Colorado Revises Motor Fuel Tax Laws – New Provisions Effective January 1, 2022

Jul 13, 2021

Colorado’s legislature recently revised the motor fuel tax statute to restructure the gasoline and special fuel tax. Effective, January 1, 2022, Colorado’s motor fuel tax will collected on removals of gasoline and special fuel from a registered terminal across the terminal rack and the tax will be collected on liquefied petroleum gas when placed into the fuel tank of a vessel unless otherwise exempt. The tax is also imposed on sales, imports or removal of gasoline or special fuel by bulk transfer from or to a refinery or terminal if both parties are not properly licensed and on non-bulk imports into Colorado. The provision for three tax-deferred transactions between licensed distributors is repealed.

The legislation specifically exempts sales of jet fuel and aviation gasoline to domestic and foreign air carriers from the motor fuel tax and states that such fuel products are subject to the sales tax rules. Eligible air carriers will be issued exemption certificates by the Department of Revenue to provide to their suppliers to support the exemption. Additionally, gasoline or special fuel removed from a terminal by a licensed exporter for delivery to another state is exempt from the fuel tax.

In addition to the provisions regarding the imposition of the tax and exemptions, there are revisions to the provisions related to penalties, refunds and reporting, including that all reports must be filed electronically. Reporting related penalties will be waived for tax periods between January 1, 2022 and December 31, 2022 if the taxpayer has shown a good faith effort to comply with the changes to the law.

The full text of the legislation can be found at:

https://leg.colorado.gov/sites/default/files/documents/2021A/bills/2021a_1322_enr.pdf