Frequently Asked Questions Concerning Motor Fuel Tax
|Tax Rate on Gasoline
||Montana Law 15-70-204 (1)(b)
|Tax Rate on Special Fuel
||Montana Law: 15-70-321 (2) (a)
|Tax Rate on Aviation Fuel
||Montana Law: 15-70-204 (1) (a)
Where do I get the forms to become licensed as a gasoline or special fuels distributor?
Forms can be accessed on our webpage or call Fuel Tax Management and Analysis Bureau (FTMA) at 406.444.7276.
Where do I get a special fuel users permit?
How do I apply for an off-road fuel refund?
How are fuel taxes allocated to Montana cities and counties?
What is Biodiesel?
Biodiesel is a domestic, renewable fuel for diesel engines derived from natural oils like soybean oil, and which meets the specifications of ASTM D 6751.
Biodiesel can be used in any concentration with petroleum based diesel fuel in existing diesel engines with little or no modification. Biodiesel is not the same thing as raw vegetable oil. It is produced by a chemical process that removes the glycerin from the oil.
Is Biodiesel Taxable?
Yes. Biodiesel falls under the definition of Special Fuel 15-70-301 (16). Any person who engages in the business in this state of producing, refining, manufacturing, or compounding special fuel for sale, use, or distribution is considered a "distributor" and must be licensed as such. 15-70-301 (6).
This applies to all persons regardless of the amount they produce or manufacture, or if their intent is for personal use only. Every gallon of fuel used to propel a motor vehicle upon the highways, roads and streets of Montana is taxable.
Are there any Biodiesel Fuel Tax incentives?
Yes. The 2005 Montana Legislature created fuel tax incentives for Biodiesel producers, licensed distributors, and retailers selling Biodiesel. 15-70-601
House Bill 756: Provides 10 cents per gallon incentive on each gallon increase of Biodiesel production over the previous year. The tax incentive may be claimed for 1) the first year's total production, 2) the production in the second year that exceeds the production in the first year, and 3) the production in the third year that exceeds production in the second year.
This bill became effective July 1, 2005
HB 776: Provides a refund of 2 cents per gallon to licensed distributors and 1 cent per gallon to retailers who sell Biodiesel that is produced entirely from Biodiesel ingredients produced in Montana. The refunds must be applied for within 30 days after the quarter ends.
This bill became effective April 28, 2005
What is Dyed Special Fuel?
Special Fuel that has dye injected at a terminal is exempt from tax. Dyed special fuel is for off road use, may be used by governmental agencies, and may be used in Off-Highway Vehicle/Equipment. Montana Law: 15-70-343 2(a) 15-70-356 2(a)(b)(i)(ii) Montana Administrative Rule (ARM) 18.10.110. Special Fuel dyed by any other means such as "splash blending" is not considered exempt from tax.
What is Gasohol?
Gasohol is a gasoline fuel that is blended with denatured ethanol. Typically gasohol is a blend of 10% denatured ethanol and 90% gasoline, but the blended amounts may differ. The percentage of ethanol in the blend is identified by the letter "E" followed by the percentage number. A blend that is 10% denatured ethanol and 90% gasoline would be reflected as E-10.
What is the Montana Petroleum Storage Cleanup Fee?
$.0075 is collected on each gallon of gasoline, special fuel, dyed special fuel, aviation, and jet fuel. This fee is collected by MDT and then sent to DEQ for leaking underground storage tanks. DEQ administers the payout of this fund to qualified owners of leaky tanks that require clean up. 75-11-301
Who is exempt from paying the Montana Petroleum Storage Clean up Fee?
The cleanup fee works exactly like the tax except for a few exemptions. The last licensed distributor in the chain is responsible to pay the tax and cleanup fee. If one licensed distributor sells to another licensed distributor, the burden of tax and cleanup fee is passed on to the next licensed distributor.
If a licensed distributor exports any fuel directly from the terminal out of Montana, the clean up fee is not assessed. However, if the fuel has come to rest in any storage tanks in Montana, and then later is exported out of Montana, the cleanup fee is due because that fuel has rested in a storage tank. Retail owners of storage tanks in Montana have the benefit of applying to the DEQ for costs of cleanup due to leaking underground storage tanks.
Only those gallons of JP4 or JP8 (jet fuel) that are sold directly to the Military Defense Fuel Supply Center are exempt from the cleanup fee. This is because the military has agreed to bear the costs of any leaking underground storage tanks that they own. JP4 is not manufactured anymore. It has been replaced by JP8.
Also, special fuel sold to the Military or sold to the Railroad is also exempt from the cleanup fee. Montana's railroad companies have agreed to pay for any cleanup costs due to leaking underground storage tanks.
Any fuel that comes to rest in a storage tank in Montana (other than one owned by a railroad company or the military) is subject to the cleanup fee. 75-11-301
Do I need a license to buy and sell fuel in Montana?
