Rajan Wilcox
The tax status of marina diesel fuel depends on the region. In California, an excise tax is levied on diesel suppliers before the fuel is delivered to retail stations. In Washington, marinas sell diesel in two ways: clear and dyed. Clear diesel is sold when state fuel taxes have already been imposed and are included in the selling price, whereas dyed diesel is sold without the state fuel taxes imposed. Retail sales tax applies to the sale of dyed diesel fuel. In Washington, refunds are also available from the Department of Licensing for motor vehicle fuel tax or special fuel tax paid on fuel used for boating.
| Characteristics | Values |
|---|---|
| Marina fuel sales | Marinas sell clear and dyed gasoline and diesel |
| Clear gasoline and diesel | Sold when state fuel taxes have already been imposed and are included in the selling price |
| Retail sales tax | Does not apply to the sales of clear fuel |
| Dyed gasoline and diesel | Sold without state fuel taxes imposed |
| Retail sales tax on dyed fuel | Applicable |
| Amount of motor vehicle fuel tax, special fuel tax, and/or federal fuel tax included in the selling price of the fuel | May be deducted |
| Refund | May be sought from the Department of Licensing (DOL) for motor vehicle fuel tax or special fuel tax paid on fuel used as a boater |
| Diesel fuel tax revenue | Deposited into the Motor Vehicle Fuel Account in the Transportation Tax Fund to pay refunds authorized by the Diesel Fuel Tax Law |
| Balance of revenue | Transferred to the Highway Users Tax Account, then to the State Highway Account, with local shares transferred to city and county road funds |
| Excise taxes | Collected by the state of California from gasoline and diesel suppliers before delivery to retail stations |
| Diesel Fuel backup tax | Imposed on the delivery into the fuel tank of a diesel-powered highway vehicle of any diesel fuel that contains dye, any diesel fuel on which a refund has been claimed, or any liquid on which tax has not been imposed by the Diesel Fuel Tax Law, MVF tax law, or Use Fuel Tax Law |
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What You'll Learn
- In California, excise taxes are collected from diesel suppliers before retail delivery
- Washington state marinas sell taxed and untaxed fuel
- Dyed diesel is sold without state fuel taxes imposed
- Boaters can seek a refund for motor vehicle fuel tax
- Marina diesel may not contain road tax due to being FAME-free
In California, excise taxes are collected from diesel suppliers before retail delivery
In California, excise taxes are collected from diesel suppliers before the fuel is delivered to retail stations. This means that fuel vendors pay the tax, which is then passed on to consumers in the retail price. An excise tax is a tax directly levied on certain goods by a state or federal government. In California, the state imposes excise taxes on gasoline and diesel suppliers. The tax is imposed when the fuel is removed at the refinery or terminal rack, when it enters the state, or when it is sold to an unlicensed person. The diesel fuel tax revenue is deposited into the Motor Vehicle Fuel Account in the Transportation Tax Fund, which is used to pay refunds authorised by the Diesel Fuel Tax Law. The balance of the revenue is then transferred to the Highway Users Tax Account and the State Highway Account, with local shares going to city and county road funds for the construction and maintenance of public roads and mass transit systems.
The state excise tax is set at 59.6 cents per gallon of gasoline, with the tax expected to raise $7.5 billion from gasoline purchases for vehicles using public roads. The state also levies a fee of 2 cents per gallon on owners of underground storage tanks that contain petroleum. Additionally, California imposes excise taxes on alternative fuels such as ethanol, methanol, compressed natural gas, liquefied natural gas, and liquefied petroleum gas. These taxes vary depending on the type of fuel and can be paid through an annual flat-fee rate sticker tax based on the gross vehicle weight rating. For example, the excise tax on ethanol or methanol containing not more than 15% gasoline or diesel fuels is one-half the rate prescribed by Section 8651, which is $0.18 per gallon.
The state's cap-and-trade program also affects gasoline prices, as fuel suppliers must purchase permits for the greenhouse gases emitted when the fuel is burned. This adds an estimated 23 cents per gallon to the price of gasoline. Similarly, the state's low carbon fuel standard program requires suppliers of high-carbon fuels to purchase credits from suppliers of low-carbon fuels, adding about 8 cents per gallon to gasoline prices. While the federal government collects excise taxes on gasoline in California, these taxes are primarily used for highways and transit rather than the general fund.
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Washington state marinas sell taxed and untaxed fuel
In Washington state, marinas sell taxed and untaxed fuel. The taxed fuel is clear gasoline and diesel, where the state fuel taxes have already been imposed and are included in the selling price. On the other hand, the untaxed fuel is dyed gasoline and diesel, which are sold without the state fuel taxes imposed. The retail sales tax applies to the sales of dyed fuel. The selling price of dyed fuel is subject to tax and includes any state and/or federal per gallon taxes included in the price.
The Washington Department of Revenue outlines the different taxes that apply to marina fuel sales, including the state business and occupation (B&O) tax, retail sales tax, hazardous substance tax, petroleum products tax, and oil spill response fee. Marinas sell fuel to consumers in two ways, either clear or dyed. Clear fuel is sold with the fuel taxes already included in the price, while dyed fuel is sold without the taxes imposed.
For consumers, the purchase of fuel from marinas is subject to the B&O tax under the retailing classification. Any motor vehicle fuel tax, special fuel tax, and/or federal fuel tax included in the selling price of the fuel may be deducted. Additionally, boaters can seek a refund from the Department of Licensing (DOL) for motor vehicle fuel tax or special fuel tax paid on fuel used for boating. The refund covers the difference between the applicable per gallon fuel tax and the use tax on the value of the fuel.
