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Unladen weight Annual Fee
All passenger cars and other vehicles 4,000 lbs. or less..... $36
More than 4,000 lbs. but less than 8,001 lbs.................. 72
More than 8,000 lbs. but less than 12,001 lbs................. 120
12,001 lbs. or more........................................... 168

The flat rate fee is an annual tax. The annual period shall be that period from the end of the month in which the tax was paid to the end of the month prior in the following calendar year. When an owner or operator elects to pay the annual flat rate fuel tax on more than one vehicle, the owner or operator may request that the board prorate the tax due on a vehicle added during the annual period, so that all vehicles have the same annual period. In the year a vehicle is added, the annual flat rate fuel tax for that vehicle shall be calculated by dividing the fee by 12 and multiplying the resulting amount by the number of months remaining before the beginning of the next annual period.
(b) Identification Decal. Any person who desires to pay the annual flat rate tax under this regulation must secure a use fuel tax permit, pay the required tax to the board, and obtain from the board an identification decal for each vehicle with respect to which the annual flat rate tax has been paid. The decal shall be affixed to the vehicle by an agency or person authorized by the board. The decal shall not be transferred to another vehicle.
(c) Annual Returns. Any person may file annual use fuel tax returns if the only use of fuel of a kind taxable under the Use Fuel Tax Law is in vehicles with respect to which the annual flat rate fuel tax fee has been paid for the period during which the vehicle is operated. Any person authorized under this regulation to file returns on an annual basis and who uses fuel subject to the tax (other than fuel purchased tax paid and used in a private passenger automobile) shall advise the board of such use prior to the last day of the month following the month in which the taxable use occurred. The board may require such person to file returns on other than an annual basis.

Note: Authority cited: Section 9251, Revenue and Taxation Code. Reference: Sections 8604, 8613, 8619, 8651, 8651.5 and 8651.7, Revenue and Taxation Code.


s 1331. Return of User.
Each user of fuel except a user whose sole use of fuel is for the propulsion of a privately operated passenger automobile as provided in regulation 1331.1 is required to file a return for each calendar quarter (or each reporting period if required by the board to make a return and payment of tax for other than quarterly periods) on a form prescribed by the Board. A return shall be filed with the board for each quarter (or reporting period) even though no fuel was used during, or tax is due for, the quarter (or reporting period).
Failure to receive a return form does not relieve the user from the obligation of making a return to the board on or before the due date. If a return form is not received, a user may make a written return to the board setting forth the name, address, permit number, number of gallons of fuel used, and quarter for which the return is due. The return together with a remittance payable to "State Board of Equalization" for the amount of tax due shall be filed with the board on or before the due date and will be accepted in lieu of a return on the prescribed form.

Note: Authority cited: Section 9251, Revenue and Taxation Code. Reference: Sections 8751, 8752, 8753 and 8755, Revenue and Taxation Code.


s 1331.1. Privately Operated Passenger Automobile and Small Commercial Vehicles -When User's Permit and Tax Returns Are Not Required.
(a) General. Any person whose sole use of fuel is for the propulsion of a privately operated passenger automobile, a commercial vehicle with unladen weight of less than 7,000 pounds, a privately operated two-axle truck which the user has leased for a period of 30-days or less or a motor vehicle that is not a qualified motor vehicle operated by an interstate user in this State, in connection with an interstate trip is not required to secure a use fuel tax permit and is excused from the filing of a use fuel tax return with the board when either of the following conditions is met:
(1) all fuel used in this state, except fuel brought in to the state in the fuel tank of the vehicle, is purchased from a vendor in California who collects the tax from the user when delivering the fuel into the fuel tank of the user's vehicle, or
(2) that the flat rate fuel tax described in Regulation 1325 has been paid.
(b) Definitions.
(1) "Privately operated passenger automobile" includes a station wagon, but does not include a motor vehicle used for the transportation of persons for hire or compensation or designed, used, or maintained primarily for the transportation of property. A pickup truck used as an automobile for the private transportation of persons without the owner receiving compensation or profit for the transportation, is deemed to be a privately operated passenger automobile within the meaning of Section 8608 and Section 8752 of the Revenue and Taxation Code.
(2) "Commercial vehicle with unladen weight of less than 7,000 pounds" includes pickup trucks and other vehicles with an unladen weight of less than 7,000 pounds licensed as commercial vehicles.
(3) "Privately operated two-axle truck" means a two-axle truck in which the user does not transport persons or property for hire or compensation.
In determining whether a two-axle truck is leased for 30-days or less, the total number of consecutive days for which the same or a comparable vehicle is leased to the same lessee shall be counted. If the total number of such days exceeds 30, the truck, or trucks, shall be deemed leased for more than 30-days.
(c) Use of Fuel in More Than One Privately Operated Vehicle. If the conditions set forth in subdivision (a) of this regulation are met the user is not required to secure a use fuel tax permit and is relieved of filing of the use fuel tax returns even though the user operates more than one such vehicle using fuel subject to the use fuel tax. This is true whether or not the vehicle is, or the vehicles are, used for pleasure or in a business or profession, providing that the user is not also using such fuel in other motor vehicles which are not of the kind described in subdivision (a) of this regulation.
(d) Permit and Returns Required if Fuel from Bulk Storage is Used. Notwithstanding that a user's sole use of such fuel is in a vehicle of the kind described in subdivision (a) of this regulation or in a vehicle for which the flat rate fuel tax has been paid, the user must secure a permit and file use fuel tax returns if he is using such fuels from bulk storage acquired exempt from the use fuel tax.

