SN 2002(13)

Petroleum Products Gross Earnings Tax Changes
Effective July 1, 2002

Purpose: This Special Notice describes legislation passed in 2002 and in prior years that exempts, or extends the exemption of, certain products from the petroleum products gross earnings tax (PPGET).

Effective Date: July 1, 2002. The exemption for propane gas used as fuel for a motor vehicle has been extended through June 30, 2004. The new exemption for petroleum products used as fuel for a fuel cell is effective for the period July 1, 2002, through June 30, 2004.

Statutory Authority: Conn. Gen. Stat. §12-587(b)(2)(F), as amended by 2002 Conn. Pub Acts 4, §8 (May 9 Spec. Sess.); Conn. Gen. Stat. §12-587(b)(2)(G) and (H), as amended by 1997 Conn. Pub. Acts 281, §1; and Conn. Gen. Stat. §12-412(113), as added by 2001 Conn. Pub. Acts 6, §18 (June Spec. Sess.).

Propane Gas Exemption Extended: The first sale or importation of propane gas to be used as fuel for a motor vehicle is exempt from PPGET. Under 2001 legislation, this exemption was scheduled to expire on July 1, 2002. However, 2002 legislation extended the exemption through June 30, 2004.

New Exemption for Petroleum Products Used in Fuel Cells: Effective July 1, 2002, the first sale or importation of petroleum products to be used as fuel for a fuel cell, as defined in Conn. Gen. Stat. §12-412(113), is exempt from PPGET. The exemption remains in effect through June 30, 2004.

Conn. Gen. Stat. §12-412(113) defines fuel cell as "a device that directly or indirectly produces electricity directly from hydrogen or hydrocarbon fuel through a noncombustive electro-chemical process. . . ."

Number 6 Fuel Oil for Manufacturers Now Fully Exempt: Effective July 1, 2002, the first sale or importation of grade number 6 fuel oil, as defined in regulations adopted under Conn. Gen. Stat. §16a-22c, is exempt from PPGET. This exemption is the culmination of a rate reduction of one percent per year that began in 1998. For more information see Special Notice 2000(11), Credit Procedures for Reduced Rate Petroleum Products.

To be qualified for the exemption, the grade number 6 fuel oil must be used exclusively by a company engaged in manufacturing, included in Standard Industrial Classification codes 2000 to 3999, inclusive, or in North American Industrial Classification System Sectors 31, 32, or 33.

Number 2 Heating Oil for Vessels Now Fully Exempt: Effective July 1, 2002, the first sale or importation of number 2 heating oil to be used exclusively in a vessel primarily engaged in interstate commerce is exempt from PPGET. This exemption is the culmination of a rate reduction of one percent per year that began in 1998. For more information see Special Notice 2000(11), Credit Procedures for Reduced Rate Petroleum Products.

To be exempt, the number 2 heating oil must be used in a vessel that qualifies for exemption from sales and use taxes under Conn. Gen. Stat. §12-412.

Revised Tax Returns: A revision of Form OP-161, Petroleum Products Gross Earnings Tax Return, reflecting the exemptions described in this Special Notice, is being mailed to all distributors.

Effect on Other Documents: None affected.

Effect of This Document: A Special Notice is a document that announces a new policy or practice in response to changes in State or federal laws or regulations or to judicial decisions. A Special Notice indicates an informal interpretation of Connecticut tax law by DRS and may be referred to for general guidance by taxpayers or tax practitioners.

For Further Information on Petroleum Products Gross Earnings Tax: Call the Excise/Public Services Taxes Subdivision at 860-541-3225 during business hours, Monday through Friday.

SN 2002(13)
Petroleum Products Gross Earnings Tax
2002 Exemptions