FUEL TAX LAW§18-243-4-01

HAWAII ADMINISTRATIVE RULES
TITLE 18
DEPARTMENT OF TAXATIONCHAPTER 243
FUEL TAX LAW§18-243-1 to §18-243-3§18-243-4-01§18-243-4-02§18-243-4.1 to §18-243-6§18-243-7-01§18-243-8 to §18-243-16(Reserved.)
Refund of fuel taxes in excess of 1 cent per gallon for certain liquid
fuels used for operating agricultural equipment in areas other thanupon the public highways of the State.
Refund of fuel tax on diesel oil and liquefied petroleum gas usedfor operating motor vehicles in areas other than upon the public
highways of the State.
(Reserved.)
Tax not applicable, sale of bonded aviation/jet fuel.
(Reserved.)

This is an unofficial compilation of the Hawaii Administrative Rules as of December 31, 2023.
Historical Note: Chapter 243 of Title 18, Hawaii Administrative Rules, is based substantially uponRegulation No. 70-11 of the Department of Taxation [Eff 6/12/70; R 2/16/82] and Regulation No. 72-3 ofthe Department of Taxation [Eff 7/1/71; R 2/16/82]; [am 8/12/02].
§18-243-1 to 18-243-3(Reserved)

Refund of fuel taxes in excess of 1 cent per gallon for certain liquid fuels used§18-243-4-01
for operating agricultural equipment in areas other than upon the public highways of the State. (a) For
purposes of this section:“Agricultural equipment” means any vehicle or mechanical apparatus powered by its own motor orengine using liquid fuel and:
(1) Used in carrying on a trade or business in the State involving agriculture; or(2) Used in connection with cultivating soil; raising or harvesting any agricultural or
horticultural commodity, including the raising, shearing, feeding, caring for, training,and management of livestock, bees, poultry, fur-bearing animals and wildlife; handling,drying, packing, grading, or storing any agricultural or horticultural commodity in its
unmanufactured state; planting, cultivating, caring for, or cutting of trees or in connection
with the preparation (other than milling) of trees for market; but only if such operations
are incidental to the farming operations; operating, managing, conserving, improving, ormaintaining a farm and its tools and equipment.
“Liquid fuel” means liquids usable in internal combustion engines for the generation of power and refers
to paragraphs (3) through (6) of section 243-4(a), HRS; provided however that for purposes of this section the term
shall not include:(1) Diesel oil;(2) Gasoline or other aviation fuel used for airplanes; and(3) Liquefied petroleum gas, benzol, benzene, toluol or xylos.
“Non-highway or off the highway use” means use of liquid fuel for operating agricultural equipment inareas other than upon the public highways of the State.
“Public highways” means the same as the term is defined in section 264-1, HRS.
(b) The amount of refund is subject to the following:

HRS §243-4

243- 1 (Unofficial Compilation as of 12/31/2023)

§18-243-4-02

FUEL TAX LAW(1)

The amount of state and county fuel taxes subject to refund shall be determined bymultiplying the number of gallons of liquid fuel used by the tax rates as provided under:(A) Paragraphs (3) through (6) of section 243-4(a), HRS, in excess of 1 cent per gallon;
and(B) Section 243-5, HRS, respectively.
(2) Any interest accruing on a claim for refund shall be made as provided under sections 23123(c)(1) and 231-23(d)(1) and (2), HRS.
(3) Fuel taxes paid on liquid fuel used for highway purposes or on non-agricultural equipment
and liquid fuel exempt from tax as provided under sections 243-7 and 243-4(d), HRS, shallnot be subject to refund.
(c) All claims for refund under this section shall be filed within three years of April 20 of the year
following the year in which the fuel subject to the refund is used. With respect to when and how to file a claim:(1) The ultimate user of the liquid fuel may obtain a refund by filing a claim quarterly or
annually with the department.
(2) A claim may be filed quarterly if the amount of refund is in excess of $1,000 within anycalendar quarter. Where the amount of refund within a calendar quarter is not in excess of$1,000 but the cumulative amounts for two or more calendar quarters exceed $1,000, a claim
for refund covering such calendar quarters may be filed. Any claim not exceeding $1,000
quarterly or cumulative quarterly shall be filed on a calendar year basis regardless of thebasis used for record-keeping purposes or for filing other tax returns.
Example: “A” Corporation is a calendar year taxpayer. It computed the following amountsof allowable liquid fuel taxes paid at the end of each quarter:
January 1 through March 31
April 1 through June 30
July 1 through September 30
October 1 through December 1$2,500
500
600
1,500

