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Motor Fuels FAQ

What kinds of taxes are administered by the motor fuels section?
The excise taxes administered are: gasoline, diesel fuel, aviation, wholesale oil/import license, lubricating oil, motor carrier mileage tax, inspection fee and local excise taxes for Bullock County, Cullman County, and Lowndes County.

Where can I get information on the Alabama Underground and Aboveground Storage Tank Trust Fund Act?
The Alabama Underground and Aboveground Storage Tank Trust Fund are administered by the Tobacco Tax Section of the Business and License Tax Division. Learn more about the act

When are the tax returns due?
The terminal excise tax returns for Supplier, Importer, Exporter, and Blender are due on the 22nd of the month. Lubricating oil, inspection fee, and local counties are due on the 20th of each month. The Wholesale Oil/Import License Fee return is an annual return that is due on October 14 of each year. Motor carrier mileage tax is due on the 15th of each month. The Transporter and Terminal Operator monthly reports are due the last day of each calendar month following the period covered. The annual Terminal Operator report is due the last day of January for the prior calendar year.

If the due date falls on a weekend or a holiday, when is the due date?
The return must be submitted electronically or postmarked on or before the next business day based on the return type’s mandatory filing requirements. If you remit payment by EFT through My Alabama Taxes, then your payment must be initiated on or before the due date by 4 p.m.

Is there another option besides keying all of the data in the template?
Yes, you have the option to copy information from your database and paste it into the template.

Can the whole spreadsheet be copied into the template?
Yes, only if your spreadsheet is in the same format as the template. It might be less problematic to copy one or two columns at a time. Do not copy data into columns that are formulated to calculate the tax value.

What can be done if I detect a mistake or need to add to a Schedule in MAT?
Mistakes or errors will be shown in red on MAT. You may correct or add additional information into a schedule after it has been imported into MAT. Any cells shown in red must be corrected before the report can be submitted successfully.

Can I amend a report in MAT after it has been submitted?
Yes, you can change data if you detect an error. If the status of the report is “pending,” then you can change the original report. If the status of the report is “View Return,” then you would need to amend the report by clicking on change after you go to the return that needs to be amended.

— Terminal Excise Tax (Gasoline and Motor Fuel Products)

Who is required to be licensed?

  • A supplier who may also act as a terminal operator, permissive supplier, distributor, importer, exporter, blender, motor fuel transporter, or aviation fuel purchaser without securing a separate license but who is subject to all other conditions, requirements, and liabilities imposed on those license holders. An Alabama supplier will be deemed a permissive supplier.
  • A permissive supplier is a position holder at a terminal located outside Alabama and who will pre-collect the Alabama tax on fuel sold with destination state of Alabama.
  • A distributor who will purchase taxable motor fuel for resale within this state from a licensed terminal supplier.
  • An importer who wishes to cause motor fuel to be delivered into this state on his or her behalf, for his or her own account, or for resale to a purchaser in this state from another state in a fuel transport truck or railcar.
  • A terminal operator engaged in business in this state.
  • An exporter who exports product to another state.
  • A motor fuel transporter who transports taxable motor fuel by whatever manner whether the person is engaged for hire in interstate or intrastate commerce.
  • A blender who blends motor fuel outside the bulk transfer/terminal system.
  • An aviation fuel purchaser who wishes to purchase aviation fuel at the rate of tax specified under Section 40-17-325(3)(a).
  • An exempt entity as listed in Section 40-17-332(j) who wishes to buy motor fuel without the excise tax from a licensed distributor or credit card issuer.

How do I apply for a license for the Alabama terminal excise tax (motor fuels)?
For the Alabama Terminal Excise Tax (Motor Fuels), you find the paper application at https://revenue.alabama.gov/business-license/motor-fuels/alabama-terminal-tax/ or you can submit the application electronically through My Alabama Taxes by going to https://myalabamataxes.alabama.gov/ selecting “Business” and by choosing “Obtain a New Tax Account Number.” If you have any questions, then you can call the Motor Fuels Section at 334-242-9608 and speak with a representative of the Section.

If I am a licensed distributor transporting my own product, am I required to have a transporter’s license?
No, a transporter’s license is not required if you are transporting your own product. A transporter’s license is only required if you are transporting product for hire.

If I am currently a licensed distributor with the Department of Revenue and I am selling gasoline and undyed diesel fuel to the federal government, how will act 2015-54 impact my work flow?
You will continue to file the licensed distributor petition for refund for the excise tax on the gasoline and undyed diesel fuel, but the rate on the gasoline refund will increase from $0.16 per gallon to $0.18 per gallon effective October 1, 2016.

