TO: ALL DEPARTMENTS
OF ADMINISTRATION AND CHIEF FISCAL OFFICERS
EXCISE TAX ON GASOLINE AND DIESEL FUEL
The purpose of this
circular letter is to promulgate the State of
New Jersey's policy regarding the payment of federal excise tax
on purchases of gasoline and diesel fuel used for vehicles.
In late 1987, an
obscure provision in the Tax Reform Act was in-
terpreted by the Internal Revenue Service to require tax exempt
governments to pay excise tax on gasoline and diesel fuel used
for vehicles. The government would then be required to seek a
refund at some future time. The tax for gasoline was imposed ef-
fective January 1, 1988, while the tax for diesel fuel was im-
posed effective April 1, 1988.
On January 28, 1988,
the I.R.S. modified its position to allow
gasoline suppliers, at their option, to continue to sell
gasoline, tax free, to state and local governments. Congress has
given the U.S. Treasury, discretionary authority to exempt state
and local governments from excise tax on diesel fuel. This
authority has been exercised by the Secretary of the Treasury.
It is the policy
of the State of New Jersey that excise tax shall
not be included on invoices for gasoline or diesel fuel submitted
to the State for payment.
PROCEDURES FOR PAYMENT
- If a department
or agency receives a State Invoice (AR50/54)
for the purchase of gasoline or diesel fuel which includes a
charge for federal excise tax, such invoice shall be corrected by
the agency before submittal to OMB for processing. If excise tax
is included in the unit price of the product, the invoice shall
be returned to the vendor for correction.
- Each department
and agency is responsible for including the
following within the description field of each State Invoice for
the purchase of gasoline and diesel fuel:
- The State's
federal identification number which is 21-
- A statement
indicating that the entire quantity of fuel
purchased is for the exclusive use of the State.
- If a department
or agency experiences problems with a gasoline
or diesel fuel supplier regarding these procedures, GSA's Divi-
sion of Procurement and Central Services should be contacted for
Richard B. Standiford