Bill Text: MI SB1080 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Sales tax; collections; provisions for prepaid sales tax on gasoline and diesel fuel; revise. Amends sec. 6a of 1933 PA 167 (MCL 205.56a).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2014-09-23 - Referred To Committee On Finance [SB1080 Detail]

Download: Michigan-2013-SB1080-Introduced.html

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SENATE BILL No. 1080

 

 

September 23, 2014, Introduced by Senator ROBERTSON and referred to the Committee on Finance.

 

 

 

     A bill to amend 1933 PA 167, entitled

 

"General sales tax act,"

 

by amending section 6a (MCL 205.56a), as amended by 2013 PA 1.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 6a. (1) Through March 31, 2013, at the time of purchase

 

or shipment from a refiner, pipeline terminal operator, or marine

 

terminal operator, a purchaser or receiver of gasoline shall prepay

 

a portion of the tax imposed by this act at the rate provided in

 

this section to the refiner, pipeline terminal operator, or marine

 

terminal operator for the purchase or receipt of gasoline. If the

 

purchase or receipt of gasoline is made outside this state for

 

shipment into and subsequent sale within this state, the purchaser

 

or receiver, other than a refiner, pipeline terminal operator, or

 

marine terminal operator, shall make the prepayment required by

 

this section directly to the department. Prepayments for gasoline

 

shall be made at a cents-per-gallon rate determined by the

 

department and shall be based on 6% of the statewide average retail

 

price of a gallon of self-serve unleaded regular gasoline as

 

determined and certified by the department rounded up to the

 

nearest 1/10 of 1 cent. A person that makes prepayments directly to

 

the department shall make those prepayments according to the

 

schedule in subsection (6).

 

     (2) Beginning Except as otherwise provided in this subsection,

 

beginning April 1, 2013, at the time of purchase or shipment from a

 

refiner, pipeline terminal operator, or marine terminal operator, a

 

purchaser or receiver of fuel shall prepay a portion of the tax

 

imposed by this act at the rates provided in this section to the

 

refiner, pipeline terminal operator, or marine terminal operator

 

for the purchase or receipt of fuel. If the purchase or receipt of

 

fuel is made within a bulk transfer/terminal system, the prepayment

 

of sales tax is not required. If the purchase or receipt of fuel is

 

made within this state for shipment and subsequent sale within this

 

state and both the seller and purchaser or receiver are refiners,

 

pipeline terminal operators, or marine terminal operators, the

 

prepayment of sales tax is not required. If the purchase or receipt

 

of fuel is made within this state for shipment and subsequent sale

 

outside this state, the prepayment of sales tax is not required. If

 

the purchase or receipt of fuel is made outside this state for

 

shipment into and subsequent sale within this state, the purchaser

 

or receiver, other than a refiner, pipeline terminal operator, or

 

marine terminal operator, shall make the prepayment required by

 

this section directly to the department. Prepayments for gasoline

 

shall be made at a cents-per-gallon rate determined by the

 

department and shall be based on 6% of the statewide average retail

 

price of a gallon of self-serve unleaded regular gasoline as

 

determined and certified by the department rounded up to the

 

nearest 1/10 of 1 cent. Prepayments for diesel fuel shall be made

 

at a cents-per-gallon rate determined by the department and shall

 

be based on 6% of the statewide average retail price of a gallon of

 

undyed No. 2 ultra-low sulfur diesel fuel as determined and

 

certified by the department rounded up to the nearest 1/10 of 1

 

cent. A person that makes prepayments directly to the department

 

shall make those prepayments according to the schedule in

 

subsection (6).

 

     (3) Through March 31, 2013, the rate of prepayment applied

 

pursuant to subsection (1) shall be determined every 3 months by

 

the department unless the department certifies that the change in

 

the statewide average retail price of a gallon of self-serve

 

unleaded regular gasoline has been less than 10% since the

 

establishment of the rate of prepayment then in effect.

 

     (4) Beginning April 1, 2013, the rates of prepayment applied

 

pursuant to subsection (2) shall be determined every month by the

 

department. Notwithstanding subsection (3), the department shall

 

publish notice of the rates of prepayment applicable to gasoline

 

and diesel fuel pursuant to subsection (2) not later than the tenth

 

day of the month immediately preceding the month in which the rate

 

is effective.

