Fuel Tax Assessment Affirmed 

Tax Alert

April 18, 2014

The Commonwealth Court affirmed on several grounds an assessment under the Liquid Fuels and Fuels Use Tax Act. Luther P. Miller, Inc. v. Commonwealth, No. 550 F.R. 2009 (Pa. Commw. Mar. 20, 2014). The Department of Revenue assessed the taxpayer for failure to pay Fuel Tax on taxable purchases.  In defense, the taxpayer raised three issues. The court rejected the taxpayer's argument that sales to bus operators that provided services to a school district were exempt from taxation as sales to political subdivisions, as addressed in 61 Pa. C.S. § 315.3. To qualify for the exemption, sales must be made directly to and placed in bulk storage facilities leased or owned by the political subdivision. The court relied on Crawford Central School District v. Commonwealth, 839 A.2d 1213 (Pa. Commw. 2004), aff’d in part, rev’d in part, 888 A.2d 616 (Pa. 2005), which held that purchases for the benefit of a school district did not qualify for an exemption for sales to a school district. The court further rejected the argument that Tableland Services was a political instrumentality or agency of the commonwealth. Tableland was a nonprofit community action agency that operated the Somerset County Head Start Program. However, the taxpayer failed to prove that Tableland Services itself was an instrumentality or agency of the commonwealth, as opposed to a contractor providing services to the commonwealth. Prior allowances of such an exemption were irrelevant. The Commonwealth cannot be estopped from collecting a tax that is due based upon a failure to collect the same tax in the past. Mistaken indulgence or errors to the commonwealth of the past do not insulate a taxpayer from future tax liability. Weinberg v. State Board of Examiners of Public Accountants, 501 A.2d 239 (Pa. 1985).  Finally, the court rejected the taxpayer’s argument that it should have been allowed an adjustment for stock loss greater than the 0.5 percent customarily permitted by the Department. The taxpayer failed to produce evidence why the auditor should have departed from the standard adjustment. 


Joseph C. Bright



(215) 665-2053

Dan A. Schulder



(717) 703-5905

Cheryl A. Upham



(215) 665-4193

Related Practices

To discuss any questions you may have regarding the opinion discussed in this Alert, or how it may apply to your particular circumstances, please contact: Joseph C. Bright at jbright@cozen.com or 215.665.2053, Dan A. Schulder at dschulder@cozen.com or 717.703.5905 or Cheryl A. Upham atcupham@cozen.com or 215.665.4193.