Revenue Administrative Bulletin 1988-7

Approved: May 18, 1988

SALES OF GASOLINE TO THE FEDERAL GOVERNMENT, STATE OF MICHIGAN AND POLITICAL SUBDIVISIONS

RAB-88-7. In 1980, Public Act 482 amended the Motor Fuel Tax Act, MCL 207.112. This Bulletin addresses the proper procedure to be followed by retailers and wholesalers before claiming a tax credit for sales into storage of political subdivisions. When purchasing gasoline for placement in storage tanks, the Federal government, State of Michigan, and political subdivisions of Michigan may do so on a tax-free basis.

Public Act 482

This Act states that a political subdivision in the State using gasoline in a vehicle owned by or leased and operated by the political subdivision in the State shall be entitled to a gasoline tax refund. Community action agencies, as described in Title 2 of the Economic Opportunity Act of 1964, 42 U.S.C. 2781 to 2837, which are not a part or division of a political subdivision of this State, shall also be entitled to a refund of the tax on gasoline. Political subdivisions are defined as units of local government in this State, including counties, townships, cities, villages, school districts, and any authorities created by political subdivisions.

Reporting Procedure for Gasoline Retailers

In the case of a retailer selling gasoline into storage to the Federal government, State of Michigan, or a political subdivision in this State, the retailer shall submit the original invoice of the sale to the supplier (licensed wholesaler) who will issue the retailer a credit for the gasoline tax paid on such sales.

Reporting Procedure for Licensed Wholesalers

The licensed wholesaler may obtain a tax credit from the Department of Treasury for sales made by the retailer and credited by the wholesaler. However, credit will be given to a wholesaler only for sales where the wholesaler has retained the retailer's original invoice of sale to the political subdivision, federal government or State of Michigan. The sale is treated as though the wholesale distributor sold the product directly to the exempt governmental units.

To obtain the credit the wholesale distributor, when filing the Gasoline Tax Report Form C-3500, shall follow these procedures:

1. Detail individual sales on Schedule 8 or 9, Form C-3577.
2. Forward the total sales detailed on Schedule 8 or 9 to the appropriate line on Form C-3500. The wholesaler shall not list the retailer in the "To Whom Sold" column, but shall list the political subdivision.
3. Maintain record of these sales for four years.