Navajo Refining Company

12-18

The Taxpayer claimed a refund of New Mexico Special Fuel Suppliers Tax and Petroleum Products Loading Fee for tax periods January 2007 through March 2007.  During that period, the Taxpayer operated a refinery in Artesia, where it refined diesel fuel.  The Taxpayer also owned and stored diesel fuel at a pipeline terminal in Bloomfield.  During the period in question, the Taxpayer could not refine enough diesel fuel to satisfy its contractual obligations to its New Mexico customers and had to purchase 1,240,344 gallons of diesel fuel from another corporation.  That corporation imported the fuel from Texas into New Mexico and paid the Special Fuel Suppliers Tax and Petroleum Products Loading Fee on all of the diesel fuel it sold to the Taxpayer.  The corporation included these taxes and fees in its invoice to the Taxpayer.  The Taxpayer commingled that purchased fuel with other fuel it had stored in Bloomfield.  The Taxpayer sold 4,190,724 gallons of diesel fuel to registered New Mexico suppliers, on which no Special Fuel Suppliers Tax or Petroleum Products Loading Fee were due.  The Taxpayer also sold 129,439 gallons to unregistered suppliers and remitted Special Fuel Suppliers Taxes and Petroleum Products Loading Fees on these sales.  The Taxpayer later filed a claim for refund for the Special Fuel Suppliers Taxes and Petroleum Products Loading Fees it paid to the corporation upon purchasing the diesel fuel originally.  The Department denied the claim for refund and the Taxpayer filed a protest of that denial.  Because the Taxpayer did not pay any taxes to the State of New Mexico on the corporation’s importation of diesel fuel into the state, the Taxpayer is not eligible to claim a refund of those taxes.  Additionally, the Taxpayer could not provide evidence showing that the small percentage of fuel that it sold to unregistered suppliers and paid taxes to the state on was the purchased fuel on which taxes had already been paid.  The Taxpayer’s protest was denied.