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H.B. 184

             1     

MOTOR AND SPECIAL FUEL TAX ACT AMENDMENTS

             2     
2011 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Christopher N. Herrod

             5     
Senate Sponsor: Wayne L. Niederhauser

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Motor and Special Fuel Tax Act by amending provisions relating
             10      to a tax on liquified natural gas.
             11      Highlighted Provisions:
             12          This bill:
             13          .    amends the definition of clean fuel;
             14          .    provides that beginning on July 1, 2011, a tax is imposed at a reduced rate on
             15      liquified natural gas per gasoline gallon equivalent; and
             16          .    makes technical changes.
             17      Money Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20          None
             21      Utah Code Sections Affected:
             22      AMENDS:
             23          59-13-102, as last amended by Laws of Utah 2000, Chapter 258
             24          59-13-301, as last amended by Laws of Utah 2008, Chapters 153 and 382
             25     
             26      Be it enacted by the Legislature of the state of Utah:
             27          Section 1. Section 59-13-102 is amended to read:


             28           59-13-102. Definitions.
             29          As used in this chapter:
             30          (1) "Aviation fuel" means fuel that is sold at airports and used exclusively for the
             31      operation of aircraft.
             32          (2) "Clean fuel" means:
             33          (a) the following special fuels:
             34          (i) propane;
             35          (ii) compressed natural gas; [or]
             36          (iii) liquified natural gas; or
             37          [(iii)] (iv) electricity; or
             38          (b) any motor or special fuel that meets the clean fuel vehicle standards in the federal
             39      clean Air Act Amendments of 1990, Title II.
             40          (3) "Commission" means the State Tax Commission.
             41          (4) (a) "Diesel fuel" means any liquid that is commonly or commercially known,
             42      offered for sale, or used as a fuel in diesel engines.
             43          (b) "Diesel fuel" includes any combustible liquid, by whatever name the liquid may be
             44      known or sold, when the liquid is used in an internal combustion engine for the generation of
             45      power to operate a motor vehicle licensed to operate on the highway, except fuel that is subject
             46      to the tax imposed in Part 2, Motor Fuel, and Part 4, Aviation Fuel, of this chapter.
             47          (5) "Distributor" means any person in this state who:
             48          (a) imports or causes to be imported motor fuel for use, distribution, or sale, whether at
             49      retail or wholesale;
             50          (b) produces, refines, manufactures, or compounds motor fuel in this state for use,
             51      distribution, or sale in this state;
             52          (c) is engaged in the business of purchasing motor fuel for resale in wholesale
             53      quantities to retail dealers of motor fuel and who accounts for his own motor fuel tax liability;
             54      or
             55          (d) for purposes of Part 4, Aviation Fuel, only, makes retail sales of aviation fuel to:
             56          (i) federally certificated air carriers; and
             57          (ii) other persons.
             58          (6) "Dyed diesel fuel" means diesel fuel that is dyed in accordance with 26 U.S.C. Sec.


             59      4082 or United States Environmental Protection Agency or Internal Revenue Service
             60      regulations and that is considered destined for nontaxable off-highway use.
             61          (7) "Exchange agreement" means an agreement between licensed suppliers where one
             62      is a position holder in a terminal who agrees to deliver taxable special fuel to the other supplier
             63      or the other supplier's customer at the loading rack of the terminal where the delivering supplier
             64      holds an inventory position.
             65          (8) "Federally certificated air carrier" means a person who holds a certificate issued by
             66      the Federal Aviation Administration authorizing the person to conduct an all-cargo operation or
             67      scheduled operation, as defined in 14 C.F.R. Sec. 119.3.
             68          (9) "Fuels" means any gas, liquid, solid, mixture, or other energy source which is
             69      generally used in an engine or motor for the generation of power, including aviation fuel, clean
             70      fuel, diesel fuel, motor fuel, and special fuel.
             71          (10) "Highway" means every way or place, of whatever nature, generally open to the
             72      use of the public for the purpose of vehicular travel notwithstanding that the way or place may
             73      be temporarily closed for the purpose of construction, maintenance, or repair.
             74          (11) "Motor fuel" means fuel that is commonly or commercially known or sold as
             75      gasoline or gasohol and is used for any purpose, but does not include aviation fuel.
             76          (12) "Motor fuels received" means:
             77          (a) motor fuels that have been loaded at the refinery or other place into tank cars,
             78      placed in any tank at the refinery from which any withdrawals are made directly into tank
             79      trucks, tank wagons, or other types of transportation equipment, containers, or facilities other
             80      than tank cars, or placed in any tank at the refinery from which any sales, uses, or deliveries not
             81      involving transportation are made directly; or
             82          (b) motor fuels that have been imported by any person into the state from any other
             83      state or territory by tank car, tank truck, pipeline, or any other conveyance at the time when,
             84      and the place where, the interstate transportation of the motor fuel is completed within the state
             85      by the person who at the time of the delivery is the owner of the motor fuel.
             86          (13) (a) "Qualified motor vehicle" means a special fuel-powered motor vehicle used,
             87      designed, or maintained for transportation of persons or property which:
             88          (i) has a gross vehicle weight or registered gross vehicle weight exceeding 26,000
             89      pounds;


