BILL ANALYSIS

H.B. 3900

By: Oliveira

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Current law does not adequately address certain motor fuel tax issues. For instance, the Travis County District Attorney's Office has experienced difficulties prosecuting motor fuel tax fraud cases where the fuel transported, sold, or offered for sale by the defendant failed to meet American Standard for Testing and Materials (ASTM) standards. Changes proposed in the bill will assist in the criminal prosecution of motor fuel tax fraud even when the product sold or offered for sale does not meet ASTM standards.

Currently, certain motor fuel transactions are allowed to be made tax-free within the bulk terminal/transfer system if the proper license is held. Eliminating the requirement to obtain a license only to conduct transactions within the bulk terminal/transfer system will reduce the number of license holders required to report transactions when there is no tax due. This would not affect the collection of taxes. Tax is collected when the motor fuel is removed from the bulk terminal/transfer system. 

The current signed statement limitations have been burdensome on industry. The signed statement limitations have been determined by the number of gallons that a normal fuel transport truck can deliver. Industry has changed and transport capacities have been increased, thereby creating a need to update the law to reflect current industry standards.

H.B. 3900 redefines terms, makes changes to shipping document requirements, clarifies liability for certain gasoline and diesel fuel taxes, clarifies provisions relating to tax-free purchases of dyed diesel fuel, and clarifies provisions relating to civil and criminal liability.

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. 3900 amends the Tax Code to remove the purchaser's license number from the information required to be included in a shipping document issued by the terminal operator or operator of a bulk plant.  The bill clarifies that provisions requiring certain documents for motor fuel transportation do not apply to motor fuel that is delivered into the fuel supply tank of a motor vehicle.  The bill removes the requirement that a shipping document for a fuel be created by the terminal or bulk plant at which the fuel was received. The bill removes the federal employer identification number, or the social security number if the employer identification number is not available, of the carrier transporting motor fuel and the federal employer identification number and license number of the motor fuel purchaser from the information required to be included in a shipping document for the importation or exportation of motor fuel.  The bill adds to the information required to be included in the shipping document the destination state of each portion of a split load of motor fuel if the motor fuel is to be delivered to more than one state.  The bill clarifies that requirements to retain and provide shipping documentation apply to a seller, transporter, or receiver of motor fuel, rather than a terminal, a bulk plan, the carrier, the licensed distributor or supplier, and the person that received the motor fuel.

H.B. 3900 makes a supplier or permissive supplier liable for the tax imposed at the time gasoline is imported into Texas, in addition to requiring the supplier or permissive supplier to collect the tax. The bill clarifies that a tax is imposed on the removal, rather than the sale or transfer, of gasoline from the bulk transfer/terminal system in Texas, removes the condition relating to the sale or transfer being made by a supplier to a person who does not hold a supplier's license, and makes the supplier liable for the tax, in addition to requiring the supplier to collect the tax.  The bill makes an interstate trucker liable for and required to pay the tax imposed on gasoline brought into Texas in a supply tank or tanks of a motor vehicle. The bill makes a blender liable for the tax imposed on the blending of gasoline at the point gasoline blended fuel is made in Texas outside the bulk transfer/terminal system, in addition to requiring the blender to pay the tax.

H.B. 3900 provides an exception to the requirement that the fuel tax be collected from the purchaser or recipient of the gasoline at the time of sale for a person who sells gasoline by bulk transfer. The bill extends to a distributor liability for any taxes due on gasoline sold to purchasers with certain canceled or revoked licenses if the gasoline was sold after receiving notice of the cancellation or revocation. The bill adds a purchaser whose aviation fuel dealer's license has been canceled or revoked to the purchasers for which such a sale invokes the tax liability.

