§ 40-17-329 — Exemptions

Alabama § 40-17-329

• Jurisdiction: Alabama
• Title 40: Revenue and Taxation
• Ch. 17: Gasoline and Other Motor Fuels; Lubricating Oils
• Art. 12: Alabama Terminal Excise Tax Act

Text

(a) Unless otherwise provided for in this subsection, sales of motor fuel to the following are exempt from the tax levied by subsection (a) of Section 40-17-325 and shall not be paid at the rack:
(1) All motor fuel exported from this state for which proof of export is available in the form of a terminal issued destination state shipping document that is a. exported by a supplier who is licensed in the destination state or b. is sold by a supplier to a licensed exporter for immediate export to a state for which the applicable destination state motor fuel excise tax has been collected by the supplier who is licensed to remit the tax to the destination state. If the motor fuel is exempt from the excise tax due to the product being exported from this state, then the motor fuel exported from this state shall also be exempt from the inspection fee imposed under Section 8-17-87. This exemption shall not apply to any motor fuel which is transported and delivered outside this state in the motor fuel supply tank of a highway vehicle.
(2) All K-1 Kerosene or aviation jet fuel that is produced at a refinery in this state and is either exported from this state directly by the operator of that refinery or is sold for immediate export by the operator to a licensed exporter. In either case proof of export is to be available in the form of a terminal destination state shipping document and in addition all relevant sales documents are to reference the product known as “K-1 Kerosene” or “aviation jet fuel,” as applicable. If the K-1 Kerosene is exempt from the excise tax due to the product being exported from this state, then the K-1 Kerosene that is exported shall also be exempt from the inspection fee imposed under Section 8-17-87.
(3) All sales of dyed diesel fuel.
(4) Gasoline blendstocks or cellulosic biofuel, as defined in Section 40-17-322, when sold to a. a licensed supplier or b. a person who will not be using the blendstocks or cellulosic biofuel in the manufacture of gasoline or as a motor fuel, as evidenced by the exemption certificate prescribed under regulations promulgated under Section 4081, Title 26 of the United States Code. If the gasoline blendstocks or cellulosic biofuel is exempt from the excise tax due to the product being sold to a licensed supplier or to a person who will not be using the blendstocks or cellulosic biofuel in the manufacture of gasoline or as a motor fuel, then the gasoline blendstocks or cellulosic biofuel shall also be exempt from the inspection fee imposed under Section 8-17-87.
(5) All motor fuel sold by a licensed supplier or licensed permissive supplier to an exempt agency electing to be licensed under Section 40-17-332. If the motor fuel is exempt from the excise tax due to the product being sold to the United States government or any agency thereof, who is a licensed exempt entity in this state, then the motor fuel sold to the United States government or any agency thereof shall also be exempt from the inspection fee imposed under Section 8-17-87. If the motor fuel is exempt from the excise tax due to the product being sold to a licensed exempt entity, other than the federal government, then the motor fuel sold to the licensed exempt entity shall be subject to the inspection fee imposed under Section 8-17-87 and the inspection fee shall be remitted by the supplier or permissive supplier on the monthly inspection fee return.
(6) Motor fuel that is delivered by a licensed supplier from one terminal to another terminal when ownership in the motor fuel has not changed, or by a licensed supplier from a terminal to a refinery operated by the licensed supplier. If the motor fuel is exempt from the excise tax due to the product being transferred from one terminal to another terminal, then the motor fuel transferred from one terminal to another terminal shall also be exempt from the inspection fee imposed under Section 8-17-87.
(b) Having first paid the tax owed under this article, a licensed distributor shall have the right to apply to the department on a monthly basis for a refund of the taxes paid on the gallons sold by that licensed distributor to the exempt agencies listed under subsection (e), provided the exempt agency has elected to obtain a license under Section 40-17-332. If the motor fuel is exempt from the excise tax due to the product being sold to the United States government or any agency thereof, who is a licensed exempt entity in this state, then the motor fuel sold to the United States government or any agency thereof shall also be exempt from the inspection fee imposed by Section 8-17-87. If the motor fuel is exempt from the excise tax due to the product being sold to a licensed exempt entity, other than the federal government, then the motor fuel sold to the licensed exempt entity shall be subject to the inspection fee imposed under Section 8-17-87. The department is authorized to reduce the excise tax refund by the amount of the inspection fee that is due.