             90          (ii) has three or more axles regardless of weight; or
             91          (iii) is used in a combination of vehicles when the weight of the combination of
             92      vehicles exceeds 26,000 pounds gross vehicle weight.
             93          (b) "Qualified motor vehicle" does not include a recreational vehicle not used in
             94      connection with any business activity.
             95          (14) "Rack," as used in Part 3, Special Fuel, means a deck, platform, or open bay which
             96      consists of a series of metered pipes and hoses for the delivery or removal of diesel fuel from a
             97      refinery or terminal into a motor vehicle, rail car, or vessel.
             98          (15) "Removal," as used in Part 3, Special Fuel, means the physical transfer of diesel
             99      fuel from a production, manufacturing, terminal, or refinery facility and includes use of diesel
             100      fuel. Removal does not include:
             101          (a) loss by evaporation or destruction; or
             102          (b) transfers between refineries, racks, or terminals.
             103          (16) (a) "Special fuel" means any fuel regardless of name or character that:
             104          (i) is usable as fuel to operate or propel a motor vehicle upon the public highways of
             105      the state; and
             106          (ii) is not taxed under the category of aviation or motor fuel.
             107          (b) Special fuel includes:
             108          (i) fuels that are not conveniently measurable on a gallonage basis; and
             109          (ii) diesel fuel.
             110          (17) "Supplier," as used in Part 3, Special Fuel, means a person who:
             111          (a) imports or acquires immediately upon importation into this state diesel fuel from
             112      within or without a state, territory, or possession of the United States or the District of
             113      Columbia;
             114          (b) produces, manufactures, refines, or blends diesel fuel in this state;
             115          (c) otherwise acquires for distribution or sale in this state, diesel fuel with respect to
             116      which there has been no previous taxable sale or use; or
             117          (d) is in a two party exchange where the receiving party is deemed to be the supplier.
             118          (18) "Terminal," as used in Part 3, Special Fuel, means a facility for the storage of
             119      diesel fuel which is supplied by a motor vehicle, pipeline, or vessel and from which diesel fuel
             120      is removed for distribution at a rack.


             121          (19) "Two party exchange" means a transaction in which special fuel is transferred
             122      between licensed suppliers pursuant to an exchange agreement.
             123          (20) "Undyed diesel fuel" means diesel fuel that is not subject to the dyeing
             124      requirements in accordance with 26 U.S.C. Sec. 4082 or United States Environmental
             125      Protection Agency or Internal Revenue Service regulations.
             126          (21) "Use," as used in Part 3, Special Fuel, means the consumption of special fuel for
             127      the operation or propulsion of a motor vehicle upon the public highways of the state and
             128      includes the reception of special fuel into the fuel supply tank of a motor vehicle.
             129          (22) "User," as used in Part 3, Special Fuel, means any person who uses special fuel
             130      within this state in an engine or motor for the generation of power to operate or propel a motor
             131      vehicle upon the public highways of the state.
             132          (23) "Ute tribal member" means an enrolled member of the Ute tribe.
             133          (24) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.
             134          (25) "Ute trust land" means the lands:
             135          (a) of the Uintah and Ouray Reservation that are held in trust by the United States for
             136      the benefit of:
             137          (i) the Ute tribe;
             138          (ii) an individual; or
             139          (iii) a group of individuals; or
             140          (b) specified as trust land by agreement between the governor and the Ute tribe meeting
             141      the requirements of Subsections 59-13-201.5 (3) and 59-13-301.5 (3).
             142          Section 2. Section 59-13-301 is amended to read:
             143           59-13-301. Tax basis -- Rate -- Exemptions -- Revenue deposited with treasurer
             144      and credited to Transportation Fund -- Reduction of tax in limited circumstances.
             145          (1) (a) Except as provided in Subsections (2), (3), (11), and (12) and Section
             146      59-13-304 , a tax is imposed at the same rate imposed under Subsection 59-13-201 (1)(a) on the:
             147          (i) removal of undyed diesel fuel from any refinery;
             148          (ii) removal of undyed diesel fuel from any terminal;
             149          (iii) entry into the state of any undyed diesel fuel for consumption, use, sale, or
             150      warehousing;
             151          (iv) sale of undyed diesel fuel to any person who is not registered as a supplier under


