Filing a Petroleum Tax Refund Claim

Minnesota's special fuel tax law requires the first licensed distributor receiving undyed diesel fuel or undyed kerosene to pay the special fuel excise tax. Minnesota's law is consistent with the federal dyed fuel program.

Distributors can, however, receive a credit for the tax paid on the following tax free sales of undyed diesel fuel or undyed kerosene on their monthly special fuel return:

• Sales of fuel for residential heating
• Sales of fuel to the U.S. government
• Exports of fuel out of Minnesota for product consigned to this state

On the above sales only, licensed distributors may claim the credits based on the current filing requirements. Unlicensed distributors may claim tax free sales by using the Form PDR-1, Minnesota Motor Fuel Claim for Refund. Refund claims may be filed anytime within one year of the sale.

All PDR-1 refund claims must be filed for the whole month being claimed. A separate claim is required for each and every month in which you have a qualifying sale or purchase. Only one claim is allowed per period so if you have multiple qualifying purchases or sales they must be combined on a single form. If corrections to the original claim are necessary, an amended claim must be filed.

Retail service stations must charge the special fuel excise tax on all sales of undyed diesel fuel and undyed kerosene, except in the following situations:

• Undyed diesel fuel sold for exclusive use in a truck refrigeration unit (reefer fuel)
• Undyed kerosene sold from a blocked pump (as defined by IRS regulations) and placed in tanks not used to propel a motor vehicle

To receive a refund of tax paid on the above sales, the retail station operator must complete Form PDR-1, Minnesota Motor Fuel Claim for Refund. Refund claims may be filed anytime within one year of the sale.

For all other undyed fuel sales or purchases, the ultimate end user is responsible for applying for a refund if the fuel is used for a qualifying off highway purpose. In all cases, refund claims must be supported by original sales tickets.

Recordkeeping

Although it is not necessary to be licensed or file a monthly tax return, retail service stations and bulk purchasers must maintain complete records for at least 3 1/2 years.

If the claim is for fuel purchased from a retail service station, you must keep the original sales ticket to verify the claim.

Original sales tickets must have:

• Name and address of dealer or retail station
• Number of gallons purchased, price per gallon, type of fuel
• Description or unit number of vehicle
• Name and address of purchaser
• Dollar amount of sale
• Rate and amount of motor fuel excise tax charged, or a statement that explains Minnesota tax is included in the price
• Date of purchase

The department will accept alternative records for fuel purchased, including computer or electronically generated listings, as long as they clearly provide the necessary information.

Tax Free Sales

A common misconception is that if the gasoline is used for off highway use or is used in a non-licensed piece of equipment, it can be sold tax free by distributors as a farm sale. This is not always the case. For example, the gasoline used in a tractor that is not used on a farm is not eligible as a tax free farm sale. Also, gasoline sold to the following businesses do not qualify for tax free sales from distributors:

• Golf courses
• Construction companies
• Marinas
• Ag tiling companies
• Nonprofit organizations
• Grain elevators
• Cemeteries
• Landscapers
• Game refuges

While gasoline cannot be sold tax free for use in the examples provided above, distributors may inform purchasers that they may be eligible for a refund on the tax paid if the fuel is used off highway for a business purpose. The purchaser would use Form PDR-1, Minnesota Motor Fuel Claim for Refund to claim the refund.

Note: The fact that gasoline may be subject to a refund is not a reason to sell the gasoline tax free.

Tax paid on fuel used in a licensed motor vehicle is not refundable.

• Any gasoline powered vehicles using Minnesota roads and highways must pay the excise tax (M.S. 296A.07)
• All licensed motor vehicles powered by special fuel are subject to the petroleum excise tax (M.S. 296A.08)
• A licensed motor vehicle is defined as a vehicle that is subject to Minnesota registration (M.S. 296A.01, subd. 29)

Sales Tax

The fuel on which the motor fuel tax has been refunded under this law may be subject to Minnesota sales and use tax. Please see Petroleum Products (Sales Tax Fact Sheet 116) for additional information.

Tax paid on gasoline or special fuel used to operate a power takeoff unit (PTO) or auxiliary engine fueled from the same supply tank as the highway vehicle is refundable. The refund claim is based on only the fuel consumed by the PTO or auxiliary engine.

Note: Fuel consumed during idling time is not eligible for refund.

Reporting Requirements

To claim a refund, complete Form PDR-1, Minnesota Motor Fuel Claim for Refund and attach the Form PDR-1 PTO, Power Takeoff Worksheet. Use the Power Takeoff Worksheet to calculate the PTO gallons claimed on the claim. Claims must be filed within one year of the date of purchase to qualify. All refund claims must have the original sales ticket, bulk fuel invoices, or a signed dealer affidavit available for audit at the taxpayer's location.