 

     (5) A person subject to tax under this act that makes

 

prepayment to another person as required by this section for

 

gasoline may claim an estimated prepayment credit on its regular

 

monthly return filed pursuant to section 6. The credit shall be for

 

prepayments made during the month for which the return is required

 

and shall be based upon the difference between prepayments made in

 

the immediately preceding month and collections of prepaid tax

 

received from sales or transfers during the month for which the

 

return required under section 6 is made. A sale or transfer for

 

which collection of prepaid tax is due the taxpayer is subject to a

 

bad debt deduction under section 4i, whether or not the sale or

 

transfer is a sale at retail. The credit shall not be reduced

 

because of actual shrinkage. A taxpayer that does not, in the

 

ordinary course of business, sell gasoline in each month of the

 

year may, with the approval of the department, base the initial

 

prepayment deduction in each tax year on prepayments made in a

 

month other than the immediately preceding month. The difference in

 

actual prepayments shall be reconciled on the annual return in

 

accordance with procedures prescribed by the department.

 

     (6) Notwithstanding the other provisions for the payment and

 

remitting of tax due under this act, a refiner, pipeline terminal

 

operator, or marine terminal operator shall account for and remit

 

to the department the prepayments received pursuant to this section

 

in accordance with the following schedule:

 

     (a) On or before the twenty-fifth of each month, prepayments

 

received after the end of the preceding month and before the

 

sixteenth of the month in which the prepayments are made.

 

     (b) On or before the tenth of each month, payments received

 

after the fifteenth and before the end of the preceding month.

 

     (7) A refiner, pipeline terminal operator, or marine terminal

 

operator that fails to remit prepayments made by a purchaser or

 

receiver of fuel is subject to the penalties provided by 1941 PA

 

122, MCL 205.1 to 205.31.

 

     (8) The refiner, pipeline terminal operator, or marine

 

terminal operator shall not receive a deduction under section 4 for

 

receiving and remitting prepayments from a purchaser or receiver

 

pursuant to this section.

 

     (9) The purchaser or receiver of fuel that makes prepayments

 

is not subject to further liability for the amount of the

 

prepayment if the refiner, pipeline terminal operator, or marine

 

terminal operator fails to remit the prepayment.

 

     (10) A person subject to tax under this act that makes

 

prepayment to another person as required by this section for diesel

 

fuel may claim an estimated prepayment credit on its regular

 

monthly return filed pursuant to section 6. The credit shall be for

 

prepayments made during the month for which the return is required

 

and shall be based upon the difference between the prepayments made

 

in the immediately preceding month and collections of prepaid tax

 

received from sales or transfers during the month for which the

 

return required under section 6 is made. A sale or transfer for

 

which collection of prepaid tax is due the taxpayer is subject to a

 

bad debt deduction under section 4i, whether or not the sale or

 

transfer is a sale at retail. The credit shall not be reduced

 

because of actual shrinkage. A taxpayer that does not, in the

 

ordinary course of business, sell diesel fuel in each month of the

 

year may, with the approval of the department, base the initial

 

prepayment deduction in each tax year on prepayments made in a

 

month other than the immediately preceding month. Estimated

 

prepayment credits claimed with the return due in April 2013 shall

 

be based on the taxpayer's retail sales of diesel fuel in March

 

2013. The difference in actual prepayments shall be reconciled on

 

the annual return in accordance with procedures prescribed by the

 

department. Repayment of the credit claimed on the return due in

 

April 2013 shall be made by the earlier of the date that the

 

taxpayer stops selling diesel fuel or October 15, 2013.

 

     (11) As used in this section:

 

     (a) "Blendstock" includes all of the following:

 

     (i) Any petroleum product component of fuel, such as naphtha,

 

reformate, or toluene.

 

     (ii) Any oxygenate that can be blended for use in a motor fuel.

 

     (b) "Boat terminal transfer" means a dock, a tank, or

 

equipment contiguous to a dock or a tank, including equipment used

 

in the unloading of fuel from a ship and in transferring the fuel

 

to a tank pending wholesale bulk reshipment.

 

     (c) "Bulk plant" means a motor fuel storage and distribution

 

facility that is not a terminal and from which motor fuel may be

 

withdrawn by a tank wagon, a transport truck, or a marine vessel.

 

     (d) "Bulk transfer" means a transfer of motor fuel from 1

 

location to another by pipeline tender or marine delivery within a

 

bulk transfer/terminal system, including, but not limited to, all

 

of the following transfers:

 

     (i) A marine vessel movement of motor fuel from a refinery or

 

terminal to a terminal.

 

     (ii) Pipeline movements of motor fuel from a refinery or

 

terminal to a terminal.

 

     (iii) Book transfers of motor fuel within a terminal between

 

licensed suppliers before completion of removal across the terminal

 

rack.

 

     (iv) Two-party exchanges between licensed suppliers.