             152      this part unless the tax has been collected under this section;
             153          (v) any untaxed special fuel blended with undyed diesel fuel; or
             154          (vi) use of untaxed special fuel other than propane or electricity.
             155          (b) The tax imposed under this section shall only be imposed once upon any special
             156      fuel.
             157          (2) (a) No special fuel tax is imposed or collected upon dyed diesel fuel which:
             158          (i) is sold or used for any purpose other than to operate or propel a motor vehicle upon
             159      the public highways of the state, but this exemption applies only in those cases where the
             160      purchasers or the users of special fuel establish to the satisfaction of the commission that the
             161      special fuel was used for purposes other than to operate a motor vehicle upon the public
             162      highways of the state; or
             163          (ii) is sold to this state or any of its political subdivisions.
             164          (b) No special fuel tax is imposed on undyed diesel fuel or clean fuel that is:
             165          (i) [is] sold to the United States government or any of its instrumentalities or to this
             166      state or any of its political subdivisions;
             167          (ii) [is] exported from this state if proof of actual exportation on forms prescribed by
             168      the commission is made within 180 days after exportation;
             169          (iii) [is] used in a vehicle off-highway;
             170          (iv) [is] used to operate a power take-off unit of a vehicle;
             171          (v) [is] used for off-highway agricultural uses;
             172          (vi) [is] used in a separately fueled engine on a vehicle that does not propel the vehicle
             173      upon the highways of the state; or
             174          (vii) [is] used in machinery and equipment not registered and not required to be
             175      registered for highway use.
             176          (3) No tax is imposed or collected on special fuel if it is:
             177          (a) (i) purchased for business use in machinery and equipment not registered and not
             178      required to be registered for highway use; and
             179          (ii) used pursuant to the conditions of a state implementation plan approved under Title
             180      19, Chapter 2, Air Conservation Act; or
             181          (b) propane or electricity.
             182          (4) Upon request of a buyer meeting the requirements under Subsection (3), the


             183      Division of Air Quality shall issue an exemption certificate that may be shown to a seller.
             184          (5) The special fuel tax shall be paid by the supplier.
             185          (6) (a) The special fuel tax shall be paid by every user who is required by Sections
             186      59-13-303 and 59-13-305 to obtain a special fuel user permit and file special fuel tax reports.
             187          (b) The user shall receive a refundable credit for special fuel taxes paid on purchases
             188      which are delivered into vehicles and for which special fuel tax liability is reported.
             189          (7) (a) Except as provided under Subsections (7)(b) and (c), all revenue received by the
             190      commission from taxes and license fees under this part shall be deposited daily with the state
             191      treasurer and credited to the Transportation Fund.
             192          (b) An appropriation from the Transportation Fund shall be made to the commission to
             193      cover expenses incurred in the administration and enforcement of this part and the collection of
             194      the special fuel tax.
             195          (c) Five dollars of each special fuel user trip permit fee paid under Section 59-13-303
             196      may be used by the commission as a dedicated credit to cover the costs of electronic
             197      credentialing as provided in Section 41-1a-303 .
             198          (8) The commission may either collect no tax on special fuel exported from the state
             199      or, upon application, refund the tax paid.
             200          (9) (a) The United States government or any of its instrumentalities, this state, or a
             201      political subdivision of this state that has purchased special fuel from a supplier or from a retail
             202      dealer of special fuel and has paid the tax on the special fuel as provided in this section is
             203      entitled to a refund of the tax and may file with the commission for a quarterly refund in a
             204      manner prescribed by the commission.
             205          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             206      commission shall make rules governing the application and refund provided for in Subsection
             207      (9)(a).
             208          (10) (a) The purchaser shall pay the tax on diesel fuel or clean fuel purchased for uses
             209      under Subsections (2)(b)(i), (iii), (iv), (v), (vi), and (vii) and apply for a refund for the tax paid
             210      as provided in Subsection (9) and this Subsection (10).
             211          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             212      commission shall make rules governing the application and refund for off-highway and
             213      nonhighway uses provided under Subsections (2)(b)(iii), (iv), (vi), and (vii).


