South Carolina Guidance Regarding Exports of Fuel to Georgia During Fuel Tax Suspension
The South Carolina Department of Revenue has advised that during the pendency of the Georgia fuel tax suspension (May 10 – 22, 2021) removals of fuel from a South Carolina terminal at the rack for export to Georgia are not subject to South Carolina tax. Instead, bills of lading for exports should have a Georgia destination and invoices should bill the Georgia tax at $0 and reference the Georgia Executive Order suspending the tax. The South Carolina Motor Fuel Supplier selling at the terminal rack would report these transactions on Schedule 7B of their South Carolina Motor Fuel Supplier Monthly Return: “Gallons Removed For Export (Destination State Tax Exempt)”.
Georgia Extends Fuel Tax Suspension
Georgia has extended the suspension of its motor fuel tax collection through May 22nd: https://dor.georgia.gov/document/document/mft-2021-01-suspension-georgia-motor-fuel-taxes/download.
IRS Issues Dyed Diesel Penalty Waiver For States Impacted by Colonial Pipeline Shutdown
The Internal Revenue Service has issued a penalty waiver dyed diesel is sold for use or used on the highway in the States of Alabama, Delaware, Georgia, Florida, Louisiana, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and the District of Columbia. This waiver is in response to the shutdown of the Colonial Pipeline. It applies from May 7, 2021 through May 21, 2021.
This penalty waiver is available to any person that sells or uses dyed diesel fuel for highway use. In the case of the operator of the vehicle in which the dyed diesel fuel is used, the relief is available only if the operator or the person selling such fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use. There will be no penalties for failure to make semimonthly deposits of this tax.
**UPDATED** Georgia Fuel Tax Suspension – Border State Destination State Tax Rules
With Georgia having suspended collection of its motor fuel tax from May 11 – 15, 2021, the border states are providing information on how, if at all, this impacts their destination state rules for tax collection on exports to Georgia. We have just been advised that the border states are meeting today and may issue a joint statement. In the meantime below is what we have been advised:
Tennessee: Tennessee has revised its position that under its destination state tax rule, all removals of gasoline and diesel at the terminal rack for export to Georgia are subject to the Tennessee tax during the period the Georgia tax is suspended. Instead, the supplier can invoice the Georgia tax at $0. There are no changes to reporting requirements. The Tennessee export fee should be collected.
Florida: Florida allows a licensed exporter to purchase gasoline or diesel from a Florida terminal and export it without payment of tax if certain conditions are met, including payment of the destination state tax. During the period of Georgia’s fuel tax suspension, exporters can meet this requirement by invoicing $0 in Georgia fuel taxes and reporting the collection of same on Schedule 7b of the Florida fuel tax return. Suppliers should keep a copy of Georgia’s Executive Order suspending the collection of tax in case of audit.
Alabama: Alabama has indicated that the suspension of Georgia motor fuel taxes does not impact its destination state tax rules. Alabama’s fuel tax will have to be charged on all removals of gasoline and diesel at the terminal rack for export to Georgia during the period of the suspension. The general rule is that either Alabama or the destination state tax is collected.
North Carolina: During the period of suspension, Georgia destination state tax would not be collected. North Carolina would require a non-licensed taxpayer exporting fuel to get a temporary exporters license. This would allow the exporter to apply for a refund of North Carolina tax if it was exported to Georgia from a North Carolina bulk plant. The taxpayer would file for the refund on the GAS-1239 Motor Fuel Monthly Bulk Plant Exporter Return. In addition, G.S. 105-449.82(c) Terminal Rack Removal states, “If the motor fuel is removed for export by an unlicensed exporter, the exporter is liable for the tax on the fuel at the motor fuel rate and at the rate of the destination state.”
South Carolina: South Carolina has not issued guidance to date but anticipates having information by May 17th.
Tennessee Updates Position on Destination State Taxes During Georgia’s Motor Fuel Tax Suspension
The State of Tennessee has updated its position with respect to the collection of motor fuel tax on removals of fuel from Tennessee terminals across the rack for export to Georgia. Under state law, either Tennessee or Georgia motor fuel tax should be collected. Tennessee has advised that it will not require Tennessee motor fuel tax to be collected on gasoline and diesel removed from a terminal for export. Rather, the Georgia (as destination state) tax may be invoiced as $0. Suppliers would report the transactions under the normal rules. Tennessee will be collecting the export fee.
Colonial Pipeline Shutdown – Alabama Temporarily Suspends Certain Motor Fuel License Requirements
The Commissioner of the Alabama Department of Revenue has issued an Order temporarily suspending the motor fuel exporter, importer and transporter license requirements for exporters, importers or transporters assisting in relief efforts connected to the State of Emergency that has resulted from the shutdown of the Colonial Pipeline. Through June 11, 2021, exporters, importers and transporters engaging in the export of motor fuel from Alabama to other states where a state of emergency resulting from the shutdown has been declared, or importing fuel into Alabama, will not be required to comply with licensing rules. The Order states that the remainder of the Alabama Terminal Excise Tax remains in effect, including the requirement for suppliers to collect destination state tax on exports.
Colonial Pipeline Shutdown – Federal and State Actions
In the wake of the Colonial Pipeline ransomware attack and subsequent shutdown, federal and state government has taken steps to alleviate the impact. The Federal Highway Administration has eased trucking restrictions with many states along the Pipeline route, including Georgia and North Carolina, doing the same. The Environmental Protection Agency has eased fuel regulations related to Reid vapor pressure. The Department of Transportation is surveying the capabilities of U.S.-flagged vessels to transport fuel and may ask the Department of Homeland Security for a waiver of the Jones Act to allow foreign flagged vessels to transport fuel between points in the United States (this despite a tightening of the Jones Act waiver rules at the end of 2020.)
At the state level, Georgia has suspended collection of its motor fuel tax on gasoline and diesel. The suspension is effective from 9.45pm EST May 10, 2021 through May 15, 2021. During this time, no distributor need collect and remit motor fuel tax on sales of gasoline and diesel to an unlicensed customer. The Tennessee Department of Revenue has advised that during the period of Georgia’s motor fuel tax being suspended, all exports of gasoline and diesel from Tennessee to Georgia via truck must remit the Tennessee fuel tax under that state’s destination state tax rule. The Florida Department of Revenue has advised that it is considering waiving its destination state tax rule with respect to exports to Georgia during the period of Georgia’s motor fuel tax suspension. In addition, Georgia, Virginia, and North Carolina have declared a state of emergency, waiving certain transportation regulations, and activating price gouging rules.