HBA-GUM H.B. 3082 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3082 By: Telford Ways & Means 4/12/1999 Introduced BACKGROUND AND PURPOSE Current motor fuel tax law provides a system of cross-checks, monthly reports, audits, and recordkeeping to ensure that appropriate taxes are remitted. The law also provides for prosecution of tax evasions through a motor fuel tax unit within the Travis County District Attorney's office, and provides for enforcement of the motor fuels tax laws through a criminal investigations division within the comptroller of public accounts office. These motor fuel tax laws have been amended and refined several times to minimize potential loopholes for motor fuels tax evasion, and to help ensure that the state receives every dollar of tax owed to it. H.B. 3082 further refines and clarifies the motor fuel tax laws by increasing permit-holders' reporting requirements; imposing new restrictions on the import and export of motor fuel; recognizing dyed-diesel fuel and limiting the sale of tax-free undyed-diesel fuel to agricultural users; requiring reports to be submitted to the comptroller's office in an electronic format; defining blending and blended products; and limiting the period of validity of inactive permits. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 153.001, Tax Code, to amend the definition of "motor fuel," and to define "export," "import," "bulk lot vehicle," "dyed diesel fuel," "undyed diesel fuel," "blended fuel," "blending" and "shipping document." SECTION 2. Amends Section 153.010, Tax Code, to authorize the Comptroller of Public Accounts (comptroller), a peace officer, an employee of the Texas Natural Resource Conservation Commission (TNRCC), or an employee of the Department of Agriculture to take samples of motor fuel from a storage tank or container. Includes a shipping document among the items that may be examined to determine whether the taxes have been paid or accounted for. SECTION 3. Amends Section 153.403, Tax Code, as follows: (19) Makes a conforming change. (21) Makes a conforming change. (22) Provides that failing to deliver a shipping document related to a shipment when delivering a motor fuel shipment is a criminal offense. Makes a conforming change. (32) Provides that it is a criminal offense by the dealer purchasing motor fuel to fail to accept or receive a shipping document relating to the shipment being accepted. (34) Provides that it is a criminal offense to import, sell, use, distribute, or store motor fuel upon which taxes imposed by this chapter (Motor Fuel Taxes) are owed but have not been paid to or reported by the holder of a valid, unrevoked distributor's permit, supplier's permit, jobber's permit, or aviation fuel dealer's permit. (35) Provides that it is a criminal offense to produce a blended product to evade paying applicable motor fuel taxes. (36) Provides that it is a criminal offense to evade or attempt to evade a tax imposed by this chapter (Motor Fuel Taxes). SECTION 4. Amends Chapter 153, Title 2, Tax Code, by adding Section 153.018, as follows: Sec. 153.018. IMPORTATION AND EXPORTATION OF MOTOR FUEL (a) Prohibits the import and export of motor fuel by a bulk lot vehicle unless the person or business entity possesses a shipping document created by a terminal or bulk plant at which the fuel was loaded. Requires the terminal or bulk plant to provide the shipping document to the operator of the bulk lot vehicle. Requires the document to provide specified information. (b) Requires the terminal, bulk plant, carrier, permitted distributor or supplier, and person that received the motor fuel to retain a copy of the shipping document for four years after the date of receipt of the fuel and, upon request, to provide the comptroller of TNRCC (comptroller) or a law enforcement officer a copy of the document within 10 working days. (c) Requires the operator of a bulk lot vehicle operator to have possession of the shipping document while transporting imported or exported motor fuel. Requires the operator to show the document to the comptroller or a peace officer upon request. Authorizes the comptroller to delegate inspection of the document to other governmental agencies. Requires the operator to provide a copy of the document to the person receiving the delivery of the fuel. (d) Requires the operator to deliver motor fuel only to the state or states specified in the shipping document. (e) Requires a terminal to post a notice describing the duties of operators under this section (Importation and Exportation of Motor Fuel). Requires the notice to be conspicuously