Regan Brown
Texas charges a tax on diesel fuel, which is usually paid by suppliers, permissive suppliers, distributors, importers, exporters, and blenders. The tax rate is twenty cents per gallon on diesel fuel removed from a terminal, imported, blended, sold to an unauthorized person, or for another taxable use not exempted by law. However, there are certain exemptions to this tax, such as diesel fuel sold to non-profit food banks or used for farming, home heating, or local government purposes. In addition, the state offers penalty relief during certain periods and in specific counties affected by wildfires. To avoid penalties, purchasers of dyed diesel fuel must provide a signed statement with an end user number issued by the comptroller.
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What You'll Learn
Texas dyed diesel fuel tax exemptions
Texas levies a tax of $0.20 per gallon on diesel fuel removed from a terminal, imported, blended, sold to an unauthorized person, or for other taxable uses not exempted by law. This is known as the Texas dyed diesel fuel tax.
Texas has certain exemptions for its dyed diesel fuel tax. Firstly, the tax does not apply to the sale of dyed diesel fuel if the purchaser provides a licensed supplier or distributor with a signed statement that includes an end user number issued by the comptroller. This exemption is allowed for up to 25,000 gallons of dyed diesel fuel per month.
Additionally, House Bill 3599, effective from 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 for food delivery.
It is important to note that penalties may apply if taxes are not paid by the due date or if there is a false or erroneous execution of a promissory statement.
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Texas dyed diesel fuel tax penalties
Texas levies a tax on diesel fuel removed from a terminal, imported, blended, sold to an unauthorized person, or put to other taxable uses. This tax amounts to $0.20 per gallon. The state offers a 2% discount to suppliers and importers and a 1.75% discount to distributors and importers if the tax is paid by the due date.
The Texas Comptroller outlines penalties for late payments and other infractions concerning diesel fuel tax. If the tax is paid over 30 days after the due date, a 10% penalty is assessed. A $50 penalty is also assessed for each report filed after the due date.
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 a destination in Texas before export. A penalty of $2,000 or five times the amount of tax due, whichever is greater, is assessed if the tax due on the redirected fuel is paid after the due date. A penalty of $200 is assessed for 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 the context of purchasing dyed diesel fuel, a taxable use of the fuel forfeits the purchaser's right to buy dyed diesel fuel tax-free for a year from the date of the offense. If a purchaser of dyed diesel fuel fails to pay an amount owed to a licensed supplier or distributor, the comptroller shall revoke the purchaser's end user number. The comptroller may reinstate the end user number upon receipt of proof that the purchaser has satisfied the judgment.
In response to the Texas wildfires, the IRS granted temporary penalty relief for the use of dyed diesel fuel in certain counties. Ordinarily, dyed diesel fuel is not taxed when sold for uses exempt from excise tax, such as for farming, home heating, or local government purposes. However, during the wildfire relief period, the IRS did not impose penalties for the use of dyed diesel fuel in diesel-powered vehicles on the highway in the affected counties.
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Texas dyed diesel fuel tax refunds
Texas charges a tax of $0.20 per gallon on diesel fuel that is removed from a terminal, imported, blended, sold to an unauthorized person, or put to any other taxable use not otherwise exempted by law. This tax is known as the Texas Dyed Diesel Fuel Tax.
Certain entities are exempt from this tax, including the United States Government, Texas public school districts, and certain exporters. Additionally, House Bill 3599, effective from September 1, 2023, exempts from tax any diesel fuel sold to a non-profit food bank for delivery in a storage facility or trucks with a gross vehicle weight of at least 25,000 pounds owned by the food bank.
For the Texas Dyed Diesel Fuel Tax, refunds are available for certain entities, including interstate truckers and transit authorities. To claim a refund, eligible entities must complete and submit Form 06-106, Texas Claim for Refund of Gasoline or Diesel Fuel Taxes.
It is important to note that there are penalties for late payments of the Texas Dyed Diesel Fuel Tax. If the tax is paid more than 30 days after the due date, a 10% penalty is assessed. Additional penalties may also apply, such as a penalty of $2,000 or five times the amount of tax due, whichever is greater, if the tax is redirected to a destination in Texas before export and paid after the due date.
