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Fuel Tax -- Quick Answers
Aviation Fuel Taxes
Aviation products included on the tax return
Only fuel is reported on the aviation fuel sales tax return, form DR 1510. The revenues generated from the state sales tax are transferred to the aviation fund as required by statute, [43-10-109(1) C.R.S.]. Tires, motor oil and other aviation items are reported on the
Retail Sales Tax Return (DR 0100)
Aviation Fuel Sales Tax Report
The entity who sells the fuel to the end user is responsible for remitting the aviation fuel sales tax.
Fuel flowage fees subject to sales or use tax
If sales or use tax is imposed on the sale, the fee is subject to state and/or jurisdictional taxes that apply to the sale. By statute, jet fuel or gasoline used for aviation can be subject to a fuel flowage (in-plane) fee imposed by the airport. This fee is part of the retail purchase price.
Jet fuel retailer, add or delete locations
Download a blank
Aviation Fuel Sales Tax Return (DR 1510)
and complete. Contact the Fuel Tax unit at 303-205-8205, option 2 or send a web message through the
site for jurisdictional codes and additional information.
Blended or Biodiesel Fuel
Biodiesel Fuel -- Definition
Biodiesel fuel is motor vehicle fuel that is produced from plant or animal products or wastes, as opposed to fossil fuel sources. Biodiesel is treated as a special fuel, and is subject to the fuel excise tax rate of $0.205 per gallon if it is clear and the Environmental Response Surcharge fee. Only the Environmental Response Surcharge applies if it is dyed.
Biodiesel -- Fuel type
Biodiesel is considered a clear special fuel because it can be used in vehicles without modification. As such, biodiesel is taxed at the special fuel rate of 20.5 cents per gallon unless it is sold to a licensed distributor, exported out of Colorado, sold to a government entity, or blended with dyed special fuel. The environmental response surcharge also applies unless the biodiesel is sold to a licensed distributor, exported out of Colorado, or sold to a railroad.
Diesel anti-coagulate additives fuel excise tax
Additives to diesel are subject to fuel excise tax if the diesel fuel can be used to propel motor vehicles on public highways.
Misuse of dyed diesel
IRS penalties for misuse of dyed diesel are $1000 or $10 per gallon for the first violation. See
IRS publication 4941
Report anti-coagulate diesel additives
When the additives are received, the receipt of those products should be reported on schedule 2 as blending components; if the additive has a specific code in COFTS, such as 076 for xylene or 199 for toluene, the specific code should be used.
Report blended fuel in COFTS
If you are blending fuel types, the initial receipt of the fuel(s) should be reported on a Schedule 2. The fuels to be blended should then be reported on Schedule 6 as a disbursement to yourself, with a mode of transportation of "BA" (book adjustment). Then the blended fuel should be reported on and other Schedule 2 with the mode of transportation as "BA".
Report blending biodiesel
Licensed blenders can blend biodiesel with dyed petroleum diesel up to the maximum federal allowance after withdrawal from the terminal rack. Blenders must have a Colorado blending license and a federal blending permit.
Tax-exempt dyed diesel reported on fuel distributor’s report
Dyed diesel, used for non-taxable purposes such as agriculture or construction equipment, is tax exempt. Dyed diesel is not exempt from the Environmental Response Surcharge fee, which is reported and remitted on the fuel distributor's report.
Colorado Fuel Tracking System (COFTS)
Accepted tax returns in COFTS
Once a taxpayer submits the return to COFTS, an acknowledgment email informing the taxpayer whether the return was accepted or rejected will be sent. If the file is rejected, the email will notify the taxpayer of the reason why. It is the taxpayer's responsibility to verify the correct email is reported under the acknowledgment section. In addition, the taxpayer must ensure the acknowledgment email from COFTS does not go to junk or spam mail.
COFTS, also known as the Colorado Fuel Tracking System, is a site that allows fuel distributors to file their monthly fuel tax report (DR 7050), as well as view previously filed reports.
New rates in COFTS
Once the alert is sent to all taxpayers, COFTS will update the XLS spreadsheet templates and the web entry form. Once the updated XLS templates are provided by COFTS, the taxpayer needs to enter a tax period on the return to calculate the correct tax rate and the correct ERS fee.
On-time fuel reports in COFTS
Once your return has been received, you will then be sent either an accepted or rejected email from the automated system. An "Accepted result indicates your return is being processed, as there are additional error checks which are performed on files once they are processed by the fuel tracking system. Always verify that you receive an "Accepted" email from the FOFTS system for the correct tax period. If you do not receive an "Accepted" notice within an hour, you may also verify your file was accepted by logging into your account at
. All past filings for your entity are available online. Only those files that are received AND accepted by the FOCTS system will be posted to your account. If you do not see the file was posted to your account, please contact the COFTS helpdesk for further assistance at 877-352-2586. Your filing must be "Accepted" by the due date to be considered filed on time."