Note: Authority cited: Section 9251, Revenue and Taxation Code. Reference: Sections 8603, 8608, 8619, 8620 and 8752, Revenue and Taxation Code.


s 1331.2. Payment by Electronic Funds Transfer.
Payments by electronic funds transfer shall be made in accordance with California Code of Regulations, Title 18, Section 4905.

Note: Authority cited: Section 8760, Revenue and Taxation Code. Reference: Sections 8760 and 8762, Revenue and Taxation Code.


s 1331.5. Weekly Returns and Payments of Vendor.
If a vendor is required to make returns and pay weekly the tax required to be collected, he shall make his weekly return on Form BT-401-V5, Vendor Use Fuel Tax Weekly Return.
The return for each calendar week shall be filed with the Board on or before Wednesday of the following week and shall be accompanied by a remittance for the amount of tax due.
The making of weekly returns and payments does not relieve the vendor of the obligation to make a monthly return of all tax which he has been required to collect during the month. To the extent that the tax liability shown by the monthly return has been prepaid by payments accompanying weekly returns, no further payment need accompany the monthly return.
Whenever a week falls in two calendar months the amount of the tax collected during the portion of the week falling in each calendar month shall be stated separately in the return, but the return may be accompanied by a single remittance for the total tax collected during the week.

Note: Authority cited: Sections 9251 and 8755 Revenue and Taxation Code. Reference: Chapter 556, Stats. 1963.


s 1331.6. Credit for Bad Debt Losses of Vendors.
The amount of tax reported and paid by a vendor which is included in an account found to be worthless and charged off for income tax purposes, may be taken as a credit against the tax due on the use fuel tax return of the vendor. Allowance of this credit is subject to the limitation period prescribed in Section 8782 of the Revenue and Taxation Code and the other provisions of this regulation.
The right to the tax credit arises in the month in which the account is found to be worthless and charged off for income tax purposes. The credit should be taken on the return for the period in which the right to the credit arose. Failure to take this credit in the proper period will not prevent the allowance of a credit of the amount of tax for which the vendor was entitled to credit under this section.
A vendor using the reserve method to account for bad debts for income tax purposes should take the credit on the return for the period in which the account is found to be worthless and charged against the reserve.
No tax credit is allowable for any portion of a debt recovered that is retained by or paid to any person as compensation for his or her services or expenses in collecting the account.
If any account with respect to which credit has been taken is subsequently collected, in whole or in part, the vendor shall apply the amount collected ratably to the charges for the fuel and the tax thereon. If the purchaser is indebted to the vendor with respect to other items also charged off as bad debts, payments made on account thereof shall first be credited to the charges for the fuel and the tax thereon unless the purchaser shall specify otherwise. The tax thus collected shall be included in the return due for the period in which the collection is made and must be remitted to the Board within the time prescribed for payment of the tax due for that period.
Whenever any charge arising from the sale of fuel remains unpaid for a period of 90 days after the close of the calendar month in which the sale is made, or the account is found to be uncollectible prior to 90 days after the close of the calendar month in which the sale is made, that indebtedness is a delinquent account as to which the vendor shall report to the Board as herein specified. For the purpose hereof the date of the delivery invoice is deemed the date of sale.
The vendor shall file with each use fuel tax return a schedule listing the names and addresses of all purchasers whose accounts became delinquent within the meaning of the preceding paragraph as of the close of the reporting period for which the return is filed and remain unpaid at the time of such filing. The listing shall be accompanied by a notice of delinquent account on a form prescribed by the Board.
When the account of the purchaser is no longer delinquent or amounts remaining unpaid for over 60 days have been cleared and the vendor is satisfied that the remainder of the account will be paid, the vendor should complete the triplicate and quadruplicate of the Notice of Worthless Account (Bad Debts) form (BOE-120 Rev. 1 (7-98)) (incorporated by reference) by indicating the payments received. The triplicate (pink) of the Notice of Worthless Account (Bad Debts) form should be forwarded promptly to the Board.
Failure to list a delinquent account as herein required shall constitute a waiver of the credit that might otherwise be allowable for the amount of the delinquency under Section 8732.5 of the Revenue and Taxation Code in the event that the account is later found to be worthless.

