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Fuel Tax Letter Rulings


Private Letter Rulings & General Information Letters

Businesses and individuals can request a general information letter or private letter ruling on any tax administered by the department. General information letters are general discussions of tax issues that are not specifically addressed in other department publication, such as FYIs, rules and regulations, or form instructions. General Information Letters are general statements of department understanding and cannot be relied upon as binding guidance. Private letter rulings are specific determinations of the tax consequences of a proposed or completed transaction. Unlike general information letters, private letter rulings are binding on the department and, therefore, provide taxpayers with greater certainty for their business and personal taxes. However, private letter rulings can only be relied upon by the party to whom the ruling is issued. Private letter rulings cannot be relied upon by any taxpayer other than the taxpayer to whom the ruling is made. For more information about general information letters and private letter rulings including fee amounts and how to submit a request, please see department regulation 24-35-103.5.



Taxability of Liquefied Petroleum Gas - Published October 11, 2023

The sale of liquefied petroleum gas for use in recreational vehicles (not for propulsion), cabins, or tents at campsites is subject to sales tax as a retail sale. A retail merchant who uses a portion of liquefied petroleum gas purchased at wholesale for their own use must remit use tax to the department on the purchase price paid for the amount of gas used. Liquefied petroleum gas sold for retail use, and not to propel a motor vehicle, is not subject to the gasoline and special fuel tax.


Sales Taxability of Federal Excise Tax on Aviation Fuel Refunded to Customers

State sales tax does not include federal excise tax collected by the aviation fuel supplier from the airline carrier because the federal tax was always refundable and only charged in the first instance as an administrative measure to ensure the federal exemption for fuel is properly claimed.


Propane Reporting

Company can file Colorado Distributor Returns for January 1, 2014 to present on a net gallons basis. However, until January 1, 2016, those gallons that are able to be reported on a gross gallon basis, should be reported as such rather than a net gallon basis.


Domestic Jet Fuel Used in International Flights

Colorado sales tax applies to aviation fuel sold in Colorado to commercial airlines even if the fuel is used for international flights.


Fuel Tax on and Reporting Requirements of Propane

A propane dealer is not required to be a special fuel licensee if it is certain no sales of its fuel will be used to propel a motor vehicle. Any licensed propane dealer who makes no motor fuel (or potential motor fuel) sales need not post the bond. Any licensed propane dealer must also report all sales of propane in COFTS.


Liquefied Petroleum Gas and Excise Taxes

Liquefied petroleum gas used for home heating and other non-vehicle purposes does not fall within the definition of special fuels and, thus, are not be subject to the excise tax when used in such a manner. Because the tax must sometimes be paid before the ultimate use is established, only fuel that the distributor is reasonably certain will be used for home heating or other non-vehicle purposes may be sold without the excise tax. The Department will presume that propane delivered to a stationary tank located next to a residence that does not have any attachments to extract the propane, except for a delivery line to the home, is used solely for home heating and can be sold tax free.