Fuel and Excise Tax Recovery: What You Need to Know About Power Take Off (PTO) Equipment

Written by: Rob Mandeville

Power Take-Off (PTO) equipment and devices are installed on vehicles to transfer a portion of the mechanical power in a vehicle’s engine to another piece of equipment that does not have its own independent energy source to power the equipment or the motor. These are commonly used in farming equipment, utility trucks, and commercial vehicles.

PTO equipment, generally but not in all cases, operates using fuel from the same fuel tank that is used to propel the vehicle, including:

• Waste management vehicles​
• Vacuum/hydro-vac trucks​
• Ready mix cement trucks​
• Utility “Bucket” trucks
• Cranes​
• Pumping Trucks

Instead of wasting resources and energy or requiring installation of additional independent fuel-sourcing equipment on the vehicles, PTO systems transfer power generated at the origin–the engine–and divert some of that energy to perform a variety of other essential functions through the installed PTO equipment. However, because excise tax is paid on the fuel for the original engine, and PTO equipment ​uses a percentage of that fuel, opportunities for tax recovery​ are available in many jurisdictions.

PROOF OF PAYMENT

To qualify for PTO equipment tax recovery, you must have proof that you have paid the required fuel taxes. This can typically be achieved by having records of fuel purchases, including receipts, purchase invoices, or fuel card statements.

PROOF OF QUALIFICATION

Each jurisdiction has specific requirements for vehicles to qualify for PTO equipment tax recovery. Generally, vehicles must meet specific criteria, such as weight limits, engine specifications, and usage purposes, to qualify as an eligible PTO-equipped vehicle.

PROOF OF UTILIZATION

To qualify for tax recovery, you must demonstrate that your vehicles equipped with PTO equipment are being actively used within the jurisdictions where the recovery is sought. This can be established through documentation such as mileage logs, delivery records, or service agreements that reflect the vehicle’s usage within the jurisdiction.

DOCUMENTATION

Documentation is key when it comes to qualifying for PTO equipment tax recovery and being able to substantiate your claim.

DMA’S PTO TAX REVIEW AND RECOVERY SERVICE

DMA manages the entire PTO tax review and recovery process for you. Our team will work together to review all periods available under each jurisdiction’s respective statute of limitations and work with your team to locate and compile all necessary data. From there, our experts will analyze the commercial vehicle fleet employed during the respective periods, as well as the total spend on motor fuel and excise tax paid on those specific fuel transactions.

Upon authorization to proceed with a claim filing, we will then work directly with the corresponding jurisdiction, from substantiating all findings all the way through to the issuance of a refund check. DMA will perform periodic submissions of refund claims on a go-forward basis, creating a consistent stream of tax savings for your company.

DMA’S FUEL & EXCISE TAX SERVICE

Our Fuel & Excise Tax service identifies and supports all fuel and excise tax responsibilities throughout North America, including:

• Fuel and excise tax review and recovery​
• Advisory services such as analysis, research, and process improvement​
• Fuel and excise compliance including return preparation, licensing, registration, and reporting​
• Tax technology implementation and integration to support fuel and excise tax compliance

Our expert service opens the door to discovering tax recovery opportunities for your business. We also find eligible credits and work with you to prepare refund claims to recover those credits. We will work together with your team to guide you through the intricacies of return preparation and filing, as well as other complex tax processes—ensuring your fuel and excise taxes are accurate and compliant.