Note: Authority cited: Section 9251, Revenue and Taxation Code. Reference: Sections 8732.5, 8737 and 8782, Revenue and Taxation Code.


s 1332. Records.
(a) General. A taxpayer shall maintain and make available for examination on request by the board or its authorized representatives, records in the manner set forth at California Code of Regulations, Title 18, Section 4901.
(b) Specific Applications. In addition to the record keeping requirements set forth in subdivision (a), vendors and users of use fuel shall comply with the following requirements.
(1) Vendor's Records. A vendor shall maintain complete records of all sales or other dispositions including self-consumed fuel, inventories, purchases, receipts, and tank gaugings or meter readings, of liquefied petroleum gas, and any other fuel the use of which is subject to the use fuel tax.
(2) Vendor's Sales Invoices. The vendor shall prepare a serially numbered invoice for each sale of fuel whether the fuel is sold for use in motor vehicles or for other uses. A single invoice covering multiple deliveries of fuel made during a period of time not to exceed a calendar month shall constitute an invoice for each sale. If the multiple delivery invoice includes tax-exempt deliveries either into a bulk storage facility or into fuel tanks of motor vehicles with respect to which the vendor is excused from collecting the tax as provided in Regulations 1319 and 1320, and deliveries into fuel tanks of motor vehicles upon which the tax is required to be collected, the invoice shall contain or be accompanied by a statement showing separately the deliveries and gallonage upon which the tax is collected and the tax-exempt deliveries and gallonage. The invoice shall be delivered to the purchaser, and a copy thereof shall be retained by the vendor.
A sales invoice shall contain the following information:
(A) The name and address of the vendor.
(B) The date of sale.
(C) The number of gallons or units of fuel sold, the price per gallon or unit and the total amount of the sale.
(D) The amount of the use fuel tax collected, if delivery is into a fuel tank of a motor vehicle; however, the amount of the tax collected need not be separately stated if the invoice bears the notation that the price includes the tax.
(E) For single deliveries of less than 250 gallons or units, the type of receptacle, other than a fuel tank of a motor vehicle, into which the vendor delivered fuel without collecting the use fuel tax (e.g., storage tank, crawler tractor, drum, stationary generator). On machine-prepared invoices, reasonable code designations will be acceptable in lieu of such description.
The sales invoice shall upon payment by the purchaser constitute a receipt for the amount of use fuel tax included therein collected by the vendor.
(3) User's Records. Users of fuel subject to the tax shall obtain from the vendor of the fuel and retain in their files an invoice for each delivery of such fuel into the fuel tank or tanks of each vehicle operated by them and for each delivery into their bulk storage tank or tanks. These invoices shall set forth the information specified in subsection (b)(2) of this regulation and shall be filed or identified in a systematic manner so that they may readily be traced into their purchase or expense records and into their returns to the board.
Users should keep as part of their records a detail of figures upon which are based the totals set forth on their returns to the board. When fuel is placed into the fuel tank of a qualified motor vehicle, either the user or the vendor should indentify on the invoice the qualified motor vehicle into which the fuel was placed. All individual invoices supporting charge accounts which include purchases of fuel shall be retained by the user in such manner as to enable the representatives of the board to establish the identity of all the merchandise or service included in the total charge and the specific gallonage of fuel purchased.
In addition to the records prescribed above, a lessor of a vehicle who is a user as defined under regulation 1304(d) (18 CCR 1304(d) shall maintain records of each trip or the mileage the vehicle is operated by the lessee.

Note: Authority cited: Section 9251, Revenue and Taxation Code. Reference: Sections 8732, 8752, 9253 and 9254, Revenue and Taxation Code.


s 1333. Records of Vendors, Invoices and Receipts.

Note: Authority cited: Section 9251, Revenue and Taxation Code. Reference: Sections 8732 and 9253, Revenue and Taxation Code.


s 1334. Successor's Liability.
(a) When Duty to Withhold Purchase Price Arises. The requirement that a successor or purchaser of a business or stock of goods withhold a sufficient amount of the purchase price to cover the tax liability of the seller arises only in the case of the purchase and sale of a business or stock of goods under a contract which provides for the payment to be made to the seller or to a person designated by the seller of a purchase price consisting of money, property or the assumption of liabilities or a combination of forms of consideration. The liability of the successor can be no more than the amount of the purchase price. This requirement does not arise in connection with other transfers of a business such as assignments for the benefit of creditors, foreclosures of mortgages, or sales by trustees in bankruptcy.
(b) Amounts to Which Liability Extends. The liability of the successor or purchaser of a business or stock of goods extends to taxes incurred with reference to the operation of the business by the predecessor or any former owner, including the sale thereof, even though not then determined against the former owner, to interest thereon to the date of payment of the taxes, to penalties for nonpayment of taxes, and to penalties for negligence or intentional disregard of the Use Fuel Tax Law or authorized rules and regulations, or for fraud or an intent to evade the tax determined and unpaid at the time of sale.
(c) Release from Obligation. The purchaser of the business or stock of goods will be released from further obligation to withhold the purchase price if the purchaser obtains a certificate from the board stating that no taxes, interest, or penalties are due from a predecessor. The purchaser will also be released if he or she makes a written request to the board for a certificate and if the board does not issue the certificate or mails to the purchaser a notice of the amount of the tax, interest, and penalties that must be paid as a condition of issuing the certificate within 60 days after the latest of the following dates:
(1) The date the board receives a written request from the purchaser for a certificate.
(2) The date of the sale of the business or stock of goods.
(3) The date the former owner's records are made available for audit.
The certificate may be issued after the payment of all amounts due under the Use Fuel Tax Law, according to the records of the board as of the date of the certificate, or after the payment of the amounts, including amounts not yet ascertained, is secured to the satisfaction of the board.
(d) Enforcement of Obligation. The liability is enforced by service of a notice of successor liability not later than three years after the date the board receives written notice of the purchase of the business or stock of goods. The successor may petition the Board for reconsideration of the liability within 30 days after service. The liability becomes final, and the amount due and payable, in the same manner as determinations and redeterminations of other use fuel tax liability.
(e) Separate Business Locations. Where one person operates several business establishments, each at a separate location, each establishment is a separate "business" and has a separate "stock of goods" for purposes of determining the liability of a successor. A purchaser of the business or stock of goods of any such establishment is subject to liability as a successor with respect to that establishment even if he or she does not purchase the business or stock of goods of all the establishments.
(f) Purchase of a Portion of a Business. A person who purchases a portion of a business or stock of goods may become liable as successor. For example, the purchaser may be liable where he or she purchases substantially all of the business or stock of goods or where the business or stock of goods is purchased by two or more persons. In cases of doubt as to possible liability, the purchaser should obtain a certificate as provided in (c) above.