 

     (e) "Bulk transfer/terminal system" means a motor fuel

 

distribution system consisting of refineries, pipelines, marine

 

vessels, and terminals. Motor fuel in a refinery, pipeline,

 

terminal, or marine vessel transporting motor fuel to a refinery or

 

terminal is in a bulk transfer/terminal system. Motor fuel in a

 

fuel storage facility including, but not limited to, a bulk plant

 

that is not part of a refinery or terminal, in the fuel supply tank

 

of any engine or motor vehicle, in a marine vessel transporting

 

motor fuel to a fuel storage facility that is not in a bulk

 

transfer/terminal system, or in any tank car, rail car, trailer,

 

truck, or other equipment suitable for ground transportation is not

 

in a bulk transfer/terminal system.

 

     (f) (c) "Diesel fuel" means any liquid other than gasoline

 

that is capable of use as a fuel or a component of a fuel in a

 

motor vehicle that is propelled by a diesel-powered engine or in a

 

diesel-powered train. Diesel fuel includes number 1 and number 2

 

fuel oils and mineral spirits. Diesel fuel also includes any

 

blendstock or additive that is sold for blending with diesel fuel

 

and any liquid prepared, advertised, offered for sale, sold for use

 

as, or used in the generation of power for the propulsion of a

 

diesel-powered engine, airplane, or marine vessel. An additive or

 

blendstock is presumed to be sold for blending unless a

 

certification is obtained for federal purposes that the substance

 

is for a use other than blending for diesel fuel. Diesel fuel does

 

not include dyed diesel fuel, kerosene, or an excluded liquid.

 

     (g) (d) "Dyed diesel fuel" means diesel fuel that is dyed in

 

accordance with internal revenue service rules or pursuant to any

 

other internal revenue service requirements, including any

 

invisible marker requirements.

 

     (h) (e) "Excluded liquid" means that term as defined in 26 CFR

 

48.4081-1.

 

     (i) (f) "Fuel" means gasoline and diesel fuel that is subject

 

to tax under this act, collectively, except when gasoline or diesel

 

fuel is referred to separately.

 

     (j) (g) "Gasoline" means and includes gasoline, alcohol,

 

gasohol, casing head or natural gasoline, benzol, benzine, naphtha,

 

methanol, transmix, any blendstock additive, or other product that

 

is sold for blending with gasoline or for use on the road, other

 

than products typically sold in containers of less than 5 gallons.

 

Gasoline also includes a liquid prepared, advertised, offered for

 

sale, sold for use as, or used in the generation of power for the

 

propulsion of a motor vehicle, airplane, or marine vessel,

 

including a product obtained by blending together any 1 or more

 

products of petroleum, with or without another product, and

 

regardless of the original character of the petroleum products

 

blended, if the product obtained by the blending is capable of use

 

in the generation of power for the propulsion of a motor vehicle,

 

airplane, or marine vessel. The blending of all of the above-named

 

products, regardless of their name or characteristics, shall

 

conclusively be presumed to have been done to produce fuel, unless

 

the product obtained by the blending is entirely incapable of use

 

as fuel. An additive or blendstock is presumed to be sold for

 

blending unless a certification is obtained for federal purposes

 

that the substance is for a use other than blending for gasoline.

 

Gasoline does not include diesel fuel, dyed diesel fuel, kerosene,

 

or an excluded liquid.

 

     (k) (h) "Kerosene" means all grades of kerosene, including,

 

but not limited to, the 2 grades of kerosene, No. 1-K and No. 2-K,

 

commonly known as K-1 kerosene and K-2 kerosene, respectively,

 

described in American society for testing and materials

 

specification D-3699, in effect on January 1, 1999, and kerosene-

 

type jet fuel described in American society for testing and

 

materials specification D-1655 and military specifications MIL-T-

 

5624r and MIL-T-83133d (grades jp-5 and jp-8), and any successor

 

internal revenue service rules or regulations, as the specification

 

for kerosene and kerosene-type jet fuel. Kerosene does not include

 

an excluded liquid.

 

     (l) (i) "Marine terminal operator" means a person that stores

 

fuel at a boat terminal transfer.

 

     (m) (j) "Pipeline terminal operator" means a person that

 

stores fuel in tanks and equipment used in receiving and storing

 

fuel from interstate and intrastate pipelines pending wholesale

 

bulk reshipment.

 

     (n) (k) "Purchase" or "shipment" does not include an exchange

 

of fuel or an exchange transaction between refiners, pipeline

 

terminal operators, or marine terminal operators.

 

     (o) (l) "Refiner" means a person that manufactures or produces

 

fuel by any process involving substantially more than the blending

 

of fuel.

 

     (p) "Terminal" means a motor fuel storage and distribution

 

facility that meets all of the following requirements:

 

     (i) Is registered as a qualified terminal by the internal

 

revenue service.

 

     (ii) Is supplied by pipeline or marine vessel.

 

     (iii) Has a rack from which motor fuel may be removed.