Information

Q. What is a Motor Fuel Distributor?

A: A Motor Fuel Distributor, as defined by 30 Del C, c. 51 §5101(1), is "any person, association of persons, firm or corporation, wherever resident or located, who imports or causes to be imported into the State gasoline, for use, distribution, storage or sale after the gasoline reaches the State or who, being in the business of selling and or distributing gasoline in bulk quantities, desires to purchase gasoline tax free from another distributor for resale within this State or for export from this State; and also any person, association of persons, firm or corporation who produces, refines, manufactures or compounds, or causes to be produced, refined, manufactured or compounded gasoline, within the State."

Any business entities intending to operate as a Motor Fuel Distributor must obtain a license from the Division of Motor Vehicles. In addition to the non-refundable $10.00 application fee, a surety bond must be obtained and submitted with the application, in accordance with guidelines specified by 30 Del C, c. 51 §5107. The license must be renewed yearly, and is valid 12 months from July 1 - June 30.

Upon issuance of a Distributor's license, the licensee must file a monthly tax return, identifying all taxable and non-taxable receipts and distributions of gasoline (as defined by 30 Del C, c. 51 §5101(4)). These returns must be filed by the 25th of the month following the month in which activity occurs (or the next business day, if the 25th falls on a weekend or holiday). When tax reports are filed beyond the due date, interest accrues and late file penalties are assessed, in accordance with 30 Del C, c. 51 §5115.

By law, Motor Fuel Distributors must maintain records of gasoline received, used, sold and/or delivered for a period of three years. This includes invoices, bills of lading, and any other documents that verify Distributor activities.

In order to assist with the completion of the Distributor tax return, Transportation Services has created a Motor Fuel Distributor Return Sample Package in Microsoft Excel where transactions can be entered to the schedules, and the schedule totals carry to the cover sheet. The tax computation is also performed by the workbook.

Q. What is a Special Fuel Supplier?

A: A Special Fuel Supplier, as defined by 30 Del C c. 51 §5131(8), is "any person in the business of handling or selling special fuel who delivers or places such fuel into a bulk supply tank or tanks of a special fuel user or special fuel dealer."

Any business entities intending to operate as a Special Fuel Supplier must obtain a license from the Division of Motor Vehicles. In addition to the non-refundable $10.00 application fee, a surety bond must be obtained and submitted with the application, in accordance with guidelines specified by 30 Del C c. 51 §5134(d). The license must be renewed yearly, and is valid 12 months from July 1 - June 30.

Upon issuance of a Supplier's license, the licensee must file a monthly tax return, identifying all taxable and non-taxable receipts and distributions of special fuel (as defined by 30 Del C c. 51 §5131(4)). These returns must be filed by the 25th of the month following the month in which activity occurs (or the next business day, if the 25th falls on a weekend or holiday). When tax reports are filed beyond the due date, interest accrues and late file penalties are assessed, in accordance with 30 Del C c. 51 5136.

By law, Special Fuel Suppliers must maintain records of special fuel inventories, receipts, deliveries, use and sales or other dispositions in any other manner, for a period of three years. This includes invoices, bills of lading, and any other documents that verify Supplier activities.

PLEASE NOTE: In accordance with the Policy Directive Regarding the Taxation of Low Sulfur Clear Diesel Fuel, sales of Low Sulfur Clear diesel fuel to purchasers not the holders of a valid User, Dealer or Supplier license issued by the Division of Motor Vehicles must include the Delaware Special Fuel excise tax.

In addition, direct fuelings of Low Sulfur Clear diesel fuel to vehicles and equipment must include the Delaware Special Fuel excise tax, even if the vehicles are owned/controlled by licensed Special Fuel Users and Dealers. User and Dealer licenses only allow tax-free receipts to designated tanks.

In order to assist with the completion of the Supplier tax return, Transportation Services has created a Special Fuel Supplier Return Sample Package. In addition, a Microsoft Excel workbook has been created, where transactions can be entered to the schedules, and the schedule totals carry to the cover sheet. The tax computation is also performed by the workbook.

Q. What is a Special Fuel User or Dealer?

A: A Special Fuel User, as defined by 30 Del C c. 51 §5131(6), is "the owner or other person responsible for the operation of a motor vehicle at the time special fuel is placed in the fuel supply tank or tanks thereof while such vehicle is within this State." A Special Fuel User license allows an entity to receive tax-free Special Fuel, use the fuel in a taxable or non-taxable (off-highway) manner, and pay excise tax based only on the taxable usage.

A Special Fuel Dealer, as defined by 30 Del C, c 51, §5131(5), is "any person in the business of handling special fuel who delivers any part thereof into the fuel supply tank or tanks of a motor vehicle not then owned or controlled by the person". A Special Fuel Dealer license allows an entity to receive tax-free Special Fuel, use the fuel in a taxable or non-taxable (off-highway) manner, sell Special Fuel in a taxable manner, sell Special Fuel in a non-taxable manner (except for low sulfur clear diesel fuel), and pay excise tax based only on the taxable sales and/or usage.

Any business entities intending to operate as a Special Fuel User or Special Fuel Dealer must obtain a license from the Division of Motor Vehicles. In addition to the non-refundable $10.00 application fee, a surety bond must be obtained and submitted with the application, in accordance with guidelines specified by 30 Del C c. 51 §5134(d). The license must be renewed yearly, and is valid 12 months from July 1 - June 30.