posted proximate to the point of receipt of shipping papers by operators. Authorizes the comptroller to prescribe the language, type, style, and format of the notice. (f) Sets forth the penalties incurred for violation of this section. SECTION 5. Amends Section 153.006, Tax Code, by adding Subsection (e), to authorize the comptroller to revoke a distributor or supplier permit when a distributor or supplier purchases, for export in this state, motor fuel exclusive of the motor fuel tax, and diverts or causes the diversion of the motor fuel from the destination originally designated. SECTION 6. Amends Section 153.117(a), Tax Code, by amending Subdivision (4) and adding Subdivisions (6)-(8), as follows: (4) Makes a conforming change. (6) Requires a distributor to keep a record of an itemized statement showing by load the number of gallons of gasoline received during the preceding calendar month for export, the location of the loading, and the destination of each load. (7) Requires a distributor to keep a record of an itemized statement showing by load the number of gallons of gasoline exported from this state. Makes a conforming change. (8) Requires a distributor to keep a record of an itemized statement showing by load the number of gallons of gasoline imported during the preceding calendar month. SECTION 7. Amends Section 153.219(a), Tax Code, by amending Subdivision (4) and adding Subdivisions (6)-(10), as follows: (4) Includes all purchasers of a single sale of diesel fuel in the information a supplier is required to keep a record of. Makes a conforming change. (6) Requires a supplier to keep a record of an itemized statement showing by load the number of gallons of diesel fuel received during the preceding calendar month for export. (7) Requires a supplier to keep a record of an itemized statement showing by load the number gallons of diesel fuel exported from this state. (8) Requires a supplier to keep a record of an itemized statement showing by load the number of gallons of diesel fuel imported during the preceding calendar month. (9) Requires a supplier to keep a record of an itemized statement showing by purchaser, end user number, or agricultural user exemption number, the number of gallons of dyed and undyed diesel fuel sold tax-free to a purchaser utilizing a signed statement in accordance with Section 153.205 (Statement for Purchases of Diesel Fuel Tax Free). Requires that the statement differentiate between dyed and undyed fuel. (10) Requires a supplier to keep a record of an itemized statement showing by purchaser, end user number, or agricultural user exemption number the number of gallons of dyed diesel fuel sold tax-free to bonded purchasers. SECTION 8. Amends Section 153.112(a), Tax Code, to require, rather than authorize, the comptroller to cancel a distributor's permit under circumstances specified under this section. Decreases from twelve to nine months the period of time during which no purchase, sale, or use of gasoline has been reported the period of time required to cancel a distributor's permit. SECTION 9. Amends Section 153.118(a), Tax Code, to apply this section (Reports and Payments) to any person liable to the state for payment of tax under Section 153.105(a) (relating to the collection of tax and allowances). Provides that the reports required by the comptroller may be submitted in a manner approved by the comptroller. Provides that failure to obtain software from the comptroller is no excuse for failure to file a complete report. Makes conforming changes. SECTION 10. Amends Section 153.215(a), Tax Code, to specify that this section applies to a dyed diesel bonded user permit and an agricultural bonded user permit. Requires, rather than authorizes, the comptroller to cancel a supplier's permit under specified conditions. Makes conforming changes. SECTION 11. Amends Section 153.221(a), Tax Code, to apply this section to a dealer required to collect tax under Section 153.206(b) (relating to the collection and payment of tax and allowances by a diesel fuel dealer) or a user required to pay tax under Section 153.206(c) (relating to the collection and payment of tax and allowances by a diesel fuel user). Requires a report of diesel fuel delivered by a user into the fuel tank of a motor vehicle owned or operated by him to be filed with the comptroller. Applies this section to taxes needed to be paid. Provides that reports may be submitted in a manner provided and approved by the comptroller. Provides that failure to obtain software from the comptroller is no excuse for failure to file a complete report. Makes