What are the bond requirements for each license?

  •  The bond amount for a supplier, permissive supplier, or terminal operator will be twice the average monthly liability, not to exceed $2,000,000.
  • The bond amount for an exporter, blender, importer, or distributor will be the minimum of $2,000 or twice the average monthly tax liability, whichever is greater.
  • There is no bond requirement for a motor fuel transporter or aviation fuel purchaser.
  • Only one bond is required of an applicant for multiple licenses which will be based on the highest average monthly tax liability of the separate licenses.

If I am a licensed fuel distributor in Alabama when the new terminal tax goes into effect on October 1, 2012, will I be required to file a new motor fuels application and post a new bond before being issued a new license?
Yes, any person applying for a license under the new terminal tax will be required to file a new application and post a new bond if one is required. However, the bond amount will remain the same if the distributor is an active license holder at the time the new terminal tax law goes into effect.

What are the license fees?

  • Supplier // $200
  • Exporter // $100
  • Importer // $100
  • Transporter // $50
  • Distributor // $50
  • Aviation Fuel Purchaser // $200
  • Permissive Supplier // No fee
  • Terminal Operator // No fee
  • Blender // No fee
  • Exempt Entities // No fee

Any person, other than one who possesses a valid Alabama supplier’s license, engaged in more than one activity for which a license is required shall obtain a separate license for each activity.

What are the grounds for denial of a license?

  • Had a license or registration issued under prior law or this act canceled by the Department for cause.
  • Had a motor fuel license or registration issued by another state canceled for cause.
  • Had a federal certificate of registry issued under Section 4101 of the Internal Revenue Code, or a similar federal authorization, revoked.
  • Been convicted of any offense involving fraud or misrepresentation.
  • Been convicted of any other offense that indicates that the applicant may not comply with this act if issued a license.
  • Applicant is in arrears to the state for any taxes or for other good cause shown.

Can my license be revoked?
Yes, the Department may cancel any license upon written notice sent to the licensee’s last known address, for any of the following reasons:

  • Filing by the licensee of a false report of the data or information required by this act.
  • Failure, refusal, or neglect of the licensee to file a report or to provide any information required by this act.
  • Failure of the licensee to pay the full amount of all excise taxes due or to pay any penalties or interest due.
  • Failure of the licensee to keep accurate records of the quantities of motor fuel received, produced, refined, manufactured, compounded, sold, or used in Alabama.
  • Failure to file a new or additional cash deposit or surety bond upon request of the department pursuant to Code Section 40-17-335.
  • Conviction of the licensee or a principal of the licensee for any act prohibited under this act.
  • Failure, refusal, or neglect of a licensee to comply with any other provision of this act or any rule promulgated pursuant to this act.
  • Having a motor fuel license or registration issued by another state canceled for cause.
  • For any change in the ownership or control of the business.

Can tax-free transactions occur in the pipeline?
Yes, a tax-fee transaction can only occur in the pipeline if all parties involved in the transaction have a valid Alabama Supplier license. Otherwise, the tax is to be collected from the person ordering the sale or transfer in the bulk transfer/terminal system.

When is the motor fuel floor stock tax return and payment due?
The motor fuel floor stock tax return is due on or before November 15, 2012, and the payment is due on or before December 31, 2012. The failure to timely file and/or pay penalties will be charged on late returns or payments.

Who is allowed to take the credit for tax on reported bad debt?
Suppliers and Permissive Suppliers can only take the credit for the tax amount not received from their licensed distributors and importers.

Does the supplier or permissive supplier have to notify the department before taking the credit for tax on reported bad debt?
Yes, they must submit the “Supplier 20 Day Notification” form to the Department within 20 business days from the date the tax was due from the licensed distributor or importer. Once the Department receives the notification, then an authorized letter of credit will be issued to the Supplier or Permissive Supplier to be used on the next tax return. The credit cannot be taken until letter authorizing credit has been issued.

What discounts are allowed for suppliers and permissive suppliers?
Suppliers and Permissive Suppliers are eligible to receive a discount of one-half of one percent (.005) of the amount of tax payable to the state, no limit, and they must pass on four-tenths of one percent (.004) of this discount to licensed distributors and importers that timely pay the tax due. Also, Suppliers and Permissive Suppliers are allowed a discount of one-tenth (.001) of one percent of the amount of tax payable to this state, not to exceed $2,000 per month.

If a supplier or permissive supplier underpays but files on time, do they get the discount?
No. Returns must be fully paid on time and timely filed to receive the discount.

