Can a trucking company get a Motor Fuel Tax refund for undyed diesel used to run a refrigeration unit that shares one fuel tank with the truck's engine?

Plain-English summary

A trucking company (COMPANY1), a subsidiary of a frozen-food company (COMPANY) that COMPANY1 hauls product for, asked the Illinois Department of Revenue for a Private Letter Ruling on Motor Fuel Tax refunds. COMPANY1 operates commercial motor vehicles -- refrigerated trucks, tractors, refrigerated trailers, and support vehicles -- that transport frozen foods in and out of Illinois. Some of its refrigerated trucks run the engine and the refrigeration unit off one shared fuel tank; others have a separate tank dedicated solely to the refrigeration unit. COMPANY1 had previously been told by the Department's Motor Fuel Tax and Refunds Section that fuel used by a refrigeration unit sharing a common tank with the engine was not a refundable use, and it wanted the Department to reconsider that position through a ruling.

COMPANY1 argued that Section 13 of the Motor Fuel Tax Law (35 ILCS 505/13) allows a refund for "undyed diesel fuel used by a commercial motor vehicle for any purpose other than operating the commercial motor vehicle upon the public highways," so long as the same vehicle is also used for highway purposes, and that running a refrigeration unit was such a non-highway purpose -- regardless of whether the refrigeration unit had its own tank.

The Department disagreed and denied the request for a binding ruling, instead issuing this GIL. It explained that under 86 Ill. Adm. Code 500.235, refund claims must be supported by a showing that the fuel was used for a nontaxable purpose and that the refundable portion can practically be calculated and itemized -- something the Department's own rules illustrate with an example like a truck driven partly on public highways and partly on a landfill. The Department read the "any purpose other than operating the vehicle on public highways" language in Section 13 to mean off-highway operation of the vehicle itself, not fuel consumed by an attached refrigeration unit that runs off the same engine-connected tank as the vehicle. Critically, the Department pointed to a separate provision -- Section 13's subsection (6) -- which expressly allows a refund for "undyed diesel fuel used by refrigeration units that are permanently mounted to a semitrailer... wherein the refrigeration units have a fuel supply system dedicated solely for the operation of the refrigeration units." If a shared-tank refrigeration unit already qualified under COMPANY1's broader reading of the statute, that separate dedicated-tank provision would serve no purpose -- and citing the Illinois Supreme Court's decision in People v. Rogers, 2013 IL 113510, the Department noted that statutes must be read so no part is rendered meaningless or superfluous.

The Department's bottom line: "a company may not claim a refund for fuel usage for refrigeration units on trucks that share a common fuel supply with the engine." A refund is only available for refrigeration-unit fuel when the refrigeration unit has its own dedicated, separate fuel supply system, per subsection (6).

What this means for you

Trucking and logistics companies operating refrigerated trucks

If your refrigerated trucks or trailers use one fuel tank for both the engine and the refrigeration unit, this GIL tells you the Department's position: fuel burned by that shared-tank refrigeration unit is not eligible for a Motor Fuel Tax refund under 35 ILCS 505/13, even though the truck itself may also be used off public highways elsewhere in your operations. If you want a refund for refrigeration-unit fuel, the clear path under the statute is a refrigeration unit permanently mounted to a semitrailer with its own dedicated fuel supply system, separate from the tank that feeds the engine -- that scenario is expressly covered by subsection (6) of Section 13.

Anyone documenting a Motor Fuel Tax refund claim

Beyond the shared-tank issue, remember that 86 Ill. Adm. Code 500.235 requires any refund claim to be backed by proof of the amount of fuel actually used for the nontaxable purpose, in a way that can practically be calculated and itemized -- the Department will not approve claims that can't be isolated from ordinary taxable highway use.

Accountants and tax professionals

Note that the Department denied this taxpayer's request for a binding Private Letter Ruling and issued a GIL instead, per 2 Ill. Adm. Code 1200.110(a)(4) and 1200.120. That means this letter -- while a clear statement of the Department's current reasoning and a useful preview of how it is likely to treat similar facts -- is not binding even on the company that requested it, let alone on other taxpayers. A client who wants a binding answer on its own shared-tank or dedicated-tank fact pattern would need to submit its own PLR request.

