News Alerts

OH House Bill 62 Increases Fuel Tax

Effective July 1, 2019, OH motor fuels tax increases from 28¢ per gallon to 47¢ per gallon and increases the tax on compressed natural gas as follows:

(1) Ten cents on and after July 1, 2019, and before July 1, 2020;
(2) Twenty cents on and after July 1, 2020, and before July 1, 2021;
(3) Thirty cents on and after July 1, 2021, and before July 1, 2022;
(4) Forty cents on and after July 1, 2022, and before July 1, 2023;
(5) Forty-seven cents on and after July 1, 2023.

The bill also allows a township to levy an additional $5 annual license tax per motor vehicle.

Alabama Gasoline and Undyed Diesel Fuel Excise Tax Law Changes

On March 12, 2019, Governor Kay Ivey signed into law Act 2019-2 also known as the Rebuild Alabama Act which levies an additional excise tax on gasoline and undyed diesel effective September 1, 2019. The changes made regarding the Rebuild Alabama Act are summarized
below.

Tax Increase
Effective September 1, 2019, the gasoline and undyed diesel excise taxes will increase by $.06 per gallon to $.24 per gallon for gasoline and to $.25 per gallon for undyed diesel.

Additional Tax Increases/Indexing
Act 2019-2 also provides for the following additional excise tax rate increases/indexing:
o Effective October 1, 2020 (bringing Act 2019-2 total additional tax to $0.08)
▪ Additional $0.02 gasoline tax
▪ Additional $0.02 diesel tax
o Effective October 1, 2021 (bringing Act 2019-2 total additional tax to $0.10)
▪ Additional $0.02 gasoline tax
▪ Additional $0.02 diesel tax
o Effective October 1, 2023 and on July 1 of every other year thereafter
▪ The gasoline and undyed diesel excise tax rate will be adjusted by the percentage change in the yearly average of the
National Highway Construction Cost Index and rounded to the nearest whole cent with the increase or decrease of the excise
tax rate not exceeding $.01 per gallon.

Tax Return Due Date
The due date of the return and payment for all motor fuel taxes, other than the 3-day voucher and payment as required in Section 40-17-340(d), Code of Alabama, has been changed from the 22nd to the 20th day of the month following the month in which the tax accrues. This change applies to the Blender, Exporter, Importer, and Supplier returns and payments (Alabama Terminal Excise Tax Act 2011-565 and amendments). The due date for the September 2019 period returns and payments is October 21, 2019 (Oct. 20th is on a Sunday).

Floor-Stocks Tax
Any wholesale distributor holding motor fuel in inventory outside of the bulk transfer/terminal system on the effective date of each tax increase levied by this Act shall be liable for the additional excise tax. A floor-stocks tax return shall be filed and the tax paid on or before the last day of the third month following the tax increase. The floor-stocks tax return and payment for the tax increase effective September 1, 2019 shall be due on or before December 31, 2019.

Questions
If you have any questions pertaining to this notice, please contact this office at the address or telephone number shown below or via email at mft@revenue.alabama.gov.

BUSINESS & LICENSE TAX DIVISION
MOTOR FUELS SECTION
P. O. BOX 327540
MONTGOMERY, ALABAMA 36132-7540
(334) 242-9608
(334) 242-1199 (Fax)

Texas Crude Oil & Natural Gas Electronic Tax Filing Software and Petro Imports

Texas EDI News, March 2019

New Crude Oil & Natural Gas Electronic Tax Filing Software

Effective April 28, 2019, we will release a new version of the Texas Comptroller’s filing software that allows you to enter crude oil producer and purchaser reports for crude oil leases claiming multiple oil exemptions on the same lease.

New Petro Import and Preload Templates
The new software download will include updates to the import and preload templates for taxpayers who elect to use them. The new templates will be used for both crude oil and natural gas severance tax filers even though only crude oil taxpayers will have new capabilities. Our software installer program automatically saves the templates to C:\ProgramData\TexasCPA\Petro50.

Third-party or Proprietary Software
If you create or use third-party or proprietary software to create the EDI files, please review the new EDI maps. When you are ready to test your EDI files, please email them to us.
More Information

For EDI questions, please email us or call 800-442-3453.

For Crude Oil or Natural Gas tax questions, you can also email us or call 800-531-5441, ext. 3-4455.

Changes to IRS ExSTARS System

The IRS recently announced that ExSTARS version 2.3.0 is now running in production to process the ExSTARS EDI files submitted.  Many of the changes will be transparent, however there are a few items worth noting.

Most errors which previously would have generated a 997E (accepted with errors) return file will now result in a 997A (accepted).  In those cases, you will also receive a 151 which indicates what, if any, errors were contained in the file.  Please note that even though you have a 997A, you may still have must fix errors that must be corrected before your next filing.  The IRS has also enhanced its software to provide the help desk with more details in the event the system generates a 997R (rejected) file.  This will aid the help desk in quickly identifying the problem so they can then contact the filers to help them resolve the issue.