Upon issuance of a User's or Dealer's license, the licensee must file a monthly tax return, identifying all taxable and non-taxable receipts and distributions of special fuel (as defined by 30 Del C c. 51 §5131(4)). A Dealer must also file a report of the meter (totalizer) reading of each diesel pump as of the last day of each month. These returns must be filed by the 25th of the month following the month in which activity occurs (or the next business day, if the 25th falls on a weekend or holiday). When tax reports are filed beyond the due date, interest accrues and late file penalties are assessed, in accordance with 30 Del C c. 51 §5136.

By law, Special Fuel Users and Dealers must maintain records of special fuel inventories, receipts, use or other dispositions in any other manner, for a period of three years. This includes invoices, bills of lading, and any other documents that verify User/Dealer activities.

PLEASE NOTE: Special Fuel Users are not authorized to place Special Fuel into vehicles not owned or controlled by them. In order to do so, a Special Fuel Dealer license must be obtained.

In order to assist with the completion of the User or Dealer tax return, Transportation Services has created a Special User/Dealer Return Sample Package in Microsoft Excel where transactions can be entered to the schedules, and the schedule totals carry to the cover sheet. The tax computation is also performed by the workbook.

Q. What are Delaware Fuel Tax Rates?

A: The excise tax rate for Motor Fuel (Gasoline, Gasohol and Aviation Gasoline) is $0.23 per gallon. The excise tax rate for Special Fuel (all other fuels placed into a licensed motor vehicle in Delaware) is $0.22 per gallon.

Q. How does Delaware determine a taxable gallon of fuel?

A: The Delaware tax is calculated based on gross gallons for both gasoline and special fuels.

Q. Is Jet Fuel taxable in Delaware?

A: No, Delaware does not tax jet fuel.

Q. Why is some diesel fuel dyed red?

A: The Internal Revenue Service enacted a program of placing red dye into diesel fuel, to identify fuel on which Federal excise taxes have not been paid. The State of Delaware recognized the non-taxable designation of the red dyed diesel fuel by enacting dyed diesel fuel law (Title 30 Delaware Code, Chapter 51, Subchapter II, Section 5140). As a result, transactions involving the sale and/or purchase of Special Fuel containing evidence of red dye are generally exempt from the State of Delaware Special Fuel excise tax. Since the red dyed fuel does not contain Federal or State excise taxes, it cannot be placed into the fuel supply tank of the propulsion engine of a licensed (or subject to be licensed) vehicle.

Q. Does Delaware tax dyed diesel fuel?

A: No, Delaware does not tax dyed diesel fuel unless it is used in a taxable manner in vehicles used over the road. Only special exceptions to dyed fuel use in over the road vehicles is permitted. Dyed diesel fuel is not required to be reported on the monthly special fuel supplier tax return unless it is used in a taxable manner.

Q. Does Delaware tax propane, compressed natural gas (CNG), or liquefied petroleum gas (LPG) if it is used in a motor vehicle operated over the road?

A: Yes. Delaware does tax these fuels as a special fuel if used in a motor vehicle operated over the road.

Q. Can I get a refund of the Delaware tax paid on clear diesel fuel used in off road equipment?

A: No. Delaware law does not have a refund provision for clear diesel fuel used in off road equipment. A dyed diesel fuel can be purchased without the Delaware tax from suppliers for this type of operation.

Q. Is an ethanol fuel blend of 85% ethanol and 15% gasoline (E-85) taxable?

A: Yes, Delaware considers E-85 as a special fuel and is taxed at a rate of 22 cents per gallon. This activity is reported on the special fuel supplier tax return.

Q. Can I pay the Delaware tax due by ACH?

A: Yes. It is not required to pay your monthly tax liability by ACH unless it exceeds $20,000; however, we encourage all of our customers to take advantage of this method of payment. If you have questions regarding paying your taxes by ACH, please contact us at (302) 744-2724.

Q. When are the Delaware Motor Fuel and Special Fuel Tax Returns due?

A: All Delaware Motor Fuel and Special Fuel Tax Returns must be filed by the 25th day of the next succeeding calendar month following the monthly period to which it relates. When the twenty-fifth day of the month falls on a weekend or state holiday, the due date of the report shall be the next following business day of the State. Reports and payment shall be considered to have been duly and timely filed if the report or payment is postmarked by the United States Postal Service on or before the due date.

Q. I no longer am doing business in Delaware as a Motor Fuel Distributor/Supplier/User/Dealer or will be selling my company. Do I need to notify the State of Delaware?

A: Yes. Notify the Division of Motor Vehicles in writing that you are no longer doing business in Delaware or the company has been sold. If you have questions, please contact us at (302) 744-2729.

Q. I had no reportable activity this month. Do I still need to file a tax return?

A: Yes. A tax return must be filed every month even if you have no activity until your license has been cancelled by the Division of Motor Vehicles. Check the "no activity" box on the tax return and submit by the 25th day of the next succeeding calendar month following the monthly period to which it relates.

Q. Can I file my tax returns online?

A: No. Delaware does not currently have a system to receive tax returns electronically online. An original tax return must be submitted by mail.