Was a Florida sale of biodiesel to an unlicensed buyer taxable when the buyer immediately exported the fuel?

Plain-English summary

Florida ruled that a licensed wholesaler's sale of biodiesel to an unlicensed buyer was taxable even though the buyer loaded the fuel onto a vessel and exported it from Florida.

The fuel entered Florida by rail and was stored at a facility that was not an IRS-registered terminal. Title and possession passed to the buyer at that Florida facility. Because the sale occurred in Florida to an unlicensed person and did not qualify as a terminal-based tax-free export purchase, the wholesaler had to charge the 2008 Florida fuel-tax rate of 29 cents per gallon.

For gallons on which the wholesaler had already accrued and paid tax as importer of record, it still had to pass the tax to the buyer but did not remit it a second time. The buyer should have held an exporter license. That license would not have exempted this purchase because the seller was not a licensed terminal supplier, but it could have made the buyer eligible to seek a refund after export with the required records and destination-state returns.

What this means for you

Export destination does not erase an in-state fuel transaction. Licensing, the seller's terminal-supplier status, mode of entry, location of title transfer, and refund documentation determine whether tax is avoided at purchase or recovered later.

Common questions

Was the biodiesel sale taxable? Yes.

What rate applied? 29 cents per gallon for the 2008 transaction.

Would an exporter license have made the purchase tax-free? No, but it could have supported a refund.

Citations and references

• Fla. Stat. §§ 206.01, 206.052, 206.86, and 206.87, and Fla. Admin. Code r. 12B-5.080, as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10B5-001

Original ruling text

SUMMARY

QUESTION: Was the sale of biodiesel to an unlicensed person in this state for export subject to
fuel tax?
ANSWER: Yes, this was a taxable transaction, because the sale occurred in Florida between a
licensed Florida wholesaler and an unlicensed person.
QUESTION: Was Buyer required to obtain an exporter’s license for the transaction?
ANSWER: Yes, although an exporter’s license would not exempt Buyer from the Florida fuel
tax, because the fuel was not purchased from a terminal supplier, the license would have made
buyer eligible for a refund of the fuel taxes.
QUESTION: Should Taxpayer have collected from Buyer the Florida taxes Taxpayer paid on
the biodiesel fuel it purchased from Seller A, then sold and delivered to Buyer, and which Buyer
subsequently exported out of Florida?
ANSWER: Yes, Taxpayer should have collected Florida fuel tax on its sale of biodiesel because
it was a taxable transaction. Taxpayer should have collected Florida fuel tax at the rate of 29
cents per gallon.
QUESTION: If Taxpayer, as importer of record, incurs and pays the taxes on the fuel entering
into Florida for Seller B and Seller C transactions, should Taxpayer then pass those taxes to, and
collect the taxes from Buyer?
ANSWER: Yes, the sale was subject to Florida fuel tax, because the sale occurred in Florida
between a licensed Florida wholesaler and an unlicensed person. Since Taxpayer had incurred
and paid the fuel taxes to the Department for the biodiesel entering Florida for purchases from
Seller B and Seller C, Taxpayer should have charged the Florida fuel tax to Buyer on those
gallons, but would not have been required to remit this tax to the Department, because it had
already accrued and paid this tax to the Department.
QUESTION: If Buyer was required to obtain an exporter’s license for the transaction, and it did
not have the requisite license at the time of the transaction, what are the potential consequences
to Buyer of Buyer’s failure to have the exporter’s license?
ANSWER: A refund of Florida fuel tax is available only to a person that is the holder of a Florida
exporter’s license and that has paid the Florida fuel tax on fuel that was exported by the licensee. To
be granted a refund the exporter must comply with the certain requirements.
January 6, 2010

XXX
XXX
XXX
Re:

Technical Assistance Advisement 10B5-001
Fuel Tax – Sale of Biodiesel
Sections: 206.86, 206.87, 206.01, and 206.052, Florida Statutes (F.S.)
Rule: 12B-5.080, Florida Administrative Code (F.A.C.)
XXX (Taxpayer)
XXX
XXX
FEIN: XXX

