I sold gasoline to a buyer who claimed it was tax-exempt for export to Ontario, Canada, but never gave me fully proper exemption paperwork before the Department denied my refund. Am I stuck owing the New York motor fuel tax and prepaid sales tax?

Plain-English summary

Fleet Supplies, Inc., a registered New York Article 12-A distributor based in Ohio, bought gasoline from a New York-based distributor (P.A.L. Oil) and resold it to another company, Golden State Products & Petroleum, which claimed it was exporting the fuel tax-free to a licensed distributor in Ontario, Canada. Fleet paid the New York motor fuel tax and prepaid sales tax to P.A.L. Oil up front, initially passed those taxes through to Golden State on its invoices, then credited Golden State for the taxes based on Golden State's claim of exemption — before Golden State had actually provided complete, proper exemption paperwork.

When Fleet tried to get its own refund from the Department for the taxes it had paid to P.A.L. Oil, the Department only partially refunded it, because the exemption documents Golden State submitted (two separate "Statement of Exportation of Motor Fuel by Purchaser" forms, FT-936) were not properly completed — critically, they never showed that Golden State was an appointed collector under section 6 of the Ontario Gasoline Tax Act, the Canadian-provincial equivalent of a licensed New York distributor.

The Department's answer: New York law presumes all motor fuel sold in the state is taxable unless the contrary is proven, and the burden of proving an exemption falls on the purchaser (here, Golden State) and, absent proper documentation, on the seller who must pass the tax through (here, Fleet). A seller is protected from liability only if it accepts a properly completed exemption certificate in good faith, within 90 days of delivery (and, for export sales specifically, at or before delivery). Because Golden State's documentation didn't establish it as a valid, appointed Ontario collector, Fleet could not treat the sale as exempt — meaning Fleet, not Golden State, was left holding the unrefunded portion of the New York taxes it had already paid to its own supplier.

The opinion also confirms the general policy (extending New York's own reciprocal-distributor export exemption to Canadian provinces, established a couple years earlier in TSB-A-87(2)M) that a distributor can sell gasoline tax-free in New York for immediate export to a properly appointed Ontario collector — but only with the right paperwork in hand.

What this means for you

Fuel wholesalers, distributors, and jobbers

Don't extend credits or exemptions to a customer based on a bare assertion of tax-exempt export status. Before treating any sale as tax-free (or crediting back tax already invoiced), get a fully and properly completed Form FT-936 and, for sales ultimately destined to Ontario, documentation that the Canadian buyer is an appointed collector under section 6 of the Gasoline Tax Act — not just a distributor "license" in some other jurisdiction (here, Golden State was shown only to be licensed in Pennsylvania, which didn't establish the Ontario-collector status the exemption actually requires).

Businesses claiming a cross-border fuel export exemption

If you're buying fuel in New York for export to Canada, get your appointment letter from the Ontario Ministry of Revenue (or your home-province equivalent) and hand it to your New York seller before or at delivery, along with a properly completed FT-936 for each purchase. Incomplete paperwork can leave your supplier stuck with a tax bill it may then look to you to cover.

Common questions

Q: Who ends up owing the tax if a claimed export exemption isn't properly documented?
A: The presumption favors the state — fuel sold in New York is taxable unless the purchaser (and the seller, in passing the tax through) proves otherwise with complete documentation. Here, the unrefunded tax landed on Fleet, the seller, because its buyer's paperwork was deficient.

Q: Does a Pennsylvania distributor license substitute for Ontario-collector status?
A: No. For a New York seller to treat a sale to an Ontario-bound buyer as exempt, the buyer specifically needs documentation that it's an appointed collector under section 6 of the Ontario Gasoline Tax Act — a distributor license in a different jurisdiction (even Pennsylvania) doesn't establish that.

Q: Is there a time limit for accepting exemption documentation?
A: Yes. A seller is relieved of liability for not passing through the tax only if it accepts, in good faith, a properly completed exemption certificate within 90 days after delivery generally — and for the export-sale exemption specifically, at or before the time of delivery.

Q: Can I rely on this ruling for my own export sales?
A: No. This advisory opinion binds the Department only as to the petitioner and the specific facts described — get your own documentation right before relying on any export exemption.

Citations and references

Statutes and regulations:

• Tax Law § 289-c(1)-(2) (motor fuel tax ultimately borne by, and passed through to, the purchaser)
• Tax Law § 414.1(a)(3) (export exemption for registered distributors, extended by policy to Canadian-province collectors)
• Tax Law § 414.1(c)(1)-(2) (presumption fuel is taxable; burden of proof on purchaser/seller)
• Tax Law § 414.1(d)(1)-(2) (seller relief on good-faith acceptance of a properly completed exemption certificate)
• Tax Law § 414.1(e) (presumption and documentation for prepaid sales tax)
• Motor Fuel Tax Regulations § 415.1(a)-(b)

Related opinions

• TSB-A-87(2)M — the earlier origin ruling establishing that New York extends its reciprocal distributor tax-free export privilege to a duly appointed Ontario Gasoline Tax Act section 6 collector, the same rule applied (and found unmet on the facts) here.

