Motor Fuels Tax Minute, Episode 60: 637 Notification Letter

In this week’s episode of Motor Fuels Tax Minute, our hosts give their take on the 637 notification letter.

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Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 60

00:00:00
Kelly: Welcome to this week’s Motor Fuels Tax Minute, where we talk all things motor fuels. Now, Leanne, we know you’ve been on a kick with this licensing thing. And one thing that we have noticed from some of our clients is that they ask for a packet containing the 637 registration, the state license application, every year from their customers. Now for the 637 registration, we verified that if nothing changes, you don’t have to renew it or do anything annually. What is your take on this?

00:00:30
Leanne: Yeah, that’s right. And we do see these packet requests quite often. They’re really done for compliance reasons. We’ve talked about state licenses. Some of them need to be renewed. We’ve talked about the occasional situation where a 637 license may need to be renewed. And it’s also possible a 637 license could be canceled. Either you cease doing business or there is an IRS compliance review, and they determine that a taxpayer isn’t doing the business and therefore doesn’t need the registration. And so, they go ahead and cancel it.

I think the reason why we see these packets include that 637 request every year is just to be comprehensive and make sure they’re in compliance. To make sure they’re charging taxes where they should be and not charging them where they don’t need to be.

It’s not entirely required to have that 637 notification letter every year. I wouldn’t push back on it necessarily. It shouldn’t be a big deal to include it. If somebody doesn’t ask for it, I wouldn’t worry about asking for it if you’ve already given them one in the past. If somebody does ask for it, I would just go ahead and fill it out. It’s going to be the same information year after year.

00:01:41
Kelly: That makes sense, especially considering the huge consequences if somebody does have an expired 637 registration, they aren’t keeping up with it, or they’re no longer doing that type of business. The taxes connected with that we know are large, because it’s mostly all bulk activity that would start being taxable.

00:01:58
Leanne: That’s right. Of course, the other thing that these requests might do is for somebody who doesn’t have a 637 license to think, maybe I need one. There are big penalties for failure to register. That might be a discussion for another day.

It can be useful to get these letters and packets every year, even though they’re not technically required on the federal side. They are for state. We’ve talked about how a lot of states have annual renewals at all different times of the year. There are exemptions because generally they need to be renewed again. Some can be annual. Good practice is a matter of, I think contract lawyers will tell you they should go with the transaction. But like I said, discussion for another day.

00:02:42
Kelly: Well, it sounds like we have a lot of great topics coming up. Thank you everyone for joining us for this Motor Fuels Tax Minute. And just as a reminder, go ahead and submit any ideas that you might have that you want us to cover. And we’ll send you over some Weaver swag. Thanks again.

00:02:56
Leanne: Thank you.