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Texas dyed diesel fuel tax licenses
Texas charges a tax of twenty cents ($0.20) per gallon on diesel fuel removed from a terminal, imported, blended, sold to an unauthorized person, or put to other taxable uses not exempted by law. This tax is due on the 25th day of the month following the end of the calendar month for the previous month's activity. For example, tax on March activity would be due on April 25.
The state offers a discount of 2% to suppliers and importers and a discount of 1.75% to distributors and exporters if the tax is paid by the due date. If the tax is paid more than 30 days after the due date, a 10% penalty is assessed.
In the context of Texas dyed diesel fuel tax, a "licensed supplier or distributor" refers to an entity that has been issued a license by the state to sell or distribute diesel fuel. Purchasers of dyed diesel fuel must furnish a signed statement, including an end user number issued by the comptroller, to the licensed supplier or distributor to avoid paying taxes on the fuel.
To obtain this end user number, a purchaser must apply to the comptroller and provide a signed statement indicating that none of the purchased dyed diesel fuel will be delivered or permitted to be delivered into the fuel supply tank of a motor vehicle operated on Texas's public highways. The monthly limitations prescribed by Texas law apply regardless of whether the dyed diesel fuel is purchased in a single transaction or multiple transactions during that month.
If a purchaser exceeds the monthly limitations, they are required to obtain a dyed diesel fuel bonded user license. Additionally, if a purchaser of dyed diesel fuel fails to pay an amount owed to a licensed supplier or distributor, the comptroller shall revoke the purchaser's end user number.
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Texas dyed diesel fuel tax rates
Texas imposes a tax rate of $0.20 per gallon on diesel fuel that is removed from a terminal, imported, blended, or sold for an unauthorized use. This tax rate also applies to diesel fuel used for other taxable purposes not exempted by law. This rate is subject to discounts for suppliers, importers, and distributors who pay by the due date, which is typically the 25th day of the month following the end of the calendar month. For example, taxes for March activity would be due on April 25th.
Certain entities are exempt from paying diesel fuel tax in Texas. Effective September 1, 2023, non-profit food banks are exempt from tax on diesel fuel delivered to their storage facilities or trucks with a gross vehicle weight of at least 25,000 pounds used for food delivery. Additionally, purchasers of dyed diesel fuel can apply for an end user number from the comptroller to make tax-free purchases. However, this fuel cannot be used in motor vehicles operated on public highways in Texas.
The state imposes penalties for late payments and redirection of fuel intended for export. A 10% penalty is assessed if the tax is paid more than 30 days after the due date. If licensed suppliers, permissive suppliers, distributors, importers, or exporters redirect fuel intended for export to a destination in Texas, they face a penalty of $2,000 or five times the tax due, whichever is greater. A $200 penalty is also assessed for each subsequent sale of tax-free diesel fuel in Texas that is not reported within 180 days of the original sale date.
To avoid penalties, it is important for businesses involved in the distribution and use of diesel fuel in Texas to be aware of the applicable tax rates, exemptions, and due dates. Late payments and redirection of fuel can result in significant financial consequences. By staying compliant with the tax regulations, businesses can benefit from the discounts offered for timely payments and avoid any disruptions to their operations.
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Frequently asked questions
Texas imposes a tax on diesel fuel removed from a terminal in the state. However, dyed diesel fuel may be exempt from this tax if certain conditions are met.
To qualify for tax exemption, purchasers must furnish a signed statement to a licensed supplier or distributor, including an end user number issued by the comptroller. The statement must indicate that the dyed diesel fuel will not be delivered into the fuel supply tank of a motor vehicle operated on public highways in Texas.
Yes, there are penalties for non-payment or late payment of the tax. A 10% penalty is assessed if the tax is paid more than 30 days after the due date. Additionally, there are specific penalties for licensed suppliers, permissive suppliers, distributors, importers, and exporters who redirect fuel intended for export to a destination in Texas.
Yes, certain entities are exempt from the diesel fuel tax, including the United States Government, Texas public school districts, Texas counties, and certain exporters.
Yes, in certain circumstances, the Internal Revenue Service (IRS) has granted penalty relief for the use of dyed diesel fuel in Texas. For example, during the Texas wildfires in 2024, the IRS did not impose penalties for the use of dyed diesel fuel in specific counties.
