Groups Urge Congress to Oppose Retroactive Renewal of the Oil Spill Liability Tax

On January 24, PMAA and like-minded associations sent a letter to Congressional tax writing committees to renew the Oil Spill Liability Tax (OSLT) on a prospective basis after the date of enactment. Applying an excise tax to 2019 transactions that have already been processed and the associated products sold multiple times would create significant transactional concerns and potential legal implications within the entire fuel supply chain. Click here to read the letter.

The 9 cents per barrel Oil Spill Liability Tax (OSLT) expired at midnight December 31, 2018. The OSLT is imposed on crude oil at the refinery gate and the collections are used to support the Oil Spill Liability Trust Fund (OSLTF). The OSLT has no tax related impact on downstream marketers, it is simply a cost passed through on finished product. The OSLT is paid by the refiner upstream. Unfortunately, some terminals break out the OSLT as a separate line item on bills of lading and invoices. This practice causes confusion downstream because the tax is paid by refiners on crude oil. The OSLT is not imposed, remitted or refunded downstream. There are no OSLT floor stock taxes or OSLT tax exempt parties downstream. However, breaking out the OSLT as a separate line item gives it a perception of importance downstream. Some downstream wholesale petroleum marketers who break out the OSLT on invoices to their end user customers may need to adjust their accounting practices and software to reflect the recent expiration. However, there is no regulatory requirement to breakout the OSLT downstream of the terminal rack on invoices.