Common questions

Q: Can a company get a Motor Fuel Tax refund for diesel used to run a refrigeration unit that shares a fuel tank with the truck's engine?
A: No. The Department concluded that a company may not claim a refund for fuel usage by refrigeration units on trucks that share a common fuel supply with the engine.

Q: Is there any way to get a refund for refrigeration-unit fuel?
A: Yes, per subsection (6) of Section 13 (35 ILCS 505/13), a refund is available for undyed diesel fuel used by refrigeration units that are permanently mounted to a semitrailer and have their own fuel supply system dedicated solely to the refrigeration unit -- i.e., a separate tank from the one that fuels the engine.

Q: Why didn't the taxpayer's argument about "any purpose other than operating the vehicle on public highways" succeed?
A: The Department read that language in Section 13(4) to refer to off-highway operation of the vehicle itself (its example: driving on a landfill instead of a public road), not to fuel consumed by an attached refrigeration unit. Reading it the way the taxpayer proposed would make the separate dedicated-tank refrigeration refund in subsection (6) unnecessary, which conflicts with the rule that statutes should be read so no part is superfluous (citing People v. Rogers, 2013 IL 113510).

Q: What does a taxpayer need to document to support any Motor Fuel Tax refund claim?
A: Under 86 Ill. Adm. Code 500.235, claims must be made on Department-provided forms, include documentation of the fuel purchase, and be supported by proof of the amount of fuel used for a nontaxable purpose that can practically be calculated and itemized separately from taxable highway use.

Q: Did the Department issue a binding ruling here?
A: No. The taxpayer requested a Private Letter Ruling, but the Department denied that request under 2 Ill. Adm. Code 1200.110(a)(4) and issued this GIL instead, which is not a statement of Department policy and is not binding on the Department, even as to the requesting taxpayer.

Citations and references

Statutes:

• 35 ILCS 505/13 (from Ch. 120, par. 429) (motor fuel tax refund claims; the undyed-diesel exceptions, including subsection (4) for non-highway use and subsection (6) for dedicated-tank refrigeration units)
• 35 ILCS 505/1.16 (from Ch. 120, par. 417.16) (definition of "commercial motor vehicle")
• 35 ILCS 505/1.28 (definition of "semitrailer," referenced via Section 13(6))

Regulations:

• 86 Ill. Adm. Code 500.235 (motor fuel tax refund claim documentation requirements, including subsection (i))
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedure, including the Department's authority under (a)(4) to decline a PLR request)
• 2 Ill. Adm. Code 1200.120 (General Information Letter procedure)

Case law cited by the Department:

• People v. Rogers, 2013 IL 113510 (canons of statutory construction; statutes read so no part is rendered meaningless or superfluous)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2024.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2024/ST24-0009-GIL.pdf

Original ruling text

ST 24-0009-GIL 03/07/2024 MOTOR FUEL TAX LAW
This letter discusses claims for refunds for fuel usage for refrigeration units on trucks that
share a common fuel supply. 35 ILCS 505/13; 86 Ill. Adm. Code 500.523(j)(6). (This is a
GIL.)
March 7, 2024
COMPANY
NAMES
ADDRESS
Dear NAME:
This letter is in response to your letter dated February 22, 2024, in which you requested
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are
issued by the Department in response to specific taxpayer inquiries concerning the application of a
tax statute or rule to a particular fact situation. A PLR is binding on the Department, but only as to the
taxpayer who is the subject of the request for ruling and only to the extent the facts recited in the PLR
are correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in
the Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information
Letter (“GIL”) is to direct taxpayers to Department regulations or other sources of information
regarding the topic about which they have inquired. A GIL is not a statement of Department policy
and is not binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website
at https://tax.illinois.gov/ to review regulations, letter rulings and other types of information relevant to
your inquiry.
The Department will respond to all requests for private letter rulings either by issuance of a
ruling or by a letter explaining that the request for ruling will not be honored.” 2 Ill. Adm. Code
1200.110(a)(4). The Department has elected to deny your request for a PLR. The Department has
decided to issue a general information letter. In your letter you have stated and made inquiry as
follows:
COMPANY1, a wholly owned subsidiary of COMPANY, is requesting a Private
Letter Ruling regarding Motor Fuel Tax Refunds. COMPANY1’s claim is being
represented and requested by its parent company, COMPANY.
FACTS
COMPANY1 has a fleet of commercial motor vehicles that operate in and outside of
IL. These vehicles primarily transport frozen foods (ice) for its parent company
COMPANY. Within the fleet, there are several types of commercial motor vehicles.
These include refrigerated trucks, tractors, refrigerated trailers, and support
vehicles. The refrigerated trucks primarily have one common fuel supply tank that
provides fuel to both the engine and refrigeration unit. Several of these refrigerated
trucks also have a separate tank solely devoted to refrigeration fuel.
COMPANY1 has previously corresponded with the Motor Fuel Tax and Refunds
Section regarding non-taxable fuel usage for refrigeration units on trucks that share