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/fuel/a89_1m.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-89 (1) M
Motor Fuel
September 29, 1989

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M890512B

On May 12, 1989 a Petition for Advisory Opinion was received from Fleet Supplies, Inc.,
250 Mahoning Avenue, Cleveland, Ohio 44101.
The issue raised is whether Petitioner, Fleet Supplies, Inc. ("Fleet") is responsible for the
payment of motor fuel tax and the New York State prepaid sales tax on motor fuel or in the
alternative for obtaining and providing appropriate exemption documents.
Petitioner, Fleet Supplies, Inc., is an Ohio corporation with its principal office located at 250
Mahoning Avenue, Cleveland, Ohio 44113. The business operations of Fleet include the purchase
and sale of diesel fuel, gasoline, and other petroleum products. Fleet is duly registered with the State
of New York as an Article 12-A Distributor. (No. M-2524). Golden State Products & Petroleum
("Golden State") is apparently a sole proprietorship of whom the principal is Frank Yantorn. The
principal place of business of Golden State is 1836 Euclid Avenue, Suite 811, Cleveland, Ohio
44115. International Petroleum Trades, Inc. dba P.A.L. Oil ("P.A.L. Oil") is a distributor with
facilities located at Tonawanda, New York.
Commencing on or about May 29, 1988 and continuing through on or about November 30,
1988 Golden State contracted with Fleet to have Fleet supply to Golden State #2 fuel, gasoline, and
other products ("Fuel") to be used in the business operations of Golden State. Golden State agreed
to pay the then-prevailing purchase price for the Fuel, together with all applicable taxes. On
numerous occasions after May 29, 1988, Fleet provided Fuel to Golden State. Fleet sold the Fuel to
Golden State F.O.B. origin. Title to the Fuel was transferred to Golden State without Fleet taking
physical possession of the Fuel. Golden State then used the Fuel in its business operations.
In connection with the supply and delivery of Fuel, Fleet sent invoices to Golden State for
the amount due for the Fuel for which payments were made by Golden State to Fleet. All such
invoices include the applicable purchase price for the Fuel. Initially, the invoices also include all
applicable taxes due on such sales as more fully indicated below. Each invoice provided for a
specific discount of the purchase price of the Fuel if payment was received by the indicated date.
Fleet purchased the Fuel used for resale to Golden State from P.A.L. Oil. At the time Fleet
purchased the Fuel from P.A.L. Oil, Fleet was invoiced and Fleet paid the purchase price and all
applicable taxes due on the purchases. Thereafter, Fleet would transfer title to the Fuel to Golden
State in Tonawanda, New York. The invoices from May 29, 1988 through June 6, 1988, include
charges for New York State Motor Fuel Tax and New York State Prepaid Sales Tax (sometimes
hereinafter collectively referred to as "New York State Taxes") as well as the New York State

TP-9 (9/88)

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Motor Fuel
September 29, 1989

Gross Receipts Tax. In addition, the invoices include charges for federal tax on diesel or gasoline,
as appropriate.
Thereafter, Golden State advised Fleet that Golden State was exempt from New York State
Taxes. With regard to federal taxes, Golden State indicated that it was also exempt from federal
diesel fuel taxes. Golden State paid the federal tax on gasoline purchases (except for the purchases
for which no payment has been received). Fleet subsequently provided Golden State credits for the
amount of the New York State Taxes and federal diesel taxes previously invoiced through June 8,
1988. Such credits were provided even though Fleet had paid P.A.L. Oil the New York State Taxes
and federal taxes on its purchases prior to that date and continued to pay P.A.L. 0il the New York
State Taxes and federal taxes thereafter.
Fuel was purchased by Golden State from Fleet during the period from May 29, 1988 through
September 26, 1988. For purposes of this Petition, however, the only New York State Taxes at issue
pertain to purchases of a total of 119,004 gallons of gasoline made during June, 1988. The total
amount of New York State Taxes paid by Fleet to P.A.L. Oil and which Golden State should have
paid to Fleet on the sale of 119,004 gallons of gasoline is as follows:
New York State Motor Fuel Tax
(119,004 gallons at 8C/gallon)