No. A person must qualify for the license by engaging in one or any of the following activities:
- The business of producing, refining, manufacturing, or compounding gasoline or special fuel for use, or distribution; or
- Importing from another state or province;
- Exporting fuel from Montana to another state or province;
- Engaging in the business of wholesale distribution of gasoline or diesel and CHOOSES to become licensed to assume the Montana state gasoline and/or special fuel tax liability. ALSO REFER TO ARM 18.9.108 through 18.9.110
- Grand-fathered (licensed prior to 1969)
- A blender of alcohol and gasoline ALSO REFER TO ARM 18.9.111
15-70-201(6) a-f; and 15-70-301(7) a-d
If the tax is $.27 on gas and $.2775 for special fuel, why does the distributor pay .2673 on gas and .2747 on special fuel?
All licensed distributors receive a collection allowance in the amount of 1% on gasoline and special fuel. There is no collection fee on aviation fuel. 15-70-205(1); and 15-70-344(1)
Do I need a separate license for each type of fuel I want to distribute?
NO. A distributor needs only one license. The tax reporting form includes all fuel types that are taxable.
Do I need a separate license to import or export?
NO. Once a person qualifies as a distributor, he is able to engage in all the activities defined for a distributor. 15-70-201; and 15-70-301
Can I buy clear fuel then add dye to be exempt from tax?
NO. To be exempt from the tax, diesel must be injected with dyed at a refinery or terminal. 15-70-343; See ARM 18.10.112
As a licensed distributor, what amount of surety bond is required?
A distributor must post a bond equal to not more than twice their estimated monthly tax liability.
The minimum bond amount for a distributor who imports or exports is $25,000.00. 15-70-202; and 15-70-341 The maximum amount the department can require is $100,000.00. ARM 18.9.102
As a licensed distributor, how often do I need to file?
Distributors file monthly, even if they do not have activity during the month. 15-70-205; and 15-70-344
What is the due date for distributors tax report and payment?
The due date for the report and payment of the tax is the 25th of each calendar month following the actual month the distributor distributed the fuel. If the distributor pays his taxes by electronic funds transfer, the due date for the payment of tax becomes the fifth day after the 25th of the month. The due date for the tax return remains as the 25th. Anytime the due date falls on a weekend or holiday, the due date is the first business day after the 25th. 15-70-205; and 15-70-344
If I have a problem and am not able to file a tax return on the due date, am I allowed an extension to pay the tax due or file my report?
No. There is no provision in the law for an extension of either paying the taxes or filing a tax report. There have been some instances where a distributor had problems with their computers. The best thing for them to do is estimate the best they can and pay and file on the due dates. Distributors can amend their reports and can get credit they have overpaid. 15-70-210; 15-70-221; 15-70-356; and 15-70-352
What is the penalty for late filing?
10% of tax due or $100.00, whichever is greater. In addition, the late paying of tax bears interest at the rate of 1% on the tax due for each calendar month prorated daily. 15-70-210; and 15-70-352
Do I have to re-license every year?
No. The license is good until canceled or revoked.
Is there a fee to become licensed?
Who is exempt from paying the Gasoline license tax?
Licensed distributors pay the gasoline license tax to the Department of Transportation. The motor fuel tax is then passed down to the customer or ultimate consumer. There are no exemptions for paying the gasoline tax. However, the gasoline tax may be subject to refund or credit if conditions are met as stated in MCA 15-70-221.
Who is exempt from paying the Special Fuel license tax?
SEE DYED SPECIAL FUEL
Licensed distributors pay the special fuel license tax to the Department of Transportation. The motor fuel tax is then passed down to the customer or ultimate consumer. City, state and federal governments may use untaxed dyed special fuel upon public roads or may apply for a refund of the taxes paid on special fuel regardless of the use of the special fuel. However, the special fuel tax may be subject to refund or credit if conditions are met as stated in MCA 15-70-356. 18.10.111
What are the consequences of importing fuel into MT without a license?
Failure to obtain a Montana Gasoline/Special Fuel Distributor License as required, subjects the distributor to the provisions of 15-70-233 allowing for the seizure, confiscation, and possible forfeiture of the fuel. 15-70-202 (5)
What are the consequences for using dyed special fuel in a propulsion tank on the public roads?
Effective October 1, 2005, the penalties for using dyed fuel on public roads in Montana are:
1st offense - up to $1,000.00 - Civil Penalty
2nd offense - up to $5,000.00 - Civil Penalty
3rd and subsequent offense - Criminal Penalty - minimum fine $100.00 - maximum $1,000.00
or by imprisonment for not less than 30 days or more than 6 months, or both.
Who are MDT's contacts for fuel tax?
|Report Fuel Tax Evasion: 1.888.383.5529 (1 888 FUEL LAW)
Alcohol Tax Incentive
Airline Fuel Tax Refunds
General Fuel Tax Questions
|Vanessa Olson 406.444.7276
Fuel Tax Legislation
General Fuel Tax Questions
|Tracy Halubka 406.444.0806
|Off Road Fuel Tax Refunds