(a) Affidavit. To purchase gasoline or diesel fuel less the state tax, a commercial transportation company that provides transportation services to a public school district in Texas must submit to the comptroller an affidavit stating:
  (1) that the company has contracted with a specific public school district to provide transportation services (other than charter trips) for the school district; and
  (2) that motor fuel purchased tax-free will be used exclusively by the company to provide the transportation services for the school district.
(b) Exception letter. After review and approval of the affidavit required by subsection (a) of this section, the comptroller shall issue to the company a letter of exception specifying that the company may purchase tax-free gasoline and/or diesel fuel used to provide transportation services to a public school district in Texas. The letter of exception may be reproduced for licensed suppliers and licensed distributors. An exception letter shall be issued to the company for specific vehicles operated using compressed natural gas or liquefied natural gas. The letter may be furnished to inspectors when a compressed natural gas or liquefied natural gas powered bus is undergoing a safety inspection and to compressed natural gas and liquefied natural gas dealers when the company purchases compressed natural gas or liquefied natural gas tax free to be placed into the fuel supply tank of the bus. Compressed natural gas and liquefied natural gas dealers may not accept an exception letter for compressed natural gas or liquefied natural gas delivered into a motor vehicle at an unmanned compressed natural gas or liquefied natural gas retail location. An unmanned compressed natural gas or liquefied natural gas retail location is a location where compressed natural gas or liquefied natural gas is sold to the public and which is completely unstaffed, meaning that there are no personnel routinely working at the site. An unmanned compressed natural gas and liquefied natural gas retail location does not include self-service filling stations at which customers pump their own fuel and have the option of paying an attendant or paying at the pump. A company who pays tax on compressed natural gas and liquefied natural gas delivered into the fuel supply tank of a vehicle issued an exception letter may request refund under §3.432 of this title (relating to Refunds on Gasoline, Diesel Fuel, Compressed Natural Gas, and Liquefied Natural Gas Taxes).
(c) Records required. A commercial transportation company providing transportation services to a Texas public school district shall keep separate records for tax-free and tax-paid fuels. Both sets of records must show:
  (1) the number of gallons of gasoline, diesel fuel, compressed natural gas, or liquefied natural gas on hand on the first day of each month;
  (2) the number of gallons of gasoline, diesel fuel, compressed natural gas, or liquefied natural gas purchased or received, showing the name of the seller and the date of each purchase;
  (3) the date and number of gallons of gasoline, diesel fuel, compressed natural gas, or liquefied natural gas delivered into the fuel supply tanks of vehicles used to furnish transportation services to public school districts;
  (4) the date and number of gallons of gasoline, diesel fuel, compressed natural gas, or liquefied natural gas delivered into the fuel supply tanks of vehicles used to furnish transportation services other than to public school districts;
  (5) the date and number of miles traveled to provide transportation services for the public school district, including starting point, destination, purpose of trip, beginning and ending odometer readings, vehicle identification number, and the vehicle license plate number; and
  (6) the date and number of miles traveled to provide transportation services for customers other than public school district(s), including the beginning and ending odometer readings, vehicle identification number, and vehicle license plate number of the vehicle so used.
(d) Taxable use.
  (1) A commercial transportation company forfeits its right to purchase gasoline or diesel fuel tax-free if:
    (A) the gasoline or diesel fuel is sold, other than to a Texas public school district for which the commercial transportation company provides transportation services; or
    (B) the gasoline or diesel fuel is used in a vehicle for any purpose other than providing transportation services for a Texas public school district.
  (2) A commercial transportation company that forfeits its right to purchase gasoline or diesel fuel tax-free under paragraph (1) of this subsection must return to the comptroller the original and all copies of the letter of exception issued to the company under subsection (b) of this section.
(e) Cancellation or completion of contract. A commercial transportation company shall report the total number of gallons of tax-free gasoline and/or diesel fuel on hand in storage tanks and in the fuel supply tanks of motor vehicles, and remit the tax due on the ending tax-free inventory to the comptroller within five days of the cancellation or completion of a contract with a Texas public school district.
(f) Charter trips. A commercial transportation company that charters round-trip transportation to special events for a Texas public school district may claim a refund for the gasoline, diesel fuel, compressed natural gas, or liquefied natural gas used in the charter vehicle.
  (1) The refund shall be computed by starting the trip with a full fuel supply tank or tanks, maintaining records of the fuel delivered into the fuel supply tank or tanks of the vehicle during the trip, and filling the fuel supply tank or tanks upon arrival back at the origination point. The number of gallons delivered into the fuel supply tank or tanks after the start of the trip will be the number of gallons upon which the charter company may claim a tax refund.
  (2) The records required by subsection (c)(5) of this section shall also be maintained for each charter trip.
  (3) The commercial transportation company shall keep a copy of the billing to the school district for the trip.
(g) Refunds.
  (1) A commercial transportation company providing transportation services to a Texas public school district may file a claim for refund of state taxes paid on gasoline, diesel fuel, compressed natural gas, or liquefied natural gas used exclusively for such transportation purposes.
  (2) A metropolitan rapid transit authority operating under Transportation Code, Chapter 451, that is party to a contract governed by Education Code, §34.008, and that is providing transportation services to a Texas public school district may file a claim for refund of state taxes paid on gasoline, diesel fuel, compressed natural gas, or liquefied natural gas used for such transportation services.
    (A) A claim for refund must contain the following information by month for each vehicle used to provide public student transportation:
      (i) total miles traveled, evidenced by odometer or hubometer readings and total miles traveled on public school transportation routes;
      (ii) hours of service;
      (iii) total fuel consumed;
      (iv) total number of student passengers per route;
      (v) total number of non-student passengers per route; and
      (vi) records required by Tax Code, §§162.127, 162.229, and 162.367.
    (B) A claim for refund cannot be made for a single route in any month of a school year in which the number of non-student passengers for that single route is greater than 5.0% of the total passengers for that single route.
    (C) The gallons of gasoline, diesel fuel, compressed natural gas, or liquefied natural gas eligible for refund in a qualifying month for each vehicle is determined by multiplying the vehicle's average miles-per-gallon for that month by the miles traveled for public school transportation during that month.
Attached Graphic

Source Note: The provisions of this §3.448 adopted to be effective September 2, 2004, 29 TexReg 8374; amended to be effective November 27, 2007, 32 TexReg 8521; amended to be effective November 19, 2014, 39 TexReg 9051; amended to be effective January 27, 2016, 41 TexReg 684