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Revenue Administrative Bulletin 2002-18

Revenue Administrative Bulletin 2002-18

Notice of Change in Prepaid Gasoline Sales Tax Rate

Approved: November 22, 2002

(Replaces Revenue Administrative Bulletin 2002-13)

Note: This RAB was replaced by RAB 2003-3 on December 1, 2003.

RAB 2002-18. This Revenue Administrative Bulletin (RAB) announces a change in the prepaid gasoline sales tax rate, and describes the prepayment of gasoline sales tax and the corresponding rate determination, MCL 205.56a; MSA 7.527(1). This RAB supersedes RAB 2002-13.

Issues

  1. What is the new rate?
  2. Why do we need to change rates?
  3. What is the recent historical information on the rate?

Conclusions

  1. Effective January 1, 2003, the new prepaid gasoline sales tax rate is 7.2 cents per gallon.
  2. The rate change is necessitated by MCL 205.56a, section 6a(2), which requires the department to determine the rate every 6 months unless the change in the price of a gallon of gasoline has been less than 10%. The rate shall be determined not less than annually.
  3. a. Effective May 1, 1994 through July 31, 1999, the rate was established at 5.4 cents per gallon.

b. Effective August 1, 1999 through December 31, 1999, the rate was established at 4.6 cents per gallon.

c. Effective January 1, 2000 through August 31, 2000, the rate was established at 5.7 cents per gallon.

d. Effective September 1, 2000 through February 28, 2001, the rate was established at 6.8 cents per gallon.

e. Effective March 1, 2001 through February 28, 2002, the rate was established at 8.1 cents per gallon.

f. Effective March 1, 2002 through July 31, 2002, the rate was established at 7.9 cents per gallon.

g. Effective August1, 2002 through December 31, 2002, the rate was established at 5.8 cents per gallon.

Law & Analysis

As provided in Section 6a of the General Sales Tax Act, [MCL 205.56a; MSA 7.527(1)], at the time of purchase or shipment from a refiner, pipeline terminal operator, or marine terminal operator, a purchaser or receiver of gasoline shall prepay a portion of the sales tax at a rate determined and certified by the department. The department must determine the rate every 6 months unless the change in the statewide average retail price of a gallon of self-serve unleaded regular gasoline has been less than 10% during the 6-month period. However, the department must determine and adjust the rate not less than annually, regardless of the percentage change. The last review by the department covered gasoline prices for the 6-month period November 1, 2001 through May 1, 2002 and resulted in a determination and change in the rate to 5.8 cents per gallon. The review most recently completed examined the gasoline prices for the 6-month period May 1, 2002 through October 31, 2002. The change in the price of gasoline falls outside the 10% statutory criteria. Therefore, a determination and change to the 7.2 cents per gallon rate is being announced.

Questions may be directed to:

Michigan Department of Treasury
Technical Services Division
430 W. Allegan Street
Lansing, MI 48922
Telephone (517) 636-4230