How does a registered motor-fuel distributor that sells gasoline through its own stations compute the sales tax, and when is the tax due?

Plain-English summary

Amos Post Incorporated, a motor-fuel distributor registered under Article 12-A, sells gasoline through its own retail outlets. It asked two things: (1) how to compute the sales tax on that gasoline, and (2) when the tax liability is incurred.

The Department held the distributor computes tax on the statutory selling-price base (not its own cost), and the tax is due when fuel is pumped into the customer's tank.

• A distributor's fuel sale is a "retail sale." Section 1105(a) taxes receipts from retail sales, and § 1101(b)(4)(ii) deems a distributor's sale of automotive fuel to be a retail sale. So § 1111(e)(1) governs how the tax is computed.
• The base is the statutory selling price, not cost. As enacted (L.1982, c.454, effective September 1, 1982), § 1111(e)(1) based the tax on the price paid to a distributor by a purchaser, which included any federal excise tax charged and the statewide average retail mark-up. There was no exception for distributors selling through their own outlets. Amos Post's argument that it could compute tax on its purchase price rather than its selling price was untenable.
• A later amendment changed the base. By L.1982, c.930, § 1111(e)(1) was amended to base the tax generally on the regional average retail sales price for the region where the sale occurs, applicable to quarterly periods beginning March 1, 1983.
• Timing. The tax becomes due when the fuel is pumped into the customer's tank and is collected when the price is collected (§ 1132(a); 20 NYCRR 525.2, 532.1(a)(2)).

What this means for you

Being both the distributor and the retailer doesn't let you tax your cost. New York's motor-fuel sales-tax computation used a statutory retail base (originally a statewide, later a regional, average price plus mark-up), and there was no carve-out for integrated distributor-retailers. The tax follows the statutory base, not what you paid for the fuel.

The taxable event is the pump. For gasoline sold at retail, the sales tax is incurred when the fuel goes into the customer's tank and is collected along with the price — a concrete answer to "when do I owe it?"

Treat the specific numbers as historical. This opinion describes the 1982–83 versions of the motor-fuel computation rules. New York's fuel-tax mechanics (including prepaid sales tax on motor fuel) have changed substantially since; use current statutes, regulations, and Department publications for present-day rates and bases.

Common questions

Q: I'm a distributor selling gas at my own stations. Can I compute sales tax on what I paid for the fuel?
A: No. Under the rules in this opinion the tax is computed on the statutory selling-price base (the statutory average retail price plus mark-up), not on your purchase price. There's no exception for distributors selling through their own outlets.

Q: When do I owe the sales tax on gasoline I sell at retail?
A: When the fuel is pumped into the customer's tank; you collect it when you collect the price (§ 1132(a)).

Q: Are these the current computation rules?
A: No. The opinion reflects 1982–83 law and a subsequent amendment. The motor-fuel sales-tax rules have since changed; check current law before relying on the specific base or method.

Citations and references

Statutes:

• Tax Law § 1105(a) — tax on receipts from retail sales
• Tax Law § 1101(b)(4)(ii) — a distributor's sale of automotive fuel is deemed a retail sale
• Tax Law § 1111(e)(1) — computation of tax on motor fuel (statewide, then regional, average retail price)
• Tax Law § 1132(a) — collection of tax
• Tax Law Article 12-A — motor fuel distributors

Regulations:

• 20 NYCRR 525.2; 532.1(a)(2) — timing/collection of tax

Department guidance:

• TSB-M-82(28)S — computation of motor-fuel sales tax

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1984.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a84_31s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-84(31)S
Sales Tax
October 15, 1984

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S821012D

On October 12, 1982 a Petition for Advisory Opinion was received from Amos Post
Incorporated, P.O. Box 351, Catskill, New York 12414.
Petitioner inquires as to: (1) the correct method of computing the sales tax on the sale of
gasoline by a motor fuel distributor registered under Article 12-A of the Tax Law, when such sales
are made through his own retail outlets, and (2) the point at which the tax liability is incurred.
Section 1105(a) of the Tax Law imposes a sales tax on "the receipts from every retail sale
of tangible personal property . . . . " Section 1101(b)(4)(ii) of the Tax Law provides that "a sale of
automotive fuel by a distributor is deemed to be a retail sale . . . . " The term "distributor" refers to
distributors for purposes of Article Twelve-A of the Tax Law, "excluding persons who are not
required pursuant to section two hundred eighty-two-a to pay the tax imposed thereby." Tax Law,
§ 1101(b)(4)(ii)(B)
Section 1111(e)(1) of the Tax Law provides for the computation of tax. As originally enacted
by L.1982, c.454, effective September 1, 1982, it provided that the tax was to be "based on the price
paid to a distributor by a purchaser, which shall include (i) any charge by the distributor to the
purchaser for any tax imposed by the United States pursuant to chapter thirty-two of the Internal
Revenue code, and (ii) the statewide average retail mark-up . . . . " No statutory exception was
created for distributors selling through their own retail outlets. See Technical Services Bureau
Memorandum, TSB-M-82(28)S, p. 3. Petitioner's contention that, as of the time its Petition was
received, in October, 1982, it was entitled to base its computation of tax on its purchase price, rather
than its selling price, is untenable.
It is to be noted that Section 1111(e)(1) of the Tax Law was amended by L.1982, c. 930, to
provide that the tax is generally to be based on the "regional average retail sales price for the region
in which the sale occurs . . . . " Such provision was made applicable to quarterly periods beginning
March 1, 1983.

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-84(31)S
Sales Tax
October 15, 1984

As to Petitioner's second query, the tax becomes due at the time the fuel is pumped into the
tank of the customer, and is to be collected by Petitioner at the time its price is collected. Tax Law,
§1132(a); 20 NYCRR 525.2, 532.1(a)(2).

DATED: July 10, 1984

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.