Dear XXX
This is a response to your letter of November 17, 2009, requesting a Technical Assistance Advisement
(TAA) regarding the above-referenced matter. This response to your request constitutes a TAA under
Chapter 12-11, F.A.C., and is issued to you under the authority of Section 213.22, F.S.
FACTS
Taxpayer is a XXX corporation that is registered as a Florida wholesaler, exporter, and importer.
Taxpayer purchased biodiesel from XXX (Seller A), XXX (Seller B), and XXX (Seller C), and
stored the product in the XXX (Storage Facility), located in XXX. All of the biodiesel was
transported into XXX via rail car. Taxpayer sold the product from the XXX (Buyer).
Seller A is registered as a XXX wholesaler and importer and sold 1,819 metric tones of biodiesel to
Taxpayer. Seller A was the importer of record and collected approximately $158,264.50 in fuel tax
from Taxpayer.
Seller B is not a registered XXX fuel tax dealer. Taxpayer purchased 1,773 metric tons of biodiesel
from Seller B. Taxpayer was the importer of record and was responsible for payment of the XXX
fuel tax to the Department.

Seller C is not a registered XXX fuel tax dealer. Taxpayer purchased 408 metric tons of biodiesel
from Seller C. Taxpayer was the importer of record and was responsible for payment of the XXX
fuel tax to the Department.

Buyer was not a registered XXX fuel tax dealer at the time of the transaction. Buyer was granted a
XXX terminal supplier’s license on December 2, 2008. On June 4, 2008 (prior to being licensed as a
terminal supplier), Buyer purchased 4,000 metric tons of biodiesel from Taxpayer. Approximately
forty-five percent (45%) came from Taxpayer’s purchases from Seller A and approximately fiftyfive percent (55%) came from Taxpayer’s purchases from Seller B and Seller C. Possession of and
title to the biodiesel transferred from Taxpayer to Buyer at the Storage Facility. Buyer loaded
product on to its vessel at the XXX port for export to the XXX.
TAXPAYER’S POSITION
Taxpayer believes that the sale of biodiesel to Buyer is a taxable transaction, because Taxpayer
incurred taxes (either to Seller A as importer or to the Department as importer of record) and sold
the product to Buyer in XXX. Taxpayer, as a licensed wholesaler, is required to collect the XXX
fuel tax from Buyer.
Taxpayer further asserts, if Buyer was licensed as an exporter of diesel fuel at the time of the
transaction, it would still have been a taxable transaction, because the exemption from the payment
of XXX fuel tax by an exporter applies when the licensed exporter purchases fuel from a licensed
XXX terminal supplier. Taxpayer maintains that it was not licensed as a terminal supplier and,
therefore, the transaction is a taxable transaction.
Taxpayer believes that, based on the definition of “export,” the removal of diesel fuel from XXX by
“bulk transfer” may be tax-exempt under certain conditions. The statutory definitions of “bulk
transfer” and “terminal” make clear that a bulk transfer must occur at a terminal that is registered
with the Internal Revenue Service. Based on the foregoing, if the transaction between Taxpayer and
Buyer involved the removal of fuel from an IRS-registered terminal, the transaction might be taxexempt. However, because Storage Facility is not registered with the IRS, and Buyer exported the
fuel to the XXX, where there are no IRS-registered terminals, this transaction did not occur via bulk
transfer. Furthermore, because the fuel was imported into XXX by rail, it is not considered bulk
transfer pursuant to subsection 206.01(15), F.S. Because this transaction did not occur via bulk
transfer, it is not tax-exempt.
ISSUE
Taxpayer seeks advice on the following:

1. Was this transaction a taxable transaction?
2. Was [Buyer] required to obtain an exporter’s license for the transaction?
3. Should [Taxpayer] have collected from [Buyer] the XXX taxes [Taxpayer] paid on the
   biodiesel fuel it purchased from [Seller A], then sold and delivered to [Buyer], and which
   [Buyer] subsequently exported out of XXX?
4. If [Taxpayer], as importer of record, incurs and pays the taxes on the fuel entering into
   XXX for [Seller C] and [Seller B] transactions, should [Taxpayer] then pass those taxes

to, and collect the taxes from [Buyer]?