(c) Having first paid the tax owed under this article, an exporter shall have the right to apply to the department on a monthly basis for a refund of the taxes paid to this state on the gallons of motor fuel that are ultimately exported by the exporter. The department will require the exporter to provide proof of payment of the applicable destination state excise taxes before issuing a refund. If the motor fuel is exempt from the excise tax due to the product being exported from this state, then the motor fuel exported from this state shall also be exempt from the inspection fee imposed under Section 8-17-87.
(d) Having first paid the tax owed under this article, a licensed aviation fuel purchaser shall have the right to apply to the department on a monthly basis for a refund of the taxes paid to this state on the gallons of jet fuel sold to a certificated or licensed air carrier that purchases jet fuel within this state and uses the jet fuel to propel aircraft powered by jet or turbine engines operated in scheduled all-cargo operations being conducted on international flights or in international commerce. For the purposes of this subsection, the following words or terms shall be defined and interpreted as follows:
(1) AIR CARRIER. Any person, firm, corporation, or entity undertaking by any means, directly or indirectly, to provide air transportation.
(2) ALL-CARGO OPERATIONS. Any flight conducted by an air carrier for compensation or hire other than a passenger carrying flight, except passengers as specified in Section 121.583 (a) or 135.85 of the Federal Aviation Regulations, as amended.
(3) INTERNATIONAL COMMERCE. Any air carrier engaged in all-cargo operations transporting goods for compensation or hire on international flights.
(4) INTERNATIONAL FLIGHTS. Any air carrier conducting scheduled all-cargo operations between any point within the 50 states of the United States and the District of Columbia and any point outside the 50 states of the United States and the District of Columbia, including any interim stops within the United States so long as the ultimate origin or destination of the aircraft is outside the United States and the District of Columbia.
(e) Having first paid the tax to its vendor, the following entities shall have the right to apply to the department for a refund on a quarterly basis for any purchases of motor fuel:
(1) The United States government or any agency thereof. If the motor fuel is exempt from the excise tax due to the product being sold to the United States government or any agency thereof, which is a licensed exempt entity in this state, then the motor fuel sold to the United States government or any agency thereof shall also be exempt from the inspection fee imposed under Section 8-17-87.
(2) Any county governing body of this state. If the motor fuel is exempt from the excise tax due to the product being sold to a licensed exempt entity, which is a county governing body, then the motor fuel sold to the licensed exempt entity shall be subject to the inspection fee imposed under Section 8-17-87. The department is authorized to reduce the excise tax refund by the amount of the inspection fee that is due.
(3) Any incorporated municipal governing body of this state. If the motor fuel is exempt from the excise tax due to the product being sold to a licensed exempt entity, which is an incorporated municipal governing body, then the motor fuel sold to the licensed exempt entity shall be subject to the inspection fee imposed under Section 8-17-87. The department is authorized to reduce the excise tax refund by the amount of the inspection fee that is due.
(4) City and county boards of education of this state. If the motor fuel is exempt from the excise tax due to the product being sold to a licensed exempt entity, which is a city or county board of education, then the motor fuel sold to the licensed exempt entity shall be subject to the inspection fee imposed under Section 8-17-87. The department is authorized to reduce the excise tax refund by the amount of the inspection fee that is due.
