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.
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.
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.
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.
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.
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.
Tax Policy Division
ACCESSION NUMBER: 9509870L
DOCUMENT TYPE: L
TAX TYPE: FEE