Licensing and Regulatory

Special Fuel Exemptions 

I. POLICY

Special fuel is any fuel other than gasoline, that is usable as fuel in a compression or spark-ignited internal combustion engine. The Comptroller of Maryland, Field Enforcement Bureau, Licensing and Registration Section requires a business to obtain a Special Fuel Tax Exemption Certificate before engaging in the business of importing, exporting, or buying and selling, special fuel in Maryland. The Exemption Certificate authorizes the holder to acquire special fuel in bulk without paying the motor fuel tax. There are three types of Special Fuel Tax Exemption Certificates, a Special Fuel Seller Exemption, a Special Fuel User Exemption, and a Turbine Fuel Seller Exemption. Special fuel is any fuel other then gasoline, including diesel fuel, fuel oil, kerosene, natural gas, propane, jet fuel, SVO (straight vegetable oil) and any form of liquid biological fuel, such as bio-diesel fuel.

II. SPECIAL FUEL TAX EXEMPTION QUALIFICATIONS

  • The entity shall hold a Class “F”, “S”, or “U” Motor Fuel License.
  • The entity may not own or operate on public highways in Maryland, a vehicle that is propelled by special fuel.
  • The entity must be qualified to do business in Maryland.

III. SPECIAL FUEL TAX EXEMPTION APPLICATION REVIEW

An Applicant for a Motor Fuel License shall submit to the Bureau:

  • A completed application, on the form that the Comptroller requires stating the name under which the applicant does or will do business in the State. Partnerships require the name of each partner. Business firms require the name of each member and corporations require the names and addresses of its principal officers, resident agent, attorney, and a security bond as required under Title 13 of this article.

The following procedure is performed upon receipt of the application:

  • The Motor Fuel Licensing and Registration Section shall keep an index of all records for each application and exemption certificate. These records are kept in the Comptroller electronic mainframe tax system, PI-Safe file storage application, and various other databases. Paper files and records are kept for the duration of time allotted in the Bureau’s Retention Schedule
  • Review the attributes and contents of application.
  • Official date and time stamped on the front of the application.
  • The Business must Indicate type of ownership of the business on application.
  • Confirm the business name and address are on the application.
  • Crosscheck in CICS DSSN using the Federal Identification number to confirm if a motor fuel account is already established.
  • Verify with LICN by using the Federal Identification number, and the officers social security number to confirm that there are no outstanding liabilities associated with the business or officers personal liabilities.
  • Conduct compliance check with SDAT website to confirm the business is registered to operate in Maryland and is in “Good Standing”.
  • The Business must provide the names, titles, home address, phone numbers with social security number of all officers if the type of business is a corporation, partnership, or limited liability.
  • Non-Maryland residents must have a Maryland Resident Agent listed on application.
  • Confirm the types of special fuel for the tax exemption is provided.
  • Confirm the fuel supplier is provided.
  • Verify the applicant included the anticipated monthly sales or use of special fuel, the fuel supplier name, storage capacity, and storage location (if different than mailing address) in Maryland.
  • The applicant must include a detailed explanation of their proposed motor fuel operations and intended use of the fuel in the State of Maryland to determine if the applicant qualifies for an exemption certificate. If this is not included, the applicant must resubmit the application.
  • The applicant must answer if they do or do not sell motor fuel and indicate whether propane, diesel, kerosene, natural gas, jet fuel, and, or turbine fuel is sold.
  • Determine if the application is for turbine fuel delivered as a tax-exempt Aviation Fuel. If yes, the applicant must include the FAA Air Carrier Certificate and or other supporting documents pursuant to MD Tax-General 9-303 to qualify for the exemption.
  • The applicant must affirm that the business complies with the Worker’s Compensation Act and provides evidence of such compliance for item 12 of the application.
  • Applicants will be contacted for missing or erroneous information. Applications will be held for 60 days awaiting additional information. After 60 days, the applications will not be processed and discarded.
  • Following completion of the review and approval of the application the account information is entered into the Comptroller licensing system, and license numbers will be assigned. The Maryland Motor Fuel License, the Maryland Special Fuel Tax Exemption Certificate and the Maryland Inspections of Sale of Motor Fuel Registration will then be generated and mail to the applicant.

NOTE: If the application is not clear on what type of exemption the business is requesting, the application will be escalated to the Deputy Director of Regulatory and Administrative Operations or the Director of Field Enforcement Bureau for approval of continuance.

IV. STANDARD OPERATING PROCEDURES

  • Standard Operating Procedures (SOP) for special fuel tax exemptions are located on the FEB network drive in the SOP folder.

V. CANCELLATION

None.

The following regulations govern special fuel tax exemptions:

  • Tax General Article, Title 1, Subtitle 204 of the annotated code of Maryland.
  • Tax General Article, Title 9, Subtitle 101 through 337 of the annotated code of Maryland.
  • Code of Maryland Regulations (COMAR) 03.03.01.04 & 16.