COMPANY/NAME
March 7, 2024
Page 2

a common fuel supply with the engine. The Motor Fuel Tax and Refunds Section
stated that this is not a refundable usage.
Correspondence of this has been attached.
(35 ILCS 505/) outlines Motor Fuel Tax Law. The following information is stated
within here:
(35 ILCS 505/13) (from Ch. 120, par. 429)
For claims based upon taxes paid on or after January 1, 2000, a claim based upon
the use of undyed diesel fuel shall not be allowed except (i) if allowed under the
preceding paragraph or (ii) for claims for the following:
(4) Undyed diesel fuel used by a commercial motor vehicle for any purpose
other than operating the commercial motor vehicle upon the public highways.
Claims shall be limited to commercial motor vehicles that are operated for both
highway purposes and any purposes other than operating such vehicles upon the
public highways.
REQUEST
COMPANY1 is requesting a ruling based off this information in (35 ILCS 505/).
Breaking down the information in (35 ILCS 505/13) (from Ch. 120, par. 429)(4), we
see four parameters to claim a refund for undyed diesel.

1. Undyed diesel fuel: This refers to diesel fuel that doesn’t have the red dye
   added, which is typically used for off-road vehicles and equipment.
2. Commercial motor vehicle:
   (35 ILCS 505/l.l6)(from Ch. 120, par. 417.16)
   Sec. 1.16. “Commercial motor vehicle” means a motor vehicle used,
   designed, or maintained for the transportation of persons or property and
   either having 2 axles and a gross vehicle weight or registered gross vehicle
   weight exceeding 26,000 pounds or 11,793 kilograms, or having 3 or more
   axles regardless of weight, or that is used in combination, when the weight of
   the combination exceeds 26,000 pounds or 11,793 kilograms gross vehicle
   weight or registered gross vehicle weight, except for motor vehicles operated
   by this State or the United States, recreational vehicles, school buses, and
   commercial motor vehicles operated solely within this State for which all
   motor fuel is purchased within this State. Vehicles that are exempted from
   registration, but are required to be registered for operations in other
   jurisdictions may apply for a motor fuel use tax license and decal under the
   provisions of the International Fuel Tax Agreement referenced in Section
   14a of this Act.
   (Source: P.A. 94-1074, eff. 12-26-06.)

COMPANY/NAME
March 7, 2024
Page 3

This refers to any vehicle designed for transporting goods or passengers, buses,
refrigeration trucks, tractors, and trailers.

