Regan Brown
The price of diesel fuel is a concern for many people, especially those who drive diesel cars or rely on diesel fuel for their profession. In Texas, the price of diesel fuel is impacted by various factors, including taxes and penalties. As of September 2023, House Bill 3599 exempts tax on diesel fuel sold to nonprofit food banks, but other taxes and penalties may apply in certain situations. The cost of diesel fuel in Texas can vary, and it's important for consumers and businesses to stay updated on the latest prices and any applicable discounts or exemptions.
| Characteristics | Values |
|---|---|
| Tax on diesel fuel per gallon | $0.20 |
| Discount for suppliers and importers when paid by due date | 2% |
| Discount for distributors and importers when paid by due date | 1.75% |
| Due date for suppliers, permissive suppliers, distributors, importers, exporters and blenders | 25th day of the month following the end of the calendar month |
| Due date for dyed diesel fuel bonded users and interstate truckers | 25th day of the month following the end of the calendar quarter |
| Penalty for redirection of fuel purchased for export to Texas | $2,000 or five times the amount of tax due (whichever is greater) |
| Penalty for each subsequent sale of tax-free fuel not reported within 180 days of the original sale due date | $200 |
| Interest on past due taxes | Charged beginning 61 days after the due date |
| Exemption from tax | Diesel fuel sold to a non-profit food bank and delivered into a storage facility or trucks with a gross vehicle weight of at least 25,000 pounds |
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What You'll Learn
Diesel fuel tax exemptions
The current price of a gallon of diesel fuel in Texas is twenty cents ($0.20) per gallon when removed from a terminal, imported, blended, sold to an unauthorized person, or for other taxable uses not exempted by law. This price includes a 2% discount for suppliers and importers and a 1.75% discount for distributors and importers if the tax is paid by the due date.
There are several exemptions to the diesel fuel tax in Texas. These include:
- Diesel fuel sold to the United States for its exclusive use, as long as it is not sold or delivered to a person operating under a contract with the country.
- Diesel fuel sold to a public school district in Texas for the district's exclusive use.
- Diesel fuel sold to a commercial transportation company or a metropolitan rapid transit authority that provides public school transportation services to a school district, as long as the fuel is only used for those services.
- Diesel fuel exported by a licensed supplier or exporter from Texas to another state, as long as the bill of lading indicates the destination state and the supplier collects the destination state tax.
- Diesel fuel sold to a non-profit food bank and delivered to a storage facility or trucks with a gross vehicle weight of at least 25,000 pounds owned by the food bank and used for food delivery.
In addition, there are penalties for suppliers, permissive suppliers, distributors, importers, and exporters who redirect fuel intended for export to a destination in Texas before export. A penalty of $2,000 or five times the tax amount, whichever is greater, is assessed if the tax on the redirected fuel is paid after the due date. A $200 penalty is also assessed for each subsequent sale of tax-free fuel not reported within 180 days of the original sale date. Past due taxes are charged interest beginning 61 days after the due date.
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Diesel fuel tax penalties
The state of Texas levies a tax on diesel fuel of twenty cents ($0.20) per gallon on diesel fuel removed from a terminal, imported, blended, sold to an unauthorized person, or put to another taxable use not exempted by law. This tax is due on the 25th day of the month following the end of the calendar month, and a $50 penalty is assessed for each report filed after the due date. If the tax is paid over 30 days late, a 10% penalty is assessed.
Effective January 2018, additional penalties apply to licensed suppliers, permissive suppliers, distributors, importers, and exporters who purchase diesel fuel for export but redirect it to Texas before export. A penalty of $2,000 or five times the amount of tax due, whichever is greater, is assessed if the tax on redirected fuel is paid after the due date. A penalty of $200 is assessed on each subsequent sale of tax-free diesel fuel in Texas that is not reported within 180 days of the original report of the sale. Past-due taxes are charged interest beginning 61 days after the due date.
In response to the Texas wildfires, the IRS granted penalty relief for dyed diesel fuel, which is usually not taxed because it is sold for uses exempt from excise tax, such as to farmers for farming purposes, for home heating, and to local governments. This relief was in effect from February 23, 2024, to March 22, 2024, and applied to certain counties in Texas. During this period, the IRS did not impose penalties for failure to make semi-monthly deposits of tax for dyed diesel fuel sold for use in diesel-powered vehicles on the highway in the listed counties. The IRS also did not impose penalties when dyed diesel fuel with a sulfur content not exceeding 15 parts-per-million was sold for use in diesel-powered vehicles on the highway in certain counties in Texas.
Additionally, House Bill 3599 of the 88th Legislative Session, effective September 1, 2023, exempts from tax any diesel fuel sold to a non-profit food bank and delivered into either a storage facility or trucks with a gross vehicle weight of at least 25,000 pounds owned by the food bank and used to deliver food.
