Tax-Exempt Fleets Can Use Fleet Cards Until March 1, 2005
New deadline will allow Congress to consider changes to the new law.
The Internal Revenue Service has agreed to allow tax-exempt fleets to continue using fleet cards to purchase gasoline until March 1, 2005, according to a report on the Web site of National Association of Fleet Administrators (NAFA). A provision in the Job Creation Act of 2004 attempted to treat handling of gasoline and diesel taxes the same. Some fuel card companies, under the wording of the new law, would no longer achieve ultimate vendor status. They therefore may not be able to deduct tax on behalf of tax-exempt customers. Those customers presently don't pay taxes when they pump gas using the card. Fuel card companies and industry groups such as NAFA brought the issue to Congress and the IRS. As a result the IRS will maintain the status quo until March 1, allowing Congress time to make changes to the new law. NAFA posted on its Web site the IRS guidance contained in IRS Notice 2005-04: "Under the rules in effect prior to 2005, a sale charged on an oil company credit card issued to an exempt person is not considered a direct sale by the person actually selling the gasoline to the ultimate purchaser (i.e., the person selling the gasoline is not the ultimate vendor) if the person actually selling the gasoline receives a reimbursement from the oil company based on a price that excludes the tax. Treasury and the Service are considering whether this rule has continuing applicability under the new [law] but while considering the issue will continue generally to apply the rule with respect to sales before March 1, 2005. Therefore, in the case of a sale of gasoline before March 1, 2005, on an oil company credit card issued to a [state, local government] or nonprofit educational organization, the person that actually paid the tax [the oil company] is the only person eligible to make the claim....Congress may wish to address this issue prior to March 1, 2005, and Treasury and the Service will assist Congress in administering an administrable alternative."
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