May 19, 2000
New diesel rules take
effect on September 1
Senate Bill 1547, passed by the 76th Legislature, will go into effect on Sept. 1. The act limits the sale of tax-free, undyed (clear) diesel to agricultural users, and requires anyone using a signed statement to purchase tax -free, dyed diesel fuel to register with the Texas Comptroller of Public Accounts.
Signed statement registration
Beginning Sept. 1, new restrictions are placed on the issuance of a signed
statement to purchase tax-free diesel fuel.
All signed statement purchases are limited to single transactions of 3,000
gallons or less and to no more than 10,000 gallons per calendar year. To purchase
larger quantities of tax-free diesel fuel, a Dyed Diesel Bonded User or Agricultural
Bonded User permit will be required.
A person who uses diesel fuel exclusively for an agricultural purpose in off-highway
equipment and wants to issue a signed statement to purchase tax-free dyed
or undyed (clear) diesel fuel is required to register with the comptroller
for an Agricultural User Exemption Number. This number, prefixed with “AG,”
is used in conjunction with a signed statement.
A person who wants to issue a signed statement to purchase tax-free dyed diesel
fuel for off-highway use must register with the comptroller for an End Use
Number. This number, prefixed with “DD,” is used in conjunction
with a signed statement. The End Use Number may only be used to purchase tax-free
dyed diesel fuel from a permitted supplier. Tax must be paid when purchasing
undyed (clear) diesel fuel, but the end user is eligible to file for a refund
when the fuel is used in off-highway equipment.
Only agricultural users will be authorized to use signed statements to purchase
tax-free undyed (clear) diesel fuel for use in off-highway equipment. All
other off-highway users may purchase only dyed diesel fuel tax-free with a
signed statement.
All signed statements currently on file will be revoked effective Aug. 31,
2000. Copies of the Texas Diesel Fuel End User or Agricultural User Exemption
Signed Statement Number Registration, form AP-197, were mailed to permitted
suppliers on April 1. Anyone wanting to issue a signed statement to purchase
tax-free diesel fuel on or after Sept. 1 must return the registration to the
Comptroller’s office by June 15.
Two new permits
All current Diesel Fuel Bonded User permits will be cancelled effective Aug.
31. A person wanting to purchase more than 10,000 gallons per month of tax-free
diesel fuel for off-highway use must obtain a new diesel fuel permit.
All current Diesel Fuel Bonded User permit holders were notified on or about
May 1 of the new permits. Permit holders will need to return the notice declaring
whether they use diesel fuel exclusively for agricultural purposes to the
Comptroller no later than July 1 to receive a new Bonded User Permit before
Sept. 1.
The new Agricultural Bonded User permit allows a person to purchase more than
10,000 gallons per month of tax-free dyed or undyed diesel fuel used exclusively
for agricultural purposes. Only agricultural users are authorized to purchase
tax free undyed diesel fuel. Agricultural Bonded User permit holders will
file quarterly or yearly tax returns showing the amount of dyed or undyed
diesel fuel purchased and their tax exempt and taxable uses. A record of purchases,
uses and monthly inventories must also be maintained.
Prepaid User Permit
The issuance of a Diesel Tax Prepaid User permit will be restricted to persons
whose use of diesel fuel is predominantly in agricultural non-highway equipment
who elect to prepay the tax rather than obtain an Agricultural Bonded User
Permit. All other restrictions and requirements of the current Diesel Tax
Prepaid User permit are applicable.
All diesel Tax Prepaid User permit holders will be notified in June and July
to re-qualify. Permit holders must return the notice to the Comptroller’s
office declaring whe-ther their use of diesel fuel is predominately in agricultural
non-highway equipment no later than July 1 to receive a new permit. All Diesel
Tax Prepaid User permits (other than agricultural users) will be revoked effective
Aug. 31. The comptroller will automatically issue a refund for the unused
portion of the permit.
Use of dyed fuel
The law prohibits a person from operating a motor vehicle on a public highway
in this state with taxable diesel fuel that contains dye unless the use of
dyed diesel fuel is lawful under the United States Internal Revenue Service
Code and regulations.
Diesel fuel containing dye may be used in vehicles operated by state and local
governments, in intercity buses, and in vehicles operated by certain non-profit
World War II aircraft museums.
However, state diesel fuel tax is due on this fuel.
The use of dyed diesel fuel to operate a motor vehicle on the highway is a
Class C misdemeanor criminal offense.
It is unlawful for a person to alter or attempt to alter the strength or composition
of a dye or marker in dyed diesel fuel.
