MOTOR FUEL TAX ‑- AVIATION GASOLINE ‑- EXPORT REPORTS.
Notwithstanding failure to supply export certificates and tax exemption claims, an exporter is not subject to the tax penalty unless additional information is required by the director of licenses and refused.
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January 12, 1953
Honorable Della Urquhart
Director of Licenses
Olympia, Washington Cite as: AGO 51-53 No. 458
We acknowledge receipt of your request for an opinion of this office based upon an audit made by the Liquid Fuel Tax Division of the License Department of the books of an importer and distributor of motor vehicle fuel in this state and in which it was revealed that large quantities of aviation gasoline have been handled as "export transfers" from this state to Portland, Oregon and to British Columbia. The first question you ask is whether such transactions are taxable and if so:
"(1) If the delivery of the fuel is determined by the Attorney General to be a Washington sale, may the purchaser still claim a refund of the tax under Section 18, although the statutory period for filing the claim has expired?
"(2) If the delivery of the fuel is determined by the Attorney General to be an export sale by the distributor, may the Director under Section 13 or any other provision of the Motor Fuel Tax Law grant a tax exemption to the distributor although the statutory period for claiming exemption and filing an export certificate (Section 17) has expired?"
Our conclusions are: [[Orig. Op. Page 2]] (1) An export transfer must be to a branch of the distributor outside the State of Washington; otherwise, an export certificate and claim for tax exemption must be supplied as required by law.
(2) The tax on aviation gasoline exported without execution of export certificate does not appear notwithstanding failure to report within sixty days unless the distributor fails or refuses to supply additional information.
(3) Since the tax does not apply unless additional information requested is not supplied, the director does not grant an exemption from the tax.
It appears that during 1948 and 1949 aviation gasoline which had been imported to this state by the Shell Oil Company and delivered to its storage tanks where it was later shipped at various times to the storage facilities of an aviation company at Portland, Oregon and to storage facilities of the Shell Oil Company of British Columbia, in Shelbourne, British Columbia. The reports of the Shell Oil Company reported such movements as export transfers but no certificates or tax exemption claims were ever filed with the director of licenses. There is no doubt that the fuel came to rest in this state and became subject to our laws.
The term "export transfer" is one which has been used by motor vehicle fuel distributors in this state to represent the shipment of said fuel to facilities of said distributors elsewhere and are not taxable. Furthermore, an analysis of the motor fuel tax law from 1932 until the present reveals that the problem has been that of preventing evasion of the motor fuel tax which is based primarily upon the highway use theory and numerous orders and regulations have been issued by the various directors of licenses to eliminate such evasions occurring by reason of such fuel starting on an export shipment and being diverted in this state.
Aviation gasoline has always been excepted from this type of tax and despite numerous amendments to the law, said exemption has been specifically retained.
The exemption for exports of motor fuel is found in RCW 82.36.230 and provides that such petroleum products exported from the state or sold by a qualified distributor to distributors outside the state or to aviation gasoline dealers or [[Orig. Op. Page 3]] users, but reports shall be made on all of such exports on forms as directed by the director of licenses. An export certificate is required to be supplied under oath together with details as required by the director and must be completed and filed within sixty days after the end of the calendar month in which the shipments were made. The section states further:
"* * * The director may demand of any distributor such additional data as are deemed necessary by the director in support of any such certificate, and failure to supply such data will constitute a waiver of all right to exemption claimed by virtue of such certificate."
It is thus apparent that the exemption of aviation fuel from the tax applies unless the distributor fails to supply the required additional information requested by the director of licenses. Although said distributor, in the words of the act, must supply said certificate and make the exemption claim, the penalty, namely imposition of the tax, does not apply unless the certificate is not filed and additional information requested is not supplied. Inasmuch as our courts are not prone to invoke such heavy penalties in relation to this act, we doubt that interpretation of the word "must" would mean that the penalty does not apply unless the distributor affected refused to supply all information validly requested by the director.
It is, therefore, our opinion that the penalty, namely imposition of the tax which otherwise would not apply, does not follow mere failure to file a certificate within the sixty day period.
The information reported discloses that the sales were sales in Washington according to the usual tests and the use of an export transfer to the aviation company in Oregon was clearly erroneous. The transfer to the Shell Oil Company of British Columbia may have been to a subsidiary of the distributor, but since it appears to have a separate legal entity the appropriate export certificates should have been executed notwithstanding earlier regulations of the License Department recognizing subsidiaries as branches of the distributor.
Specifically answering your questions, after examining the bills of lading and other supporting papers it appears to this office that the sale to the Oregon [[Orig. Op. Page 4]] aviation company was a Washington sale, that export certificates and exemption claims should have been executed, but in the absence of refusal to supply additional information the failure to make the appropriate certificates within sixty days of shipment does not make them subject to the tax. As to the delivery to the Canadian corporations, in the absence of additional information it appears that this was also a Washington sale, but the tax is not applicable unless the distributor has failed or refused to supply the additional information required.
Very truly yours,
PHILIP W. RICHARDSON
Assistant Attorney General