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Monthly and quarterly tax due dates
The cost of diesel fuel in Texas includes a tax of twenty cents ($0.20) per gallon, which is due on the 25th day of the month following the end of the calendar month (for example, April 25 for March activity). This applies to suppliers, permissive suppliers, distributors, importers, exporters, and blenders. If the tax is paid by the due date, a discount of 2% is applicable for suppliers and importers, and 1.75% for distributors and importers.
For dyed diesel fuel bonded users and interstate truckers (except IFTA licensed), the due date is the 25th day of the month following the end of the calendar quarter (April 25, July 25, October 25, and January 25), or yearly on January 25 if qualified. IFTA licensees are required to pay quarterly on the last day of the month following the end of the calendar quarter (April 30, July 31, October 31, and January 31). If the due date falls on a weekend or a legal holiday, the next business day is considered the due date.
Penalties for licensed suppliers, permissive suppliers, distributors, importers, and exporters who redirect fuel intended for export to a destination in Texas include a fine of $2,000 or five times the amount of tax due, whichever is greater. A penalty of $200 is applied to each subsequent sale of tax-free gasoline or diesel fuel that is not reported within 180 days of the original sale date. Interest on past-due taxes begins to accrue 61 days after the due date.
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Texas Fuels Tax Report
The Texas Fuels Tax Report is a complex document that governs various aspects of diesel fuel taxation in the state. One of the critical components of the report is the taxation on diesel fuel removed from a terminal, imported, or sold for unauthorized use. A tax of twenty cents ($0.20) per gallon is levied in these cases, with specific deadlines and discounts in place for different entities. For instance, suppliers and importers can avail a 2% discount if the tax is paid by the due date, while distributors and importers are eligible for a 1.75% discount.
The Texas Fuels Tax Report also outlines penalties for non-compliance and redirection of fuel intended for export. Licensed suppliers, permissive suppliers, distributors, importers, and exporters who redirect fuel intended for export to a destination in Texas are subject to a penalty of $2,000 or five times the tax due, whichever amount is greater. An additional penalty of $200 is imposed for each subsequent sale of tax-free fuel that goes unreported within 180 days of the original sale's due date.
Furthermore, the report has specific provisions for non-profit food banks. House Bill 3599, effective from September 1, 2023, exempts from tax any diesel fuel sold to a non-profit food bank and delivered into eligible trucks or storage facilities. This has resulted in necessary changes to several forms, including Form 06-168 (Texas Fuels Tax Report), Form 06-159 (Texas Schedule of Gallons Sold Tax-Free to Exempt Entities), and Form 06-106 (Texas Claim for Refund of Gasoline or Diesel Fuel Taxes).
The Texas Comptroller provides a range of pre-printed forms to facilitate the tax reporting process, including the Texas Fuels Tax Report Forms for Diesel Fuel Distributors. These forms are designed to work seamlessly with Adobe Reader, ensuring a smooth filing experience. Additionally, IFTA reports can be filed online through WebFile or EDI software, offering a convenient digital alternative to the traditional paper-based process.
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Discounts for early tax payments
The price of diesel fuel in Texas is dynamic, and taxes are levied on diesel fuel based on various factors. For instance, a tax of twenty cents ($0.20) per gallon is charged on diesel fuel removed from a terminal, imported, blended, sold to an unauthorized person, or used for other taxable purposes. When this tax is paid by the due date, suppliers and importers can avail a 2% discount, while distributors and importers are eligible for a 1.75% discount.
In Texas, early tax payments may qualify for discounts, and these vary based on the type of tax and the timing of the payment. Here are some key points regarding early tax payment discounts:
Prepayment Discounts:
Texas offers prepayment discounts for certain taxes, such as sales and use tax. To qualify for a prepayment discount, taxpayers must make a reasonable estimate of their tax liability. This typically means paying at least 90% of the current period's total tax amount due or paying 100% of the total tax amount from the same reporting period in the previous year.
Property Tax Discounts:
Texas Tax Code Section 31.05 allows taxing units to adopt early payment discounts for property taxes. There are two types of discount structures:
- October-November-December Discount: A 3% discount is offered if the tax is paid in October or earlier, a 2% discount for payment in November, and a 1% discount for payment in December.
- 3-2-1 Discount: A 3% discount is provided if the taxes are paid before or during the next full calendar month following the mailing of tax bills. This option is applicable when tax bills are mailed after September 30.
Diesel Fuel Tax Discounts:
As mentioned earlier, discounts are available for the diesel fuel tax in Texas. Suppliers and importers can avail a 2% discount, while distributors and importers are eligible for a 1.75% discount if the tax is paid by the due date.
Payment Methods:
It's important to note that payment methods may impact the availability of discounts. Texas offers various payment options, including cash, check, money order, credit card, and electronic funds transfer. However, late payments or failure to comply with required payment methods, such as electronic payments for certain tax amounts, may result in penalties and the loss of timely filing and/or prepayment discounts.
To ensure you take advantage of any applicable discounts and comply with payment requirements, it is recommended to refer to the Texas Comptroller's website or consult your local tax collection office for the most up-to-date information on early tax payment discounts and payment options.
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