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If your company (or your client's company) is involved in moving customers or employees by motor vehicle, then there may be a significant way to reduce your operating costs (tax) compliments of the Florida legislature. What might be even more interesting is that the tax savings can be retroactive via a refund of taxes already paid over the last three (yes 3!) years. The legislative grace relates to taxes paid on motor fuels for companies in the "mass transit" industry, which is a much broader term than busing company. Something as simple as a taxi cab or ambulance can qualify and the tax savings can be significant.

As a starting point, pursuant to chapter 206, Florida Statutes ("F.S."), Florida and its various counties impose a motor fuel tax (Sec. 206.41, F.S.) and a diesel fuel tax (Sec. 206.87, F.S.) based on the number of gallons of the respective fuel sold in Florida. The fuel tax is a different tax than the typical sales tax in that the fuel tax funds are used to provide funding for the transportation systems in Florida. However, if such fuel is purchased and used for "mass public transportation," then the user is entitled to a refund. The phrase "mass public transportation" is defined by Florida law as a person authorized to operate within any city, town, and municipality, county or transit authority region in Florida. It is further defined to mean a system for transportation of the public by bus, rail, or any other means of conveyance serving the general public or moving over prescribed routes. With such a broad definition, there may be creative refund opportunities for companies that do not appear on the surface to qualify. In the simpler case, if a county, city, or municipality operates a service that qualifies, then it must have separate licenses and file separate returns for each function.

While it may not seem applicable to many businesses, many petroleum dealers and distributors may have customers that qualify and can facilitate strong customer relationships with companies, counties, cities, or municipalities that provide mass public transportation. Good examples of companies that could qualify for a refund would be an ambulance company, taxi company, or even a company specializing in the transportation of the disabled or elderly. If a company is in the business of transporting people, then the company may qualify for the exemption. In addition if you operate or represent a company, county, city, or municipality that qualifies, it may be worthwhile to investigate this exemption and see if you or your client's operation qualifies for a largely unknown fuel tax refund opportunity. The refund if a company that qualifies for a mass transit system refund can be up to 30.5 cents per gallon for gasoline and up to 25.5 cents per gallon for diesel fuel.

A good example of this refund scenario can be found in TAA 96B5-001, in which a county leased four transit coaches to a city for providing public transportation. The coaches were used at the sole expense and control of the City. While the City was required to pay significant money for the lease of the coaches, it was able to offset some of its costs by obtaining a significant refund from the State on fuel tax paid for the use of the coaches. The Department ruled that in this scenario, the City was entitled to a refund.

While some refund claims are straightforward, this refundable exemption has specific guidelines that must be followed in order to be entitled to this refund. Therefore, it may be wise to consult with a sales tax attorney or accountant if you or your client's company may qualify for the refund.


About the author: Mr. Donnini is a Florida Attorney and an associate in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A., in Fort Lauderdale, Florida. Mr. Donnini's primary practice is Florida tax controversy with a heavy emphasis on sales tax and the petroleum industry. Mr. Donnini worked as an accountant for a public REIT prior going to law school and is currently pursuing his LL.M. in Taxation at NYU. You can learn more about Mr. Donnini at his firm Bio here.


Sec. 206.41, F.S. (Motor Fuel Taxes)

Sec. 206.87, F.S. (Diesel Fuel Taxes)

TAA 96B5-001 (Oct. 1, 1996)

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