“A” Corporation may elect to file quarterly claims for the quarters ending March 31 andDecember 31. It may not file quarterly claims for the quarter ending June 30 and September
30 since the amounts within those quarters were less than $1,000. However, the refund forsuch quarters may be combined and the cumulative amount of $1,100 ($500+$600) may beclaimed for the quarter ending September 30.
(d) Liquid fuel used on agricultural equipment operated both off and on the highways of the State may
be allocated on actual gallons used, percentage of total gallons used or other basis acceptable by the director. Such
allocation must be based, however, upon operating experiences and supported by taxpayer’s records.
(e) An itemized list showing the various agricultural equipment utilized and the corresponding numberof gallons of liquid fuel used on such agricultural equipment need not be submitted with the claim. Generally, a claim
for refund shall be supported by the furnishing of the following information:(1) Total gallons on hand at beginning of period.
(2) Total number of gallons of liquid fuel purchased during the period.
(3) Total number of gallons of liquid fuel used on non-agricultural equipment or for highway
purposes.
(4) Total number of gallons of liquid fuel used on agricultural equipment for non-highway
purposes.
(5) Total number of gallons of liquid fuel on hand at end of the period.
(6) Name of the county in which the liquid fuel was used. (Separate claim to be filed for eachcounty).
(7) Name of the seller or sellers.
(f)Taxpayers are expected to keep at their principal place of business in the state such records as will
enable the director to verify the accuracy of the refund claimed. The records must show separately the number ofgallons of liquid fuel used for the purpose that will qualify for refund. [Eff 2/16/82; am and ren 8/12/02; am 8/21/2021](Auth: HRS §§231-3(9), 243-4, 243-16) (Imp: HRS §243-4)
Refund of fuel tax on diesel oil and liquefied petroleum gas used for operating§18-243-4-02
motor vehicles in areas other than upon the public highways of the State. (a) For purposes of this section:“Diesel oil” means diesel oil for which tax rates are provided in paragraph (1) of section 243-4(a), HRS,and paragraphs (1) through (4) of section 243-4(b), HRS.

HRS §243-4

243- 2 (Unofficial Compilation as of 12/31/2023)