All PDR-1 refund claims must be filed for the whole month being claimed. A separate claim is required for each and every month in which you have a qualifying sale or purchase. Only one claim is allowed per period so if you have multiple qualifying purchases or sales they must be combined on a single form. If corrections to the original claim are necessary, an amended claim must be filed.

If the claim is for fuel purchased from a retail service station, you must keep the original sales ticket to verify the claim.

Original sales tickets must have:

• Name and address of dealer or retail station
• Number of gallons purchased, price per gallon, type of fuel
• Description or unit number of vehicle
• Name and address of purchaser
• Dollar amount of sale
• Rate and amount of motor fuel excise tax charged, or a statement that explains Minnesota tax is included in the price
• Date of purchase

The department will accept alternative records for fuel purchased, including computer or electronically generated listings, as long as they clearly provide the necessary information. If you are a company that has business in multiple states you may use your IFTA report as an acceptable backup for your PTO worksheet. For additional information, please see the guidelines for using your IFTA report.

If the claim is for fuel withdrawn from your tax-paid bulk storage, detailed disbursement records must be kept.

You should include all of the following:

• Date of disbursement
• Number of gallons withdrawn
• Description of PTO unit or auxiliary engine

Hubometers (Hub Meters)

A hubometer measures the actual road mileage of a vehicle. A claim for refund may be based on information provided from a hubometer or odometer and calculated miles per gallon. This information is used to determine the PTO gallons while the vehicle is stationary.

Refund Calculation

You can determine the amount of fuel subject to refund by either using the allowable percentage method or an alternate method. Whichever method you use, you must meet the recordkeeping requirements.

Allowable Percentage Method

The department has determined percentage amounts that represent the fuel used by the PTO unit. These percentages are based on the type of PTO unit and are applied against all the fuel in the supply tank of the motor vehicle to which the PTO is attached. The PTO worksheet details these percentages. Enter the total amount of fuel placed in the motor vehicle on the applicable line and multiply that total by the percentage to arrive at the fuel eligible for refund.

Alternate Method

You may choose not to use the straight percentage if you can provide accurate records and documentation to substantiate the refund claim. To use another method of calculation, you must receive written approval from the department in advance.

Sales Tax

The fuel on which this motor fuel tax has been refunded under this law may be subject to Minnesota sales and use tax. Please see Petroleum Products (Sales Tax Fact Sheet 116) for additional information. 

A refund of the Minnesota motor fuel excise tax is available when tax paid biodiesel (B100 or B99) is blended with dyed diesel fuel and is used for a nontaxable purpose. Gallons of undyed biodiesel blended with dyed diesel fuel should be accumulated monthly and a refund claim should be submitted to receive your refund. The refund should be claimed by filling out Form PDR-1, Minnesota Motor Fuel Claim for Refund and mailing it to the address shown on the form.

The blending of tax paid biodiesel with dyed diesel fuel should only take place to meet the biodiesel mandate set forth by Minnesota Statute 239.77. The amount of biodiesel being used and refunded should represent the proper percentage required by this biodiesel mandate.

All PDR-1 refund claims must be filed for the whole month being claimed. A separate claim is required for each and every month in which you have a qualifying sale or purchase. Only one claim is allowed per period so if you have multiple qualifying purchases or sales they must be combined on a single form. If corrections to the original claim are necessary, an amended claim must be filed.

The commissioner shall allow a refund on the tax paid on undyed kerosene used exclusively for a purpose other than as fuel for a motor vehicle using the streets and highways. To obtain a refund, the person making the sale to an end user must meet the Internal Revenue Service requirements for sales from a blocked pump (Minn. Stat. 296A.16, Subd.4).

Registered Ultimate Vendor (Blocked Pump)

An ultimate vendor is a person who meets the requirements of the Internal Revenue Service and sells undyed kerosene from a blocked pump.

A credit or refund may be allowable to a registered ultimate vendor (blocked pump) if the vendor sold undyed kerosene from a blocked pump for use other than as a fuel in a diesel powered licensed vehicle and the vendor had no reason to believe the kerosene would not be used in that matter.

Blocked Pump

A blocked pump is a fuel pump that meets all the following requirements:

• The pump is used to make retail sales of undyed kerosene for use by the buyer for any nontaxable use
• The pump is at a fixed location
• The pump is identified with a legible and  clearly visible notice stating, "Undyed Untaxed Kerosene, Nontaxable Use Only"
• The pump meets either of the following requirements:
  • The pump cannot reasonably be used to dispense fuel directly into the fuel supply tank of a licensed vehicle or train
  • The pump is locked after each sale and unlocked upon the buyers request for nontaxable kerosene

This refund is claimed on the Form PDR-1, Minnesota Motor Fuel Claim for Refund and must be completed and mailed to the address on the form.