-

$ 9,520.32

New York State Prepaid Sales Tax
(119,004 gallon at 5.2C/gallon)
TOTAL

-

$ 6,188.21
$15,708.52

Fleet received Golden State's Out of State Retailer Number (017044) and its Certificate for
Exemption from Certain Taxes Imposed on Diesel Motor Fuel and Propane (Form FT-1005)
indicating that Golden State was exempt from New York State taxes on diesel fuel. With regard to
the New York State Gross Receipts Tax due on the sale of Fuel, Fleet has a direct pay license for
Gross Receipts Tax. This amount was not paid by Fleet because Golden State has provided an Export
Certificate from the New York State Gross Receipts Tax (Form CT-13-AX). The amount which
would be due if the purchase of the Fuel were not exempt would have been $1,870.08.
Fleet requested Golden State to provide documentation so that Fleet could obtain a refund
of the New York State Taxes which it had paid to P.A.L. Oil. Golden State provided Fleet with a
Form FT-936 - Statement of Exportation of Motor Fuel by Purchaser ("Statement of Exportation"),
dated September 27, 1988. The Statement of Exportation was submitted to the New York State Tax
Department of Taxation and Finance ("Department"), which stated that Golden State was a registered
distributor in the State of Pennsylvania and that the product was being exported to Ontario, Canada.
Fleet filed its Return of Tax on Motor Fuel for the month of June 1988 requesting a refund
of Motor Fuel Tax in the amount of $25,187.84. On or about October 24, 1988, the State of New

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Motor Fuel
September 29, 1989

York refunded only $15,667.52. The balance of $9,520.32 was not refunded.
Fleet also filed its Report of Sales Tax Prepayment on Motor Fuel for the month of June,
1988 indicating a credit due in the amount of $10,183.88. The Prepaid Sales Tax for sales to exempt
purchasers other than to Golden State was refunded. The amount of $6,188.21 was not refunded
because Fleet did not submit an Application for Refund for sales to Golden State because Fleet did
not receive the necessary properly completed documentation from Golden State with regard to such
sales. The Department had advised Fleet that the Form FT-936 - Statement of Exportation of Motor
Fuel by Purchaser delivered by Golden State to Fleet was not properly completed.
After Fleet received notice from the Department that it would not refund the New York State
Taxes to Fleet, Fleet requested Golden State to provide additional appropriate documentation so that
Fleet could obtain a refund of the New York State Taxes. Thereafter, Golden State submitted to Fleet
a second Statement of Exportation, dated November 7, 1988. The second Statement of Exportation
was submitted to the Department but the Department has not issued a refund of the applicable New
York State Taxes previously paid by Fleet. Neither Statement of Exportation indicated that Golden
State was a collector pursuant to Section 6 of the Ontario Gasoline Tax Act. The statements did
indicate that Golden State was a licensed distributor in the State of Pennsylvania.
Payments of the purchase price without the New York State Taxes were paid by Golden State
to Fleet through August 8, 1988, at which time, Golden State had a $450.00 credit toward the
purchase price of Fuel without taxes. Thereafter, additional fuel was delivered by Fleet to Golden
State, the purchase price for which without taxes if payment were made within the time to obtain the
discount was $29,835.15. This amount less the credit of $450.00 results in a net discounted balance
due without taxes in the amount of $29,385.36. As of September 9, 1988, the balance due for the
purchase price of the Fuel without taxes and without the discount was $30,584.36
On or about September 26, 1988, Fleet submitted an invoice to Golden State for the total
amount of New York State Taxes due for the sales by Fleet to Golden State. As the tax rate for the
New York State Prepaid Sales Tax was different than originally invoiced, on or about November 30,
1988, Fleet submitted to Golden State revised invoices for the total amount of New York State
Taxes.
On or about September 27, 1988, Golden State submitted a check in the amount of
$29,385.15 with a restrictive endorsement indicating that such payment would be payment in full
in an effort to avoid payment of the New York State Taxes due on the purchases made by Golden
State. Fleet refused to accept partial payment as payment in full and returned the check to Golden
State. Golden State responded by letter dated October 4, 1988.
The Motor Fuel Tax due upon importation for use, distribution, storage or sale, though
payable by the distributor, is borne by the purchaser and when paid by the distributor, is deemed to