Note: Authority cited: Section 9251, Revenue and Taxation Code. Reference: Sections 9021, 9022, 9023 and 9024, Revenue and Taxation Code.


s 1335. Relief of Liability.
A person may be relieved from the liability for the payment of the use fuel tax, including any penalties and interest added to those use fuel taxes, when that liability resulted from the failure to make a timely return or a payment and such failure was found by the board to be due to reasonable reliance on written advice given by the board as described in California Code of Regulations, Title 18, Section 4902.

Note: Authority cited: Section 9251, Revenue and Taxation Code. Reference: Section 8879, Revenue and Taxation Code.


s 1411. Highway.
(a) "Highway" means a way or place, of whatever nature, within the exterior boundaries of the State including a way or place within a Federal area, publicly maintained and open to the use of the public for purposes of vehicular travel, including, but not limited to, the shoulder and rest stops, notwithstanding private participation in the maintenance of the way or place. It shall be presumed that a way or place is dedicated and accepted as a highway when it is recognized as a part of a maintained highway system by a public authority.
(b) A way or place within a national or state forest which is entirely privately maintained, or a road over which forest products are transported in a national or state forest privately constructed or maintained pursuant to an existing agreement with the public authority having jurisdiction thereof, shall not be considered a highway notwithstanding the fact that it may be declared by the public authority to be a part of its road system.
(c) A way or place is not a highway within the meaning of Revenue and Taxation Code Section 60016, during such times as it is closed by the governmental authority to the use of the public regardless of the purpose for which it is closed. A highway is open to the use of the public if vehicular travel is permitted although subject to traffic controls.

Note: Authority cited: Section 60601, Revenue and Taxation Code. Reference: Section 60016, Revenue and Taxation Code.


s 1413. Tax-Paid Diesel Fuel and Ex-Tax Diesel Fuel.
(a) "Tax-paid diesel fuel" is the gallonage of diesel fuel acquired with the California diesel fuel tax paid. An acquisition of diesel fuel will be considered tax-paid only if it can be supported by one of the following:
(1) A sales invoice or contract which clearly states that the diesel fuel tax is included in the invoice or contract and proof that the amount representing diesel fuel tax has been paid, or
(2) A diesel fuel purchase receipt showing that the amount paid for the fuel included the diesel fuel tax, or
(3) Other documentation showing that the diesel fuel tax has been paid to the state.
(b) "Ex-tax diesel fuel" is the gallonage of diesel fuel acquired which is not tax-paid diesel fuel.

Note: Authority cited: Section 60601, Revenue and Taxation Code. Reference: Sections 60048.1, 60050, 60050.1, 60051, 60052, 60053, 60054, 60055, 60056, 60057, 60058, 60059, 60060, 60061, 60062, 60100 and 60106, Revenue and Taxation Code.


