DOJ: News Release

AG: School District Not Entitled to Fuels Tax Refund When Contractor Pays Tax

HELENA – In a formal opinion released Thursday, Montana Attorney General Mike McGrath held that a school district may not claim a refund of taxes paid on “special fuels” by a company that provides bus service for the district’s students.

The Montana Department of Transportation collects taxes on “special fuels,” including diesel fuel. Montana statutes provide that a local government or political subdivision that pays the tax may then claim a refund.

Sanders County Attorney Robert Zimmerman requested the opinion, asking whether a school district may claim the refund even when it contracts with a bus company for student transportation.

McGrath held that since the contractor – and not the district – owns and operates the busses and pays for the fuel, the exemption is not available to the district.

“The refund is available to the district only for ‘taxes paid,’” McGrath held. “The district pays no tax under (this) scenario … and the refund procedure therefore does not apply.”

Opinions carry the weight of law unless a court overturns them or the legislature modifies the laws involved.

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