Motor Fuels Tax Minute, Episode 52: Exports to Mexico

In this week’s episode of Motor Fuels Tax Minute, our hosts discuss exports to Mexico.

For information or assistance, contact us. We are here to help.

©2024

Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 52

00:00:00
Leanne: Welcome to Weaver’s “Motor Fuels Tax Minute,” the vlog where we talk all things motor fuel. Today it’s myself, Emilda and Kelly all together in the Houston office. We wanted to have a little discussion about an issue that’s coming up a lot with many of our clients, and just the industry in general, and that is exports to Mexico, primarily from Texas and Arizona.

Emilda, I know you’ve got quite a few clients doing a lot of work in this area. What are you seeing and what are the red flags or the hot topics?

00:00:28
Emilda: Good point, Leanne. I think we’re starting to see a few things, especially from, as you mentioned, Texas and Arizona. Primarily, I’ve seen a lot in Texas where fuel is being exported from Texas outside of the US, and we’re finding that carriers are not licensed in Texas as transporters. And so, Texas does require a transporter license for fuel that is picked up in Texas and exported outside of the US. So, I think that’s creating some issues.

00:00:57
Kelly: I do a lot with the e-filings. If you’re a supplier or distributor, you have to enter that number in. Does it get rejected? Does your return go through?

00:01:06
Emilda: Great point, Kelly. We’re starting to see that those returns are not able to be submitted electronically because they’re missing the carrier transportation license number. And so we’re seeing that, to your point, suppliers and distributors are not able to file the returns.

00:01:23
Leanne: And of course, added in, are they aware of the customs? You know, anytime you’ve got exports, you’ve got to file those electronic export information documents with the bureau, the Census Bureau. Those have to be done at the time that you issue that bill of lading and do the export. You can’t do it months and months later, and they’re needed to support export claims. In addition to any pedimentos, those of course, pedimentos are really hard to get if you can’t get them at all. The electronic export of information is sort of your bare minimum.

00:01:52
Kelly: So, if I have hundreds and hundreds of exports, I need to keep hundreds and hundreds of documentation?

00:01:58
Leanne: Yep. You do. It is filed online. But yeah, you do need to maintain that, and you need to maintain it for the period that the state requires that they keep their statutes open for any audits that might occur or just any basic exams, if they pull a return for an exam. So that’s usually around three years. And, you know, the other layer to this is we’ve got a lot of free trade zones down in Texas and Arizona and there’s a special way you have to enter fuel into a free trade zone. Emilda, I feel like you’ve come with a lot of questions. People are saying it’s in the free trade zone. Is that correct?

00:02:35
Emilda: Correct. And I think to your point, Leanne, is if they’re in a free trade zone, is it subject to tax?

00:02:41
Leanne: The answer to that is a little complicated, because what does it mean to be in the free trade zone? Port of Brownsville, we’ll use that as an example, it’s a huge area. Not every tank in there is a free trade zone designated tank. And so, in order to have your fuel for motor fuels, but we could be talking about widgets, in the free trade zone, you have to formally enter it as such under customs. There’s a special customs form. If you don’t file that it’s not free trade zone fuel, no matter where in the port you have it.

So, Kelly, that’s another layer of paperwork.

00:03:14
Kelly: That is another layer of paperwork.

This was this week’s Motor Fuels Tax Minute. And I think we’re going to follow up with this with a little more information actually about free trade zones. We’re throwing that term around. I think learning what it is will be great.

Thank you for joining us.