To obtain a fuel license in Washington state, fuel suppliers, distributors, blenders, terminal operators, and carriers must submit specific documentation and licenses related to their fuel transactions and tax exemptions. The Washington State Department of Licensing outlines the requirements for each type of fuel license, providing instructions for online or mail applications and tax filings.
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Dyed diesel is sold without state fuel taxes imposed
In the United States, taxes can make up about 20% of the cost of gas and diesel. These fuel taxes are collected to pay for public road maintenance and repair. However, not all fuel is used for this purpose. Some diesel fuel is used for off-road or non-public road purposes, such as by the United States Armed Forces for use in ships or aircraft, or by commercial shippers. Therefore, to avoid paying unnecessary fuel taxes, certain companies can purchase dyed diesel, which is sold without state fuel taxes imposed.
Dyed diesel is also known as red diesel and is unavailable for consumer purchase. It is typically sold by special retailers in bulk to commercial firms. It is only legal for certain industries to use and is intended for off-road or non-public road use. For example, in California, using dyed diesel on public roads is not permitted unless authorized by federal and state law and licensed. The penalty for each violation is either $10 for every gallon of dyed diesel used or $1,000, whichever is greater.
Dyed diesel is exempt from certain taxes because it is intended for non-highway use. For example, in Texas, it can be used in the fuel supply tanks of railway engines, motorboats, refrigeration units, or other stationary equipment powered by a separate motor from a separate fuel supply tank. It can also be used by commercial transportation companies that provide transportation services to Texas public school districts.
Each state has its own guidelines on what uses are approved for tax-exempt dyed diesel, which may differ from federal regulations. Companies that use dyed diesel must carefully review federal and state rules and implement a tracking system for the use and consumption of their fuels.
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Boaters can seek a refund for motor vehicle fuel tax
While procedures and qualifications for refunds vary by state, the process typically involves saving fuel receipts and completing some paperwork, which is often available online. For example, in Washington state, boaters can apply for a refund from the Department of Licensing (DOL) for motor vehicle fuel tax or special fuel tax paid on fuel used for boating.
Some states that offer refunds on state highway/road fuel taxes for marine fuel include Alaska, California, Connecticut, Delaware, Massachusetts, Missouri, Nebraska, North Carolina, Texas, Virginia, Washington, and Wyoming. In these states, boaters can fill out forms, send in receipts, and receive refunds on fuel taxes paid.
It is important to note that not all states offer refunds on marine fuel taxes. Some states, such as Washington, impose state fuel taxes on clear gasoline and diesel, while dyed gasoline and diesel are sold without these taxes. In such cases, retail sales tax applies to the sale of dyed fuel. Additionally, some states choose to allocate tax revenues from marine fuel taxes towards boating programs through the Aquatic Resources Trust Fund.
Overall, boaters who purchase taxed fuel for their boats may be able to receive a refund on the 'highway use tax' portion, depending on the state in which the fuel was purchased. By seeking refunds, boaters can avoid paying taxes intended for road repairs, which are not applicable to their mode of transportation.
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Marina diesel may not contain road tax due to being FAME-free
Some diesel engines, such as the Yanmar 3GM30F, explicitly state that FAME should not be used in their engines. This is likely due to reliability concerns, as FAME-free diesel is often sought out by owners of offshore boats and commercial fishing vessels. These boats require a fuel that is dependable and will not fail them in emergency situations.
Additionally, FAME-free diesel is also a result of customer demand for alternative fuel types. Marinas are responding to these demands by offering FAME-free fuel options. This is particularly relevant for boat owners who wish to avoid the potential issues associated with biofuels, such as biological growth and the negative impact on "rubber" seals in older engines.
Furthermore, FAME-free diesel may be sought after due to tax considerations. In some jurisdictions, such as Washington state, marina fuel sales are subject to various taxes, including state fuel taxes and retail sales tax. However, these taxes may not always apply to FAME-free diesel, which is often classified as ""off-road diesel"" and exempt from certain taxes.
Overall, the absence of FAME in marina diesel may contribute to it being tax-free or having reduced tax obligations. This, combined with the reliability and performance considerations of boat owners, drives the demand for FAME-free marina diesel.
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Frequently asked questions
Marina diesel fuel does not include road tax. However, the price of marina diesel fuel includes state fuel taxes.
Marina diesel fuel is sold to consumers in two ways: clear and dyed. Clear diesel is sold when state fuel taxes have already been imposed and are included in the selling price. Dyed diesel is sold without the state fuel taxes imposed but is subject to retail sales tax.
The tax collected from diesel fuel is deposited into the Motor Vehicle Fuel Account in the Transportation Tax Fund. The revenue is used to pay refunds authorized by the Diesel Fuel Tax Law, and the remaining balance is transferred to the Highway Users Tax Account and the State Highway Account. Local shares are also transferred to city and county road funds for constructing and maintaining public roads and mass transit systems.
Yes, in California, the state collects excise taxes from gasoline and diesel suppliers before they deliver the fuel to retail stations.
Yes, you may be able to seek a refund from the Department of Licensing (DOL) for motor vehicle fuel tax or special fuel tax paid on marina diesel fuel. The refund will be the difference between the applicable per-gallon fuel tax and the use tax that applies to the value of the fuel.
