Motor Fuels Tax Minute, Episode 64: Delaware Gross Receipts Tax

In this week’s episode of Motor Fuels Tax Minute, our hosts dive into the Delaware gross receipts tax.

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Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 64

00:00:00
Leanne: Welcome to Weaver’s Motor Fuels Tax Minute, the vlog where we talk all things motor fuel.

A few weeks ago, you saw my post where I was on vacation keeping up with my animals going from kangaroos to llamas.

Kelly, what have you been up to this summer? I heard that maybe you moved back to Delaware.

00:00:16
Kelly: I did, I moved back to my home state where I was born and raised. The first state, the home of Grottos and Thrashers, a state with 200 times more chickens than people. Also well known for not having sales tax. But as we well know, Leanne, it has the Delaware gross receipts tax.

00:00:36
Leanne: Oh yes, it does, and Kelly, the Delaware gross receipts tax is not for the faint of heart. I know the two of us have worked on it over the years. I’m guessing because you mentioned it though, you’ve got something to say.

00:00:47
Kelly: Absolutely. So, for our listeners who don’t know much about the Delaware gross receipts tax and only know Delaware for tax-free sales, the Delaware tax gross receipts tax is a tax on the total gross revenue of a business. It’s actually levied on the seller of goods and services, as opposed to the consumer. Now, this becomes especially important for our petroleum wholesalers because on top of that gross receipts tax, they also have a hazardous substance tax that you can pass on as a separate line item to your customers, and a surtax on petroleum products. It comes with extremely limited exemptions, one of the ones that we know well is for exports. But unlike where a lot of states are like you export the product, just keep your VOL, keep your invoice, good to go. Delaware actually requires your customers to complete a Form 373 that you need to keep on file for a year and renew annually if you use it as a blanket certificate.

00:01:46
Leanne: That’s right. I know we’ve run into issues in the past with taxpayers not having those certificates. And then in addition to just the complexity of the petroleum surcharge, the hazardous substance tax and the very limited exemptions, there’s some interesting product definitions in there that determine whether or not the tax is actually charged. What’s a finished product? What’s an intermediate product? What’s a partially refined product? And they’re all treated a little bit differently.

00:02:14
Kelly: Yeah. You’re giving me flashbacks over here, Leanne. Not good ones.

00:02:18
Leanne: Yeah, I think it’s probably a little bit too much for one Motor Fuels Tax Minute. But if you’re in Delaware, please do reach out. It is complicated. And, you know, while there are not many exemptions, there are some products that may not be subject to the tax depending on whether it’s partially refined, fully refined, intermediate, a feedstock, etc. So please do reach out to us if you’re having any concerns in Delaware.