One or more recipients when a report is rejected
Only the email listed under the acknowledgment section on the taxpayer's settings will receive notification in case a filing is rejected. Only one recipient can be notified by COFTS. If a taxpayer needs multiple recipients, they may set their email address to allow automatic forwarding to other email addresses.
Rejected tax returns in COFTS
Two reasons why returns can be rejected include taxpayers not using the current version of the XLS template or reporting activities for which they are not licensed.
Sending updates on reporting changes
An email alert will be sent to the email contacts under the taxpayer's COFTS login settings. Also, a PDF version of the letter will be available on the COFTS website under newsletters.
Setting up fuel tracking system (COFTS)
Upon processing of the fuel distributor license application packet, the department will forward the COFTS Electronic Trading Partner Agreement to the COFTS Fuel Tracking Center. They will process the request and send a fax to the taxpayer. An electronic signature will be provided by COFTS along with a login and password, if none were requested on the trading partner agreement by the taxpayer.
Fuel Distributors Taxes
Application sent in
Once an application is sent in allow at least six weeks to receive your license before you start operations.
Close fuel distributor license
The Colorado fuel distributor license is perpetual until notification from the taxpayer is received by the Department of Revenue. In order for the Department to close a fuel distributor license, the following steps must be taken:
Written correspondence, including the Colorado account number, name, and authorized signature, requesting the fuel distributor account be canceled, must be submitted by the taxpayer. This must be received by the end of the month in which the fuel distributors wish to cancel their license.
In addition to the above written request, the taxpayer must surrender the fuel distributor license originally issued.
After the license has been canceled by the department, the taxpayer must make sure that all monthly fuel tax filings, up to the period in which the account was closed are completed with correct payments of all fuel tax liabilities.
As a Colorado fuel distributor, do we need to report fuel transactions to the State of Colorado on fuel that is purchased from us but the transportation fee is paid to the carrier by our buyer
It is the responsibility of Colorado Fuel Distributors to report all fuel distribution activity on your monthly COFTS filing.
Fuel distributor report due
The filing deadline for any given month is the 26th day of the following month; unless that day falls on a legal holiday or a weekend, then the following business day will be considered the legal deadline.
Fuel distributor’s payment
By law, the fuel tax payments must be remitted via Electronic Funds Transfer (EFT). These payments must be filed and completed before 4 p.m. MST on the date the return is due. Fuel distributors can make payments online under the Electronic Payment page on Revenue Online or by telephone at 1-877-COLOEFT (1-877-265-6338).
Licensed to supply fuel to tax-exempt foreign entity
Statute 39-27-104 C.R.S. requires all distributors and suppliers be licensed.
Fuel Tax Information
Environmental Response Surcharge (ERS) and Liquefied Petroleum Gas (LPG) and Natural Gas (NG) inspection fee
The Environmental Response Surcharge is collected on Special Fuel and Gasoline. It is not collected on aviation fuel, fuel sold to railroads, or fuel exported from Colorado. Fees collected from ERS are deposited into the Petroleum Storage Tank Fund in order to reimburse owners for incurring expenses involved in the cleaning of underground and above ground storage tanks. Likewise, the LPG and Natural Gas Inspection Fee is collected on Liquefied Petroleum Gas and Natural Gas gallons sold by manufacturers and distributors of LPG and Natural Gas fuels. The inspection fee is not charged for LPG and Natural Gas shipments exported from Colorado. Fees collected from the inspection fee are deposited into the LPG and Natural Gas inspection Fund for inspections of newly installed and existing facilities and for investigations of accidents related to gaseous fuels.
Fees for Environmental Response surcharge/LPG inspection surcharge
The monthly ERS fee can vary depending on the amount of money in the Petroleum Storage Tank Fund. The rate can range from $50 to $100 per truck load. The LPG and Natural Gas Inspection Fee is $10 per tank truckload. A tank truckload is defined as 8,000 gallons or 8,000 gallon equivalents. The ERS fee is currently $.0125 per gallon. The LPG and natural gas inspection fee is $.00125 per gallon.
Fuel products subject to ERS surcharge
Per statute 8-20-206.5: gasoline, blended gasoline, gasoline sold for gasohol production, gasohol, diesel, biodiesel blends, special fuels and special fuel mixes with alcohol.
Fuel products subject to LPG/Natural Gas Inspection fee
Per statute 8-20-206.5: liquefied petroleum gas, liquefied natural gas and compressed natural gas.
Responsibility for collecting and remitting fees
Colorado licensed fuel distributors are responsible for remitting the ERS, and LPG and Natural Gas Inspection Fee to the State of Colorado. The amount(s) due are calculated on a fuel distributor's fuel tax return (DR 7050) through the COFTS Electronic Monthly Filing. Payment is due by the 26th of the following month, at the same time the return is due. If the due date is a weekend or a legal holiday, then the following business day is the due date. The return and payment are submitted electronically each month
International Fuel Tax Agreement (IFTA) -- Quick Answers