Aviation or aircraft fuel is subject to many taxes from the time the crude oil is brought into this state to be refined to the time it is sold to a consumer for use in aircraft. This article discusses the taxes, how to compute the selling price for retail sales tax and business and occupation (B&O) tax, and applicable exemptions from retail sales tax.
There are two common aircraft fuels sold in Washington:
- Aviation gasoline
- Jet fuel
Taxes applying to aviation fuel
The applicable taxes and the administering agencies are listed below:
Federal aviation fuel tax (IRS)
Aircraft fuel tax – 82.42 RCW (DOL)
State business and occupation (B&O) tax – 82.04 RCW (DOR)
Retail sales tax – 82.08 RCW (DOR)
Hazardous substance tax – 82.21 RCW (DOR)
Petroleum products tax – 82.23A RCW (DOR)
Oil spill response fee and oil spill response administrative fee – 82.23B RCW (DOR)
Local B&O tax (cities)
Airport flow fees (Airport authorities)
Aircraft fuel is sold to either consumers or resellers. We address the selling price in both situations below.
Retail sales to consumers
Retail sales tax applies to the selling price of the aircraft fuel which includes any of the taxes listed above (other than sales tax). The income received by the seller of fuel to consumers is also subject to B&O tax under the retailing classification.
All the taxes listed above (other than sales tax) are imposed on the seller of the fuel or at a distributor level. The taxes are not imposed on the consumer. Therefore, the amount of these taxes is not deductible from the selling price whether shown separately on an invoice or not. Also, there is no exemption from retail sales tax when the per-gallon aircraft fuel tax applies, unlike sales of motor vehicle or special fuel (gasoline and diesel) for on-road use.
Wholesale sales to resellers
Sales of aircraft fuel to persons that provide the seller with a reseller permit are not subject to retail sales tax. However, the income received by the seller is subject to B&O tax under the wholesaling classification. The amount of state aircraft fuel tax collected from the buyer is excluded from the selling price for calculating the amount of B&O tax due.
Retail sales tax exemptions
Farm fuel users are exempt from retail sales tax on the purchase of aircraft fuel for agricultural purposes. The seller should retain a completed copy of the Farmers’ Certificate for Wholesale Purchases and Sales Tax Exemptions. (See RCW 82.08.865.)
A retail sales tax exemption is available for purchases of aircraft fuel by common or private carriers registered by the Department for use in interstate or foreign commerce. The seller should retain a copy of the Buyers’ Retail Sales Tax Exemption Certificate. The buyer will owe use tax on fuel actually consumed within Washington. (See WAC 458-20-175.)