5. If [Buyer] was required to obtain an exporter’s license for the transaction, and it did not
   have the requisite license at the time of the transaction, what are the potential
   consequences to [Buyer] of [Buyer’s] failure to have the exporter’s license?
   DISCUSSION AND RESPONSE
   Section 206.86, F.S., provides definitions and states in part:
   (1) "Diesel fuel" means all petroleum distillates commonly known as diesel #2, biodiesel, or
   any other product blended with diesel or any product placed into the storage supply tank of a
   diesel-powered motor vehicle. . . .
   (14) "Biodiesel" means any product made from nonpetroleum-based oils or fats which is
   suitable for use in diesel-powered engines. Biodiesel is also referred to as alkyl esters. . . .
   This provision of Florida statutes provides that biodiesel is defined as “diesel fuel” and will be
   treated in the same manner as diesel fuel for tax imposition and administration.
   Section 206.87(1), F.S., imposes the following taxes on diesel fuel and states in part:
   1)(a) An excise tax of 4 cents per gallon is hereby imposed upon each net gallon of diesel
   fuel subject to the tax under subsection (2), except alternative fuels which are subject to the
   fee imposed by s. 206.877.
   (b) An additional tax of 1 cent per net gallon shall be imposed by each county on each net
   gallon of diesel fuel, which shall be designated as the "ninth-cent fuel tax." This tax shall be
   used as provided in s. 336.021.
   (c) An additional tax of 6 cents per net gallon shall be imposed on diesel fuel by each
   county, which shall be designated as the "local option fuel tax." This tax shall be levied and
   used as provided in s. 336.025.
   (d) An additional tax designated as the State Comprehensive Enhanced Transportation
   System Tax is imposed on each net gallon of diesel fuel in each county, at a rate equal to the
   maximum rate provided in s. 206.41(1)(f). This tax shall be used as provided in s. 206.608.
   (e)1. An additional tax is imposed on each net gallon of diesel fuel, which tax is on the
   privilege of selling diesel fuel and which is designated the "fuel sales tax," at a rate
   determined pursuant to this paragraph. Before January 1 of 1997 and of each year thereafter,
   the department shall determine the tax rate applicable to the sale of diesel fuel applicable for
   the forthcoming 12-month period beginning January 1, rounded to the nearest tenth of a cent,
   by adjusting the initially established tax rate of 6.9 cents per gallon by the percentage change

in the average of the Consumer Price Index issued by the United States Department of Labor
for the most recent 12-month period ending September 30, compared to the base year
average, which is the average for the 12-month period ending September 30, 1989. However,
the tax rate shall not be lower than 6.9 cents per gallon. . . .
This provision of statutes provides the rate of tax on diesel fuel for the relevant time period. For
2008, the rate of tax for paragraph (d) was 6.4 cents per gallon and the rate of tax for paragraph (e)
was 11.6 cents per gallon. All of the other tax rates for diesel fuel remain as stated in the sections.
The total XXX fuel tax charged on a gallon of diesel fuel in 2008 was 29 cents per gallon.
Section 206.01, F.S., provides definitions that are pertinent to this discussion and states in part:
(15) “Bulk transfer” means the shipment of fuel by pipeline or marine vessel between
terminals or from a refinery to a terminal. . . .
(18) “Terminal” is a storage and distribution facility for taxable motor or diesel fuel,
supplied by pipeline or marine vessel, that has the capacity to receive and store a bulk
transfer of taxable motor or diesel fuel, including a loading rack through which petroleum
products are physically removed into tanker trucks or rail cars, and that is registered with the
Internal Revenue Service as a terminal. . . .
(20) "Export" means any removal of taxable motor or diesel fuels from this state other
than by bulk transfer.
(21) “Exporter” means any person that has met the requirements of s. 206.052 and that is
licensed by the department as an exporter of taxable motor or diesel fuels either from
substorage at a bulk facility or directly from a terminal rack to a destination outside the state.
(22) “Terminal supplier” means any position holder that has been licensed by the
department as a terminal supplier, that has met the requirements of ss. 206.05 and 206.90,
and that is registered under s. 4101 of the Internal Revenue Code for transactions involving
the bulk storage and transfer of taxable motor or diesel fuels. . . .
Subsection 206.87(2), F.S., provides the imposition of the Florida diesel fuel tax and states in part:
(2) The taxes specified in this section are imposed on all of the following: . . .
(c) The entry of diesel fuel into this state for sale, consumption, use, or warehousing if
either of the following applies:

