As Recommended by Senate Committee on

Assessment and Taxation


S.B. 421 would make several changes in the motor fuel tax law to clarify that the legal incidence of the motor fuel tax is on motor fuel distributors, and not on retailers or customers. These changes are as follows:

Section one clarifies that although both retailers and distributors have the duty to file reports it is only the distributors who pay tax, penalty, or interest.

Section two clarifies that the incidence of the tax is on the distributor of first receipt of motor fuel, and that the 2.5 percent shrinkage allowance afforded to distributors is for the physical loss of fuel due to spillage, shrinkage, evaporation, or other causes while handling the fuel and not for any administrative costs incurred by the distributor in remitting the fuel tax.

Section three clarifies that tribal retailers cannot be held liable for the inventory tax that occurs from time to time when fuel tax rates increase.

Section four allows the distributor's cost of business as well as the tax paid to be included in the selling price of fuel.

Section five changes a reference to delinquent distributor, manufacturer, importer, or retailer to "delinquent taxpayer."

Section six repeals a statute which disallows the tax-free sales of gasoline and special fuels to retail dealers located on an Indian reservation in Kansas, if the fuel is sold and delivered to a nonmember of the reservation.


This bill was requested and supported by the Department of Revenue. There were no opponents.

The fiscal note indicates that enactment of S.B. 421 would have no fiscal effect. The Department's spokesperson stated the Department's belief that the legislative intent of the motor fuel tax act clearly is to levy a tax on the distributor; the bill was requested to clarify portions of the act which lack clarity or could possibly be construed to the contrary.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at