I am surprised the township building official could not give you an answer. Does this mean no permit is required for removal?

This would be a good question to post on the Buying and Selling Homes forum. Some of the realtors should be able to give advice.

My suggestion is to contact companies which specialize in oil tank removals. Find out what are the options and what they cost. The safest option is to have the tank removed and to get a verification in writing there was no oil leakage. Burying the tank with sand is covering a potential future problem when it is time to sell the house.

Were potential issues with the tank discussed when you bought the house? Do you have insurance in case you find the tank has a major leak?

Contact a tank remediation company in your area. They can test for soil contamination and give a price for removal. Filling it with foam, called abandonment in place, is usually accepted practice. Even so, a future buyer's mortgage or insurance may require it to be removed. If a permit is needed they can advise on that.

To fill it with sand legally the tank would have to be exposed so the top can be removed, the tank thoroughly cleaned, then filled with sand. Quite often, depending on your location, the health dept will witness it. All in all that's just postponing the inevitable.