October 26, 2016
NJ PETROLEUM GROSS RECEIPTS TAX RATE INCREASE- UPDATE
The State of New Jersey is raising the NJ Petroleum Gross Receipts Tax (PGRT).
It is to be increased by 12.85% of the surveyed average pre-tax price for fuel in the state as of 7-1-2016. This increase will be on top of the $0.0400 per gallon currently being charged for the NJ PGRT.
For gasoline the increase to the PGRT will take place on Nov. 1st, raising the tax on gasoline by an estimated $0.2260 per gallon (final rate pending announcement from NJ Division of Taxation). This rate increase will be in addition to the $0.0400/gal NJGRT previously in effect. The rate is reported to be adjustable, changing as frequently as quarterly, as determined by periodic surveys of the statewide pricing by the Board of Public Utility. Additionally there is language in the bill indicating that for gasoline sales, the pre-existing $0.0400/gal PGRT rate will be raised to $0.0800/gal on or after 7-1-2017, effectively raising the tax an additional $0.0400/gal.
For resellers only, this increase will also be applied to ‘floor stocks’, fuel volumes held in inventory. Resellers will be required to- (1)take their inventory volume as of the close of the first business day after the enactment, (2)report their inventory to the state within 45 days on forms yet to be defined, and then (3) remit to the state the increased tax levied on their fuel in inventory by 2-1-2017. Tanks over 10,000 gallons are to exempt the first 400 gallons and similarly the first 200 gallons for smaller tanks.
NJ Tax Div. of Taxation has confirmed that the floor tax is only to be applied to fuel resellers. Previous discussions of the floor tax with the NJ Tax Div. of Taxation had indicated that it would be applied to all holders of inventory, but that point has now been clarified.
The increase on the PGRT for ‘clear’ highway diesel will been broken into 2 parts- applying 70% of the increase (estimated at $0.1600/gal.) on Jan. 1 2017, and then the remaining 30% of the increase (estimated at $0.0700/gal.) on Jul. 1 2017. Details are pending from the state Tax Dept. Stocks are expected to be ‘floor taxed’ at both implementation dates. This rate will also be adjusted as frequently as quarterly thereafter.
OFF ROAD DIESEL & HEATING OIL
NJ PGRT will no longer apply to most uses of off-road diesel (including- farm equipment, construction equipment, generators and most commercial fishing vessels). The exemption of commercial heating oil from NJ PGRT is pending confirmation from the state at this writing. Residential heating oil uses will continue to be exempted.
OTHER PETROLEUM PRODUCTS
The law raises the tax on other petroleum products like lube oils to 7% from 2.75%
It is expected that operators of exempted systems like commercial fishing vessels, ambulances etc that use gasoline or clear ULSD will be required to pay the new PGRT taxes at time of purchase and then later file with the state for a refund of the PGRT.
We are awaiting further clarifications from the NJ Dept. of Taxation and will update this page as new information is made available. Many thanks to the people at the NJ Division of Taxation people & The Fuel Merchants Association of New Jersey for their efforts keep us informed on the progress and details of this new legislation.
Click the link below for a complete copy of the law.