Can Kansas motor fuel tax be refunded on diesel burned in a truck's diesel particulate filter 'regeneration' cycle?

Plain-English summary

A firm representing several interstate trucking companies asked whether Kansas motor fuel tax could be refunded on diesel that its trucks burn during diesel particulate filter (DPF) "regeneration." Modern diesel engines have a filter that traps soot from the exhaust; the truck periodically burns extra diesel to heat and clean ("regenerate") that filter so the engine keeps running. The firm argued this fuel isn't used to propel the truck, so the tax on it should be refundable.

The Department said no refund is available. Kansas motor fuel tax under K.S.A. 79-3408 applies to fuel used "for any purpose whatsoever," and the refund in K.S.A. 79-3453 is only for fuel used "for any purpose other than operating motor vehicles on the public highways." Because a truck cannot run effectively on the highway without regularly regenerating its filter, the Department treats regeneration fuel as part of operating the vehicle on the public highways — so it falls outside the refund. The letter also warns that if motor fuel tax on diesel were refunded, that fuel would then be subject to Kansas state and local use tax under K.S.A. 79-3603(a).

What this means for you

Trucking companies and fuel-tax filers

Don't file a Kansas motor fuel tax refund claim for diesel consumed in DPF regeneration. The Department views that fuel as used to keep the truck operating on the highway, which is exactly the use the refund excludes.

Fuel-tax and multistate compliance advisors

The reasoning turns on whether a use is tied to highway operation, not on whether the fuel physically moves the vehicle. "Off-highway" refund theories that rest on a mechanical/emissions function of highway operation are unlikely to succeed here. Note too the letter's reminder that a granted fuel-tax refund can convert the fuel into a use-tax liability.

Common questions

Q: Can I get a Kansas motor fuel tax refund for diesel burned cleaning my truck's particulate filter?
A: No. The Department treats DPF-regeneration fuel as used for operating the vehicle on the public highways, which is not eligible for the refund under K.S.A. 79-3453.

Q: Why doesn't the "not used to propel the vehicle" argument work?
A: The Department reasoned that without regular filter regeneration the engine will not operate efficiently and may fail, so the truck cannot operate effectively on Kansas highways — making the fuel part of highway operation.

Q: What happens if a fuel-tax refund is granted on diesel?
A: The letter notes that diesel fuel for which motor fuel tax was refunded then becomes subject to Kansas state and local use tax under K.S.A. 79-3603(a).

Q: Does this opinion letter bind the Department for my situation?
A: No. An Opinion Letter is general interpretive guidance without the force of law; a taxpayer with different facts should not assume the same result.

Citations and references

• K.S.A. 79-3408 — imposes Kansas motor fuel tax on the use, sale, or delivery of motor-vehicle fuels or special fuels used, sold, or delivered in the state "for any purpose whatsoever."
• K.S.A. 79-3453 — allows a refund of motor fuel tax on fuel used "for any purpose other than operating motor vehicles on the public highways"; the Department held DPF-regeneration fuel does not qualify.
• K.S.A. 79-3603(a) — the sales/use tax imposition the letter cites in noting that diesel on which motor fuel tax was refunded becomes subject to Kansas state and local use tax.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2013-001

Original ruling text

Opinion Letter

Body:

KANSAS DEPARTMENT OF REVENUE
OFFICE OF POLICY & RESEARCH
June 20, 2013

XXXX
XXXX
XXXX
XXXX

Re: Request for Guidance Dated March 8, 2013

Dear Mr. XXXX:

This letter responds to the above-referenced correspondence, in which you request guidance concerning motor fuel refund claims in Kansas for diesel fuel consumed in “filter regeneration” operations. You indicate that your firm represents several interstate trucking companies operating tractors that travel in or through Kansas. Those tractors are equipped with diesel particulate filters to remove diesel fuel particulates from the engine exhaust, to comply with pollution control regulations. Diesel fuel is consumed to periodically burn off particulates and remove them from the filter. You indicate the fuel is not used to propel the tractor, nor is it used for the comfort of the cab or safety of the tractor, but is used in the regeneration process of the diesel particulate filter.

Please be advised that under Kansas law, no refund is available for motor fuel tax paid on diesel fuel consumed in the “filter regeneration” operations described above. K.S.A. 79-3408 imposes Kansas motor fuel tax on the “use, sale or delivery of all motor-vehicle fuels or special fuels which are used, sold or delivered in this state for any purpose whatsoever.” K.S.A. 79-3453 does provide for a refund of motor fuel tax paid on motor-vehicle fuels or special fuels used “for any purpose other than operating motor vehicles on the public highways.” The Department considers diesel fuel consumed in “filter regeneration” operations for tractors described above as being used for the purpose operating motor vehicles on the public highways.

Unless the tractor operator regularly conducts “filter regeneration” operations, either while the tractor is operating on the public highways, or in a stationary location, the tractor engine will not continue to operate efficiently and may eventually fail. Without regular “filter regeneration” operations, the tractor cannot operate effectively on the public highways of Kansas.

Please note, the purchase of any diesel fuel for which the motor fuel tax was refunded, would then be subject to Kansas state and local use tax. See K.S.A. 79-3603(a).

Please let me know if you have additional questions.

Very truly yours,

Richard Cram

Date Composed: 06/20/2013 Date Modified: 06/20/2013

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