Dear Mr. Solomon:
This letter responds to Notice 2005-4 as it relates to the treatment of credit card purchases ofgasoline by exempt entities. In Notice 2005-4, Treasury stated:
(ii) Sales on oil company credit cards.-Under the rules in effect prior to 2005, a salecharged on an oil company credit card issued to an exempt person is not considereda direct sale by the person actually selling the gasoline to the ultimate purchaser (i.e.,the person selling the gasoline is not the ultimate vendor) if the person actuallyselling the gasoline receives a reimbursement from the oil company based on a pricethat excludes the tax. Treasury and the Service are considering whether this rule hascontinuing applicability under new § 6416(a)(4) but, while considering the issue, willcontinue generally to apply the rule with respect to sales before March 1, 2005.
Therefore, in the case of a sale of gasoline before March 1, 2005, on an oil companycredit card issued to a state or nonprofit educational organization, the person thatactually paid the tax is treated as the only person eligible to make the claim under §§6402 and 6416.... Congress may wish to address this issue prior to March 1, 2005,and Treasury and the Service will assist Congress in designing an administrablealternative.
We hope this letter provides sufficient clarification of Congressional intent so that theTreasury Department can continue to administer these rules as in effect prior to 2005. The confereesto the American Jobs Creation Act ("JOBS Act") removed language from section 865 of the bill that would have changed the administration of refund claims for gasoline sales charged on a credit card.
By removing this language, the intent was to retain the pre-JOBS Act treatment of these claims and not to effect any changes with respect to sales on oil company credit cards. Our committees are continuing to investigate this area.
To the extent you conclude that a technical correction is needed to preserve the rules in effectprior to 2005 and currently in effect, we stand ready to work with you in crafting such language. Wewill facilitate the enactment of such technical legislation at the earliest opportunity.
We continue to review whether changes need to be made in this area to prevent erroneousclaims, including changes in the proper party to administer these claims on behalf of an exempt entity. In this regard, section 871 of the JOBS Act required that the Treasury report to our committees regarding Internal Revenue Service findings with respect to erroneous claims of taxexempt status for sales of taxable fuel and recommendations to address such erroneous claims. We would like to address this area in connection with the Highway Trust Fund reauthorization and urgeyou to provide us with the statutorily required report as soon as possible. If you cannot provide acomplete response, we request that you provide responsive information as it becomes available.
Sincerely,
Charles E. Grassley, Chairman Committee on Finance
Max Baucus,Ranking Member Committee on Finance
William M. Thomas, Chairman Committee on Ways and Means
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Source: Ranking Member’s News
