Governor Andrew M. Cuomo today announced the implementation of a change in state tax law that will benefit small business operators selling heating oil and certain highway diesel motor fuels. The change, signed into law by Governor Cuomo earlier this year, took effect this month.
"This administration is committed to creating a business-friendly setting in New York State, and this change contributes a positive step in that direction for fuel distributors," Governor Cuomo said. "By updating the State's fuel tax law we are addressing an unnecessary financial burden on small businesses."
Petroleum distributors generally buy a large volume of product and store it for extended periods of time in New York-based fuel terminals. Previously, distributors had to pay the appropriate fuel taxes at the time they purchased the fuel. Yet while fuel taxes were collected from the distributor at the time of the initial bulk purchase, the sale of fuel from distributor to consumer often does not take place until months later.
Under this change, fuel taxes will be collected from distributors when the product is loaded into a fuel truck and removed from the storage terminal.
"It's our hope that this amendment to New York's tax policy will help an industry that employs more than 32,000 people throughout the state," said Commissioner of Taxation and Finance Thomas H. Mattox.
"Our members applaud this change," said Thomas J. Peters, Chief Executive Officer of the Empire State Petroleum Association (ESPA), a trade association representing 300 petroleum marketers throughout New York. "Before, the distributor had to pre-pay all that tax upfront, but couldn't collect it until a sale was made, which might be many months down the road. It's a question of improving a business's cash position -- and this is a cash flow victory."
ESPA estimates that petroleum marketers provide heating oil service to more than 2.6 million households in New York, as well as supplying gas and diesel fuel for the 8.4 million registered automobiles and 1.3 million trucks and buses in New York.
For more information please see the Tax Department's Memorandum on this change.