New York Sales Tax Exemptions for Manufacturers - Fuel
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7/15/20262 min read
Motor Fuel & Diesel Motor Fuel
The following slides describe the sales tax exemptions and refunds available for the purchase of different types of fuel used in production. Fuel includes:
- motor fuel,
- highway diesel motor fuel,
- non-highway diesel motor fuel.
Different rules apply to the exemption or refund available for purchases of each type of fuel.
To qualify for the exemption or refund, the fuel must be used directly and exclusively (100%) in the production phase.
To qualify as being used directly in production, fuel must be used or consumed during the production phase to:
- operate exempt production machinery or equipment;
- create conditions necessary for production; or,
- perform an actual part of the production process.
Fuel used in the administration or distribution phases does not qualify for the exemption.
Therefore, fuel does not qualify for the exemption if it is used or consumed in:
- the lighting of buildings;
- the heating and cooling of buildings;
- the preparation of food and drink subject to tax imposed by section 1105(d) of the Tax Law; or,
- the storage of tangible personal property.
Fuel used for heating and cooling will qualify for the exemption only if it can be shown that it is used exclusively to create certain conditions that are necessary for production.
General heating and cooling maintained in the range for employee comfort, or for dual purposes, does not qualify for the exemption.
Motor Fuel & Highway Diesel
Motor fuel includes:
- gasoline
- compressed natural gas (CNG)
- liquefied natural gas (LNG)
- liquefied petroleum gas (LPG)
Highway diesel motor fuel includes any diesel motor fuel that is not non-highway diesel motor fuel, as defined later.
Motor fuel and highway diesel motor fuel cannot be purchased without the payment of sales tax.
However, the sales tax paid on fuel used directly and exclusively in production is eligible for a refund using Form FT-500, Application for Refund of Sales Tax Paid on Petroleum Products.
Non-Highway Diesel
Non-highway diesel motor fuel includes dyed diesel motor fuel that is designated for use other than on a public highway.
Dyed diesel motor fuel is diesel motor fuel dyed in accordance with and for the purpose of complying with the provisions of 26 USC 4082(a) and its regulations, as may be amended in the future.
Non-highway diesel motor fuel that will be used directly and exclusively in production can be purchased without paying sales tax by using either:
- Form FT-1012, Manufacturing Certification for Non-Highway Diesel Motor Fuel and Residual Petroleum Product, or,
- Form FT-1020, Exemption Certificate for Certain Taxes Imposed on Diesel Motor Fuel and Propane.
In order to qualify for the exemption, non-highway diesel motor fuel cannot be delivered into a storage tank equipped to dispense fuel into the fuel tank of a motor vehicle or otherwise used on the highways of this state.
Source: New York State Department of Taxation and Finance (NYS DTF)