Opinion ID: 202631
Heading Depth: 3
Heading Rank: 2

Heading: Delivery into a Fuel Supply Tank

Text: 21 Pesaturo argues that, even if the new rule applies, Covenant was not liable for the tax because the seller incurs tax liability only when the seller delivers the fuel into the fuel supply tank of a diesel-powered vehicle. This argument relies on a misunderstanding of the text and purpose of the new rule. Under the old rule, sellers were liable for the tax upon delivery  by the seller into the fuel supply tank of the vehicle, (emphasis added). The new rule takes a different approach, as reflected in its text. Sellers are now jointly and severally liable for the tax if the seller knew or had reason to know the fuel would later be deliver[ed] into the fuel supply tank by any party. The obligation to collect and remit the tax is no longer linked to the delivery by the seller into the fuel supply tank of the vehicle. 22 Pesaturo would have us ignore these subtle but significant changes to the text and urges us to read delivery by the seller into the fuel supply tank of the vehicle back into the new regulation. However, we find the government's interpretation of the regulation more persuasive both textually and in the context of the government's stated purpose of increasing fuel tax compliance. If fuel is delivered into a bulk supply tank temporarily for later use on the road and the seller knew or had reason to know of this later use, the seller is jointly responsible for the tax due. The objective is to ensure payment of taxes, and the new provision casts a wider net by extending the seller's liability to uses of which he is aware even if they occur further down the supply path. 15