Were blend-stock products used as gasoline components subject to Texas motor-fuels tax or sales and use tax?

Plain-English summary

The Comptroller concluded that gasoline-component “blend stock” products were not covered by the motor-fuels tax law. They were instead taxable under the limited sales and use tax.

Every seller of the taxable products needed a sales tax permit. A middleman buying for resale could give the supplier a properly completed resale certificate, then had to collect tax from its customer or obtain a proper resale certificate from that customer.

What this means for you

The products' relationship to gasoline did not place them under the motor-fuels tax regime described in the letter. They followed the ordinary sales-tax chain, including permits, resale documentation, and collection from the final purchaser.

Common questions

Were the blend stocks subject to motor-fuels tax? No.

Were they subject to sales and use tax? Yes.

Could a middleman buy them tax-free for resale? Yes, with a properly completed resale certificate.

What then had to happen on the resale? The middleman had to collect tax or accept a proper resale certificate.

Citations and references

• Tex. Tax Code §§ 151.051, 151.009, 151.010, 151.054, 151.301, 151.308 — listed as the applicable sales-tax statutes.
• Comptroller Rule 3.286 — seller responsibilities.
• Comptroller Rule 3.285 — resale certificates, as identified in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8706L0819B08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller June 19, 1987

Dear ***:

Thank you for your letter of June 1, 1987, concerning the taxability of
"blend stock" products which are components of gasoline.

These products are not covered by the motor fuels tax law, but are
instead subject to limited sales and use tax. Every seller of taxable
items is required to obtain a sales tax permit issued by the Comptrol-
ler's Office. Rule 3.286 Sellers Responsibilities, is enclosed for
your reference.

A "middleman" who is buying taxable items for resale may issue a
properly completed resale certificate to his supplier in order to
purchase the items tax free. The "middleman" must then collect sales
tax from his customer or obtain a properly completed resale certificate
in lieu of tax. Rule 3.285 Resale Certificates is enclosed.

The applicable sections of the sales tax statute are as follows:

Sections 151.051, 151.009, 151.010, 151.054, 151.301, 151.308.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Julie Pesl
Tax Policy Section
Tax Administration Division