N.J. Admin. Code § 18:18-3.3

Current through Register Vol. 56, No. 24, December 18, 2024

Section 18:18-3.3 - Distributor's license

(a) Every distributor must obtain a license from the Director permitting him or her to engage in said business within this State, before continuing in or commencing to transact the business of a distributor.

(b) Such application shall be accompanied by payment of a license fee of $ 450.00 for a three-year period or part thereof and the filing of a bond in such form as the Director shall require.

(c) An application for a license shall be made in the form and manner as the Director shall prescribe.

(d) A licensed distributor is only permitted to engage in activities that are specifically designated on the distributor license. All licensed distributors are authorized by their license to purchase and sell motor fuel in New Jersey outside the terminal transfer system. A specified licensed distributor designation is not required to engage in this activity.

(e) A licensed distributor must possess a license with the specified designation for the following activities that occur outside the terminal transfer system, in order to engage in such activities:

1. Importing motor fuel outside the terminal transfer system from another state or country;

2. Exporting motor fuel outside the terminal transfer system to another state or country;

3. Blending, as defined at N.J.S.A. 54:39-102;

4. Acting as an Aviation Fuel Dealer by buying or selling aviation fuel outside the terminal transfer system; or

5. Acting as a qualified distributor pursuant to N.J.S.A. 54:39-121.

(f) The designated activities identified at (e) above will be displayed on each distributor license approved by the Director, in the form and manner the Director prescribes.

(g) A licensed distributor that engages in any designated activity specified at (e) above without possessing a valid license evidencing the required designation, engages in an unauthorized activity, and its license is subject to revocation or suspension, at the discretion of the Director.

(h) Any seller that sells motor fuel to a licensed distributor attempting to engage in a designated activity the distributor is not authorized to engage in, is still required to collect the motor fuel tax from the distributor, even if the distributor would be exempt from the tax if the distributor was properly licensed for the designated activity.

1. Example: Supplier X sells gasoline to Distributor Y at a NJ terminal rack and Y indicates that it is going to Pennsylvania. Distributor Y does not have the specified export designation displayed on its distributor license, which means it is not a licensed distributor for the designated export activity. As such, it does not qualify for the export motor fuel tax exemption and Supplier X must charge Distributor Y the motor fuel tax.

2. Example: Supplier X sells jet fuel to Distributor Y at a NJ terminal rack. Distributor Y is not an Aviation Fuel Dealer since its distributor license does not display an Aviation Fuel Dealer designation. As such, Supplier X must charge Distributor Y both $.135 per gallon tax and $.02 per gallon tax because Distributor Y does not qualify for the Aviation Fuel Dealer tax exemption and the fuel may be for distribution to a general aviation airport, respectively. If the product was aviation gasoline, Supplier X must charge Distributor Y both the $.105 per gallon tax and the $.02 per gallon tax.

(i) A seller must obtain a copy of a distributor's valid license and verify that a distributor is permitted to engage in a designated activity based on a valid designation on the license, in order for a seller to allow a motor fuel tax exemption on a sale to a licensed distributor. Copies of these verified licenses must be kept by the seller for a minimum of four years. Failure to support motor fuel tax exempt sales with copies of valid distributor licenses with the specified designation displayed will result in the sales being subject to motor fuel tax. The seller will be held personally liable for the motor fuel tax, unless the Director, at the Director's own discretion, can otherwise determine that the distributor was properly licensed with the appropriate designated activity.

(j) A seller must accept a license from their customer in good faith. If there is any reason to doubt the validity of any aspect of the license, the license must not be accepted and the tax must be charged. The seller may inquire with the Division regarding particular reasons for doubt that the seller may encounter, and whether or not the doubt is valid.

1. Reasons for doubt include, but are not limited to, the following:

i. The name on the license is different from the name of the customer.

ii. The license appears to have been altered and/or not created by the Division.

iii. The license effective date and expiration date span more than three years.

iv. The approved designations (Import, Export, Blending, and Aviation Fuel Dealer) on the license use incorrect wording.

v. The name of the Director on the date of issuance is incorrect.

vi. The signature for the Director is incorrect.

(k) An expired license is not a valid license unless the Director specifically determines otherwise.

N.J. Admin. Code § 18:18-3.3

Adopted by 49 N.J.R. 2805(c), effective 8/21/2017

Amended by 56 N.J.R. 2338(a), effective 12/16/2024