Special Fuel

Signed 4/14/93






Petitioner, ) FINDINGS OF FACT,






) Account No. XXXXX





This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Paul F. Iwasaki, Presiding Officer, heard the matter for and on behalf of the Commission. Present, by telephone, and representing the Petitioner were XXXXX and XXXXX. Present and representing the Respondent was XXXXX, Assistant Utah Attorney General.

Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:


1. The tax is question is special fuel tax.

2. The audit period in question is XXXXX through XXXXX.

3. The Petitioner is a trucking firm which operates out of XXXXX.

4. During the period in question, the Petitioner filed its special fuel user tax returns however, made errors in those returns. Specifically, the Petitioner took sales tax credits for fuel taxes paid at the pump when, in fact, the purchases made at the pump were done so without having the special fuel tax imposed.

5. The deficiencies were brought to the Petitioner's attention by way of a statutory notice dated XXXXX.

6. During the audit period in question, the majority of states through which the Petitioner traveled collected the special fuel tax at the pump and allowed an offset for such purchases when filing the special fuel tax returns.

7. The audit assessed a special fuel tax deficiency in the amount of $$$$$ and a penalty in the amount of $$$$$. Interest was also assessed at the statutorily prescribed rate.

8. The Petitioner admitted that the individual filing the returns had made an error in allowing credits for fuel purchased in Utah. The Petitioner argued however that the error was obvious and should not have gone unnoticed when the returns were filed. Therefore, the Petitioner argues, it is unfair to attempt to collect the deficiency at this late date.


An excise tax is imposed on the sale or use of special fuel. The tax should be collected and paid to the state by the user‑dealer in all cases where the fuel is sold and delivered directly into the service tank of a motor vehicle not owned or operated by a licensed special fuel user within the state of Utah. Fuel sold and delivered into vehicles for which an exemption certificate as provided in Utah Code Ann. '59‑13‑103 has been purchased is exempt for this tax. In all other cases, the tax shall be paid by the user of such special fuel, and shall be computed on the number of gallons used, which shall be based on the average number of miles per gallon obtained by the user's vehicles divided into total miles traveled on the highways of Utah by such vehicles. (Utah State Tax Commission Admin. Rule R865‑2SF‑1, 1989.)


In the present case, neither party questions the fact that the Petitioner had made an error when remitting the special fuel user tax returns in question by claiming a $$$$$ credit for fuel purchased in Utah. The Petitioner argues, however, that the practice of purchasing special fuel ex‑tax at the pump was peculiar to Utah and that in almost every other state it operated in, the special fuel tax was collected at the time the fuel was purchased. Based upon that fact, and based upon the fact that the error was not discovered until XXXXX, the Petitioner argued it should be relieved from the deficiency assessment.

Although the special fuel tax provisions of the Utah Code do not contain a specific time limitation provision for assessment of the special fuels tax, the Commission, nevertheless, finds that there is an implied three year statute of limitation on assessments of special fuel tax. This determination is based upon examination of other provisions of the special fuel tax provisions of the code. Specifically Utah Code Ann. '59‑13‑309 requires every user‑dealer to maintain complete records on all purchases, sales, and inventories of special fuels for a minimum period of three years. Obviously, such a requirement would be inconsistent with a statute of limitations for a lesser period of time.

Such a finding is also consistent with '59‑13‑206(6) which deals with the statute of limitations on motor fuel tax. Under that section, there is an explicit three year statute of limitation on proceedings to collect motor fuel tax. This three year statute of limitation is also consistent with other provisions of the tax statutes which provide for a three year statute of limitation for assessing taxes on individual income tax and sales and use tax. (See Utah Code Ann. ''59‑10‑536 and 59‑12‑110.)

Based upon the foregoing, the Tax Commission finds that the assessment was made within the requisite time period. Therefore, the determination of the Auditing Division to the extent that it assesses a special fuel tax deficiency in the amount of $$$$$ is affirmed. The Commission also finds, however, that under the facts and circumstances of this case, the imposition of the $$$$$ penalty is inappropriate and waives that portion of the audit assessment. Interest will be imposed at the statutorily prescribed rate. It is so ordered.

DATED this 14 day of April, 1993.


R. H. Hansen Roger O. Tew

Chairman Commissioner


Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner


NOTICE: You have twenty (20) days after the date of the final order to file a request for reconsideration or thirty (30) days after the date of final order to file in Supreme Court a petition for judicial review. Utah Code Ann. ''63‑46b‑13(1), 63‑46b‑14(2)(a).