H.B. 3900 requires a license holder subject to motor fuel taxes to keep any record required by the comptroller of public accounts, in addition to the records specifically required by provisions of other law. The bill adds a distributor, importer, exporter, or blender to the entities authorized to take a credit on the monthly tax report on motor fuel taxes the entity determines were erroneously reported and remitted or overpaid. The bill makes a supplier or permissive supplier liable for the diesel fuel tax imposed on the removal of diesel fuel from the terminal using the terminal rack other than by bulk transfer, in addition to requiring the supplier or permissive supplier to collect the tax. The bill adds a supplier to the entities required to collect the diesel fuel tax imposed at the time diesel fuel is imported into Texas other than by bulk transfer for delivery to a destination in Texas and makes the supplier or permissive supplier liable for the tax. The bill clarifies that a tax is imposed on the removal, rather than the sale or transfer, of diesel fuel from the bulk transfer/terminal system in Texas, removes the condition relating to the sale or transfer being made by a supplier to a person who does not hold a supplier's license, and makes the supplier liable for the tax, in addition to requiring the supplier to collect the tax. The bill makes the interstate trucker liable for and required to pay the tax imposed on diesel fuel brought into Texas in a supply tank or tanks of a motor vehicle. The bill makes a blender liable for the tax imposed on the blending of diesel fuel at the point blended diesel fuel is made in Texas outside the bulk transfer/terminal system, in addition to requiring the blender to pay the tax.

H.B. 3900 provides an exception to the requirement that the fuel tax be collected from the purchaser or recipient of the diesel fuel at the time of sale for a person who sells diesel fuel by bulk transfer. The bill removes the 10,000 gallon limitation on the amount of dyed diesel fuel a purchaser is authorized to purchase each month for the purchaser's own use without a dyed diesel fuel bonded user license to instead apply the same monthly limitations that apply to certain tax-free purchases made with a signed statement that includes an end user number issued by the comptroller.

H.B. 3900 clarifies that the prohibition against a person making a tax-free purchase or tax-free sale of any dyed diesel fuel above certain amounts using a signed statement applies to the first sale or purchase and to any subsequent sale or purchase in a calendar month for the specified amounts.  The bill removes the prohibition against the tax-free purchase or sale using a signed statement of more than 7,400 gallons of dyed diesel fuel in a single delivery and the condition that other limitations on the amount bought or sold apply in a calendar month for which the person has previously purchased from all sources or in which the licensed supplier has previously sold to that purchaser certain amounts of dyed diesel fuel.  The bill establishes that the monthly limitations apply regardless of whether the dyed diesel fuel is purchased in a single transaction during that month or in multiple transactions during that month.  The bill removes provisions authorizing a purchaser paying a tax on dyed diesel fuel purchased in excess of the monthly limitations to claim a refund of the tax paid on any fuel used for nonhighway purposes.  The bill provides that a purchaser of dyed diesel fuel is considered to have temporarily furnished a signed statement to a licensed supplier or distributor for purposes of making a tax-free purchase using the statement if the supplier or distributor verifies that the purchaser has an end user number issued by the comptroller.  The bill requires the licensed supplier or distributor to use the comptroller's Internet website or other materials provided or produced by the comptroller to verify this information until the purchaser provides to the supplier or distributor a completed signed statement. 

H.B. 3900 clarifies that properly completed signed statements should be in the possession of the licensed supplier or distributor at the time the sale of dyed diesel fuel occurs. The bill prohibits exempt sales claimed by the licensed supplier or distributor that require delivery of signed statements if the licensed supplier or distributor is not in possession of the signed statements within 60 days after the date written notice requiring possession of them is given to the licensed supplier or distributor by the comptroller.  The bill authorizes the comptroller to verify the reason or basis for the signed statements before allowing the exempt sales if the licensed supplier or distributor delivers the signed statements to the comptroller within the 60-day period.  The bill prohibits an exempt sale from being granted on the basis of signed statements delivered to the comptroller after the 60-day period.

