What to Expect During a Motor Fuels Retailer Review

This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (DOR) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of DOR and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.

This guidance document may change with updated information or added examples. DOR recommends you do not print this document. Instead, sign up for the subscription service at revenue.nebraska.gov to get updates on your topics of interest.

Introduction

This document explains what to expect during a motor fuels retailer review by the Nebraska Department of Revenue (DOR). We will do everything possible to conduct the review efficiently, with the least inconvenience to you possible.

Motor fuels retailers are required to be licensed and are subject to periodic on-site reviews. The review is generally limited to the preceding year or 12 months of activity, but may be for up to three years. Retailers may also be subject to an audit, which generally encompasses three years of activity.

The purpose of the review is to verify:

  • All motor fuels are purchased with tax paid to the vendor;
  • Whether the retailer is experiencing fuel gains; and
  • That the retailer is maintaining the appropriate records.

In addition to verifying the tax status of the fuel transactions, the review is an opportunity for retailers to understand their recordkeeping responsibilities and requirements.

Review Process

Review Start Date

A revenue agent will contact you to determine a mutually acceptable date and time to perform the review. A confirmation email and letter that includes the review period and a list of records required for the review will follow the call. Before the review starts, it helps to go through this list and make sure the records are readily available. If you have any questions about the review, the confirmation letter will contain contact information.

Field Review

At the beginning of the review, the agent will meet with you or your representative to verify your business information and to gain an understanding of your business. It is helpful if this person is responsible for the accounting and inventory records of your business.

After the initial meeting, the agent will review the fuel records and decide how to proceed. In most cases, the agent will review the fuel activity for one year. However, if the number of transactions are large or records are missing, the agent may select a different review period. The records needed will depend upon the retailer's operations, but generally include:

  • Purchase records, including bills of lading and purchase invoices;
  • Sales records, including meter readings and sales invoices; and
  • Inventory records, including Daily Tank Inventory Records or other similar documents.

In order to shorten the time spent at your location, the agent may copy or scan some of the documents and complete additional review procedures in the DOR office.

In the event that there is missing information or issues identified by the agent, the agent will discuss the types of records needed and make suggestions regarding changes to the retailer’s procedures. The agent may provide a template that is useful to track the fuel transactions. If the current records are insufficient to complete the review, the agent will provide information regarding the proper records to be maintained and will schedule a tentative return visit, which is usually in six to 12 months.

If the review results in consistent inventory gains, the agent may expand the record review to additional months.

Finalizing the Review

DOR will notify the retailer of the results of the review by letter. If the records were incomplete, but the agent was still able to complete the review, the follow-up letter will describe the necessary changes. This may still require a follow-up review or the agent may ask that the retailer send additional records to DOR to verify that the retailer implemented the required changes.

Consistent Fuel Gains

If the retailer experienced consistent fuel gains, the agent will explain the process for the retailer to obtain a license and report any future gains. DOR will send the retailer a letter indicating the amount of tax, interest, and penalty due for the fuel gains determined during the review. If the retailer does not agree, the retailer may submit a written protest of the findings within 60 days of the date of the letter. Additional information regarding gains is available in the Consistent Fuel Gains Notice.

Review Comments

Your opinion is important to us. The agent will provide you with a Review Evaluation, and we would greatly appreciate it if you complete and return it to the audit manager indicated on the evaluation form.

Questions

If you have any questions or concerns, please discuss them with the agent or an audit manager, or visit our website at revenue.nebraska.gov.

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