All PDR-1 refund claims must be filed for the whole month being claimed. A separate claim is required for each and every month in which you have a qualifying sale or purchase. Only one claim is allowed per period so if you have multiple qualifying purchases or sales they must be combined on a single form. If corrections to the original claim are necessary, an amended claim must be filed.

When motor fuels are contaminated while in the possession of a dealer, the distributor who paid the Minnesota tax on the fuels may claim a refund with proper documentation.

A contamination occurs when fuel is destroyed or comingled, resulting in a product that no longer meets state specifications. This includes accidental mixtures of petroleum products that occur at bulk plants, service stations or in tank trucks and truck transports.

The tax will be refunded to the licensed distributor who filed the return and paid tax on the contaminated fuels.

Reporting Requirements

To claim a refund, send a letter to the department's Petroleum Tax Unit with details of the accident. It should include:

• Copies of the Bills of Lading of the products that were destroyed, or comingled
• Inventories before the accident occurred
• Any driver statements pertaining to the accident or any other details that may substantiate the claim
• Any documents relating to the return of the destroyed fuel to the terminal or other facility

Submit claims by email to petroleum.tax@state.mn.us, or by mail to

Minnesota Department of Revenue
Petroleum Tax Unit
Mail Station 3333
600 N. Robert St.
Saint Paul, MN 55146-3333 

Excise tax paid on gasoline or special fuels is refundable to the end user if used for qualified purposes or used in a manner that is exempt under Minnesota Law (M.S. 296A.07 subd. 4 and M.S. 296A.08 subd. 3).

Qualified Purposes

There are seven Minnesota Statutes under which a transit and ambulance refund may be claimed:

1. M.S. 144E.10- Ambulance service providers licensed with the Emergency Medical Ground Services Regulatory Board. These providers are eligible for refund of all state motor fuel and special fuel excise taxes paid for and used in their ambulance.
2. M.S. 144E.12- Ambulance air service providers licensed with the Emergency Medical Air Services Regulatory Board. These providers are eligible for refund of all state motor fuel and special fuel excise tax paid for and used in their air ambulances.
3. M.S. 174.24- Any public or private operator of a transit system that is contracted to and receiving financial assistance from the Minnesota Department of Transportation in  the Public Transit Participation Program is eligible for refund of all state motor fuel and special fuel excise taxes that were paid. The refund is only for fuel used in vehicles that actually provide transit services. This program is only for transit providers outside the Twin Cities metropolitan area.
4. M.S. 473.384- Any public or private operator of a transit system that is contracted to and receiving financial assistance from the Metropolitan Council to provide transit services within the metropolitan area is eligible for the refund of all state motor fuel and special fuel excise taxes that were paid. The refund is only for fuel used in vehicles that actually provide transit services. This program is only for transit providers within the Twin Cities metropolitan area.  
5. M.S. 256B.0625, subd. 17- Medical transportation provided by a special transportation services provider or common carrier recognized by and receiving reimbursement from the Minnesota Department of Human Services (DHS) is eligible for a refund of state motor fuel and special fuel excise taxes that were paid commensurate with the reimbursement procedure used by the DHS. DHS reimburses under this statute only for mileage while actually providing transportation, not when the transit vehicle is en route to pick up passenger(s), commonly referred to a loaded miles.
   No Load Miles: ATS and STS miles driven without the recipients in the vehicle. Considered an excluded costs of transportation. These are not reimbursable miles and cannot be billed to the recipient.
6. M.S. 296A.07 subd 3(2) /  M.S. 296A.08 subd. 4(2) - Providers of transportation to recipients of medical assistance home and community-based services waivers enrolled in day programs, including adult day care, family adult day care, day treatment and habilitation, prevocational services and structured day services
7. M.S. 296A.07 / M.S. 296A.08 subd. 4(4)-  Providers of medical or dental services by a federally qualified health center, as defined under title 19 of the Social Security Act, as amended by section 4161 of the Omnibus Budget Reconciliation Act of 1990, with a motor vehicle used exclusively as a mobile medical unit.

How to Apply

To apply for this refund use the Minnesota Revenue Form PDR-1T, Transit and Ambulance Claim for Refund.

For those filing under M.S. 144E.10, 114E.12, 174.24, 296A.07 subd. 3 (2)/(4) , 296A.08 subd. 4 (2)/(4) or 473.384, simply enter the number of gallons of gasoline and/or special fuel used during that month in eligible vehicles, and multiply that amount by the appropriate tax rate as shown on page 2 of the form. Then you must add the total for gasoline and special fuel to determine the amount of the refund.

