Is a federally chartered credit union exempt from Utah's motor and special fuel taxes on fuel used for its courier vehicles and backup generators, and if so, how does it recover tax already paid?

Plain-English summary

A credit union that had recently converted to a federal charter asked the Utah State Tax Commission whether it was exempt from state and federal fuel taxes on the diesel and gasoline it bought for its courier vehicles and backup generators, having paid those taxes routinely up to that point.

The Commission confirmed the exemption applies, tracing it through two layers of law. Federal law — 12 U.S.C. § 1768 — exempts federally chartered credit unions from state and local taxes generally, with only property tax carved out. Utah's own fuel-tax statutes independently confirm this: § 59-13-201(3)(a)(iv) exempts sales of motor fuel to the U.S. Government and "federal instrumentalities" (which include federal credit unions) from the motor fuel tax, and § 59-13-301(2)(b) provides the same exemption for undyed diesel (special fuel tax).

Because the credit union had already been paying the tax, the practical remedy was a refund, not a prospective exemption certificate: motor fuel tax paid can be recovered on Form TC-114M, and special fuel tax on Form TC-114S. To support a refund claim, the entity must keep original records for three years covering the exempt purchaser's name, the vehicle's license plate number, invoice date/number, supplier name and location, fuel type, gallons purchased, and the amount of tax paid. One important condition: the credit union itself must pay for the fuel directly — if an individual employee pays and later seeks reimbursement, that purchase doesn't qualify as exempt, because the tax-exempt buyer of record has to be the credit union, not an individual.

What this means for you

Federally chartered credit unions and other federal instrumentalities in Utah

You're exempt from Utah motor and special fuel tax on fuel your organization purchases directly, whether for a vehicle fleet, courier service, or backup generators. If you've been paying the tax, you can recover it retroactively via a refund application rather than losing the benefit.

Anyone administering fuel purchasing for a tax-exempt government or federal entity

Structure your purchasing so the exempt entity itself is the direct buyer of record on the invoice. Reimbursing an employee who fronts the cost personally breaks the exemption chain — the sale to the individual is not exempt even if the entity later reimburses them.

Accountants and tax professionals filing fuel tax refund claims

Keep the specific documentation the Commission requires for three years: exempt entity name, vehicle license plate, invoice date/number, supplier name/location, fuel type, gallons, and tax paid. Missing any of these elements could jeopardize a refund claim.

Common questions

Q: Are federal credit unions exempt from all Utah taxes? A: No — 12 U.S.C. § 1768 exempts them from state and local taxes generally, but property tax is specifically excluded from that exemption.

Q: How does a credit union recover fuel tax it already paid? A: By filing for a refund using Form TC-114M (motor fuel tax) or Form TC-114S (special fuel tax), supported by three years of qualifying purchase records.

Q: Does it matter who actually pays for the fuel at the pump? A: Yes. The exempt entity itself must make the payment directly. If an individual employee pays and is later reimbursed, that purchase is not treated as exempt.

Q: Can I rely on this ruling for my own organization's fuel tax exemption? A: No — it binds the Commission only for the taxpayer and facts described. If you're a different type of federal instrumentality or your purchasing structure differs, confirm your own eligibility and documentation requirements with the Commission.

Citations and references

Statutes cited:

• 12 U.S.C. § 1768 (federal credit unions exempt from state and local taxes except property tax)
• Utah Code Ann. § 59-13-201(3)(a)(iv) (motor fuel tax exemption for federal instrumentalities)
• Utah Code Ann. § 59-13-301(2)(b) (special fuel tax exemption for federal instrumentalities)

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/05-020.pdf

Original ruling text

05-020

NAME
ADDRESS

June 29, 2005

To Whom It May Concern:

I am writing to request a ruling on a particular taxation issue regarding the payment of fuel taxes. On DATE CREDIT UNION became a federally chartered credit union. As per section 1768 of Title 12 of the US Code, federal credit unions are exempt from all taxes except for real and personal property taxes. Included is an attached copy of the official exemption notification from the National Credit Union Administration.

Since DATE CREDIT UNION has been paying fuel taxes on the fuel it has purchased for the operation of company courier vehicles, backup generators, etc. It is the credit union’s opinion that according to Title 12 of the US Code it should be exempt from payment of both state and federal fuel taxes.

CREDIT UNION is requesting an official ruling from the State Tax Commission in regards to this matter. If you have any further questions or need additional information, please contact me at PHONE NUMBER.

Thank you for help in this matter.

Sincerely,

NAME
COMPANY

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RESPONSE

July 27, 2006

NAME
ADDRESS

Re: Private Letter Ruling 05-020
Tax on fuel purchased by a federally chartered credit union

Dear NAME,

This letter is in response to your request for tax guidance. This letter ruling is not intended as a statement of broad Tax Commission policy. It is an interpretation and application of the tax law as it relates to the facts presented in your request letter and the assumptions stated in the Analysis portion of this ruling letter. If the facts or assumptions are not correctly described in this letter ruling, please let me know so we can assure a more accurate response to your circumstances.

Facts

CREDIT UNION is a federally chartered credit union. The Credit Union has been paying fuel taxes on purchases of fuel used for the company’s courier fleet, backup generators, etc. You have asked for a ruling as to whether the Credit Union is required to pay tax on its fuel purchases.

Analysis

Under federal law, federally chartered credit unions are exempt from state and local taxes, except for property tax. Utah law, in section 59-13-201 (3) (a) (iv) of the Utah Code, exempts from taxation the sales of motor fuel to the United States Government and federal instrumentalities, including federal chartered credit unions. Sales of undyed diesel fuel to a federally chartered credit union is also exempt from the special fuel tax under section 59- 13-301 (2) (b). Therefore, if the Credit Union can show that it has paid tax on its purchases of motor fuel or special fuel, it may apply for a refund using form TC-114M (copy enclosed). Likewise, a government entity that paid tax on its purchase of special fuel may request a refund on form TC-114S (copy enclosed).

The government entity that claims a refund for its fuel purchases is required to maintain original records to support the refund claim for a period of three years. The records must include information on its purchases, including the following:

a. Name of the exempt entity making the purchase;
b. License plate number of the vehicle in which the fuel was used; c. Invoice date and number; d. Name of supplier and vendor location;

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e. Fuel type purchased;
f. Number of gallons purchased; and
g. Amount of state motor fuel tax paid.

Please note that payment for the fuel must be made directly by the credit union, which is the exempt entity. If an individual pays for the fuel, then requests reimbursement, the sale is not exempt.

Ruling

The Credit Union is eligible for refunds of motor fuel and special fuel tax. Application for refund can be made on the appropriate Tax Commission forms.

For the Commission

Marc B. Johnson
Commissioner

MBJ/IR
05-020