Can an exporter apply for a refund on fuel that is exported with Alabama motor fuel excise tax paid?
Yes, if a supplier does collect Alabama tax on gasoline or diesel fuel that is exported, then the exporter can apply for a refund. However, the exporter must be licensed with this state to apply for a refund. The refund will not be approved until the exportor submits documentation to the department that proves that the other state’s tax was paid.

What are the state excise tax rates on motor fuels?
The state excise tax rates for gasoline is $0.18 per gallon, diesel fuel is $0.19 per gallon, aviation gasoline is $0.095 per gallon, and jet fuel is $0.035 per gallon.

Is kerosene subject to the state fuel excise taxes?
Yes, undyed kerosene is taxed the same as undyed diesel fuel.

What is the taxability of biodiesel?
Biodiesel is treated like any other diesel fuel. Undyed biodiesel fuel is taxed the same as undyed diesel fuel and dyed biodiesel fuel is treated the same as dyed diesel fuel and is subject to state sales tax.

Is ethanol taxable?
Ethanol is not taxable until blended with a motor fuel subject to the state excise tax.

Is Transmix taxable?
Effective August 1, 2013, the $0.19 per gallon diesel excise tax is due on transmix pursuant to Act 2013-372.

Are state agencies exempt from the state motor fuel excise taxes?
No, state agencies are not exempt from the state motor fuel excise taxes.

What is an import verification number?
Anyone importing motor fuel into Alabama, who has not entered into a pre-collection agreement with their supplier or permissive supplier, must obtain an Import Verification Number. This number must be obtained before importing the motor fuel into Alabama upon which this state’s motor fuel tax has not been paid. The Import Verification Number must be written on each copy of the terminal-issued shipping papers.

The “Import Verification Number” can be obtained by going to the website www.trac3.net/. In addition, all Alabama fuel taxes must be paid within three days of the importation of nonexempt motor fuel on a Three Day Import Payment Voucher.

What are the different tax returns and reports and their due dates?

  • Supplier/Permissive Supplier Return – 22nd day of the month following the period covered
  • Terminal Operator Monthly Report – Last day of the month following the period covered
  • Terminal Operator Annual Report – Last day of January
  • Importer Return – 22nd day of the month following the period covered
  • Exporter Return – 22nd day of the month following the period covered
  • Blender Return – 22nd day of the month following the period covered
  • Transporter Monthly Report – Last day of the month following the period covered
  • Motor Fuels Floor Stock Report – November 15, 2012
  • Motor Fuel Back Up Tax Report – No Due Date – Occasional Report

When is the payment due on imports?
The excise tax is due on or before the third business day following importation if purchased from a permissive supplier who did not charge the Alabama excise tax.  If imported from a bulk plant by a licensed importer or diverted into Alabama by a licensed importer, the excise tax is due on the monthly return.

What is a diversion?
A diversion occurs when fuel is delivered to a state other than the destination state printed on the terminal issued bill of lading.

How do I report a diversion?
If motor fuel needs to be diverted to a different destination state from the one stated on the shipping document, then the carrier must obtain a diversion number by registering the diversion with TRAC III. TRAC III is a web-based system and does not offer a call-in option.

How do I register a diversion?
In order to register a diversion of fuel, go to the Trac 3 website, click on “Registration,” and enter the requested company data (for the initial registration only). Then follow the simple steps. The TRAC III database will maintain basic company name and address information for carriers and fuel marketers after the initial diversion registration. A drop-down box for federal Terminal Code Numbers (TCN’s) is provided to assist in diversion registration. Diversion registration information can easily be verified by selecting the “Confirm” option. There is no cost to register a diversion; however, a TRAC III membership can be purchased for additional access to benefits of the system.

What motor fuel refunds are available and how often can each be filed?

Exempt Entity Refund – Purchases of fuel by exempt entities as listed in Code Section 40-17-329(e):

  • United States Government – quarterly
  • County Governing Body – quarterly
  • Incorporated Municipal Governing Body – quarterly
  • City and County Boards of Education – quarterly
  • Alabama Institute for Deaf and Blind – quarterly
  • Department of Youth Services School District – quarterly
  • Private and Church School Systems K thru 12 – quarterly
  • Credit Card Issuer Refund – Purchases of fuel by exempt entities at fixed retail pump using the issuer’s credit card. The $0.02 administrative allowance per gallon does not apply to this petition. – quarterly
  • Licensed Distributor Refund – Purchases of fuel by licensed exempt agencies, having first paid the tax. The $0.02 administrative allowance per gallon pertains to this petition. – monthly
  • Petition for Refund for Casualty Loss or Contamination – as needed
  • Petition for Refund as provided in Code Section 40-17-329(d)(g)(i)(k)(l) which include the following:
    • Licensed Aviation Fuel Purchasers for sales of jet fuel used in all cargo international flights or in international commerce – monthly
    • Air Carriers with HUB operation – quarterly
    • Gasoline Blendstocks not used in the manufacture of gasoline or motor fuel – quarterly
    • Transmix not used as a motor fuel or that is delivered to a refinery for further processing – quarterly
    • Tax paid on motor fuel within the bulk transfer system in which a second tax has been paid or reported to another state or country – monthly
  • Statute of limitations for filing refunds is two years from date of sale, loss, or purchase of fuel.