s 1420. Supplier.
(a) Returns. All suppliers must prepare and file returns with the Board to report tax on diesel fuel. Returns are due at the end of the month following the calendar month in which the diesel fuel was removed, entered, or sold, unless the Board requires that a return be filed for a different period. A terminal operator who also is a position holder in diesel fuel within the terminal or is jointly and severally liable for the tax is required to file both the terminal operator return and the supplier return.
(b) Imposition of Tax. Tax applies to each supplier as follows:
(1) Blender. A blender is required to pay the tax on the removal or sale of diesel fuel blended outside the bulk transfer/terminal system. The number of gallons of blended diesel fuel subject to the tax is the difference between the total number of gallons of blended diesel fuel removed or sold and the number of gallons of tax-paid diesel fuel used to produce the blended fuel.
(2) Enterer.
(A) An enterer is required to pay the tax when the enterer imports diesel fuel into the state by means outside of the bulk transfer/terminal system.
(B) An enterer is required to pay the tax when the enterer removes or sells diesel fuel within a pipeline or terminal to an unlicensed person.
(C) An enterer is required to pay the tax when the entry is by bulk transfer and the enterer is not a licensed supplier.
(D) For purposes of proper imposition of tax, entry occurs when fuel is brought into the state, provided, however, that when entry is by bulk transfer, entry occurs as follows:
(1) When fuel is received at a marine terminal, entry occurs at the landslide of the flange.
(2) When fuel is removed from a vessel in this state to a lighter for the purpose of lightering, entry occurs at the vessel side of the flange upon the removal of fuel from a vessel in this state to the lighter; provided, however, that if the lighter unloads or discharges the fuel at a marine terminal, then entry occurs at the land side of the flange as to the fuel received at the marine terminal. As used herein, "lightering" is the use of small, shallow-draft boats in transshipment to shore of oil or other fuel from a large, deep-draft vessel unable to dock at shore facilities because of shallow water. The small boats are called lighters.
(3) When fuel is removed from a vessel in this state to another vessel in this state, and the fuel is not unloaded or discharged at a marine terminal, then entry occurs when the fuel is brought into the state.
(3) Position Holder.
(A) A position holder that holds an inventory position in the diesel fuel as reflected on the records of the terminal operator is required to pay the tax when the diesel fuel is removed from the terminal rack.
(B) A position holder is required to pay the tax when the position holder removes or sells diesel fuel within or without the bulk transfer/terminal system to an unlicensed person.
(C) For reporting periods commencing on or after January 1, 2007, a position holder that delivers diesel fuel to a receiving supplier under a two-party exchange contract shall remain liable for the tax due on the removal of diesel fuel from the terminal rack unless all Regulation 1423 requirements are met.
(4) Refiner.
(A) A refiner is required to pay the tax when the diesel fuel is removed at a terminal rack located at a refinery.
(B) A refiner is required to pay the tax when the removal of diesel fuel is by bulk transfer (e.g., transfer by pipeline or vessel) and the refiner or the owner of the diesel fuel immediately before the removal is not a licensed supplier.
(C) A refiner is required to pay the tax when the refiner removes or sells diesel fuel within or without the bulk transfer/terminal system to an unlicensed person.
(D) For reporting periods commencing on or after January 1, 2007, a refiner that delivers diesel fuel to a receiving supplier under a two-party exchange contract shall remain liable for the tax due on the removal of diesel fuel from the terminal rack located at a refinery unless all Regulation 1423 requirements are met.
(5) Terminal Operator. A terminal operator is jointly and severally liable for and may be required to pay the tax when the diesel fuel is removed at the rack if both subsections (A) and (B) below apply, or if subsection (C) applies:
(A) The position holder with respect to the diesel fuel is a person other than the terminal operator and is not a licensed supplier.
(B) The terminal operator is not a licensed supplier and either (i) does not have an unexpired notification certificate from the position holder as required by the Internal Revenue Service or (ii) has an unexpired notification certificate from the position holder, but has reason to believe or knows that any information in the certificate is false.
(C) The terminal operator provides any person with a bill of lading, shipping paper, or similar document which falsely indicates that the undyed or unmarked diesel fuel which is removed from the terminal is dyed or marked in accordance with the United States Environmental Protection Agency or the Internal Revenue Service requirements.
(6) Throughputter. A throughputter is required to pay the tax when the throughputter removes or sells diesel fuel within or without the bulk transfer/terminal system to a person who is not a licensed supplier.

Note: Authority cited: Sections 60063 and 60601, Revenue and Taxation Code. Reference: Sections 60003, 60004, 60006, 60007, 60008, 60009, 60010, 60011, 60012, 60013, 60015, 60021, 60022, 60023, 60029, 60030, 60031, 60032, 60033, 60035, 60050, 60051, 60052, 60053, 60054, 60055, 60059, 60060, 60061, 60062, 60063, 60131 and 60201, Revenue and Taxation Code.