For those filing under M.S. 256B.0625, subd. 17, use the worksheet on page 3 of the form first. A separate page 3 should be used for gasoline and special fuels, if you are filing a claim containing a refund request for both fuel types. Using your claims for reimbursement from the Department of Human Services, total the loaded miles of medical transportation provided by each of the categories of vehicles listed, multiply the number of miles by 1.5 and then divide by the miles per gallon, as listed, to derive the number of gallons for each type of vehicle. Add the vehicle subtotals together to arrive at the total number of gallons to be carried back to page one. On page one, you will multiply the total gallons by the appropriate tax rate and then add the gasoline and special fuel subtotals to determine the total refund.

Note: Your submittal to the department should include, at a minimum, page 1 of the PDR-1T form, all page 3 worksheets used to figure your refund if you are a 256B.0625 subd.17 qualifier, and a detailed list of all vehicles in which the fuel was used. It is not necessary to include fuel purchase receipts or a breakdown of fuel used by each vehicle.

Each form submitted for a refund can cover ONLY a ONE month period. You can submit forms for more than one month at a time. Please keep in mind if you fail to report your claims properly, this may delay you from receiving your refund timely.

Recordkeeping

Keep copies of your forms and equipment lists, as submitted, along with all supporting documentation for at least 3 1/2 years from the date you mailed in your refund claim. Supporting documentation includes all fuel purchase receipts, bills of lading, licensing and contracting documents related to the Statute under which your claim was made, and copies of all reimbursement requests provided to the Department of Human Services, if applicable. It is very important that you keep these records as the Petroleum Unit does audit refund claims and lack of substantiating documentation can result in your claim being disallowed with interest and penalties being assessed.

If you purchased aviation gasoline or special fuel for use in an aircraft and you paid Motor Fuel Excise Tax at the time of purchase, you may qualify for a partial refund of the tax.

To qualify, you must have received, sold, stored, or withdrawn the fuel from storage for use in an aircraft. Fuel used in motor vehicles does not qualify for the refund.

This refund is available to:

• Dealers of aviation gasoline or special fuel for aircraft use and either pay Airflight Property Tax or is an aerial applicator with a Category B-general aerial license
• Aircraft owners who purchase gasoline for aviation use

To Claim a Special Fuel Dealers Refund

Aviation fuel dealers may apply for a partial refund of tax. The per-gallon refund amount varies, based on the number of gallons purchased during the calendar year.

To claim refund, complete Form PDR-1AV, Aviation Fuel Tax Claim for Refund. Then:

Licensed Special Fuel Dealers: Enter the refund amount on your monthly Special Fuel Tax Return. Keep Form PDR-1AV for your records.

Unlicensed Special Fuel Dealers: Mail the completed Form PDR-1AV to us. Use the mailing address at the bottom of the form. Keep a copy for your records. 

Note: You may file only one Form PDR -1AV each month for all qualifying sales or purchases during the month. To correct a previously filed form, file an amended claim on a new PDR-1AV and check the Amended Claim box at the top of the form.

To Claim a Customer Refund

Aircraft owners who purchase gasoline for aviation use may apply for a partial refund of the 28.5 cents-per-gallon excise tax on gasoline used to power their aircraft. To claim a refund:

• Mail a completed Form PDR-1AV, Aviation Fuel Tax Claim for Refund, to us at the address at the bottom of the form.
• Include a copy of FAA Form 337 stating that the aircraft can burn this type of gasoline.

Due Date

Your final claim for a calendar year must be filed on or before April 30 of the following the year.

Recordkeeping

Obtain an invoice for each fuel purchase regardless of the amount. Original sales tickets must include all of the following information:

• Dealer’s name and address
• Number of gallons purchased, price per gallon, and type of fuel
• Purchaser’s name and address
• Dollar amount of purchase
• Rate and amount of Motor Fuel Excise Tax charged or a statement that Minnesota excise tax is included in the price
• Date of purchase

We will accept alternative records for fuel purchased, such as computer or electronically generated listings, as long as they clearly provide the above information.

Aviation Gasoline

The tax rate on aviation gasoline is 5 cents per gallon.

“Aviation gasoline” means any gasoline that is used to propel internal a combustion engine aircraft. It includes gasoline that is either of the following: 

• Invoiced and billed as "aviation gasoline" that meets ASTM specification D910-16 or other ASTM specification for internal combustion engine aircraft.
• Sold to an aviation gasoline dealer for dispensing directly into the fuel tank of an aircraft.

Gasoline for Aviation Purposes

The tax rate on gasoline for aviation purposes is 28.5 cents per gallon (the full gasoline tax rate).  Aircraft owners may apply for a partial refund.

“Gasoline for aviation purposes” is any gasoline that can be used in certain aircraft, even though it does not meet ASTM specifications for internal combustion aircraft.

Distributors must always collect the full gasoline tax rate when selling this fuel, unless it is sold to a “dealer of aviation gasoline” at an airport for fueling aircraft.

IFTA Report

EIA Average Retail Fuel Price