The new system will now accept book adjustment receipts into all products.  Filers can begin the process of transferring their reported inventories out of the substitute product codes and back into the normal product codes:

For example, say last month you reported and ending inventory of 1,000,000 gallons of S92.  This month you would report a transaction on the disbursement schedule 15B in the amount of 1,000,000 gallons under product S92 with a mode of BA .  Also report a receipt transaction on schedule 15A in the amount of 1,000,000 gallons under product 092 with a mode of BA.

Also, don’t forget to make sure that any product code conversions you may have specified which utilize the substitute product codes are updated to once again use the corresponding approved codes.  Please note you have until 10/1/2019 to make these changes.

Since the change, the IRS has seen a number of cases where filings have generated errors due to missing gross gallons.  Please ensure that you are populating the gross quantities in all required cases.  If the values are in your system but not in the edi file submitted, you may need to contact your software provider as they may need to update their software.

Finally with the new updates, the IRS is now validating the vessel number information provided.  Currently invalid numbers will result in a warning.  Starting 10/1/2019 they will result in must fix errors.  In the new system, you will receive more details on what the incorrect value is, helping you to locate the transactions with the incorrect values quicker so they can be fixed.

Details on acceptable numbers and proper formatting can be found in the IRS Facts section at  https://www.irs.gov/businesses/small-businesses-self-employed/vessel-identification-numbers.

Two good websites to aid in validating individual numbers are the US Coast Guard website at https://cgmix.uscg.mil/PSIX/PSIXSearch.aspx and the Equasis website at http://www.equasis.org/EquasisWeb/public/HomePage

Tax Extenders Introduced in the Senate

A package of tax extenders was introduced in the Senate yesterday by Finance Committee Chairman Charles Grassley (R-IA) and Ranking Member Ron Wyden (D-OR). The as yet unnumbered “Tax Extender and Disaster Relief of Act of 2019” proposes, among other provisions:

• a retroactive extension of the biodiesel and renewable diesel credits through December 31, 2019;
• a retroactive extension and clarification of the alternative fuel and alternative fuel mixture credits through December 31, 2019. The clarification is language that states that an alternative fuel mixture credit is not available to mixtures of that contain liquefied petroleum gas, compressed or liquefied natural gas and compressed or liquefied gas derived from biomass. The clarifying language applies on a forward basis and will not affect credits being claimed for the retroactive period;
• extension of the oil spill tax through 2019. The tax would be reinstated on the 1^st day of the calendar month following enactment of the legislation.

The introduction of the legislation does not necessarily mean that extenders will be enacted anytime soon. The House Ways and Means Committee Chairman Richard Neal (D-MA) has indicated that he wants to take time to review each provision and hold a hearing in March.

The text of the Senate proposal can be found at: https://www.finance.senate.gov/imo/media/doc/116.S.xxx%20-%20Tax%20Extender%20and%20Disaster%20Relief%20Act%20of%202019%20-%20MCG19154.pdf

Judge Rules on Exxon’s $960 Million Dollar Mixture Credit

On August 8, 2018, Judge David Godbey from U.S. District Court, Northern District of Texas issued a ruling to deny a motion for summary judgement that would allow Exxon to exclude from gross income certain credits received for mixing alcohol with gasoline.

Congress provided a tax incentive under IRC Section 6426 for the production and sale or use of alcohol and gasoline mixtures. The incentive, now expired, required a producer of such mixtures to first take a credit against the excise tax imposed under IRC Section 4081. Any incentive that exceeded IRC Section 4081 tax would be allowed as a cash refund under IRC Section 6427.

The IRS exempted 6427 refunds from gross income but required anyone with IRC 6426 credits to include that portion in income. The argument is whether the IRC 6426 credit is merely a tax free payment like IRC 6427 or a reduction of IRC 4081 tax expenses reported on Form 720. The crazy part about the entire argument is that any producer could have easily avoided IRC 6426 credits by filing the claims under a disregarded entity that did not have IRC Section 4081 tax. Those claims default to IRC 6427 incentives.

Judge Godbey writes, “If a taxpayer takes a Mixture Credit against a fuel excise tax, may the taxpayer include the unreduced amount of the excise tax in its cost of goods sold or must the taxpayer include in its cost of goods sold only the fuel excise tax liability actually paid after deducting the Mixture Credit?”

Judge Godbey’s decision appears to deny Exxon’s motion solely on a Court of Federal Claims case where Sunoco made a bookkeeping entry to reduce their excise tax liability by the amount of the IRC Section 6426 credit. Notwithstanding the fact that Sunoco is seeking to reverse the bookkeeping entries, the Judge agreed that Sunoco’s bookkeeping was proper and that Exxon must also reduce their excise tax liability.

Tax Advisory Service Group, LLC Welcomes Ron Sass as a Senior Manager