REGULATION 39-27-103 GASOLINE AND SPECIAL FUEL TAX (1) Definitions (a) Account Percentage – The percentage of taxable fuel used for purposes other than the operation of a motor vehicle upon the highways of this state, assigned to an individual refund account. Account percentages are established by using either the Account Historical Average, Industry Segment Historical Average or Industry Standard.

(b) Account Historical Average – The average percentage of historical non-highway fuel use data used to reflect a business’ cyclical or seasonal operation. The Account Historical Average is determined by the average of the historical non-highway fuel use data of an existing account during the period of April 1, 1999 through June 2000.

(c) Industry Segment – A group of companies or businesses in an industry involved in the same business activities and processes using similar vehicles and equipment to provide services or products to customers.

(d) Industry Segment Historical Average – The percentage derived from the historical non-highway fuel use filing data of established accounts. This average will be assigned to new accounts without any previous historical filing data in the industry segment, which the new account is most closely associated.

(e) Industry Standard – The percentage proposed by an industry and derived from identical or similar industries or other state’s studies. The percentage will be used as the Account Percentage for new accounts in an industry.

(f) Refund Account – An account established for individual, company, or corporate business to claim refunds for exempt use of fuel.

(2) Identification of and Establishment of Industry Segments Industry Segments may be established in one of the two following ways: (a) Industry segments will be identified and established using information received from established refund account holders.

(b) An industry segment can be established by supporting documentation in tests or studies completed by a nationally recognized industry group or organization, or state. (3) Establishing an Industry Segment Percentage The industry segment percentage will be established based on historical filing data on previously established refund accounts or from data provided in an industry segment proposal, which has been approved by the Colorado Department of Revenue.

(4) Procedures and Documentation for an Industry Standard Proposal (a) The Industry standard proposal will include a reasonable representation of companies in the specific industry segment, a definition of the segment, a description of the segment’s business and typical equipment used in conducting business. The studies must include documentation to support the percentage proposed. Upon review and approval by the Department of Revenue, the percentage will be added as the “Industry Standard Percentage” . The approved Industry Standard Percentage will be assigned to companies in the industry segment electing to be in the segment. (b) Required Proposal Documentation:

I. Outline the rationale for the method used to determine an industry percentage for equipment, vehicles, fuel use, and typical business operations for the segment. II. Identify typical equipment used, operations, and seasonal or cyclical events that might affect business operations.

III. Explain the measuring method used and the application to typical business equipment and operations. Information and testing results provided by a manufacturer will be considered for explanation of the measuring method and percentage derived. IV. Provide fuel records and data used to determine exempt and non-exempt fuel. Records and data may include total fuel used and consumed or mileage records. V. Period of Time for Study or Test – Will include a period covering cyclical or seasonal impacts to cover low and high points of fuel usage for exempt or non-exempt purposes, or reasonably document seasonal/cyclical variations do not apply to their business. (5) Establishment of the Account Percentage and Utilization of the Industry Segment Percentage An Account Percentage will be assigned to each refund account. Refundable gallons will be calculated by multiplying the account percentage times the gallons purchased for use by the business. (a) New applicants, without a filing history, applying to establish a new refund account, will be assigned the established Industry Segment Percentage.

(b) Change in business operations by an established account – Documentation must be submitted to show the business change, change in equipment, and the change in operations. Documentation must include actual records for a year, to account for cyclical or seasonal change affecting the business when applicable. The data must include accurate information for the actual use of fuel, include equipment records and use, and provide actual mileage over the road, miles per gallon, and include inventory records of fuel and equipment.

(6) Protests of the Industry, Industry-Segment, or Account Percentage (a) An exempt fuel refund applicant may file a protest with Taxpayer Service – Fuel and Mileage Unit if the applicant disagrees with the Industry, Industry-Segment, or Account Percentage assigned to the applicant. Supporting documentation must be included with the protest for consideration of a change to the Industry, Industry-Segment, or Account Percentage. Protests that are submitted without supporting documentation will be disapproved.

(b) Supporting documentation for protests of the assigned industry, industry-segment or account percentage must include sufficient data to support an alternative percentage. The data must include actual information for total, exempt, and nonexempt fuel purchased and used, total mileage over the road, miles per gallon, equipment and vehicle use, and inventory records of fuel and equipment. The data must include accurate information for a minimum of one year to account for cyclical or seasonal operations when applicable. The data must support the alternative percentage.

(c) Subsequent appeal procedures will be handled under the provision of §39-21-104 CRS and §39-21- 105 CRS.

(7) Qualifying Fuel (a) The effective date to claim refunds using a percentage is July 1, 2000. All fuel purchased prior to July 1, 2000 should be claimed on the old refund claim forms in use prior to July 1, 2000. (b) Invoices for less than twenty gallons of fuel will qualify for a refund and can be included with the refund claim, if the total refundable gallons on a claim form exceed 20 gallons. (c) Gallons reported included with total gallons purchased for business use must be gallons on which the Colorado motor fuel excise tax was paid. Red dyed diesel, fuel purchased in another jurisdiction, or fuel purchased tax exempt does not qualify.

(8) Invoice Requirements and Record Retention for Gasoline and Special Fuel (a) Claims for refund shall be postmarked no later than twelve months after the purchase of the fuel. Invoices are the delivery tickets issued at the time of sale and delivery. Billing invoices prepared later are not acceptable unless accompanied by a receipt delivery ticket. Invoices must be retained for a period of three years from the date of purchase of fuel or the date of the refund claim filing for the fuel purchased, whichever is later. These invoices must be available for audit and upon request by the Colorado Department of Revenue. (b) Invoices must show the following information:

I. Dealer’s name and address, and address of delivery.

II. Purchaser’s name and address.

III. Correct date of sale and delivery as to month, day, and year. IV. The kind and quantity of gasoline or special fuel sold. V. Price per gallon of gasoline or special fuel, the total amount of Colorado tax, and total amount paid.

(c) Electronic invoices are acceptable if the same information for items (I – V) are included on an electronic invoice.

(9) Exempt Use of Fuel Fuel used in vehicles licensed and plated for on road use in the state of Colorado does not qualify as exempt use of fuel. In the calculation for an industry percentage for exempt fuel use the fuel is treated as taxable use. The only exception is fuel used as a power source for a qualifying exempt purpose other than powering the vehicle over the road. The fuel must have been accounted for in the industry percentage proposal approved by the Colorado Department of Revenue, or with utilization and pursuant to this regulation.