conforming changes. SECTION 12. Amends Section 153.201(a), Tax Code, to specify that this subsection applies to undyed diesel fuel. SECTION 13. Amends Section 153.203, Tax Code, by amending Subsection (3) and adding Subsection (10), as follows: (3) Specifies that this subsection refers to undyed diesel fuel sold or delivered by the specified suppliers, or agricultural bonded user under this subsection for agricultural purposes. Makes a conforming change. (10) Creates this subsection to include dyed diesel fuel among the exemptions to this subchapter. SECTION 14. Amends Section 153.205, Tax Code, by amending Subsections (a)-(d), (i), and (j) and adding Subsection (k), as follows: (a) Adds language to provide that sales of dyed diesel fuel, or undyed diesel fuel if the fuel will be used for an agricultural purpose, may be made without collecting the tax if the purchaser furnishes to a permitted supplier a signed statement, including an end user number or agricultural user exemption number issued by the comptroller's office, that stipulates specified actions. (b) Makes a conforming change. (c) Makes a conforming change. (d) Makes conforming changes. (i) Makes conforming changes. (j) Makes conforming and nonsubstantive changes. (k) Requires each person wishing to utilize a signed statement for the purchase of fuel under this section to apply to the comptroller for an agricultural user exemption number to be used in conjunction with a signed statement. Prohibits a tax-free sale of any diesel from being made to a purchaser who does not have a valid end user number or agricultural user exemption number issued by the comptroller's office. SECTION 15. Amends Subchapter C, Chapter 153, Tax Code, by adding Section 153.226 through 153.229 and 153.330, as follows: Sec. 153.226. NOTICE REGARDING DYED DIESEL FUEL. Provides that a notice stating "DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE" must be provided by a permitted supplier to a person who receive dyed diesel fuel, by a seller of dyed diesel fuel to its buyer if applicable by this subdivision, and posted by a seller on a specified pump or bulk plant. Sec. 153.227. DYED DIESEL FUEL NOTICE REQUIRED ON SHIPPING DOCUMENTS, BILLS OF LADING, AND INVOICES. Provides that the form of notice required by Section 153.226 must be provided at the time of the removal or sale and must appear on shipping documents, bills of lading, cargo manifests and invoices accompanying the sale or removal of the dyed diesel fuel. Sec. 153.228. UNAUTHORIZED SALE OR USE OF DYED DIESEL FUEL. (a) Prohibits a person from selling or holding for sale dyed diesel fuel for any use that the person knows or has reason to know is a taxable use of the diesel fuel. (b) Prohibits a person from using or holding for use dyed diesel fuel for a use other than a non-taxable use if the person knew or had reason to know that the diesel fuel was so dyed. Sec. 153.229. Alteration of Dye or Marker in Dyed Diesel Fuel Prohibited. Prohibits a person, with the intent to evade payment of tax, from altering or attempting to alter the strength or composition of a dye or marker in dyed diesel fuel. Sec. 153.330. USE OF DYED FUEL PROHIBITED. (a) Prohibits a person from operating a motor vehicle on a public highway in this state with taxable motor fuel that contains dye in the fuel supply tank of the motor vehicle. (b) Provides exemptions to the applicability of this section. (c) Provides that a person who violates this section is subject to a criminal penalty. SECTION 16. Amends Section 153.209, Tax Code, by adding Subsection (b), to provide that a dyed diesel bonded user permit authorizes a user to purchase dyed diesel fuel in excess of 10,000 gallons per month. Provides that an agricultural bonded user permit authorizes a user to purchase undyed diesel fuel in excess of 10,000 gallons per month for agricultural purposes only. Makes conforming changes. SECTION 17. Amends Section 153.217(a), Tax Code, to make conforming changes. SECTION 18. Amends Section 153.218, Tax Code, to make conforming changes. SECTION 19 is omitted in this bill as introduced. SECTION 20 is omitted in this bill as introduced. SECTION 21. Amends Section 153.223(a), Tax Code, to prohibit permitted distributors from filing claims for refunds of taxes paid by purchasers of undyed diesel fuel. SECTION 22. Amends Section 153.224(a), Tax Code, to provide that claims for refunds may be submitted to the comptroller's office once a quarter or when the amount of potential refund claim equals at least $200. SECTION 23. Effective date: September 1, 1999. SECTION 24. Emergency clause.