By: The Business Services Team
Do you sell fuel to other agencies?
UPDATE: As of the publication on this newsletter, the Office of Chief Counsel for the IRS has released a memorandum confirming that tax exempt jurisdictions MAY sell fuel to another with no tax liability.
There is a ruling from the Internal Revenue Service (IRS) regarding Federal Tax Exempt government agencies registered under one Tax ID# may not sell fuel to other agencies registered with the IRS under a separate tax ID#.
Internal Revenue Service, Publication 510 (Rev. April 2009), Cat. No. 150141, Excise Taxes, Definition of Nontaxable Uses, No. 14, reads, “Exclusive use by a state, political subdivision of a state, or the District of Columbia means fuel purchased by the state or local government for its exclusive use. A state or local government is any state, any political subdivision thereof, or the District of Columbia. An Indian tribal government is treated as a state only if the fuel is used in an activity that involves the exercise of an essential tribal government function. Gasoline, diesel fuel, and kerosene used by the American Red Cross is considered to be the use of these fuels by a state.”
Assistant Greensboro Attorney, Tom Carruthers said the IRS has taken a no-exception interpretation of the regulation. In a letter to Guilford County Attorney, Mark Payne earlier this year, Carruthers wrote “they (Brunswick County) informed us (Guilford County) that the IRS has taken a hard line on all sales of fuel that are not the ‘exclusive use’ of the purchasing entity”.
According to an article in the on-line publication, Rhinotimes.com, “County No Longer Getting Gas From City” , the City of Greensboro, NC sold gas to Guilford County for 15 years. The IRS didn’t notify the City of Greensboro that it had to cease this practice. However, after the IRS conducted an audit of Brunswick County, NC they sent notifications to other North Carolina counties and cities, making officials aware that the IRS now considered the practice of selling gas to other entities against regulations. Brunswick County received a penalty from the IRS of up to three years in back taxes.
We at RMFMA, as well as other Fleet organizations, are concerned about the impact of this interpretation of the ruling and will continue to monitor what the outcome is and report it to our membership. Many of you may not have heard of this discussion, so we thought we would share it with you. You may want your legal department to look into this as well.
We appreciate our fellow Fleet professionals monitoring this working to get a clear understanding for everyone. Christopher D. Amos, CAFM wrote a letter to the U.S. Internal Revenue Service Commissioner, Douglas Shulman. Here is an excerpt from his letter stating “In 26 USC 6416(b)(2), federal law defines specified uses of fuel where the excise tax will not apply, including fuel sold ‘to a State or local government for the exclusive use of a State or local government.’ (Emphasis added) The statue does not require that the fuel be for the exclusive use of the local government that purchased the fuel, but must be for the exclusive use of a State or local government.” He has also requested a meeting with the Commissioner and his staff.
By: Casey Dunn, Texas Chapter Member
Whether you’re a private fleet, a government fleet, or even if you are a retail maintenance organization, proper parts/inventory management can and will impact your bottom line. Improper operation of your parts storeroom directly affects everything from technician productivity and repair times to customer satisfaction and your bottom line.
If you maintain vehicles, having a parts storeroom is one of the areas that can literally make or break your organization’s bottom line. Lack of parts increases service turnaround time, lowers technician productivity and the expediting of parts adds cost in at least freight charges not to mention buying it from the first vendor without checking your other vendors for price comparison. Too many parts add to your expenses and lead to obsolete parts on the shelf.
Proper inventory controls can help you keep these risks to a minimum and increase your bottom line. You will have to run reports to give you the data you need to monitor your movement (or turns), obsolescence, value and count, to name a few.
Ways to Reduce Your Risk:
Having professional parts personnel to manage the storeroom so technicians have their parts, those parts are correct, and parts are issued into FMIS or work order, is an absolute to properly manage your inventory. Communication between Service and Parts must be intact and lived as a team.
Fleet managers must face and manage inventory to have a chance to meet budgets as well as to set budgets for the upcoming year. Just when you thought your plate was full, I know. Be personally involved in fostering the relationship between Parts and Service with these targets on your radar. It is this writer’s opinion that, if your organization is not constantly monitoring inventory, you may be missing asset dollars in the coffers. In these lean times we have been facing, I hope this acts as a refresher, a focal point, and that you find some dollars you might have been missing.
The FleetPros Blog is written and moderated by the Business Manager with contributions from the membership and Business Services Team.