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Fuel Tax | Frequently Asked Questions

The following frequently asked questions are based on real questions from fuel tax businesses. For each question, the answer is based on the fuel tax license type. They are intended to provide general guidance, but may not address your unique tax situation. If you need additional assistance, contact the Fuel Tax Unit. 

 

  • Go into Revenue Online.  
  • Go to the Fuel Excise Tax account and click on the "File/Amend and View Returns/Payments” link. 
  • Click on the "View/Amend" link for the period shown in your letter.
  • Click next on the Return, Schedule Upload tab.
  • From the Return, Schedules tab, click on the “Mode” column to bring the CD mode entries to the top of the list. Scroll to the right to view the Buyer, Date, and Doc Number (the BOL number). 
  • If you disagree with the CD entry, you may either amend your return with the correct information and explain the change to the department, or you may protest with an explanation of why you disagree, including supporting documents to substantiate your position. 

  • Terminal Operator Reporting: Terminal operators should report fuel inventory held in the terminal by the position holder on schedule 15C.
  • Supplier Reporting: Transactions between position holders within a terminal are not reported by the supplier.

In this scenario, it is assumed you own the inventory in the terminal (supplier/position holder) and have a customer who is a licensed distributor who comes into the terminal and removes the fuel. (Selling the fuel to the distributor into either their company-owned truck or a common carrier truck).

  • Terminal Operator Reporting: The terminal operator reports the disbursement from the terminal on schedule 15B on the terminal operator report. This transaction is not taxable to the terminal operator. 
  • Supplier Reporting: The supplier reports the disbursement to Distributor A on schedule 6K of their Fuel Distributor return. This transaction is not taxable to the supplier. 
  • Distributor Reporting: The distributor reports the receipt on schedule 2 on their Fuel Distributor return and owes the fuel taxes on the transaction. 
  • Carrier Reporting: If a common carrier was used, the carrier reports the delivery on Schedule 1A if the fuel is being exported or on Schedule 3A if the fuel is being delivered in the state. This transaction is not taxable to the carrier. 

A licensed distributor (Distributor A) has a contract with a supplier (position holder/supplier) at a Colorado terminal. The supplier sells to a Distributor A at the terminal rack via truck, and Distributor A simultaneously turns around and sells to their customer who is also a licensed distributor (Distributor B). The customer either loads the fuel into their own truck or a common carrier. Distributor B owns the fuel as the truck departs from the terminal.

  • Terminal Operator Reporting: The terminal operator reports the disbursement from the terminal on schedule 15B on the terminal operator report. This transaction is not taxable to the terminal operator. 
  • Supplier Reporting: The supplier reports the disbursement to Distributor A on schedule 6K of their Fuel Distributor return. This transaction is not taxable to the supplier. 
  • Distributor A Reporting: Distributor A reports the receipt on schedule 2 and the disbursement to Distributor B on schedule 5 on their Fuel Distributor return. Distributor A owes the fuel taxes on the transaction. 
  • Distributor B Reporting: Distributor B reports the receipt on schedule 1 on their Fuel Distributor return. This transaction is not taxable to Distributor B.
  • Carrier Reporting: If a common carrier was used, the carrier reports the delivery on Schedule 1A if the fuel is being exported or on Schedule 3A if the fuel is being delivered in the state. This transaction is not taxable to the carrier.

In this scenario, you own the inventory in the terminal (supplier/position holder) and have a customer who is not licensed as a distributor but is a fuel retailer who has a common carrier truck that comes into the terminal and removes the fuel.

  • Terminal Operator Reporting: The terminal operator reports the disbursement from the terminal on schedule 15B on the terminal operator report. This transaction is not taxable to the terminal operator. 
  • Supplier/Distributor Reporting: The supplier reports the disbursement from the terminal on schedule 6K of their Fuel Distributor return. A user who is a licensed distributor must pay the fuel taxes. Since the purchaser is not a licensed distributor, the supplier must report the receipt on schedule 2  of their Fuel Distributor return and owe the fuel taxes on the transaction.
  • Carrier Reporting: The carrier reports the delivery on Schedule 1A if the fuel is being exported or on Schedule 3A if the fuel is being delivered in the state. This transaction is not taxable to the carrier. 
  • Retailer(s): The retailer has no fuel reporting requirement and is not subject to the fuel tax.  

