Issue link: https://read.dmtmag.com/i/175761
LEGAL CORNER Technicial Corrections to Terminal Excise Tax Act ("Rack Tax") H. Dean Mooty, Jr., Mooty & Associates, P.C. A s has been reported, House Bill 261, referred to as the "Technical Corrections Bill," has been passed by the Alabama Legislature and signed into law by Governor Bentley as Act 2013-372. It will become effective August 1, 2013. As you know, the underlying "rack tax" bill passed in 2011 and its implementation raised a handful of issues that all interested parties wanted to clear up; thus this Technical Corrections bill. Most of the "technical" corrections involve terminal or terminal supplier issues with very few directly related to 'downstream' issues affecting the distributor or retail level. The Technical Corrections bill does the following: 1. 1 The Wholesale Oil License Fee or "WOLF" is exempted from diesel gallons exported from the state. 2. 2 Transmix is exempt from the WOLF. 3. 3 It clarifies the definition of "special fuel," simply because that terminology was loosely, and inconsistently, used throughout the state and federal tax codes. 4. 4 It clarifies the definition of "Two Party Exchange." Again, this is not a jobber/distributor issue, but it clarifies when a taxable transaction occurs between terminal suppliers "across the rack." 5. 5 It adds the definition of "Associate Jobber." In the original rack tax legislation, a "distributor" was/ is defined as one who buys fuel from a supplier in this state. The Department of Revenue realized 18 OIL PROPHETS SUMMER 2013 after the fact that this definition had implications for the associate jobber or sub-jobber network with regard to tax-exempt sales. Essentially, an associate or sub-jobber was definitionally not a distributor since it does not buy from a "supplier" in this state but rather from a distributor and, consequently, having paid the tax on fuel itself to tax-exempt customers, it could not apply for a refund unless it held a distributor's license. The intention was not to prevent an associate jobber from selling fuel to tax-exempt customers. The Technical Corrections bill defines an associate jobber as "a person who acquires motor fuel from a licensed distributor in this state for subsequent sale. An associate jobber may obtain a distributor's license even though it does not acquire fuel from a supplier in this state." This was somewhat of a compromise resolution to attempt to allow sub-jobbers to maintain their taxexempt business, but in order to do so, the subjobber must obtain a distributor's license. As a side note, the definitional problems the original rack tax raised on this issue is a non-issue for marketers who sub-job some fuel, but also hold a distributor's license. The Department of Revenue, once it notes the existence of a distributor's license, does not look past that point on tax-exempt sales, e.g. to determine whether the actual fuel sold to the tax-exempt entity was from the marketer's "status" as a sub-jobber or as a licensed distributor. Complications arose only for those marketers who do not hold a distributor's license and sub-job all their fuel.