REQUEST LETTER

04-003

NAME

ADDRESS

Dear Commissioners:

Re:             Request for private letter ruling

COMPANY 2., and COMPANY 3

Special fuel tax on diesel fuel

COMPANY 1 , is a consulting company specializing in non-income taxes.   One of our clients, COMPANY 2 is a certified Air Carrier operating under Part 135 of the Federal Aviation Regulations.   Among its clients are major commercial banking consortia and independent financial institutions.   COMPANY 2 is affiliated with COMPANY 3, a ground carrier company specializing in scheduled route services for the banking industry.   COMPANY 3 uses armored vehicles for its courier service.

Question to be addressed by private letter ruling:

Would the exemption from the special fuel tax on diesel fuel used in a vehicle off-highway (UCA 59-13-301 (2) (b) (iii) apply to fuel consumed by an armored vehicle while it is parked on private property with the engine running during the delivery and retrieval of packages?

Facts for consideration:

•  During an actual delivery, the driver of each armored vehicle parks the vehicle, either in a privately owned parking lot or at the curbside in an area that is designated for parking.   Occasionally, when no parking spaces are available, the vehicle is double-parked.   The driver keeps the engine idling and remains in the vehicle while another person attends to the delivery.

•  COMPANY 3 has maintained a recorded history of fuel use per minute for each of its armored vehicles.

•  COMPANY 3 also keeps a log of each stop and how much time the vehicle is parked and idling.

Available documentation:

•  Dated fuel invoices, showing the cost of the fuel, the gallonage purchased, and the amount of special fuel tax charged.

•  Explanations and documentation of the methods used to calculate fuel usage.

•  Fuel-use logs for armored vehicles.

Thank you for evaluating this issue.   If you need information not provided in this letter, please let me know.

  RESPONSE LETTER

                                                                                    April 16, 2004

NAME

ADDRESS

RE:        Private Letter Ruling Request – Special Fuel Taxes on Fuel Used by Vehicles While Idling

Dear NAME,

            We have received your request for information regarding the refund of special fuel taxes paid on undyed diesel fuel.   In accordance with Utah Code Ann. §59-13-301(2)(b)(iii), undyed diesel fuel used in a vehicle off-highway is not subject to taxation.   The specific circumstances you ask about involve an armored car service that specializes in scheduled route services for the banking industry.   During a delivery, the driver of the armored vehicle parks the vehicle either in a privately owned parking lot or at curbside.   The driver keeps the engine idling and remains in the vehicle while another person makes the delivery.   You ask if the consumption of undyed diesel fuel while the armored vehicle is idling qualifies as use in a vehicle off-highway.

            Utah Code Ann.§59-13-102(10) defines “highway” as “every way or place, of whatever nature, generally open to the use of the public for the purpose of vehicular travel notwithstanding that the way or place may be temporarily closed for the purpose of construction, maintenance, or repair.”   Accordingly, the Commission would consider “off-highway” to include all places that do not qualify as a “highway;” i.e., “off-highway” would be every way or place, of whatever nature, not generally open to the use of the public for the purpose of vehicular travel.

            Armored vehicles servicing the banking industry, such as the one you describe, generally idle in a bank parking lot that the public may use when conducting business at that bank or at the curbside of a public road or street outside the bank.   The Commission considers these areas to be ways or places generally open to the use of the public for the purposes of vehicular travel.   Therefore, the use of a vehicle in these areas would be considered used on a “highway” for purposes of the special fuel tax, and any fuel used while idling in these areas would not qualify for refund for “off-highway” usage.

            Nevertheless, the armored vehicles you describe may sometimes enter and idle in a parking lot or other area from which the general public is restricted, such as a restricted area of the Federal Reserve Bank in which the general public may not bring its vehicles.   In such an area, any undyed diesel fuel used by the armored vehicles while idling would qualify as use in a vehicle “off-highway.”

As provided in Section 59-13-301(10) and Utah Admin. Rule R 865-4D-2(B), the special fuel taxes paid on fuel used in a vehicle “off-highway” may be refunded to the purchaser if adequate records are maintained.   To adequately document the “off-highway” usage of the armored vehicles you describe, the Commission would expect the company to maintain and submit records that clearly indicated that its vehicle entered a parking lot or other area from which the general public was restricted from vehicular travel.   Records should also indicate the amount of time in which the vehicle was located in such an area, as well as the amount of fuel used in this area.   Additional vehicle information including truck type, weight, and MPG per vehicle would also need to be maintained and submitted.   The Commission expects to promulgate a rule in the near future that will address the type of documentation that will be required.   We would appreciate your participation in the rule-making process.

If you have any other questions, please contact us.

For the Commission,

Marc B. Johnson

Commissioner

MBJ/KC

04-003