In this scenario, you own the inventory in the terminal (supplier/position holder) and have a customer who is not licensed as a distributor who comes into the terminal and removes the fuel. You sell the fuel into either their company-owned truck or a common carrier truck.

  • Terminal Operator Reporting: The terminal operator reports the disbursement from the terminal on schedule 15B on the terminal operator report. This transaction is not taxable to the terminal operator. 
  • Supplier/Distributor Reporting: The supplier reports the disbursement from the terminal on schedule 6K of their Fuel Distributor return. A user who is a licensed distributor must pay the fuel taxes. Since the purchaser is not a licensed distributor, the supplier must report the receipt on schedule 2 of their Fuel Distributor return and owe the fuel taxes on the transaction.
  • Unlicensed Distributor: The unlicensed distributor is liable for a penalty of $5,000 for the first violation, $10,000 for the second violation, and $15,000 for the third or subsequent violations, for operating as a fuel distributor in Colorado without first obtaining a Colorado fuel distributor license. Each day of operation without a license is considered a separate violation. 
  • Carrier Reporting: If a common carrier was used, the carrier reports the delivery on Schedule 1A if the fuel is being exported or on Schedule 3A if the fuel is being delivered in the state. This transaction is not taxable to the carrier. 

  • Supplier at the Origin State Terminal: The supplier at the terminal in the origin state, is subject to the reporting requirements of the origin state and reports the disbursement and pays the applicable tax to the origin state, a refund may be allowed from the state of origin when the fuel is exported. 
  • Colorado Importer: The Colorado importer is the distributor who owns the fuel as it enters Colorado. The distributor reports the transaction on either Schedule 3 or Schedule 4 on their Fuel Distributor return and owes the Colorado fuel taxes on the transaction.

  • Distributor  Reporting: The distributor reports receipt in the same manner as originally shipped, (example schedule 2 railcar, then reports disbursement in the new shipping mode (for example: schedule 6 truckload (J) to CO terminal code. This transaction is not taxable to the distributor.
  • Terminal Operator Reporting: The terminal operator reports the receipt on Schedule 15A on the terminal operator report. This transaction is not taxable to the terminal operator.

  • Terminal Operator Reporting: The terminal operator reports the disbursement on Schedule 15B on the terminal operator report. This transaction is not taxable to the terminal operator.
  • Supplier Reporting: The supplier reports the disbursement from the terminal to the distributor on Schedule 6k. This transaction is not taxable to the supplier.
  • Distributor Reporting: The distributor reports receipt on Schedule 2 and pays the tax. When the fuel is disbursed from the trans-loading facility, the distributor reports the disbursement by the new transportation mode to the disbursement location. If sold to another distributor; the subsequent distributor will report the purchase on schedule 1. This transaction is not taxable to the subsequent distributor.

  • Terminal Operator Reporting: The terminal operator reports the disbursement from the terminal on Schedule 15B on the terminal operator report. This transaction is not taxable to the terminal operator. 
  • Supplier/Distributor Reporting: The supplier/distributor reports the disbursement from the terminal on schedule 6K and the receipt of the fuel below the terminal rack on Schedule 2 of their Fuel Distributor return and owes the fuel taxes on the transaction. The ultimate sale of the fuel will also be reported on the Fuel Distributor return as a disbursement on schedule 5, 6, 7, 8, 9, or 10 depending on how the fuel is sold. 
  • Carrier Reporting: If a common carrier was used, the carrier reports the delivery on Schedule 1A if the fuel is being exported or on Schedule 3A if the fuel is being delivered in the state. This transaction is not taxable to the carrier. 

