center, Inc. sells products including lubricating oils and grease, and asked whether that activity subjects it to New York's oil company franchise tax under Tax Law § 182-a. The answer required untangling a rapid sequence of 1981 amendments to the statute.

As originally enacted by Chapter 481 of the Laws of 1981, § 182-a defined "oil company" to include any corporation engaged in "selling" petroleum, with an exception for corporations selling 60 million gallons or less in the preceding year. Chapter 482 of the same year's laws then removed that small-seller exception. But Chapter 1043 -- also enacted in 1981 -- amended the definition again, this time removing the SALE of petroleum from the "oil company" criteria altogether, so that the tax now reaches only importing, extracting, producing, refining, manufacturing, or compounding petroleum, not merely selling it. Chapter 1043 also added a second definition of "petroleum" (in a new paragraph (e)) alongside the original one, listing items like crude oil, gasoline, aviation fuel, kerosene, diesel fuel, and liquefied gases.

Applying the standard rule that where the legislature enacts contrary provisions, the later one controls (McKinney's Statutes §§ 391-399), the Department confirmed that simply SELLING petroleum products -- without importing, extracting, producing, refining, manufacturing, or compounding them -- no longer creates § 182-a liability at all after Chapter 1043. And separately, the Department noted that BOTH of the statute's "petroleum" definitions (original and Chapter 1043's) exclude lubricating oils and grease specifically, per its own guidance in TSB-M-81(5.4)C (Revised). So Bitterman's retail sale of lubricating oils and grease fails to trigger the tax on two independent grounds: it's a sale (no longer covered at all), and even if it mattered, lubricating oils and grease aren't "petroleum" under either definition.

What this means for you

Retailers of automotive lubricants and grease

Simply selling lubricating oils and grease at retail does not create New York oil company tax exposure under section 182-a -- neither because "selling" itself is covered (it isn't, post-1981) nor because these products count as "petroleum" (they don't, under either statutory definition).

A useful illustration of how to read a rapidly amended statute

When a single tax provision gets amended multiple times within one year, check enactment order and effective dates carefully -- Chapter 1043 controls over the earlier Chapter 481/482 language on the "selling" question specifically because it was the LATER enactment, not because it was somehow more authoritative in any other sense.

Common questions

Q: Does simply selling gasoline or other petroleum products (without importing, refining, etc.) create New York oil company tax liability?
A: No, not since the 1981 Chapter 1043 amendment removed "selling" from the criteria defining a taxable "oil company" under section 182-a.

Q: Are lubricating oils and grease considered "petroleum" for this tax?
A: No. The Department has determined that both statutory definitions of "petroleum" exclude lubricating oils and grease.

Q: Can another retailer of lubricants and grease rely on this Opinion?
A: No. It binds the Department only as to Bitterman's own facts and can't be relied upon by other taxpayers, though the underlying statutory analysis (both grounds) is of general application to similarly situated sellers.

Citations and references

Statutes and guidance:

• Tax Law § 182-a.2(a), (e) (definitions of "oil company" and "petroleum")
• Chapter 481, Chapter 482, and Chapter 1043 of the Laws of 1981
• McKinney's Statutes §§ 391-399 (later statute controls)
• TSB-M-81(5.4)C (Revised)

Related ruling:

• TSB-A-82(11)C (Merit Oil) -- a contrasting case finding a gasoline distributor WAS a taxable "oil company," because it imported petroleum into New York for sale rather than merely selling already-imported product

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/corporation_ao_1982.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/corporation/a82_6c.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-82(6)C
Corporation Tax
April 12, 1982

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. C811201A

On December 1, 1981 a Petition for Advisory Opinion was received from Bitterman's
Automotive Center, Inc., 7631 Transit Rd., East Amherst, New York 14051.
The issue raised herein is whether the franchise tax on certain oil companies imposed under
section 182-a of the Tax Law is applicable to a corporation which sells such products as lubricating
oils and grease. It is determined herein that the sale of these products does not render Petitioner
subject to such tax.
Section 182-a of the Tax Law imposes a franchise tax on certain oil companies. The term "oil
company" is defined, in section 182-a.2(a), as follows:
"The term "oil company" means every corporation formed for or engaged in the business of
importing or causing to be imported (by a person other than a corporation subject to tax
under this section) into this state for sale in this state, extracting, producing, refining,
manufacturing, or compounding petroleum."
As originally enacted, by Chapter 481 of the Laws of 1981, this provision included as "oil
companies" every corporation "engaged in the business of . . . selling petroleum . . . . ," with an
exception for certain corporations which sold sixty million gallons or less of petroleum during its
preceding taxable year. Such exception was removed by Chapter 482 of the Laws of 1981. However,
the subject provision was amended again, by Chapter 1043 of the Laws of 1981, so as to wholly
exclude from the criteria for "oil companies" the sale of petroleum.
The term "petroleum" is defined in two locations within section 182-a. In section 182-a.2(a)
it is defined as including, but not limited to, " . . . gasoline, aviation fuel, kerosene, diesel motor fuel,
benzol, distillate fuels, residual oil, crude oil or any similar product." This definition was contained
in the original enactment of section 182-a by Chapter 481 of the Laws of 1981. A second definition
was added to section 182-a of the Tax Law by Chapter 1043 of the Laws of 1981, in a new paragraph
(e), which reads as follows:
"The term "petroleum" shall mean crude oil, plant condensate, gasoline, aviation fuel,
kerosene, diesel motor fuel, benzol, petrochemical feed-stocks, distillate fuels, residual oil,
and liquified or liquefiable gases such as butane, ethylene, or propane."

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-82(6)C
Corporation Tax
April 12, 1982

Where the legislature enacts two contrary statutory provisions, it is a canon of statutory interpretation
that the later version controls. Mck. Statutes, §§391-399. With respect to the present instance, it has
been determined that both definitions exclude lubricating oils and grease from the definition of
petroleum for purposes of section 182-a of the Tax Law. Technical Services Bureau Memorandum
TSB-M-81(5.4)C(Revised).
It follows from the foregoing that Petitioner is not rendered subject to the tax imposed under
section 182-a of the Tax Law by reason of its described activities, inasmuch as the retail sale of
lubricating oils and grease does not constitute "extracting, producing, refining, manufacturing or
compounding petroleum."

DATED: April 1, 1982

s/GABRIEL DI CERBO
Deputy Director
Technical Services Bureau