1. The entry is by bulk transfer and the enterer is not licensed as a terminal supplier; or
2. The entry is not by bulk transfer.

(d) The removal of diesel fuel in this state to an unregistered person, unless there was a
prior taxable removal, entry, or sale of the diesel fuel. . . .
Florida law imposes fuel tax on biodiesel if the fuel is imported into the state by marine vessel or
pipeline and the importer is not licensed as a terminal supplier. XXX fuel tax is also imposed on
biodiesel that is imported into this state by means other than bulk transfer, such as by a rail car or
tanker truck. The tax is imposed on any sale in this state of biodiesel to any person not holding a
XXX fuel tax license. Taxpayer removed biodiesel in this state for sale in the state to Buyer, who
exported the product to a foreign country. Buyer did not hold a valid XXX exporter licensed at the
time of the transaction.
Section 206.052, F.S., provides the requirements for the export of tax-free fuel and states:
(1) A licensed exporter may purchase from a terminal supplier at a terminal taxable motor
fuels for export from this state without paying the tax imposed pursuant to this part only
under the following circumstances:
(a) The exporter has designated to the terminal supplier the destination for delivery of the
fuel to a location outside the state;
(b) The exporter is licensed in the state of destination and has supplied the terminal supplier
with that license number;
(c) The exporter has not been barred from making tax-free exports by the department for
violation of s. 206.051(5); and
(d) The terminal supplier collects and remits to the state of destination all taxes imposed on
said fuel by the destination state.
(2) A licensed exporter shall not divert for sale or use in this state any fuel designated to a
destination outside this state without first obtaining a diversion number from the department
as specified in s. 206.416(1)(b) and manually recording that number on the shipping paper
prior to diversion of fuel for sale or use in this state.
Florida law requires a person to be licensed as an exporter to be exempt from the XXX fuel tax on
purchases of undyed biodiesel for export. The fuel must be purchased from a licensed XXX
terminal supplier, the purchaser must be licensed in the state of destination, and the purchaser must
provide the XXX terminal supplier a copy of the license it holds in the destination state. The
terminal supplier will collect the tax of the destination state.
Rule 12B-5.080(5), F.A.C., provide provisions for a refund of the Florida fuel tax to exporters and
states:

