Texas Comptroller of Public Accounts    STAR System


September 19, 1995


Dear ************ :

Thank you for your letter concerning the changes made to the Automotive Oil 
Sales Fee by SB 1683.  The answers below are based on our analysis of the 
recently passed legislation. For clarity, your questions have been repeated.

Question 1

If a petroleum marketer registers as a "Used Oil Collection Center" and 
purchases automotive oil from a manufacturer without the fee being assessed as 
a result of Section 371.062 (a)(2)(C), can the petroleum marketer resell the 
automotive oil to a trucking company fee free from the facility registered as a 
"Used Oil Collection Center?"

Answer.  Only oil manufacturers or distributors that make a first sale of 
automotive oil are responsible for paying the automotive oil fee.  A sale to a 
used oil collection center registered with the Texas Natural Resources 
Conservation Commission (TNRCC) is specifically exempted from the first sale 
definition by Section 371.062 (a)(2)(C).  Since first sales can only be made by 
manufacturers or distributors, all oil sold by a registered used oil collection 
center is fee free.

Question 2

If a petroleum distributor sells more than 25,000 gallons of automotive oil 
annually, is he required to become a permitted distributor or can he elect not 
to become a permit holder?

Answer.  A distributor is defined by this bill as a "person who maintains a 
distribution center or warehouse in this state and annually sells more than 
25,000 gallons of automotive oil."  Section 371.062 (m) states that, "a 
distributor must obtain a permit from the comptroller." It is our 
interpretation that if a person meets the distributor requirements, they must 
obtain a permit. There is no option.

Question 3

If a distributor is given a copy of a TNRCC registration form, but purchaser 
has not yet received a registration number for his used oil collection center, 
can the distributor legally sell the oil without the fee being assessed?

Answer.  A manufacturer or distributor cannot sell oil fee free to an entity 
that does not yet have its registration number from the TNRCC.  Only collection 
centers that are registered with the TNRCC can purchase the oil fee free. An 
application is not proof of registration.

Question 4

A petroleum marketer does not qualify for a distributor permit because he does 
not sell more than 25,000 gallons annually but sells to a purchaser who is 
registered as a used oil collection center, how does the marketer recover the 
fee that he has paid on the oil?

Answer.  When an oil marketer that does not qualify as a distributor makes a 
subsequent sale to an exempt purchaser, the refund procedure is the same as it 
is now. The marketer will go back to the manufacturer or distributor with proof 
of the exempt sale and request a refund of the fee for the oil sold to the 
exempt purchaser.  The marketer will be given the refund and the manufacturer 
or distributor will apply to the comptroller for a refund.

Question 5

A distributor also becomes registered as a used oil collection center, and 
sells some of its oil in quart cans, but also sells drums of oil as well, would 
all the oil sold from the facility that is registered be exempt or just the oil 
sold to the household do-it-yourselfers in quart cans?

Answer.  There is no fee attached to any oil sold from a TNRCC registered used 
oil collection center.  As long as the distributor offers to make sales to 
individuals, and collect used oil from individuals, all the oil sold from that 
facility will be fee free.  This exemption holds true for quart cans as well as 
drums of oil.

These opinions are based on the facts you presented. Other facts, though 
similar, may yield different responses.

If you have any further questions do not hesitate to call me at (512) 475-1079.


Bill Glenn
Tax Policy Division

DATE: 09/19/1995