Administrative Procedure

Administrative Procedure AP 111: Special Fuels: G.L. c. 64E

Date: 01/31/2018
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Sales and Use Tax

            General: All combustible gas and liquids, other than gasoline, which propel registered motor vehicles, are special fuels. Only licensed suppliers and user‑sellers maintain storage facilities of special fuels. Only licensed suppliers are allowed to make bulk sales of special fuels. Suppliers acquire special fuels on a tax‑free basis and collect the tax from user‑sellers and users. User-sellers are required to pay the excise on all special fuels acquisitions.

Table of Contents

A. SUPPLIERS

            Application for License: Suppliers of special fuel must file with the Department of Revenue (DOR) Form SFT-1 with a $25.00 fee initially and renew by each January 1st. Applications must be filed online through MassTaxConnect (MTC). All returns must be filed and outstanding taxes must be paid before a license as a Supplier of Special Fuels will be granted.

 

            Filing Requirements: Suppliers of special fuel must file Form SFT-3 by the 20th day of each month for special fuel supplied during the previous month. Form SFT-3 must be filed even if no tax is due. Businesses with certain combined liabilities at or exceeding $5,000 must file electronically through MassTaxConnect. See TIR 16-9. 

 

            Payment: Suppliers with total annual payments in excess of $5,000 must make payments electronically through MTC. Failure to make electronic payments may result in a penalty per G.L. c. 62C, s. 33(g). For those not required to make electronic payments, the payment must be included with the monthly return. Make the check or money order for the exact amount payable to the Commonwealth of Massachusetts.

 

            Rate of Tax: The rate of tax is $.24 per gallon. For liquefied gases (propane, CNG, LNG, etc.), the rate is 19.1% of the average price per gallon (as determined by the Commissioner for each calendar quarter) computed to the nearest 10th of a cent per gallon. Liquefied gas suppliers will be notified of the rate approximately four (4) weeks before the start of the calendar quarter. The current liquefied gas tax rate is also published on the DOR website.

 

            Exemptions: The following sales or uses are either exempt from tax or may entitle the purchaser to a refund: (1) sales to the federal government; (2) sales in foreign or interstate commerce, except where permitted under the Constitution and laws of the United States; (3) sales to foreign embassies; (4) sales by one licensed supplier to another or to a person duly licensed in another state (under certain restrictions); (5) sales of special fuels used in watercraft; (6) sales to regional transportation authorities and certain authorities including MWRA, MBTA, and MASSPORT; (7) sales of special fuels for propelling any vehicle on a turnpike constructed by the Massachusetts Turnpike Authority; (8) sales of special fuels for off‑highway use; and (9) sales of special fuels for farm purposes. Generally, a purchaser claiming an exemption from the tax must present the vendor a properly executed Form ST-12, Exempt Use certificate. In certain instances, sales or use tax may nonetheless apply.

            Interest and Penalties: If returns are not properly filed, interest and penalties may be assessed. The Massachusetts interest rate is based on the federal short‑term rate plus four percentage points, compounded daily. G.L. c. 62C, § 32, as amended. For more information on calculation of interest, see Regulation 830 CMR 62C.33.1. Quarterly TIRs are issued to announce the interest rates. The penalty for late filing is 1%/month or fraction thereof, not to exceed 25% of the amount due; and the penalty for late payment is 1%/month for each month or fraction thereof, not to exceed 25% of the amount due.

 

            See TIR 99-18 regarding waiver of G.L. c. 62C, § 33(c) late‑pay penalties and suspension or involuntary collection activities under G.L. c. 62C, § 32(e) when the taxpayer disputes the assessment (or any portion thereof) administratively within DOR or with the Appellate Tax Board or Probate Court.

 

            Extensions of Time to File: For good cause, the Commissioner may grant a reasonable extension of time for filing a return. Requests must be in writing to the address below. Failure to pay 80% of the tax required to be paid on or before the due date for payment of tax will void any extension of time to file and the return will be subject to penalty as a late return.

 

     Amended Returns: Taxpayers often discover after filing a return that information was omitted or a mistake was made. To adjust information reported on a prior return, a taxpayer must file an amended return with DOR. An amended return must be filed to increase previously reported tax; to decrease previously reported tax; to report an increase to tax resulting from a federal or state change; to report a decrease resulting from a federal or state change and to make amendments that have no net effect on tax. Most taxpayers are required to amend their returns electronically using MTC. Taxpayers filing amended returns on paper will manually complete the same form as used for the original or prior amended return, whichever is filed later, and check the box indicating that the return is an amended. See AP 605, Amending Tax Returns for more details.  