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Motor Fuel
September 29, 1989

have been paid for the account of the purchaser in accordance with Section 289-c(1) of the Tax Law
and Section 415.1 of the Motor Fuel Tax Regulations. It is the intention of the law to place the
ultimate burden resulting from such tax, so far as possible, on the persons who use the public
highways of New York State in accordance with Section 289-c(2) of the Tax Law and Section
415.1(b) of the Motor Fuel Tax Regulations.
In order to obtain an exemption from tax in the present situation, the purchaser must furnish
to the seller a properly completed certificate (Form FT-936 - Statement of Exportation of Motor Fuel
by Purchaser) to the effect that the purchaser is entitled to acquire motor fuel upon which the tax has
not passed through in accordance with Section 414.1(c)(2)(i)(a) of the Motor Fuel Tax Regulations.
The Department reviews the documents to determine whether the documents are properly completed.
The purchaser must be a duly registered or licensed distributor of, or dealer in, motor fuel in a state
of the United States or province of a foreign country and must immediately export such motor fuel
to an identified facility in that same state or province in which the purchaser is registered or licensed
in accordance with Section 414.1(a)(3) of the Motor Fuel Tax Regulations.
It is presumed that all motor fuel in New York State is subject to tax unless the contrary is
established in accordance with Section 414.1(c)(1) of the Motor Fuel Tax Regulations. The burden
of proving that any sale of motor fuel is not subject to tax is upon the purchaser of the motor fuel
and, unless otherwise provided, is also on the person required to pass through the tax in accordance
with Section 414.1(d)(1) of the Motor Fuel Tax Regulations. If, however, a seller of motor fuel,
within 90 days after delivery of such fuel, in good faith accepts from the purchaser a properly
completed exemption certificate or other document evidencing exemption from tax, the seller is
relieved of liability for failure to have passed through the tax with respect to that transaction and the
burden of proving that such sale of motor fuel is not subject to tax is solely on the purchaser in
accordance with Section 414.1(d)(2) of the Motor Fuel Tax Regulations. Provided, however, a seller
of motor fuel shall be relieved of liability for failure to have passed through the tax on sales for
export under paragraph (a)(3) of this section only if such seller receives, and accepts in good faith,
the properly completed certificate prescribed by the Department of Taxation and Finance at or prior
to the time of delivery of such motor fuel.
As with the New York State Motor Fuel Tax, there is a presumption that all sales of fuel are
subject to the New York State prepaid sales tax until the contrary is established in accordance with
Section 414.1(d) of the Motor Fuel Tax Regulations as prescribed by Section 414.1(e) of said
regulations.
The Laws of the State of New York and the Regulations of the Commissioner of Taxation
and Finance and their application in particular instances are presumed to be constitutional at the
administrative level.
While there is no specific provision of the Tax Law allowing tax free purchases by
distributors licensed by the provinces of Canada, Section 414.1(a)(3) of the Motor Fuel Regulations

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September 29, 1989

extends the same privileges to distributors duly registered or licensed by the taxing authorities of the
provinces of Canada.
It is noted that the Province of Ontario does not issue licenses to motor fuel distributors in
a manner similar to that employed by the State of New York pursuant to the Tax Law. However, the
Ontario Ministry of Revenue is authorized to appoint any person who is selling gasoline for resale
in Ontario to be a collector under section 6 of the Gasoline Tax Act. The State of New York will
recognize a Province of Ontario gasoline distributor appointed as a collector under section 6 of the
Gasoline Tax Act by the Ministry of Revenue, as a duly licensed distributor for purposes of
purchasing gasoline tax free in New York State for immediate export to an identified location in
Ontario for the purposes of selling such gasoline. Inasmuch as the Ministry of Revenue does not
issue licenses to such collectors, a letter issued by the Ontario Ministry of Revenue, Motor Fuels and
Tobacco Tax Branch appointing a Province of Ontario distributor as a collector under section 6 of
the Gasoline Tax Act will be acceptable as proof of such appointment.
A distributor's right to purchase tax free in New York State will terminate if the distributor's
appointment by the Province of Ontario as a collector is suspended or revoked.
Accordingly, as long as the Province of Ontario distributor to whom Fleet sells the gasoline
is authorized by the Ministry of Revenue to be a collector under section 6 of the Gasoline Tax Act,
it will be recognized by the State of New York as a distributor of or a dealer of motor fuel in the
Province of Ontario and will be authorized to purchase gasoline tax free for immediate export to an
identified facility in Ontario for the purposes of selling such gasoline.
To effectuate a tax free purchase, Golden State must furnish to Fleet a copy of the letter of
the Ministry of Revenue appointing it as a collector under section 6 of the Gasoline Tax Act.
Additionally, it must furnish to Fleet a properly completed Statement of Exportation of Motor Fuel
By Purchaser (Form FT-936) for each purchase of gasoline. In the absence of such documentation,

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Motor Fuel
September 29, 1989

Fleet will be responsible for the payment of Motor Fuel Tax and the New York State Prepaid Sales
Tax on Motor Fuel and may not take a credit for, or obtain a refund of said taxes.

DATED: September 29, 1989

NOTE:

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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