Answer(s) for out-of-state terminals to Colorado terminal movement:

  • Colorado Importer: The Colorado importer is the distributor who owns the fuel as it crosses into Colorado and reports the receipt on schedule 4 and the disbursement to the terminal on schedule 6 using the terminal code for the terminal destination.  This transaction is not taxable to the Colorado importer.
  • Terminal Operator reporting: The terminal operator reports receiving the fuel by railcar on Schedule 15A.  This transaction is not taxable to the terminal operator.

Answer for Colorado terminal to Colorado terminal movement:

  • Originating Terminal Operator: The originating terminal operator reports the disbursement on Schedule 15B. This transaction is not taxable to the terminal operator. 
  • Supplier Reporting: The supplier reports the disbursement from the originating terminal on schedule 6K of their Fuel Distributor return. This transaction is not taxable to the supplier. 
  • Distributor Reporting: The distributor reports the receipt below the terminal rack on Schedule 2 and the disbursement to the destination terminal on Schedule 6 on their Fuel Distributor return. This transaction is not taxable to the distributor.
  • Destination Terminal Operator: The receiving terminal operator reports the fuel receipt by railcar on Schedule 15A.  This transaction is not taxable to the terminal operator.

  • If pulled from a Colorado Terminal: No, the first licensed distributor to own the fuel below the terminal rack is liable for the fuel taxes. If the supplier sells to an unlicensed distributor or retailer, the supplier is liable for the fuel taxes, since they are a licensed distributor.
  • If fuel is pulled from a non-Colorado Terminal and imported into Colorado, the importer is liable for paying the Colorado tax. An importer is defined as the entity that owns the fuel as it crosses the state line into Colorado.

Butane blended with gasoline is included in the definition of gasoline. Butane that is not blended must be reported as a blend component.

A distributor/supplier license.

The Department does not promulgate rules for payment terms among other parties.

  • Terminal Operator Reporting: Bulk movements by pipeline to a terminal operated by a licensed terminal operator must be reported as a receipt on Schedule 15A by the terminal operator. 
  • Supplier Reporting: Bulk transfers within the terminal system do not get reported.

Common or Contract Carriers are required to report all diversions. All deliveries that are diverted from the bill of lading or manifest destination must be reported to the Colorado Department of Revenue within 24 hours of diversion.

Loads scheduled to be delivered to a location outside of Colorado, but diverted to a Colorado location must also be reported within 24 hours of the diversion. This is required of all Colorado fuel licensees and third-party, carriers.

When a diversion is reported, you will receive a diversion tracking number to report delivery information on a diverted load. Diversions are tracked by bill of lading number, date, and TCN (terminal code number.)
 

Colorado currently uses FuelTrac for their diversion registry. Diversions are entered online at www.fueltrac.us.

If the diversion occurs before the filing period due date, report the correct information i.e. correct delivery location and schedule on your original return DR 7050.

If your return has already been filed, you may amend it through Revenue Online to provide the correct destination, buyer, fuel type, schedule, etc.

The first distributor below the rack is responsible and owes the tax/fees, even in the case where the fuel is exported by a subsequent distributor. When the first distributor sells the fuel before it is exported, the first distributor is required to report the receipt on Schedule 2 and the tax-paid disbursement on Schedule 5. The second distributor will see the tax/fee on the invoice and will report the receipt on Schedule 1. Assuming the second distributor is exporting the fuel, they will report the disbursement on Schedule 7 and their return will have a credit to offset the tax/fee for the exported loads.

Fuel held within a terminal should not have tax paid on it because the point of taxation is when the fuel leaves the Terminal. This includes, but is not limited to, Aviation fuel, Gasoline and Special Fuel. Fuel received into a terminal by pipeline, is not reported on a distributor return nor counted as a part of their distributor inventory. Fuel shipped to a Colorado terminal by any other method, must be reported by the distributor on Schedule 6, using the receiving terminal code as the destination. When a distributor imports fuel, they report the receipt on Schedule 4.