               

            Refunds: User-sellers and users of special fuels may submit refund applications. A copy of the tax receipt showing the tax paid must accompany the application. Refund applications must be filed electronically.  

 

     Use the following forms to apply for special fuel refunds:

Type Form
Off‑Highway Use SFT-9, Special Fuels Refund Application
Turnpike SFT-9T, Special Fuels Refund Application for Massachusetts Turnpike Use
Motor Carrier (IFTA)* IFTA-100, IFTA Quarterly Fuel Use Tax Return*

* A motor carrier licensed under the International Fuel Tax Agreement (IFTA) may apply for a special fuels tax refund for special fuels consumed on the Massachusetts Turnpike on its IFTA-100, IFTA Quarterly Fuel Use Tax Return. Massachusetts Turnpike miles are included in the total IFTA miles but are excluded from the Massachusetts taxable miles. This lowers the MA IFTA tax liability. However, an IFTA motor carrier claiming this exemption must file a Business Use Tax Return, Form ST-10, and pay the 6.25% use tax on the fuel consumed in exempt travel on the Massachusetts Turnpike.  

 

            All refund claims must be filed within two years of the date of purchase. For more information on Massachusetts Turnpike refunds, see LR 84-82.

 

      A special fuel refund may only be claimed for special fuels excise paid to Massachusetts.

 

      Interest: Refund payments are not subject to interest.

 

      Abatements: An abatement is a reduction of a tax or penalty assessed by DOR. See 830 CMR 62C.37.1. Taxpayers seeking to obtain an abatement of a tax or penalty that has been assessed by DOR should use MTC and follow the instructions provided for disputing a tax or penalty assessed by DOR. Alternatively, taxpayers may file a paper Form ABT, Application for Abatement. However, abatement applications filed electronically through MTC will be processed faster than paper applications. Note that taxpayers that are required to file their taxes electronically must also file abatement requests electronically. See AP 627, Applications for Abatement for more details. 

           

            Changing Information or Status: Changes should be made electronically through MTC. A taxpayer who does not have access to MTC may submit changes in writing to the address given below.

 

 

For more information, contact:

 

Massachusetts Department of Revenue

Excises Unit, Special Fuels Tax Section

P.O. Box 7012

Boston, MA 02204

(617) 887-5060

B. USER-SELLERS

            Application for License: User‑sellers of special fuel must file with DOR license application Form SFT-1 with a $25.00 fee initially and renew by each January 1st. Applications must be filed online through MassTaxConnect.

 

            Filing Requirements: User‑sellers of special fuel must file with DOR Form SFT-4 by the 20th day of each month for special fuel used or sold during the previous month. Form SFT-4 must be filed although no tax is due. Businesses with certain combined tax liabilities at or exceeding $5,000 must file electronically.

 

            Extensions of Time to File: For good cause, the Commissioner may grant a reasonable extension of time for filing a return. Requests must be in writing to the address below.

            Amended Returns: See above.

 

            Refunds: User-sellers may submit refund applications. (See above under Refunds) A special fuel refund may only be claimed for special fuels excise paid to Massachusetts.  

 

      Abatements: See above.

 

            Exemptions: None.

 

            Changing Information or Status: Changes should be submitted electronically through MTC. A taxpayer who does not have access to MTC may submit changes in writing to the address given below.

 

For more information, contact:

 

Massachusetts Department of Revenue

Excises Unit, Special Fuels Tax Section

P.O. Box 7012

Boston, MA 02204

(617) 887-5060

G.L. c, 62C, §§ 32, 33(c), 33(e), 33(g)

G.L. c. 64E

830 CMR 62C.19.1

830 CMR 62C.33.1

TIR 16-9

Form ABT,  Application for Abatement  

Form SFT-1, Special Fuels License Application

Form SFT-3B, Supplier’s Tax Return – Special Fuels

Form SFT-4, User – Seller’s Special Fuels Tax Return

Form SFT-9, Special Fuels Refund Application

Form SFT-9T, Special Fuels Refund Application for Massachusetts Turnpike Use

Form ST-10, Business Use Tax Return

IFTA – 100, IFTA Quarterly Fuel Use Tax Return

Referenced Sources:

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