             214          (c) A refund of tax paid under this part on diesel fuel used for nonhighway agricultural
             215      uses shall be made in accordance with the tax return procedures under Section 59-13-202 .
             216          (11) (a) Beginning on April 1, 2001, a tax imposed under this section on special fuel is
             217      reduced to the extent provided in Subsection (11)(b) if:
             218          (i) the Navajo Nation imposes a tax on the special fuel;
             219          (ii) the tax described in Subsection (11)(a)(i) is imposed without regard to whether the
             220      person required to pay the tax is an enrolled member of the Navajo Nation; and
             221          (iii) the commission and the Navajo Nation execute and maintain an agreement as
             222      provided in this Subsection (11) for the administration of the reduction of tax.
             223          (b) (i) If but for Subsection (11)(a) the special fuel is subject to a tax imposed by this
             224      section:
             225          (A) the state shall be paid the difference described in Subsection (11)(b)(ii) if that
             226      difference is greater than $0; and
             227          (B) a person may not require the state to provide a refund, a credit, or similar tax relief
             228      if the difference described in Subsection (11)(b)(ii) is less than or equal to $0.
             229          (ii) The difference described in Subsection (11)(b)(i) is equal to the difference
             230      between:
             231          (A) the amount of tax imposed on the special fuel by this section; less
             232          (B) the tax imposed and collected by the Navajo Nation on the special fuel.
             233          (c) For purposes of Subsections (11)(a) and (b), the tax paid to the Navajo Nation on
             234      the special fuel does not include any interest or penalties a taxpayer may be required to pay to
             235      the Navajo Nation.
             236          (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             237      commission shall make rules governing the procedures for administering the reduction of tax
             238      provided under this Subsection (11).
             239          (e) The agreement required under Subsection (11)(a):
             240          (i) may not:
             241          (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
             242          (B) provide a reduction of taxes greater than or different from the reduction described
             243      in this Subsection (11); or
             244          (C) affect the power of the state to establish rates of taxation;


             245          (ii) shall:
             246          (A) be in writing;
             247          (B) be signed by:
             248          (I) the chair of the commission or the chair's designee; and
             249          (II) a person designated by the Navajo Nation that may bind the Navajo Nation;
             250          (C) be conditioned on obtaining any approval required by federal law;
             251          (D) state the effective date of the agreement; and
             252          (E) state any accommodation the Navajo Nation makes related to the construction and
             253      maintenance of state highways and other infrastructure within the Utah portion of the Navajo
             254      Nation; and
             255          (iii) may:
             256          (A) notwithstanding Section 59-1-403 , authorize the commission to disclose to the
             257      Navajo Nation information that is:
             258          (I) contained in a document filed with the commission; and
             259          (II) related to the tax imposed under this section;
             260          (B) provide for maintaining records by the commission or the Navajo Nation; or
             261          (C) provide for inspections or audits of suppliers, distributors, carriers, or retailers
             262      located or doing business within the Utah portion of the Navajo Nation.
             263          (f) (i) If, on or after April 1, 2001, the Navajo Nation changes the tax rate of a tax
             264      imposed on special fuel, any change in the amount of the reduction of taxes under this
             265      Subsection (11) as a result of the change in the tax rate is not effective until the first day of the
             266      calendar quarter after a 60-day period beginning on the date the commission receives notice:
             267          (A) from the Navajo Nation; and
             268          (B) meeting the requirements of Subsection (11)(f)(ii).
             269          (ii) The notice described in Subsection (11)(f)(i) shall state:
             270          (A) that the Navajo Nation has changed or will change the tax rate of a tax imposed on
             271      special fuel;
             272          (B) the effective date of the rate change of the tax described in Subsection
             273      (11)(f)(ii)(A); and
             274          (C) the new rate of the tax described in Subsection (11)(f)(ii)(A).
             275          (g) If the agreement required by Subsection (11)(a) terminates, a reduction of tax is not


             276      permitted under this Subsection (11) beginning on the first day of the calendar quarter after a
             277      30-day period beginning on the day the agreement terminates.
             278          (h) If there is a conflict between this Subsection (11) and the agreement required by
             279      Subsection (11)(a), this Subsection (11) governs.
             280          (12) (a) Beginning on January 1, 2009, a tax imposed under this section on compressed
             281      natural gas is imposed at a reduced rate of 8-1/2 cents per gasoline gallon equivalent to be
             282      increased or decreased proportionately with any increase or decrease in the rate in Subsection
             283      59-13-201 (1)(a).
             284          (b) Beginning on July 1, 2011, a tax imposed under this section on liquified natural gas
             285      is imposed at a reduced rate of 8-1/2 cents per gasoline gallon equivalent to be increased or
             286      decreased proportionately with any increase or decrease in the rate in Subsection
             287      59-13-201(1)(a).




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