Alabama Moves to Tax Motor Fuel at the Terminal Rack

Effective October 1, 2012, the Alabama Terminal Excise Tax Act will change Alabama’s fuel taxes to impose tax at the terminal rack or when the fuel is imported into the state.

Suppliers, permissive suppliers, distributors, importers, terminal operators, exporters, motor fuel transporters, blenders, and aviation fuel purchasers may be required to obtain a license for the new tax. Any entity, including those currently licensed as fuel distributors in Alabama, required to obtain a license must file a new motor fuels application and post the required bond to obtain a new license. Further, entities, other than licensed suppliers and permissive suppliers, which engage in activities that require a license under the new law, must obtain a separate license for each activity.

Suppliers, permissive suppliers, importers, exporters, and blenders will be required to file monthly returns by the 22nd day of the month following the report period. Terminal operators and transporters will be required to file monthly reports by the end of the month following the report period.

With this change, Alabama joins a growing number of states imposing tax at the terminal rack rather than at the distributor level. California, Florida, New Jersey, New York, and Texas have all adopted the tax-at-the-terminal-rack approach to ensure compliance with motor fuels tax laws.

TECHNICAL INFORMATION CONTACT:

Robert D. Jones
Principal
Ryan
913.338.2005
bob.jones@ryan.com