FUEL TAX LAW§18-243-4-02“Liquefied petroleum gas” means liquefied petroleum gas for which tax rates are provided in paragraphs(1) and (2) of section 243-4(c), HRS.
“Non-highway use” or “off the highway use” means use of diesel oil or liquefied petroleum gas for
operating motor vehicles in areas other than upon the public highways of the State.
(b) The furnishing of exemption certificates under this section is subject to the following:(1) For any user of diesel oil or liquefied petroleum gas who furnished an exemption certificate
to the distributor, or the distributor who uses diesel oil or liquefied petroleum gas signs suchcertificate, certifying that diesel oil or liquefied petroleum gas is for use in operating motor
vehicles off the public highways, the taxes imposed under paragraphs (1) through (4) ofsection 243-4(b), HRS, and paragraph (2) of section 243-4(c), HRS, shall not be applicable.
(2) In the event an exemption certificate is not or cannot be furnished to the distributor, the tax
shall be imposed upon all sales for operating motor vehicles and collected as if the diesel
oil or liquefied petroleum gas is to be used for operating motor vehicles upon the public
highways of the State.
(3) An exemption certificate shall not be required if:(A) Diesel oil is used as a fuel for operating a stationary engine, watercraft, or for heating
purposes; or(B) Liquified petroleum gas is used exclusively for fuel and heating purposes in a home,restaurant, or an industrial plant and not used for operating an internal combustion
engine in such areas.
Notwithstanding this paragraph, the imposition of the 1 cent tax with respect to diesel oil used for
purposes stated therein shall not be exempted.
(c) The amount of refund is subject to the following:(1) The amount of state and county fuel taxes subject to refund shall be determined bymultiplying the gallons of:(A) Diesel oil used for operating motor vehicles off the highways by the tax rates asprovided under sections 243-4(b)(1) through (4), HRS, and 243-5, HRS, and(B) Liquefied petroleum gas used for operating motor vehicles off the highways by the tax
rates as provided under sections 243-4(c)(2) and 243-5, HRS.
(2) Any interest accruing on a claim for refund shall be made as provided under sections 23123(c)(1) and 231-23(d)(1) and (2), HRS.
(d) All claims for refund under this section shall be filed within three years of April 20 of the year
following the year in which the fuel subject to the refund is used. With respect to when and how to file a claim:(1) The ultimate user of the diesel oil or liquefied petroleum gas may obtain refund of all taxes
imposed under paragraphs (1) through (4) of section 243-4(b), HRS, and paragraph (2) ofsection 243-4(c), HRS, by filing a claim form quarterly or annually with the department in asituation where:(A) An exemption certificate was not or could not be furnished to the distributor and thetax was imposed and collected as provided under paragraph (b)(2); or(B) The diesel oil or liquefied petroleum gas was initially purchased and intended for use
upon the highways but was subsequently used off the highways.
(2) A claim may be filed quarterly if the amount of refund is in excess of $1,000 within any
calendar quarter. Where the amount of refund within a calendar quarter is not in excess of$1,000 but the cumulative amounts for two or more calendar quarters exceed $1,000, a claim
for refund covering such calendar quarters may be filed. Any claim not in excess of $1,000
quarterly or cumulative quarterly shall be filed on a calendar year basis regardless of thebasis used for record keeping purposes or for filing other tax returns.
Example: “A” Corporation is a calendar year taxpayer. It is entitled to refund of thefollowing amounts of diesel oil and liquefied petroleum gas taxes imposed and paid asprovided under paragraphs (1) through (4) of section 243-4(b), HRS, and paragraph (2) ofsection 243-4(c), HRS, at the end of each quarter:January 1 through March 31
April 1 through June 30
July 1 through September 30
October 1 through December 1$2,500
500
600
1,500

“A” Corporation may elect to file quarterly claims for the quarters ending March 31 andDecember 31. It may not file quarterly claims for the quarters ending June 30 and September
30 since the amounts within those quarters were less than $1,000. However, the refund for243- 3 (Unofficial Compilation as of 12/31/2023)

§18-243-4.1 to §18-243-6

FUEL TAX LAW

such quarters may be combined and the cumulative amount of $1,100 ($500+$600) may beclaimed for the quarter ending September 30.
(e) Diesel oil and liquefied petroleum gas used for operating motor vehicles both off and on thehighways of the State may be allocated on actual gallons used, percentage of total gallons used or other basis acceptableby the director. Such allocation must be based, however, upon operating experiences and supported by taxpayer’srecords.
(f)
An itemized list showing the various motor vehicles utilized and the corresponding gallons of diesel
oil and liquefied petroleum gas used on such motor vehicles need not be submitted with the claim. A claim for refund
shall be supported by furnishing the following information:(1) Total gallons on hand at beginning of the period.
(2) Total gallons purchased during the period.
(3) Total gallons used for off the public highway purposes.
(4) Total gallons used for purposes other than in paragraph (3).
(5) Total gallons on hand at end of the period.
(6) Name of the county in which the diesel oil or liquefied petroleum gas was used. (Separateclaim to be filed for each county).
(7) Name of the seller or sellers.
(g) Taxpayers are expected to keep at their principal place of business in the State such records as will
enable the director to verify the accuracy of the refund claimed. The records must show separately the gallons of diesel
oil or liquefied petroleum gas used for the purpose that will qualify for refund. [Eff 2/16/82, am and ren 8/12/02; am
8/21/2021] (Auth: HRS §§231-3(9), 243-4, 243-16) (Imp: HRS §243-4)§18-243-4.1 to §18-243-6(Reserved)

Tax not applicable, sale of bonded aviation/jet fuel. The fuel tax shall not apply§18-243-7-01
to the sale of bonded aviation/jet fuel to air carriers departing for foreign ports or arriving from foreign ports on
stopovers before continuing on to their final destinations. [Eff 8/12/02] (Auth: HRS §§231-3(9), 243-16) (Imp: HRS§243-7)

HRS §243-7§18-243-8 to §18-243-16(Reserved)

243- 4 (Unofficial Compilation as of 12/31/2023)