Colorado tax law allows for a refund of fuel tax paid for gasoline, aviation fuel, and special fuels when the fuel is used for approved commercial purposes off Colorado roads. Refunds are not allowed for fuel taxes paid on fuel used for recreational purposes. For more information, review the Fuel Tax Topics Fuel Users guidance publication.
Application Procedures
To apply for a refund permit and account, you must complete a Gasoline/Special Fuel Tax Refund Permit Application (DR 7189) and submit it to the Colorado Department of Revenue. The application may be submitted before or at the time of the first refund claim. If you are licensed for the International Fuel Tax Agreement (IFTA), you must mark the "yes" checkbox on the application.
Approved Exemption Percentage
Upon approval of the application, the Department will issue a refund permit approval letter with the approved exemption percentage per fuel type to calculate the amount of the refund allowed. A letter with your Colorado Account Number and the approved fuel types and percentages will be sent when the account is approved.
The approved exemption percentages are established from the historical average in the industry or from an industry study provided by an industry group. Your application must identify the industry that accurately describes your business, fuel use, and equipment.
The allowance of the refund depends on how the fuel is used, the type of fuel, and if and when the fuel excise tax was paid. A Fuel Tax Refund Claim for Exempt Use of Fuel (DR 7118) can be filed using our Revenue Online Website or by completing the form and mailing to address on form. When submitting a fuel tax refund claim, you may file only one claim per quarter. However, you are not required to file a claim each quarter if no exempt purchases were made in that quarter. For example, a claim form from April through June can be filed in early July. Fuel purchases claimed must be filed no later than 12 months from the date of purchase. Any claim for refund for purchases exceeding the 12-month statute of limitations will be denied.
The Fuel Tax Refund Claim (DR 7118) may be submitted without fuel purchase invoices. However, these invoices must be retained for a period of three years from the date of purchase or the date of the refund claim filing, whichever is later. The invoices must be made available upon request by the Colorado Department of Revenue. Invoices must show the following information:
- Dealer's name, address, and delivery address.
- Purchaser's name and address.
- Correct date of sale and delivery, month, day, and year.
- The kind and quantity of fuel sold.
- Price per gallon of fuel, the total amount of Colorado tax, and total amount paid.
- Notation showing payment and signature of the dealer.
Electronic invoices are acceptable if the information items (above) are included on the electronic invoice. Fuel purchases must support exempt and non-exempt fuel usage of the account's vehicles and equipment. If your fuel purchase invoices do not meet the specific requirements and you are audited, your claims will be disallowed and your permit/account can be closed.
Allow four to five weeks for the processing of your refund claim. For refund inquiries have your permit/account number, FEIN or Social Security number, the type of fuel claimed, gallons, and amount of your claim readily available.
Billing Notice
When the Exempt Fuel user overclaims a refund, the department sends a billing notice. If you have an exempt fuel tax bill, you should use the payment voucher document that comes with the "Statement of Account." The payment and voucher should be mailed to the address on the Statement of Account. Colorado law also requires that fuel taxes be remitted to the Department of Revenue electronically.
Exempt Fuel Permit Holder with an IFTA License
You must file two refund claim forms each quarter if you have an IFTA license and an approved fuel tax refund permit. One claim form for filing non-IFTA exempt fuel tax refund requests. The second claim form for filing exempt fuel refund requests is associated with the taxpayer's IFTA vehicles. You must attach a copy of the IFTA tax report filed for the corresponding calendar quarter to this claim form.
If filing using Revenue Online, you must complete both the “Exempt Fuel Refund Claim Gallons” and the “Exempt Fuel Refund Claims Gallons - IFTA” tabs, and attach a copy of your IFTA return in the Attachment tab.
Change in Business Operations Affecting Fuel Use and the Exempt Percentage
If you have a change in business operations that affects your business' fuel use on an established account, provide the Excise Tax Section with information to support the change for review and approval. Documentation must be submitted to show the business change, change in equipment, and change in operations, including exempt, non-exempt, and total fuel usage.
The documentation must include actual records for a year to account for cyclical or seasonal changes affecting the business. Suggested data might include equipment and vehicle records and fuel use, actual mileage over the road, miles per gallon, and include inventory records of fuel and equipment. Any request for a change without supporting documentation will be disallowed.
Business Ownership Changes
Refund permits/accounts are not transferable. For new businesses or changes in ownership, a new application must be submitted.
How to Report Account Changes
Any changes in the nature of the business, account name, DBA, ownership, address, equipment, storage capacity, or fuel use must be sent in writing: Web Message: Send us a secure message through your Revenue Online account.
Or Email: DOR_FuelTax@state.co.us.
Mailing Address:
Colorado Department of Revenue
Attn: Fuel Tax Unit
P.O. Box 17087
Denver, CO 80217-0087