How do I apply for a license for the Alabama Terminal Excise Tax (Motor Fuels)?
For the Alabama Terminal Excise Tax (Motor Fuels), you can find the paper application in the Forms Section of this website or you can submit the application electronically through My Alabama Taxes by choosing “Business” and then choose “Obtain a New Tax Account Number.”

What is the approved method for electronically filing the new terminal excise tax returns and reports?
Currently, the only approved method to file the returns and reports is the Federation of Tax Administrators (FTA) approved XML format. For more information, please visit our website at  https://revenue.alabama.gov/business-license/motor-fuels/motor-fuel-excise-tax-e-filing/.

— Inspection Fee

When is the $.02 per gallon excise tax on gasoline and the transfer of the inspection fee to the Department of Revenue effective?
The effective date for these changes is October 1, 2016.

The law states that reduced rates ($.00025) apply only to a permit holder selling directly to an ultimate consumer. Can a supplier also act as a permit holder?
The reduced rates for sales to the specific consumers only apply to the dyed fuel. So, you would have to get permitted with the Department of Revenue in order to sell at the reduced rates. The department will issue a refund of the excise tax for the entities that are eligible for the reduced inspection fee rates on undyed diesel.

Who has to be permitted with the Department of Revenue?
The tax is levied on the first sale or upon import of dyed diesel fuel, dyed kerosene, or lubricating oil, so anyone that is the first seller in Alabama or the importer will need to be permitted. Also, if you have exempt sales, you will need to be permitted. There is also a provision in the law for exempt sales between inspection fee permit holders. If you wish to be permitted, you will have to submit an application. Any suppliers or permissive suppliers selling directly to a licensed exempt entity at the rack will need to be permitted.

Do I have to post a surety bond to be permitted?
Effective May 16, 2017, you are not required to post a surety bond. To receive a permit, you have to submit a properly completed application.

If I am only selling gasoline and undyed diesel fuel and do not sell any dyed diesel, dyed kerosene, or lubricating oil, do I need to get an inspection fee permit?
No, the gasoline and undyed diesel fuel will be reported on the terminal excise tax return.

If I was licensed with Agriculture and Industries prior to October 1, 2016, and I only sell gasoline and undyed diesel fuel, will I need to get a bonded distributor permit with the department of revenue for the inspection fee?
No, if you are only selling gasoline and undyed diesel fuel you do not have to get a bonded distributor permit with the Department of Revenue. However, if you are selling gasoline or undyed diesel fuel to any licensed exempt entity, you will need to have a distributor’s license in order to apply for a refund of the excise tax.

Does the inspection fee apply to dyed fuel used in processing asphalt?
The inspection fee applies to dyed diesel if it is part of the asphalt mixture. There is no exemption of the fee authorized if the asphalt is manufactured in Alabama and dyed diesel is used in the process. There is no exemption of the fee granted if dyed diesel is used to heat the asphalt mixture to a temperature that produces a spreadable consistency. This heating process does not qualify under the steam boiler exemption section of the law as some have questioned in the past. The asphalt mixture is heated by a direct flame. If steam is only a by-product of the heating process, no exemption of the fee is authorized. The steam must be captured and used for a specific purpose in order to grant an exemption – like a food canning process or paper mill company, etc.

Does the inspection fee apply to aviation fuels?
Effective October 1, 2016, the inspection fee will not apply to aviation fuels.

Do I need an inspection fee permit to report ethanol?
No, ethanol will not be reported on the inspection fee return. Ethanol that is blended with gasoline is taxable and is reported on the terminal excise tax return.

If I am a licensed supplier or permissive supplier and I sell gasoline or undyed diesel to a licensed exempt entity at the terminal rack and the licensed exempt entity is listed as the purchaser on the terminal issued shipping document, then am I required to collect the inspection fee from the licensed exempt entity?
Yes, unless the product is sold to a licensed federal government exempt entity. Sales to licensed exempt entities other than the federal government will be reported on the inspection fee return.