(a) Exporters who export fuel to other states on which Florida tax has been paid may obtain a
refund of Florida taxes paid. To receive a refund of Florida tax paid, an exporter must file an
Application for Refund (Form DR-26, incorporated by reference in Rule 12-26.008, F.A.C.)
with the Department. Form DR-26 must be filed in accordance with the timing provisions of
Section 215.26(2), F.S., and must meet the requirements of Section 213.255(2) and (3), F.S.
for tax paid on or after July 1, 1999, Form DR-26, Application for Refund, must be filed
with the Department within 3 years after the date the tax was paid.
(b) Copies of invoices for purchases and sales of fuel exported outside Florida and copies of
the tax returns filed in the state of destination are required to be submitted with the
application for refund.
(c) Exporters who sell fuel exempt in another state, on which taxes were collected for the
state of destination by terminal suppliers in Florida, must obtain refunds from the states to
which the fuel was exported.
The rule requires any person that purchases fuel for export upon which the XXX fuel tax has been
paid to be licensed as an exporter to be eligible for a refund. A refund of the XXX fuel tax may be
granted provided a licensed exporter meets the criteria set forth in this Rule.
CONCLUSION
Was this transaction a taxable transaction?
Yes, pursuant to section 206.87(2) (d), F.S., this was a taxable transaction, because the sale occurred
in XXX between a licensed XXX wholesaler and an unlicensed person.
Was Buyer required to obtain an exporter’s license for the transaction?
Yes, although an exporter’s license would not exempt Buyer from the XXX fuel tax, because the
fuel was not purchased from a terminal supplier pursuant to section 206.052, F.S., it would have
made buyer eligible for a refund pursuant to Rule 12B-5.080(5), F.A.C.
Should Taxpayer have collected from Buyer the XXX taxes Taxpayer paid on the biodiesel
fuel it purchased from Seller A, then sold and delivered to Buyer, and which Buyer
subsequently exported out of XXX?
Yes, Taxpayer should have collected XXX fuel tax on its sale of biodiesel to Buyer because it
was a taxable transaction pursuant to section 206.87(2) (d), F.S. Taxpayer should have collected
XXX fuel tax at the rate of 29 cents per gallon pursuant to section 206.87(1), F.S.
If Taxpayer, as importer of record, incurs and pays the taxes on the fuel entering into XXX
for Seller B and Seller C transactions, should Taxpayer then pass those taxes to, and collect

the taxes from Buyer?
Yes, pursuant to section 206.87(2) (d), F.S., the sale was subject to XXX fuel tax, because the
sale occurred in XXX between a licensed XXX wholesaler and an unlicensed person. Since
Taxpayer had incurred and paid the fuel taxes to the Department for the biodiesel entering XXX
for purchases from Seller B and Seller C, Taxpayer should have charged the XXX fuel tax to
Buyer on those gallons, but would not have been required to remit this tax to the Department,
because it had already accrued and paid this tax to the Department.
If Buyer was required to obtain an exporter’s license for the transaction, and it did not
have the requisite license at the time of the transaction, what are the potential
consequences to Buyer of Buyer’s failure to have the exporter’s license?
A refund of XXX fuel tax is available only to a person that is the holder of a XXX exporter’s license
and that has paid the XXX fuel tax on fuel that was exported by the licensee. To be granted a refund
the exporter must comply with the provisions of Rule 12B-5.080(5), F.S.
Taxpayer sold biodiesel to Buyer, with possession transferring at the Storage Facility. Taxpayer had
paid the XXX fuel tax to its supplier on a portion of the biodiesel and had accrued and remitted tax
to the Department on the remaining gallons of biodiesel. Taxpayer was required to collect XXX fuel
tax from Buyer, because the sale occurred in XXX between a licensed XXX wholesaler and an
unlicensed person. Buyer should have been licensed as an exporter and would have been allowed a
credit or refund of the tax it should have paid to Taxpayer. The exporter’s license would not grant
an exemption to Buyer from the XXX fuel tax, because the exemption from payment of XXX fuel
tax by an exporter is only allowed when the licensed exporter purchases the biodiesel from a
licensed XXX terminal supplier pursuant to section 206.052, F.S.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is binding
on the Department only under the facts and circumstances described in the request for this advice, as
specified in s. 213.22, F.S. Our response is predicated on those facts and the specific situation
summarized above. You are advised that subsequent statutory or administrative rule changes or
judicial interpretations of the statutes or rules upon which this advice is based may subject similar
future transaction to a different treatment than expressed in this response.
You are further advised that this response, your request and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s.
213.22, F.S. Confidential information must be deleted before public disclosure. In an effort to
protect confidentiality, we request you provide the undersigned with an edited copy of your request
for Technical Assistance Advisement, the backup material and this response, deleting names,
addresses and any other details which might lead to identification of the taxpayer. Your response
should be received by the Department within 15 days of the date of this letter.
If you have any further questions with regard to this matter and wish to discuss them, you may

contact me directly at (850) 922-4732.
Sincerely,

Ron Gay
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 74354