s 1421. Successor's Liability.
(a) Duty to Withhold from the Purchase Price. The requirement that a successor or purchaser of a business or stock of goods withhold a sufficient amount of the purchase price to cover the tax liability of the seller, arises only in the case of the purchase and sale of a business or stock of goods under a contract, which provides for the payment to be made to the seller or to a person designated by the seller of a purchase price consisting of money or property or the assumption of liabilities and only to the extent thereof, and does not arise in connection with other transfers of a business such as assignments for the benefit of creditors, foreclosures of mortgages, or sales by trustees in bankruptcy.
(b) Amounts to Which Liability Extends. The liability of the successor or purchaser of a business or stock of goods extends to amounts incurred with reference to the operation of the business by the predecessor or any former owner, including the sale thereof, even though not then determined against the former owner, which include taxes, interest thereon to the date of payment of the taxes, and penalties, including penalties for nonpayment of taxes, negligence, intentional disregard, fraud, or intent to evade the tax.
(c) Release From Obligation. The purchaser of the business or stock of goods will be released from further obligation to withhold from the purchase price if the purchaser obtains a certificate from the Board stating that no taxes, interest, or penalties are due from a predecessor. The purchaser will also be released if he or she makes a written request to the Board for a certificate and if the Board does not issue the certificate or mail to the purchaser a notice of the amount of the tax, interest, and penalties that must be paid as a condition of issuing the certificate within 60 days after the later of the following dates:
(1) The date the Board receives a written request from the purchaser for a certificate.
(2) The date the former owner's records are made available for audit.
The certificate may be issued after the payment of all amounts due, including taxes, interest, and penalties, according to the records of the Board as of the date of the certificate, or after the payment of the amounts, including amounts not yet ascertained, is secured to the satisfaction of the Board.
(d) Enforcement of Obligation.
(1) The obligation is enforced by service of a notice of successor liability not later than three years after the date the Board receives written notice of the purchase of the business or stock of goods. The successor may petition the Board for reconsideration of the liability within 30 days after service. The liability becomes final, and the amount is due and payable, in the same manner as determinations and redeterminations of other diesel fuel tax liability.
(2) A successor may be relieved of any penalty included in the notice of successor liability regardless of when the notice was issued, if it is determined by the Board that failure by the successor to withhold a sufficient amount of the purchase price to cover the liability of the former owner was due to reasonable causes and circumstances beyond the control of the successor and occurred even though the successor exercised ordinary care and was not willfully negligent. A successor seeking relief of a penalty must file a written statement with the Board under penalty of perjury stating the facts upon which he or she bases the claim for relief.
(e) Separate Business Locations. Where one person operates several business establishments, each at a separate location, each establishment is a separate "business" and has a separate "stock of goods" for purposes of determining the liability of a successor. A purchaser of the business or stock of goods of any such establishment is subject to liability as a successor with respect to that establishment even if he or she does not purchase the business or stock of goods of all the establishments.
(f) Purchase of a Portion of a Business. A person who purchases a portion of a business or stock of goods may become liable as a successor as, for example, where the purchaser purchases substantially all of the business or stock of goods or where the business or stock of goods is purchased by two or more persons. In cases of doubt as to possible liability, the purchaser should obtain a certificate as provided in (c) above.

Note: Authority cited: Section 60601, Revenue and Taxation Code. Reference: Sections 60471, 60472, 60473 and 60474, Revenue and Taxation Code.


s 1422. Relief from Liability.
A person may be relieved from the liability for the payment of the diesel fuel tax, including any penalties and interest added to those taxes, when that liability resulted from the failure to make a timely return or a payment and such failure was found by the board to be due to reasonable reliance on written advice given by the board as described in California Code of Regulations, Title 18, Section 4902.

Note: Authority cited: Section 60601, Revenue and Taxation Code. Reference: Section 60210, Revenue and Taxation Code.


s 1423. Two-Party Exchange.
(a) General. In a typical two-party exchange, two suppliers who own diesel fuel in terminals, i.e., who are position holders (pursuant to Section 60010 of the Revenue and Taxation Code), agree to give each other access to the diesel fuel each owns. Both suppliers have customers in the same terminal areas. One supplier (the delivering supplier) owns fuel in one terminal, and the other supplier (the receiving supplier) owns fuel, usually in a different terminal. Each supplier agrees to exchange fuel it owns for fuel the other supplier owns. A two-party exchange contract allows each supplier to have rack removal capability at a terminal where the other supplier is a position holder, in order to supply fuel to its customers in that terminal area. The receiving supplier takes the place of the delivering supplier when the diesel fuel is removed from the terminal at the rack. A two-party exchange may involve fuel held in terminals located in one or more states and may involve one or more types of fuel. For purposes of this regulation, however, at least one of the terminals involved in a two-party exchange must be located in this state, and the requirements for reporting transactions to the Board pursuant to this regulation pertain only to transactions involving terminals located in this state.
(b) Definitions.
(1) Notwithstanding Section 60048 of the Revenue and Taxation Code, "two-party exchange" means a transaction, other than a sale, that occurs at the time of removal of diesel fuel across the rack and that meets all the following conditions:
(A) The terminal operator, delivering supplier, and the receiving supplier are each registered with the Board to file electronically and have filed electronically with respect to the subject two-party exchange; and
(B) The terminal operator treats the receiving supplier in its books and records as the person that removes the diesel fuel across a terminal rack for purposes of reporting the two-party exchange to the Board: and
(C) The two-party exchange is the subject of a written contract between the delivering supplier and the receiving supplier, acceptable evidence of which includes, but is not limited to, exchange statements, exchange differential invoices, exchange reconciliations, or any other similar writing between the parties; and
(D) All of the reporting requirements set forth in subdivisions (d) and (e) of this section are met.
(2) "Delivering supplier" means a supplier licensed pursuant to Section 60131 of the Revenue and Taxation Code, who is the position holder of the diesel fuel in the terminal on whom the diesel fuel tax is imposed on removal of diesel fuel from the rack for all purposes other than for a two-party exchange.
(3) "Receiving supplier" means a supplier licensed pursuant to Section 60131 of the Revenue and Taxation Code, on whom the diesel fuel tax is imposed only on removal of diesel fuel from the rack as the receiving supplier under a two-party exchange.
(4) "Terminal" as defined in Section 60033 of the Revenue and Taxation Code, includes, for purposes of this regulation, a terminal located at a refinery.
(c) Liability for Tax.
(1) The delivering supplier is primarily liable for taxes imposed under Section 60051 or Section 60052(a) of the Revenue and Taxation Code, except, when a transaction satisfies the conditions and requirements for a two-party exchange, the delivering supplier shall be relieved of diesel fuel tax liability and the receiving supplier shall be liable for payment of diesel fuel taxes on the diesel fuel removed pursuant to the two-party exchange.
(2) The receiving supplier must report the two-party exchange and remit any tax due on a tax return filed within three months after the close of the calendar month in which the diesel fuel was received. The receiving supplier may claim a refund for any amounts applied by the Board to the account of the receiving supplier under a two-party exchange contract. When all parties report a transaction as a two-party exchange, the receiving supplier may not file a claim for refund of the tax on the grounds that the transaction was not a two-party exchange.
(3) If the receiving supplier fails to report or remit taxes in conformity with this regulation, then the delivering supplier shall remain primarily liable for taxes due on the removal of the diesel fuel from the rack.
(d) Reporting Requirements - Generally.
(1) The terminal operator must report to the Board the two-party exchange of diesel fuel between the delivering supplier and the receiving supplier.
(2) The terminal operator, the delivering supplier, and the receiving supplier must each use the same identifying information (e.g., bill of lading number) to refer to or otherwise report the subject two-party exchange.
(3) The terminal operator, the delivering supplier, and the receiving supplier must each enter the same fuel type on any report that includes a two-party exchange.
(e) Reporting Requirements - Delivering and Receiving Suppliers. The following reporting requirements must be met in order for an exchange of diesel fuel to qualify as a two-party exchange and to shift the diesel fuel tax liability from the delivering supplier to the receiving supplier.
(1) The delivering supplier must report the two-party exchange and identify the receiving supplier to the terminal operator; and
(2) The delivering supplier must report to the Board a tax-free delivery of diesel fuel to the receiving supplier; and
(3) The receiving supplier must report to the Board a tax-free receipt of diesel fuel from the delivering supplier; and
(4) The receiving supplier must report to the Board the rack removal of diesel fuel to its customers and the amount of tax due.
(f) Operative Date. The provisions of this regulation are operative January 1, 2007.

