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MICHIGAN MOTOR FUELTAXES SET TO INCREASE ON JANUARY 1, 2016. GAS & DIESEL TAXES WILL RISE TO 26.3 CENTS PER GALLON FLOOR STOCKTAX REQUIRED

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It s been almost a year since Governor Snyder Signed into law Public Acts 174-180 of 2015. Of most importance to Petroleum Marketers and Retailers is the state motor fuel tax increases included in this legislation. Those increases are finally nearing. On January 1, 2017 both the Michigan gasoline tax and the Michigan diesel tax will increase to 26.3 cents per gallon. That is a 7.3 cents per gallon increase for gas (from 19¢) and 11.3 cents per gallon increase for diesel fuel (from 15 ¢). Inflationary increases begin on January 1, 2022.

With the increase in motor fuel tax rates, Michigan Treasury will require an inventory (floor stock) tax. Under the law, whenever there is motor fuel tax increase, a specific amount of previously taxed fuel held in storage is subject to the tax increase and the tax must be paid to the Michigan Department of Treasury based on the increase.

Below are some of the details of the floor stock:

  •  For end users, the tax applies to motor fuel held in storage in excess of 3,000 gallons.

  •  For those holding fuel for sale (e.g., retail stations), the tax applies to motor fuel in excess of dead storage. Dead storage equals either 200 gallons (for a tank with a capacity less than 10,000 gallons), or 400 gallons (for a tank with a capacity of 10,000 gallons or more).

A person in possession of motor fuel subject to this inventory tax must do all of the following:

  •  Take an inventory at the close of business on the last day before the effective date of the tax increase (i.e., December 31) to determine the gallons of motor fuel in storage.

  •  Complete a report to be filed with Treasury (on a form or in the format required by Treasury) for the following gallons held in storage: (i) total gallons of motor fuel; (ii) gallons in dead storage, and; (iii) gallons of dyed diesel fuel.

  •  File the report and pay the tax due within 20 days after the last day of the month that the increase in the tax rates took effect (i.e., Feb- ruary 20). Tax due is calculated by multiply- ing the increase in the tax rates by the taxa- ble gallons held in storage.

    MPA/MACS is still waiting for further guidance from the Michigan Department of Treasury. 

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