H.B. 3900 extends to an aviation fuel dealer liability for any taxes due on dyed diesel fuel sold to purchasers with certain canceled or revoked licenses if the diesel is sold after receiving notice of the cancellation or revocation. The bill adds a purchaser whose distributor license has been canceled or revoked to the purchasers for which such a sale involves the tax liability. The bill requires a license holder subject to diesel fuel taxes to keep any records required by the comptroller, in addition to the records specifically required by provisions of other law. The bill adds a distributor, importer, exporter, or blender to the entities authorized to take a credit on the monthly tax report on diesel fuel taxes the entity determines were erroneously reported and remitted or overpaid. The bill makes conforming changes in provisions relating to civil and criminal penalties. The bill extends to a permissive supplier provisions relating to the offense of issuance of a bad check to a licensed distributor or a licensed supplier.  The bill authorizes the state to elect the offense for which it will prosecute a person if a violation of a criminal offense provision relating to motor fuel taxes constitutes another offense under the laws of Texas. 

H.B. 3900 redefines "blending" to mean the mixing together of one or more products with other products, regardless of the original character of the product blended, that produces a product that is offered for sale, sold, or used as a motor fuel or is capable of use as fuel for the propulsion of a motor vehicle.  The term does not include mixing that occurs in the process of refining by the original refiner of crude petroleum or the commingling of products during transportation in a pipeline.

H.B. 3900 redefines "diesel fuel" to mean kerosene or another liquid, or a combination of liquids blended together, offered for sale, sold, used, or capable of use as fuel for the propulsion of a diesel-powered engine.  The term includes products commonly referred to as kerosene, light cycle oil, #1 diesel fuel, #2 diesel fuel, dyed or undyed diesel fuel, aviation jet fuel, biodiesel, distillate fuel, cutter stock, or heating oil, but does not include gasoline, aviation gasoline, or liquefied gas.

H.B. 3900 redefines "distributor" to mean a person who makes sales of motor fuel at wholesale.  The bill specifies that a distributor's activities may also include sales of motor fuel at retail.

H.B. 3900 redefines "gasoline" to mean any liquid or combination of liquids blended together, offered for sale, sold, used, or capable of use as fuel for the propulsion of a gasoline-powered engine.  The term includes gasohol, aviation gasoline, and blending agents, but does not include racing gasoline, diesel fuel, aviation jet fuel, or liquefied gas.

H.B. 3900 redefines "gasoline blended fuel" to mean a mixture composed of gasoline and other liquids, including gasoline blend stocks, gasohol, ethanol, methanol, fuel grade alcohol, and resulting blends, other than a de minimus amount of a product such as carburetor detergent or oxidation inhibitor, that is offered for sale, sold, used, or is capable of use as fuel for a gasoline-powered engine.

H.B. 3900 redefines "motor fuel" to mean gasoline, diesel fuel, liquefied gas, gasoline blended fuel, and other products that are offered for sale, sold, used, or are capable of use as fuel for the propulsion of a motor vehicle.

H.B. 3900 redefines "motor fuel transporter" to mean a person who transports gasoline, diesel fuel, gasoline blended fuel, or any other motor fuel, except liquefied gas, outside the bulk transfer/terminal system by means of a transport vehicle, a railroad tank car, or a marine vessel. The bill clarifies that the term does not include a person who is licensed under provisions relating to motor fuel taxes as a supplier, permissive supplier, or distributor and exclusively transports gasoline, diesel fuel, gasoline blended fuel, or any other motor fuel to which the person retains ownership while the fuel is being transported by the person.

H.B. 3900 redefines "shipping document" to mean a delivery document issued in conjunction with the sale, transfer, or transport of motor fuel and requires a shipping document issued by a terminal operator to be machine printed and all other shipping documents to be typed or handwritten on a preprinted form or machine printed.  The bill makes changes to conform to the distinction removed from the definition that the document is issued only by a terminal or bulk plant operator and that the issuance may be made in conjunction with the removal of fuel from the terminal or bulk plant.

H.B. 3900 defines "bulk storage" to mean a container of more than 10 gallons.

H.B. 3900 makes changes to the Tax, Transportation, and Water Codes to conform to the repeal of Chapter 153, Tax Code, enacted by Ch. 199 (H.B. 2458), 78th Legislature, Regular Session, 2003.

EFFECTIVE DATE

September 1, 2009.