Note: Authority cited: Sections 60063 and 60601, Revenue and Taxation Code. Reference: Section 60051, 60052, 60053, 60054, 60063, 60131, 60201, 60204, 60604 and 60605, Revenue and Taxation Code.


s 1425. Payment by Electronic Funds Transfer.
Payments by electronic funds transfer shall be made in accordance with California Code of Regulations, Title 18, Section 4905.

Note: Authority cited: Section 60250, Revenue and Taxation Code. Reference: Sections 60250 and 60252, Revenue and Taxation Code.


s 1430. Shipments out of State.
(a) Exports of Ex-Tax Diesel Fuel. The diesel fuel tax does not apply to the export of ex-tax diesel fuel. To qualify for an exemption from diesel fuel tax on the export of ex-tax diesel fuel, the supplier must claim the exemption on the return filed for the period in which the export occurred. Suppliers who erroneously pay tax on exports of ex-tax diesel fuel may file a claim for refund with the Board pursuant to Revenue and Taxation Code Sections 60521 through 60524 in order to obtain a refund of or credit for the amount of tax so paid.
(1) For purposes of this subdivision, "export" means the delivery or shipment from a point in this state to a point outside of the state when pursuant to the contract of sale the diesel fuel is shipped by a supplier by any of the following means:
(A) Facilities operated by the supplier.
(B) Delivery by the supplier to a carrier, customs broker, or forwarding agent, whether hired by the purchaser or not, for shipment to the out-of-state point.
(C) Delivery by the supplier to any vessel clearing from a port of this state for a port outside of this state and actually exported from this state in the vessel.
(2) For purposes of this subdivision, "carrier" means a person who is regularly engaged in the business of transporting for compensation property owned by other persons and includes both common and contract carriers. An individual or firm does not become a "carrier" simply by being designated by a purchaser to receive and ship goods to a point outside this state.
(3) For purposes of this subdivision, "forwarding agent" means a person or firm regularly engaged in the business of preparing property for shipment or arranging for its shipment. An individual or firm does not become a "forwarding agent" simply by being designated by a purchaser to receive and ship goods to a point outside this state.
(b) Exports of Tax-Paid Diesel Fuel. A person who exports diesel fuel on which tax has been paid may file a claim for refund with the Board pursuant to Revenue and Taxation Code Sections 60501 through 60512 in order to obtain a refund of the amount of tax so paid. For purposes of this subdivision, the seller is deemed to be the exporter of diesel fuel when the diesel fuel is delivered to an out-of-state location by facilities of the seller or by common carrier on behalf of the seller, and the purchaser is deemed to be the exporter of diesel fuel when the diesel fuel is delivered to an out-of-state location by facilities of the purchaser or by common carrier on behalf of the purchaser.
(1) All claims for refund of tax paid on exported diesel fuel must be supported by, and the claim for refund covering the export must contain the following:
(A) The name, address, telephone number, and permit number of the person that sold the diesel fuel to the claimant.
(B) The date the diesel fuel was purchased.
(C) A statement by the claimant that the diesel fuel covered by the claim did not contain visible evidence of dye.
(D) A statement, which may appear on the invoice or similar document, by the person that sold the diesel fuel to the claimant that the diesel fuel sold did not contain visible evidence of dye.
(E) The total amount of diesel fuel covered by the claim.
(F) A properly executed bill of lading or similar document furnishing proof of exportation by the claimant.
(2) In lieu of claiming a refund of tax for export of tax-paid diesel fuel, if the claimant is a supplier, the claimant may take a credit on its diesel fuel tax return for tax-paid diesel fuel when, pursuant to the contract of sale, the diesel fuel is required to be shipped and is shipped to a point outside of this state by the supplier claiming the credit by any of the means described in subdivision (a)(1) above. The credit must be claimed on a return filed within three months after the close of the calendar month in which the export occurred. If the credit is not claimed on a return filed within three months after the close of the calendar month in which the export occurred, the supplier must file a claim for refund pursuant to Revenue and Taxation Code Sections 60501 through 60512 and this subdivision in order to obtain a refund of the amount of taxes paid.
(c) Documentation. Any person claiming an exemption, refund or credit under this regulation must retain documentation to support the obligation to deliver diesel fuel out of state and to support the actual delivery of diesel fuel at an out of state location. Documentation may include, but is not limited to, contracts, bills of lading, delivery tickets, invoices and rack meter readings. The person claiming the exemption, refund or credit has the burden of proving that the diesel fuel was exported.
(d) Diversion of Diesel Fuel. Diesel fuel is not exported if it is diverted in transit or for any reason it is not actually delivered outside of the state, regardless of documentary evidence held by the person exporting the diesel fuel respecting delivery of the diesel fuel to a carrier for out-of-state shipment or to a vessel clearing for an out-of- state port.

