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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. 

 

  • Terminal Operator Reporting: Terminal operators can report fuel inventory held in the terminal by 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 that 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. 

In this scenario, you are a licensed distributor (Distributor A) and have a contract with your supplier (position holder/supplier) at a Colorado terminal where they sell to you at the terminal rack via truck and you simultaneously turn around and sell to your customer who is also a licensed distributor (Distributor B) who either loads the fuel into their own truck or a common carrier.  Your customer 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 on their Fuel Distributor return and owes 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 does not have a 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 on their Fuel Distributor return and owes 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 other state, 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 first distributor to own the fuel in Colorado and 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 (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 first distributor to own the fuel in Colorado and reports the receipt on schedule 4 and the disbursement to the terminal on schedule 6 using the terminal code for the 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 receipt of the fuel by railcar on schedule 15A.  This transaction is not taxable to the terminal operator.

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.

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 party liable to remit Colorado fuel tax is required to do so by the 26th of the following month on the due date. 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 which 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 your return 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. When the first distributor is also exporting the fuel; they will report the receipt on schedule 2 and the disbursement on schedule 7. When the first distributor is selling the fuel before it is exported (regardless if it's a flash sale or not), then the first distributor will report the receipt on schedule 2 and the 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 7 and their return will have a credit for tax/fee for the exported loads.