3. Any purpose other than operating the commercial motor vehicle motor vehicle
   upon the public highways: This means using undyed diesel for anything except
   driving the vehicle on public roads. This could include:
   a. Running auxiliary equipment like refrigeration units.
   b. Operating the vehicle on private property.
   c. Using fuel for other purposes like heating or powering generators.
4. Claims shall be limited to commercial motor vehicles that are operated for both
   highway purposes and any purposes other than operating such vehicles upon
   the public highway: You can claim a tax refund on the undyed diesel used for
   off-road purposes only if your vehicle also gets driven on public roads.
   CONCLUSION
   For refrigeration trucks that share a common fuel supply, COMPANY1 fits the
   criteria in (35 ILCS 505/13) (from Ch. 120, par. 429)(4) and uses undyed diesel both
   used on public roads and for other off-road purposes.
   We believe this is both fitting of the law and reasonable for current taxpayer usage.
   Diesel fuel used for refrigeration units that share a common fuel supply is currently
   exempt in several jurisdictions and states including Federal, OH, IN, MI, WI, WV. It
   is a taxpayer burden to have to invest in separate fuel tanks refrigeration units even
   though the usage of tax-exempt fuel has not changed. Your advice on this matter is
   greatly appreciated. If you need additional information or have any questions, my
   contact information is below.
   DEPARTMENT’S RESPONSE:
   Section 13 of the Motor Fuel Tax Law (“Law”), 35 ILCS 505/13, provides that any person other
   than a distributor or supplier who uses motor fuel (upon which he has paid the amount required under
   Section 2 of the Law) for any purpose other than operating a motor vehicle upon the public highways
   or water shall be reimbursed and repaid the amount so paid. Claims for reimbursement must be
   made to the Department on forms provided by the Department and must include documentation
   related to the purchase of the fuel, along with additional information deemed necessary by the
   Department regarding the specific purpose for which it was used. The specific information required of
   claimants is found at 86 Ill. Adm. Code 500.235. As Section 500.235 notes, the Department will
   approve claims only when they are based upon a showing that motor fuel was used for a nontaxable
   purpose and that the part for which refund is claimed can, as a practical matter, be calculated and
   itemized. Only claims that are supported by proof of the amount of motor fuel not used for a taxable
   purpose will be approved. See Section 500.235(i).

COMPANY/NAME
March 7, 2024
Page 4

The Company relies on the following language in Section 13 of the Law to support its claim for
a tax refund for fuel usage for refrigeration units on trucks that share a common fuel supply with
the engine:
For claims based upon taxes paid on or after January 1, 2000, a claim based upon the
use of undyed diesel fuel shall not be allowed except (i) if allowed under the preceding
paragraph or (ii) for claims for the following:
(4) Undyed diesel fuel used by a commercial motor vehicle for any purpose
other than operating the commercial motor vehicle upon the public highways.
Claims shall be limited to commercial motor vehicles that are operated for both
highway purposes and any purposes other than operating such vehicles upon the
public highways.
The Company’s reliance on subsection (4) is misplaced. The Department interprets the
language “any purposes other than operating such vehicles upon the public highways” to mean the
operation of the motor vehicle for off-highway purposes. The Department’s rules provide an example:
the operation of a commercial motor vehicle on the public highways and the operation of the motor
vehicle on landfills in the conduct of landfill operations. 86 Ill. Adm. Code 500.235(j)(4). In both
cases, the fuel is used to operate the motor vehicle.
The Law specifically addresses refrigeration units in subsection (6) (authorizing refunds for):
(6) Undyed diesel fuel used by refrigeration units that are permanently mounted to a
semitrailer, as defined in Section 1.28 of this Law, wherein the refrigeration units have a
fuel supply system dedicated solely for the operation of the refrigeration units.
If the Law is read in the manner suggested by the Company, it would render the language in
subsection (6) superfluous. The courts in Illinois interpret statutes to give meaning to all the language
in a statute. In People vs Rogers, 2013 IL 113510, ¶ 25, the Illinois Supreme Court set forth several
canons of statutory construction.
When construing a statute, this court’s primary objective is to ascertain and give effect
to the legislature’s intent, keeping in mind that the best and most reliable indicator of
that intent is the statutory language itself, given its plain and ordinary meaning. Id. In
determining the plain meaning of the statute, we consider the subject the statute
addresses and the legislative purpose in enacting it. People v. Young, 2011 IL 111886,
¶ 11. This court has repeatedly held that statutes should be read as a whole and
construed so that no part is rendered meaningless or superfluous. E.g., People v.
Edwards, 2012 IL 111711, ¶ 26. In doing so, we may consider the statute’s context,
reading the provision at issue in light of the entire section in which it appears, and the
Act of which that section is a part. People v. Jones, 214 Ill. 2d 187, 193 (2005); In re
Marriage of Mathis, 2012 IL 113496, ¶ 20.
It is the Department’s position that a company may not claim a refund for fuel usage for
refrigeration units on trucks that share a common fuel supply with the engine.

COMPANY/NAME
March 7, 2024
Page 5

I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,
Richard S. Wolters
Associate Counsel
RSW:slc