Note: Authority cited: Section 60601, Revenue and Taxation Code. Reference: Sections 60033, 60100, 60201, 60501- 60512, 60521-60524 and 60604, Revenue and Taxation Code.


s 1431. Diesel Fuel Used on a Farm for Farming Purposes.
The following provisions and definitions apply for purposes of the exemption from the backup tax pursuant to Revenue and Taxation Code Section 60100(a)(5)(A), and the refund of tax to the ultimate vendor pursuant to Revenue and Taxation Code Section 60502.
(a) The term "used on a farm for farming purposes" applies only to diesel fuel which is used (i) in carrying on a trade or business of farming, (ii) on a farm in California, and (iii) for farming purposes.
(b) A person will be considered to be engaged in the "trade or business of farming" if the person cultivates, operates, or manages a farm for gain or profit, either as an owner or a tenant. A person engaged in forestry or the growing of timber is not thereby engaged in the trade or business of farming. A person who operates a garden plot, orchard, or farm for the primary purpose of growing produce for the person's own use is not considered to be engaged in the trade or business of farming. Generally, the operation of a farm does not constitute the carrying on of a trade or business if the farm is occupied by a person primarily for residential purposes or is used primarily for pleasure, such as for the entertainment of guests or as a hobby.
(c) The term "farm" is used in its ordinary and accepted sense, and generally means land used for the production of crops, fruits, or other agricultural products or for the sustenance of livestock or poultry. The term "livestock" includes cattle, hogs, horses, mules, donkeys, sheep, goats, and captive fur-bearing animals. The term "poultry" includes chickens, turkeys, geese, ducks, and pigeons. Thus, a farm includes livestock, dairy, poultry, fish, fruit, fur-bearing animals, and truck farms, plantations, ranches, nurseries, ranges, orchards, feed yards for fattening cattle, and greenhouses and other similar structures used primarily for the raising of agricultural or horticultural commodities. Greenhouses and other similar structures that are used primarily for purposes other than the raising of agricultural or horticultural commodities do not constitute farms, as for example, structures that are used primarily for the display, storage, fabrication, or sale of wreaths, corsages, and bouquets. A fish farm is an area where fish are grown or raised, as opposed to merely caught or harvested.
(d) Diesel fuel will be considered to be used for "farming purposes" when it is used on a farm by the owner, tenant, or operator of the farm in connection with the activities described in this subdivision. Diesel fuel will be considered to be used for "farming purposes" when it is used on a farm by a person other than the owner, tenant, or operator of the farm for any of the purposes described in subdivision (d)(1).
(1) Cultivating the soil, raising or harvesting any agricultural or horticultural commodity, or raising, shearing, feeding, caring for, training, or managing livestock, poultry, bees, or wildlife. Examples of operations which are considered to be operations for "farming purposes" within the meaning of this paragraph include plowing, seeding, fertilizing, weed killing, corn or cotton picking, threshing, combining, baling, silo filling, and chopping silage.
(2) Handling, drying, packing, grading, or storing any agricultural or horticultural commodity in its unmanufactured state, but only if the owner, tenant, or operator produced more than one-half of the commodity which was so treated during the year covered by the exemption certificatedescribed in Revenue and Taxation Code Section 60503 which supports the claim for refund. (continued)