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VideoMotor Fuels Tax Minute Episode 125: Fuel Tax Suspensions Create New Compliance Challenges
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Leanne Sobel and Kelly Grace discuss the growing number of state fuel tax suspensions and the compliance challenges they create for motor fuel tax professionals. They explain why businesses should wait for official state guidance before implementing fuel tax rate changes and how suspension rules can vary significantly by state, fuel type and related fees. The conversation also covers reporting requirements, destination-state implications and the operational challenges of managing last-minute implementation timelines. Understanding these details can help fuel tax compliance teams reduce reporting errors and compliance risk.
Key Takeaways
- Fuel tax suspensions are often announced with little notice, making it essential to wait for official state guidance before implementing motor fuel tax rate changes.
- Suspension details can vary significantly by state, including affected fuel types, environmental fees and effective dates, creating complex compliance and reporting challenges.
- Fuel tax changes in one state can trigger destination-state tax consequences in neighboring jurisdictions, requiring careful evaluation of reporting obligations and filing impacts.
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Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 125
00:00:00
Leanne: Welcome to Weaver’s Motor Fuels Tax Minute, the blog where we talk all things motor fuel. Today, we’re going to talk a little bit about some fuel tax suspensions.
00:00:09
Leanne: Kelly’s been following these really closely. They’ve been cropping up in a few states, some states that we see every single time. There’s a sort of supply issue. So, Kelly, what is happening right now?
00:00:21
Kelly: It is wild right now, Leanne. As you know, I feel like these past few weeks, we’ve just been chasing these down, which I think is a really important point to start with. We get asked a lot by clients, potential clients, if we have insider knowledge. Unfortunately, we don’t have a lobbyist in every 50 states.
00:00:39
Kelly: If anyone does, please ping me on LinkedIn. Let’s get hooked up if you get this information ahead of time.
00:00:45
Kelly: But we’re using a lot of AI to track the websites, track the news releases. We are using our connections with the states and our clients and other people that we work with to try to get this out as quickly as possible.
00:00:57
Kelly: All that being said is we know these come out at the last minute. It’s very easy to want to jump in and do it right away, but I highly recommend you wait until you get that official notification on the tax website.
00:01:09
Kelly: Because we even saw with one of the latest ones, everyone thought it was point zero one. The news was reporting point zero one. It turned out to be point zero zero one.
00:01:18
Leanne: And that was Ohio, right, when they made their change?
00:01:21
Kelly: Yes. And it took about a day or so.
00:01:24
Kelly: The other thing to really keep a careful eye on is what is included when those go out. Because sometimes it includes only gasoline, sometimes it includes only diesel. You’ve got to think of environmental fees that follow those taxes as well. There’s a lot to consider.
00:01:40
Kelly: It seems so simple, and these governors are loving these announcements because it makes them look really good. But at the end of the day, it just becomes a headache, I think, for everyone. And I don’t know if anyone’s really benefiting other than the political people.
00:01:55
Leanne: Well, let me ask you this, Kelly. How many of these states are actually having this take effect cleanly on the first of the month?
00:02:02
Kelly: That’d be beautiful. That’d be so nice. No, none. I think maybe I saw one that had a reduced rate. But a lot of times, these are middle of the month at some weird time.
00:02:12
Kelly: I remember one governor, I will not name names, was like, “You guys are welcome. I gave you a warning at 04:00 PM, and it’s not going into effect until midnight.” Everyone working is like, “Great. Now I’ve got to scramble and stay late to get this tested and get this up and running.” It’s not clean.
00:02:27
Kelly: The returns are the other thing to think about. And what we’re also starting to see are states responding. I think it was South Carolina that responded to Georgia’s notification to be like, “OK. We do have this destination state taxable, but we’re going to waive that to keep everyone’s life easier.”
00:02:43
Kelly: And going back to Ohio, I think it was Ohio that came out, the reason why they had that teeny tiny little penny, half of the penny, whatever, is because they didn’t want to deal with the destination state consequences of not having a tax. Michigan could’ve potentially forced its tax on exports to Ohio.
00:03:01
Kelly: A lot of things to consider. It’s an exciting time, maybe too exciting for me. I don’t know about you, Leanne.
00:03:07
Leanne: Yeah. No, it’s a lot for sure. And like you say, states have been responding to their neighboring states, but also to their own governors. I think North Carolina initially had a sort of waiver related to dyed diesel, and they talked about how you would report that tax. They gave some guidance there, which was great, and then they suspended the tax completely.
00:03:32
Leanne: I don’t know long term, which was the easier choice for the revenue department and the taxpayers, but we’re definitely seeing the revenue departments get a little more used to this and being able to respond.
00:03:44
Kelly: Absolutely. Well, that was this week’s Motor Fuels Tax Minute. Thank you for joining us. Hopefully, after the elections, everything calms down a little for everyone.
