Fuels Number two fuel oils and other fuels that are used in diesel engines, gasoline and liquefied gases are covered under the motor fuels tax laws. Number six bunker fuel, lubricants, motor oils, greases and antifreezes are covered under limited sales, excise and use tax laws. These items are not component parts of vessels . But will qualify for sales tax exemption if they are consumed in the operation of a vessel operating exclusively in interstate commerce. Obtain a list.
Bunker fuel is taxed under sales tax laws.
Tour of Premises Visit the boat yard, repair areas, home port, storage area or applicable areas used by the taxpayer in this business. Have the taxpayer identify and describe the functions of major equipment. Internal Controls Many vessel-related companies code sales and purchases to individual vessels. Small companies may not do so. Internal controls should be tested and verified using standard procedures discussed in Chapter 5 of the Auditing Fundamentals Manual .