As a licensed Alabama supplier/permissive selling dyed diesel fuel and/or dyed kerosene at a terminal rack outside of Alabama with the destination of the product being Alabama, am I responsible for the Alabama inspection fee?
If a licensed Alabama supplier/permissive supplier sells dyed diesel fuel and/or dyed kerosene at a terminal rack outside of Alabama with destination of the product being Alabama and the purchaser is an Alabama inspection fee permit holder, then the Alabama supplier/permissive supplier is not responsible for the fee and does not have to report the transaction on the Alabama inspection fee return because the importer (that is an Alabama inspection fee permit holder) is responsible for reporting and paying the fee. If a licensed Alabama supplier/permissive supplier sells dyed diesel fuel and/or dyed kerosene at a terminal rack outside of Alabama with destination of the product being Alabama and the purchaser is not an Alabama inspection fee permit holder, then the Alabama supplier/permissive supplier is responsible for the Alabama inspection fee per Section 8-17-87(c) and (d), Code of Alabama 1975, and will have to report the transaction on line 6 of the Alabama inspection fee return.

— Lubricating Oil

How do I apply for a lubricating Oil Permit?
For the Lubricating Oil Permit Application, you can go to https://revenue.alabama.gov/forms/ click in the search box and key in “LOAP”.  If you have any questions, then you can call the Motor Fuels Section at 334-242-9608 and speak with a representative of the Section.

What is the tax rate? The rate is $0.06 per gallon.

What is the acceptable method of filing my lubricating oils tax return?
Beginning with the October 2012 return, it is mandatory that these returns are filed online through My Alabama Taxes.

Where do I find a list of active lubricating oils permit holders?
The list of active lubricating oils permit holders can be found at My Alabama Taxes.

What products are included?
Any product that performs a lubricating function, i.e. grease, transmission fluid, motor oil, and Slick 50. The definition of lubricating oil per Section 40-17-170, Code of Alabama 1975, is “Any devices or substitutes therefor, commonly used in lubricating or oiling engines, bearings, journals, axles, hubs, and other parts of machinery; provided, that nothing contained in this article shall be held to apply to those products known commercially as “kerosene oil,” “fuel oil,” or “crude oil.””

Is the tractor hydraulic/transmission fluid subject to the excise tax or sales tax?
Excise taxable, because the primary function is to lubricate the engine and gears.

How do I convert pounds to gallons?
Divide the total pounds by 8.

Is lubricating oil boarded on a vessel at the port of mobile taxable?
If it is sold from one permit holder to another it is not taxable. If it is sold to an unlicensed entity, it is considered taxable. The Port of Mobile is considered to be a part of the State, so title would be changing in Alabama.

When is the lubricating oils return/payment due?
The lubricating oils excise tax return and payment are both due by 4 p.m. on the 20th of the month following the month that the transaction took place.

— Wholesale Oil/Import License Fee

What is the wholesale oil license fee rate?
The fee is $0.0075 per gallon of diesel fuel.

What products are subject to the wholesale oil/import license fee?

The fee is charged on diesel fuel. Diesel fuel includes undyed diesel fuel, dyed diesel fuel, undyed kerosene, dyed kerosene, special fuels, and blended fuels which contain diesel fuel. Lube oil is no longer included in the computation.

At what point is the wholesale oil /import license fee due?
All sales of diesel fuel at the terminal rack in Alabama are subject to the fee which will be collected by the Licensed Supplier. For the period October 1, 2012, through July 31, 2013, diesel fuel imported into Alabama for resale is subject to the fee. Effective August 1, 2013, all diesel fuel imported into Alabama is subject to the fee. The Licensed Permissive Supplier or Licensed Imported is responsible for the fee. Effective August 1, 2013, diesel fuel exported from Alabama for which proof of export is available in the form of a terminal issued shipping document is exempt from the Wholesale Oil License/Import License Fee. Transmix should not be included in the computation of the wholesale oil/import license fee.

— Local Motor Fuel Taxes

What local excise taxes does the department administer and what are the tax rates?
The department administers Bullock, Lowndes, and Cullman county local fuel taxes. View the tax rates administered by the Department of Revenue (This listing also includes local gasoline tax rates based on information submitted by the localities. You may need to verify the rates with the locality for any of the non-administered cities and counties.)

How do I file and pay my state administered local fuel taxes for Bullock, Lowndes, and Cullman counties?
You can file a paper return that can be found https://revenue.alabama.gov/forms/. Click in the search box and key in “MFCO” for Bullock and Lowndes Counties and key in “CUL” for Cullman County.  Also, you have the option to file through My Alabama Taxes (MAT). You will need to be registered in MAT to file the return. If you are already registered in MAT, then you can log into MAT and “Add Access to an Account.”