LR 8233
Taxability of Petroleum Additives
February 24, 2023
Dear Applicant:
This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated January 12, 2023.
The facts as presented in your letter ruling request and from your website are summarized as follows:
Applicant primarily transports, stores, and distributes refined petroleum products and crude oil and is based in Oklahoma. In addition, Applicant provides additive injection services at their distribution terminals. A terminal may have multiple pipelines entering and exiting the facility, carrying products from point A to point B and further. One additive that Applicant might provide is called "cold flow improver (CFI)." CFI is added to the diesel fuel to keep it from gelling up in cold weather. It is a required additive that modifies the size and structure of the wax crystals that precipitate out of the fuel at low temperatures, permitting their passage through the fuel filter of vehicles. Applicant does not charge their customers for the cost of the CFI, but does charge an injection fee for the service performed at the terminals.
ISSUE 1:
Are Applicant's CFI purchases subject to Missouri sales tax?
RESPONSE 1:
Yes. Applicant's in-state purchases are subject to Missouri sales tax.
Section 144.020, RSMo, imposes a sales tax on the privilege of making retail sales of tangible personal property or providing certain taxable services in this state.
However, section 144.010.1(13), RSMo, provides:
"'Sale at retail' means any transfer made by any person engaged in business as defined herein of the ownership of, or title to, tangible personal property to the purchaser, for use or consumption and not for resale in any form as tangible personal property..."
Here, Applicant is not charging their customers for the sale of CFI, only a fee for their injection services. Applicant is not selling the CFI as tangible personal property. Therefore, Applicant's in-state purchases would be subject to sales tax.
ISSUE 2:
Are Applicant's purchases of CFI exempt from Missouri sales tax as a 'sale for resale?'
RESPONSE 2:
No. Applicant's purchases of CFI are not exempt from Missouri sales tax as a "sale for resale." See Response 1.
ISSUE 3:
Are Applicant's CFI purchases exempt from Missouri sales tax because motor fuel taxes are paid by their customers?
RESPONSE 3:
No. Applicant's CFI purchases are not exempt from Missouri sales tax because motor fuel taxes are paid by their customers.
Section 144.020, RSMo, imposes a sales tax on the privilege of making retail sales of tangible personal property or providing certain taxable services in this state.
Missouri's motor fuel tax is imposed by section 142.803, RSMo, and is levied and imposed on all motor fuel used or consumed in this state. The imposition of motor fuel tax under section 142.803, RSMo, does not relate to the imposition of sales tax under section 144.020, RSMo, Applicant's customers paying tax on motor fuel consumed in this state does not affect the amount of sales tax Applicant should pay on their purchases of CFI.
This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.
Should additional information be needed, please contact Legal Counsel J. Ross Shelton, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford
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