TITLE 34PUBLIC FINANCEPART 1COMPTROLLER OF PUBLIC ACCOUNTSCHAPTER 3TAX ADMINISTRATIONSUBCHAPTER SMOTOR FUEL TAXRULE §3.443Diesel Fuel Tax Exemption for Water, Fuel Ethanol, Biodiesel, and Biodiesel Mixtures (Tax Code, §§162.003, 162.204, and 162.227)(a) This rule applies only to motor fuel transactions that take place on or after January 1, 2004. Motor fuel transactions that occur prior to January 1, 2004, will be governed by sections in Texas Administrative Code, Title 34, Part 1, Chapter 3, Subchapter L.
(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Water-based diesel fuel--a combination of water, petroleum diesel fuel, emulsifier, and seasonal additives (when necessary) into an emulsion that is suitable or used for the propulsion of a diesel-powered motor vehicle.
(2) Fuel ethanol--alcohol that is made from agricultural products and bioethanol that is made from cellulosic biomass materials.
(3) Biodiesel--a fuel comprised of monoalkyl esters of long chain fatty acids generally derived from vegetable oils or fats, designated B100, and meeting the requirements of ASTM D 6751.
(4) Biodiesel Blend--a blend of biodiesel fuel meeting ASTM D 6751 with petroleum based diesel fuel, designated Bxx where xx represents the volume percentage of biodiesel fuel in the blend. (Example: B20 is 20% biodiesel and 80% petroleum diesel)
(c) Diesel fuel tax exception. The tax imposed on the first sale or use of diesel fuel in this state does not apply to biodiesel or to the volume of water, fuel ethanol, or biodiesel that is blended with taxable diesel fuel, when the finished product is clearly identified on the retail pump, storage tank, and sales invoice as biodiesel or a combination of diesel fuel and water, fuel ethanol, or biodiesel.
(d) Invoice documentation.
(1) The volume of biodiesel must be identified on the sales invoice on each sales transaction, and must continue to be identified on sales invoices until the blended product is sold to the ultimate consumer.
(2) The volume of water, fuel ethanol, or biodiesel that is combined with taxable diesel fuel must be identified on the sales invoice on each sales transaction after the water, fuel ethanol, or biodiesel is first blended with taxable diesel fuel, and must continue to be identified on sales invoices until the blended product is sold to the ultimate consumer.
(3) A sales invoice must:
(A) identify a water-based diesel fuel, ethanol blended diesel fuel, biodiesel, or biodiesel blend by a commonly accepted commercial or industry name for the blended product;
(B) list the volume in gallons (rounded to the nearest whole gallon) or the percentage (rounded to the nearest tenth of one percent) of the blended product that is water, fuel ethanol, or biodiesel;
(C) list the volume in gallons (rounded to the nearest whole gallon) or the percentage (rounded to the nearest tenth of one percent) of the blended product that is taxable diesel fuel. Taxable diesel fuel includes emulsifiers and additives, but not water, fuel ethanol, or biodiesel; and
(D) list the basis of calculating the tax (if a taxable sale) as either $0.20 for each gallon of taxable diesel fuel in the blended product or a ratable tax rate based on the percent of taxable diesel in the blended product. For example, the invoice for the sale of 100 gallons that is a blend of 20% water and 80% taxable diesel fuel may list: state diesel fuel tax of $0.20 per gallon on 80 gallons, or state diesel fuel tax of $0.16 per gallon on 100 gallons of water-based diesel fuel.
(e) Notice required on storage tank and retail pump.
(1) A notice must be posted in a conspicuous location on each storage tank and retail pump from which biodiesel is stored or sold until sold to the ultimate consumer.
(2) A notice must be posted in a conspicuous location on each storage tank and retail pump from the time that the water, fuel ethanol, or biodiesel is first blended with taxable diesel fuel until the blended product is sold to the ultimate consumer, and state the volume percentage of water, fuel ethanol, or biodiesel that is blended with petroleum diesel fuel.
(3) The notice must:
(A) identify the product by the common industry name or commercial name of the blended product,
(B) state the percentage (rounded to the nearest tenth of one percent) of the finished blended product that is water, fuel ethanol, or biodiesel, and
(C) state the percentage (rounded to the nearest tenth percent of one percent) of the finished blended product that is taxable diesel fuel. Taxable diesel fuel includes emulsifiers and additives, but not water, fuel ethanol, or biodiesel.
(f) Refund of diesel tax paid. The ultimate consumer who has paid tax on biodiesel or on the percentage of product that is water, fuel ethanol, or biodiesel may file a claim for refund of taxes that have been paid on biodiesel or on the volume of water, fuel ethanol, or biodiesel that is blended with taxable diesel fuel as provided by §3.432 of this title (relating to Refunds on Gasoline and Diesel Fuel Tax). The refund claim must be supported with purchase invoice(s) as described in subsection (d) of this section. The total volume of diesel fuel that is purchased is presumed to be taxable diesel fuel if the purchase invoice does not meet the requirements of subsection (d) of this section.
(g) Commercial motor vehicles licensed under the International Fuel Tax Agreement (IFTA).
(1) A water-based diesel fuel, ethanol blended diesel fuel, biodiesel, or biodiesel blend that is delivered into the fuel supply tank(s) of a motor vehicle that is licensed under the IFTA is presumed to be used in the jurisdiction in which it was purchased. This presumption may be overcome if it is shown that the total amount of water-based diesel fuel, ethanol blended diesel fuel, biodiesel, or biodiesel blend that is purchased in other IFTA jurisdictions is greater than the amount of total diesel fuel used in other IFTA jurisdictions by all diesel-powered motor vehicles that the IFTA licensee operates.
(2) In calculating the IFTA fleet average mile-per-gallon, the total gallons of diesel fuel that are consumed includes the total gallons of water-based diesel fuel, ethanol blended diesel fuel, biodiesel, or biodiesel blend.
(3) An IFTA licensee who overpays the tax on a water-based diesel fuel, ethanol blended diesel fuel, biodiesel, or biodiesel blend by way of an IFTA tax return may request a refund from the comptroller. A refund claim must be supported with purchase invoice(s) as described in subsection (d) of this section. The total volume of diesel fuel that is purchased is presumed to be taxable diesel fuel if the purchase invoice(s) do not meet the requirements of subsection (d) of this section.