(5) The Alabama Institute for Deaf and Blind, the Department of Youth Services school district, and private and church school systems as defined in Section 16-28-1, and which offer essentially the same curriculum as offered in grades K-12 in the public schools of this state. If the motor fuel is exempt from the excise tax due to the product being sold to a licensed exempt entity, as listed herein, then the motor fuel sold to the licensed exempt entity shall be subject to the inspection fee imposed under Section 8-17-87. The department is authorized to reduce the excise tax refund by the amount of the inspection fee that is due.
(f) If the sale of taxable motor fuel to exempt entities listed in subsection (e) occurs at a fixed retail pump available to the general public and is charged to a credit card issued to the exempt entity, the issuer of the card, having billed the exempt entity without the tax, may apply on a quarterly basis for a refund of the motor fuel excise taxes by submitting the application and supporting documentation as prescribed by the department. If the motor fuel is exempt from the excise tax due to the product being sold to the United States government or any agency thereof, which is a licensed exempt entity in this state, then the motor fuel sold to the United States government or any agency thereof shall also be exempt from the inspection fee imposed under Section 8-17-87. If the motor fuel is exempt from the excise tax due to the product being sold to any of the entities listed in subdivisions (2) through (5) of subsection (e), which is a licensed exempt entity in this state, then the motor fuel sold to the entities listed in subdivisions (2) through (5) of subsection (e) shall be subject to the inspection fee imposed under Section 8-17-87. The department is authorized to reduce the excise tax refund by the amount of the inspection fee that is due.
(g) Having first paid the tax, a licensed air carrier with a hub operation within this state shall have the right to apply to the department for a refund on a quarterly basis for any purchases of jet fuel used to propel aircraft. For the purposes of this subsection, the words “hub operation within this state” shall be construed to have all of the following criteria:
(1) There originates from the location 15 or more flight departures and five or more different first-stop destinations five days per week for six or more months during the calendar year; and
(2) Passengers and/or property are regularly exchanged at the location between flights of the same or a different certificated or licensed air carrier.
(h) End users who first pay the tax levied by subdivision (2) of subsection (a) of Section 40-17-325 on all gallons of diesel fuel used in designated off-road vehicles, other off-road equipment, or for other off-road use may apply to the department for a refund on a quarterly basis. The end users who apply for a refund under this subsection shall be subject to the inspection fee levied under Section 8-17-87 unless the end user is taxed at a reduced rate or exempt from the inspection fee under Section 8-17-98. The department is authorized to reduce the excise tax refund by the amount of the inspection fee that is due.
(i) End users who first pay the tax levied by subdivision (1) of subsection (a) of Section 40-17-325 on gallons of gasoline blendstocks not used in the manufacture of gasoline or as a motor fuel may apply to the department for a refund on a quarterly basis. The end user shall be exempt from the inspection fee on blendstocks not used in the manufacture of gasoline or as a motor fuel.
(j) Tax paid on motor fuel that (1) is lost or destroyed as a direct result of a sudden and unexpected casualty, or (2) becomes unsalable or unusable as highway fuel due to such things as the contamination by dye or mixture of gasoline and diesel shall be refundable. If a refund is issued for the excise tax due to a casualty or contamination, the inspection fee levied under Section 8-17-87 shall not be due.
(k) Tax paid on transmix not used as a motor fuel or that is delivered to a refinery for further processing shall be refundable, with the person so using the transmix being eligible to file for the refund on a quarterly basis or if a licensed supplier, a credit may be taken on its monthly supplier return. If a refund or credit is issued for the excise tax on transmix, the inspection fee levied under Section 8-17-87 shall not be due.
(l) Tax paid on motor fuel within the bulk transfer system may be refunded upon sufficient proof that (1) a second tax had been paid pursuant to Section 40-17-325 or (2) the fuel was exported to another state or country. The party paying the second tax or exporting the fuel may file for a refund on a monthly basis. If a refund is issued for the excise tax due to payment of a second tax or exported in the bulk transfer system, the inspection fee levied under Section 8-17-87 shall not be due.

Legislative History

(Act 2011-565, p. 1084, §10; Act 2013-200, p. 391, §1; Act 2013-372, p. 1350, §1; Act 2015-54, §4.)