Motor Fuels Tax Refunds

Gasoline or Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG)

A refund can be requested for taxes paid on gasoline, CNG or LNG used solely for off-highway purposes, including off-highway equipment, stationary engines, motor boats, aircrafts, locomotives and other motor vehicles not registered for use on the public highways that are exclusively used off-highway.

In addition to the original purchase invoices showing state taxes paid, taxpayers must maintain a list of off-highway vehicle(s) and equipment or documentation of other non-highway use and the total number of gallons used with a distribution log as described in Rule 3.432.

The lessor of off-highway equipment can claim a refund. In addition to the original purchase invoices, taxpayers must maintain a list of each piece of off-highway equipment, and a distribution log as described in Rule 3.432, documenting the number of gallons of gasoline, CNG or LNG used in both on-highway and off-highway vehicles and equipment.

A lessor who claims a refund of state fuel tax may include a separate refueling, fuel reimbursement, or fuel service charge on the invoice, as long as the invoice contains a statement that the fuel charge does not include state motor fuel taxes.

A refund can be claimed for taxes paid on gasoline used in a motor vehicle operated exclusively off-highway, except for incidental highway use. Incidental travel on the public highway is infrequent, unscheduled, and insignificant to the total operation of the motor vehicle, and only for the purpose of transferring the base of operation or to travel to and from required maintenance and repair. Tax is due on gasoline, compressed natural gas and liquefied natural gas used for incidental travel of motor vehicles at a rate of 1/4 gallon per mile traveled on the public highway. See Rule 3.433.

Only the end user is allowed to request a refund of taxes paid on gasoline, CNG or LNG used in off-highway equipment. For example, a marina may not request a refund of tax paid on gasoline and resold tax-free directly to motorboats.

Diesel Fuel

The refund of taxes paid on diesel fuel used for off-highway purposes expired on Jan. 1, 2005, except for the following specific uses:

Feedstock

Manufacturers can claim refund of taxes paid on diesel fuel used on or after Sept. 1, 2007, as a feedstock in the production of tangible personal property for resale other than diesel fuel used in the production of motor fuel.

Oil and Gas Well Drill Cuttings

A refund can be claimed for taxes paid on diesel fuel used on or after Sept. 1, 2007, as a medium to remove drill cuttings from a well bore in the production of oil or gas.

Oil Well Servicing Movable Specialized Equipment

A refund can be claimed for taxes paid on diesel fuel consumed on or after Sept. 1, 2007, by moveable specialized equipment used exclusively in oil well servicing. To qualify for the refund, the person purchasing the diesel fuel must have received, or be eligible to receive, a federal diesel fuel tax refund for the diesel fuel used in the moveable specialized equipment.

See Rule 3.432 for the definition of Movable Specialized Equipment and the documentation required to support the above refund request.

Gasoline

A refund can be requested for taxes paid on gasoline used in motor vehicles equipped with power take-off or auxiliary power units. See Rule 3.432 for approved methods for calculating the amount of gasoline consumed by power take-off or auxiliary power units.

Motor vehicle air conditioning and heating systems are not considered power take-off systems.

Diesel Fuel

The refund of taxes paid on diesel fuel consumed by power take-off or auxiliary power units expired on Jan. 1, 2005.

A refund can be claimed for taxes paid on gasoline or diesel fuel exported from this state in quantities of 100 or more gallons. See Rule 3.432 for documentation required to support the export.

A refund can be claimed for taxes paid on gasoline or diesel fuel lost by fire, theft or accident in quantities of 100 or more gallons. See Rule 3.432 for documentation requirements when the loss is incurred through a drive-away theft at a retail outlet, leak in a line or storage tank or by fire.

The following are exempt entities that can claim a refund on taxes paid on gasoline, diesel fuel, CNG or LNG purchased by and only for the exclusive use by:

• Federal government entities. "Federal government" means any department, board, bureau, agency, corporation or commission that the United States government has created or wholly owns. It does not include motor fuels sold or delivered to a person operating under a contract with the United States.
• Texas public school districts. It does not include Charter Schools.
• Commercial transportation companies used exclusively to provide public school transportation services to a Texas public school district.
• Texas non-profit electric and telephone cooperatives.
• Texas volunteer fire departments.
• Tribal entities and tribal members from retailers located on an Indian reservation recognized by the United States government.
• Texas county governmental entities that paid taxes on CNG or LNG and the fuel was delivered into the fuel supply tank of a motor vehicle operated exclusively by the Texas county. It does not include gasoline or undyed diesel fuel purchased by a Texas county government.

See Rule 3.432 for documentation required to support an exempt entity refund claim.

Transit companies that pay the regular tax rate can request a partial refund for motor fuel used in qualified vehicles. The refund for gasoline is one cent per gallon and one-half cent per gallon for diesel fuel.

A transit company that paid tax on the purchase of CNG or LNG can apply to the Comptroller for and obtain a refund in an amount equal to one cent per gasoline gallon equivalent of CNG or diesel gallon equivalent of LNG used in transit vehicles. See Rule 3.431.

Metropolitan rapid transit authorities (MTA) that contract directly with a Texas independent school district to transport students can receive a refund of the taxes paid on gasoline, diesel fuel, CNG, LNG and liquefied gas used to provide this service on or after July 1, 2007.

The MTA must maintain records regarding vehicle mileage, fuel consumed, total student passengers and total nonstudent passengers for routes under contract with a public school district.

A refund cannot be claimed for a single route if in any month the nonstudent passengers exceed 5 percent. The MTA must submit a refund claim to the Comptroller and maintain all supporting documentation for six years.

NOTE: Gallons claimed for public school transportation by a transit company cannot be included in the transit company's claim for refund of the one cent per gallon for gasoline, one-half cent per gallon for diesel fuel or one cent per gasoline gallon equivalent or diesel gallon equivalent for CNG or LNG. See Rule 3.448.

A license holder (except Aviation Fuel Dealers) can claim a credit for taxes paid for certain non-highway purposes, export, loss by fire, theft or accident and sales to exempt entities on their monthly tax return. A supplier, permissive supplier or distributor who reported and remitted or that paid more taxes than were due has four years to claim a credit on their tax return. See Rule 3.432.

Licensed aviation fuel dealers that pay taxes on gasoline, aviation gasoline, diesel fuel or jet fuel can claim a refund on gasoline, aviation gasoline, diesel fuel or jet fuel that is delivered into the fuel supply tank of aircraft and aircraft servicing equipment. See Rule 3.432.

Licensed interstate truckers that pay taxes on gasoline, diesel fuel, CNG, LNG or liquefied gas can claim a refund on motor fuel consumed in licensed commercial motor vehicles outside this state (i.e., in Mexico). See Rules 3.430 and 3.432 for record-keeping requirements. A credit must be claimed on or before the due date of the third successive quarterly return or, for annual filers, on or before the due date of the annual interstate trucker tax return.