BILL ANALYSIS

H.B. 3651

By: Bailes

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The comptroller of public accounts criminal investigation division (CID) is responsible for enforcing state tax laws, including ensuring taxes are paid on motor fuel transactions. The CID also investigates potential tax fraud. Current law lacks clarity and specific definitions to ensure the successful prosecution of individuals who unlawfully or fraudulently acquire motor fuel. Creative schemes to fraudulently acquire motor fuel fall outside existing definitions and evolve faster than state law. Because the strict definitions in current law fail to capture new and evolving schemes, prosecutors have declined to prosecute these cases based on the low likelihood of securing a conviction. Although motor fuel theft schemes often involve stolen credit card data, state law also lacks provisions tying motor fuel tax crimes to unauthorized use of credit cards or money. H.B. 3651 seeks to revise certain definitions and add provisions relating to motor fuel tax regulations to strengthen tax collection and prosecution of crimes related to motor fuel tax.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 3651 amends the Tax Code to clarify that the gasoline tax and diesel fuel tax must be paid by each person receiving the gasoline or diesel fuel in a subsequent sale until the tax is paid ultimately by the person using or consuming the gasoline or diesel fuel. The bill imposes a backup tax on the following persons:

· a person who acquires gasoline or diesel fuel on which tax has not been paid in an original or subsequent sale, other than a person exempted from the gasoline tax or diesel fuel tax, as applicable; and

· a person who acquires gasoline or diesel fuel by any unlawful means, including by purchase through the unauthorized use of a credit card, a debit card, or other money, regardless of whether tax was previously paid on the gasoline or diesel fuel or was added to the selling price of the gasoline or diesel fuel.

H.B. 3651 sets out and revises certain definitions relating to the imposition of motor fuel taxes as follows. Among other things, the bill does the following:

· defines "container" as any receptable used to store motor fuel;

· defines "delivery" as any transfer of motor fuel into a fuel supply tank, cargo tank, or container or to a location or into a specified receptacle;

· broadens the scope of the definition of "motor fuel" to include any products offered for sale, sold, used, or capable of use as fuel for a motor vehicle licensed for use on a public highway and to remove language limiting the fuels that qualify as motor fuel to those used for fuel for a gasoline- or diesel-powered engine;

· excludes a person who lawfully acquires motor fuel and retains ownership of the fuel while the fuel is being transported from the persons classified as a "motor fuel transporter"; and

· removes language classifying a vehicle that is designed to carry motor fuel over a public highway as a "transport vehicle" even if not used for such a purpose and specifies that motor vehicles and motor vehicle/trailer combinations may qualify as "transport vehicles."

The bill's provisions do not affect tax liability accruing before the bill's effective date.

EFFECTIVE DATE

September 1, 2023.