Was recycled or re-refined petroleum-based or synthetic lubricating oil subject to Rhode Island's hard-to-dispose materials tax when used as a lubricant?

Plain-English summary

Recycled or re-refined petroleum-based and synthetic lubricating oil was not subject to Rhode Island's hard-to-dispose materials tax, even when the buyer used it as a lubricant. The statutory and regulatory definition excluded those oils without imposing a later-use condition.

The Company purchased recycled or re-refined lubricating oils. The Department of Environmental Management had told it that chapter 44-44 tax was due when the materials were used for lubricating purposes.

R.I. Gen. Laws § 37-15.1-3 and Regulation LIT 90-2 generally included petroleum-based and synthetic lubricating oils among hard-to-dispose materials, along with tires, glycol-based antifreeze, and organic solvents.

But both provisions expressly said that petroleum-based or synthetic lubricating oil that was recycled or re-refined was not a hard-to-dispose material. The Division found that language clear and noted that neither provision made the exclusion disappear when the oil was later used as a lubricant.

What this means for you

Lubricant purchasers and users

The 1992 exclusion followed the product's recycled or re-refined status. Lubricating use did not change the result under the language quoted in the order.

Recyclers and re-refiners

Documentation that the oil was recycled or re-refined supported the defining fact on which the exclusion rested.

Accountants and environmental-tax professionals

Start with the statutory definition. The order rejected an agency position that added a use-based limitation not found in the statute or regulation.

Common questions

Were ordinary petroleum-based lubricating oils generally listed as hard-to-dispose materials? Yes.

What created the exclusion? The oil had been recycled or re-refined.

Did use in an engine or other lubricating purpose restore the tax? No. The Division found no such language in the law or regulation.

What tax chapter did the ruling address? Rhode Island chapter 44-44.

Who could rely on the ruling? The requesting taxpayer, subject to statutory and factual changes.

Citations and references

• R.I. Gen. Laws § 37-15.1-3 — hard-to-dispose material definition and recycled-oil exclusion.
• R.I. Gen. Laws ch. 44-44 — tax chapter identified in the order.
• Rhode Island Regulation LIT 90-2, section I — matching regulatory definition and exclusion.

Source

• Landing page: Rhode Island Declaratory Rulings
• Declaratory order: Declaratory Order 1992-02

Original ruling text

Ruling Request No. 92-02

Ruling Request No. 92-02

Re: Request for Declaratory Ruling Relating to Certain Purchases Under Hard-to-Dispose Materials Law

Facts

A company purchases petroleum-based or synthetic lubricating oils which have been recycled and/or re-refined. The Department of Environmental Management has informed the company that a tax is due to the State under Chapter 44-44 when said materials are used for lubricating purposes.

Ruling Requested

Whether or not a tax is due on petroleum-based or synthetic lubricating oil which is recycled and/or re-refined if such oil is used for lubricating purposes.

Discussion

R.I.G.L. 37-15.1-3 and Regulation LIT 90-2 Section I, define "Hard-to-dispose material" as follows:

"Hard-to-dispose material" means and encompasses the following materials: petroleum-based or synthetic lubricating oils, including, but not limited to, lubricants in internal combustion engines; tires used on motorized vehicles and trailers, including cars; trucks, buses, and heavy construction equipment; glycol-based antifreeze and organic solvents. A petroleum-based or synthetic lubricating oil which is recycled and/or re-refined is not, nor shall it be considered, a hard-to-dispose material.(emphasis added)

Both the law and the regulation specifically exclude from the definition of hard-to-dispose materials petroleum-based or synthetic lubricating oil which is recycled and/or re-refined. The law and regulation are clear and unambiguous. There is no further language in the law relating to a subsequent use as a lubricant.

Ruling

Petroleum-based or synthetic lubricating oil which is recycled and/or re-refined is not a hard-to-dispose material subject to tax under Chapter 44-44.

This ruling may be relied upon by this taxpayer and shall be valid until the applicable statutory provisions are amended in a manner requiring a different result or until the underlying factual presentation changes.

**R. Gary Clark

Tax Administrator

February 18, 1992**