1     
FUEL TAX REVISIONS

2     
2015 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: David E. Lifferth

5     
Senate Sponsor: Karen Mayne

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the Motor and Special Fuel Tax Act by amending provisions relating
10     to taxes imposed on fuels.
11     Highlighted Provisions:
12          This bill:
13          ▸     provides and amends definitions;
14          ▸     repeals the requirement for a person who sells motor fuel or undyed special fuel in a
15     retail sale to post a tax rate decal on each motor fuel or undyed special fuel pump or
16     dispensing device;
17          ▸     increases the tax rate of the special fuel tax imposed on compressed natural gas and
18     liquified natural gas;
19          ▸     imposes a special fuel tax on hydrogen used to operate or propel a motor vehicle on
20     a public highway; and
21          ▸     makes technical changes.
22     Money Appropriated in this Bill:
23          None
24     Other Special Clauses:
25          This bill provides a special effective date.
26     Utah Code Sections Affected:
27     AMENDS:
28          59-13-102, as last amended by Laws of Utah 2012, Chapter 369
29          59-13-301, as last amended by Laws of Utah 2011, Chapter 259
30     REPEALS:
31          59-13-104, as enacted by Laws of Utah 1998, Chapter 253
32     

33     Be it enacted by the Legislature of the state of Utah:
34          Section 1. Section 59-13-102 is amended to read:
35          59-13-102. Definitions.
36          As used in this chapter:
37          (1) "Aviation fuel" means fuel that is sold at airports and used exclusively for the
38     operation of aircraft.
39          (2) "Clean fuel" means:
40          (a) the following special fuels:
41          (i) propane;
42          (ii) compressed natural gas;
43          (iii) liquified natural gas; [or]
44          (iv) electricity; or
45          (v) hydrogen; or
46          (b) any motor or special fuel that meets the clean fuel vehicle standards in the federal
47     Clean Air Act Amendments of 1990, Title II.
48          (3) "Commission" means the State Tax Commission.
49          (4) (a) "Diesel fuel" means any liquid that is commonly or commercially known,
50     offered for sale, or used as a fuel in diesel engines.
51          (b) "Diesel fuel" includes any combustible liquid, by whatever name the liquid may be
52     known or sold, when the liquid is used in an internal combustion engine for the generation of
53     power to operate a motor vehicle licensed to operate on the highway, except fuel that is subject
54     to the tax imposed in Part 2, Motor Fuel, and Part 4, Aviation Fuel, of this chapter.
55          (5) "Diesel gallon equivalent" means 6.06 pounds of liquified natural gas.
56          [(5)] (6) "Distributor" means any person in this state who:
57          (a) imports or causes to be imported motor fuel for use, distribution, or sale, whether at
58     retail or wholesale;
59          (b) produces, refines, manufactures, or compounds motor fuel in this state for use,
60     distribution, or sale in this state;
61          (c) is engaged in the business of purchasing motor fuel for resale in wholesale
62     quantities to retail dealers of motor fuel and who accounts for his own motor fuel tax liability;
63     or
64          (d) for purposes of Part 4, Aviation Fuel, only, makes retail sales of aviation fuel to:
65          (i) federally certificated air carriers; and
66          (ii) other persons.
67          [(6)] (7) "Dyed diesel fuel" means diesel fuel that is dyed in accordance with 26 U.S.C.
68     Sec. 4082 or United States Environmental Protection Agency or Internal Revenue Service
69     regulations and that is considered destined for nontaxable off-highway use.
70          [(7)] (8) "Exchange agreement" means an agreement between licensed suppliers where
71     one is a position holder in a terminal who agrees to deliver taxable special fuel to the other
72     supplier or the other supplier's customer at the loading rack of the terminal where the delivering
73     supplier holds an inventory position.
74          [(8)] (9) "Federally certificated air carrier" means a person who holds a certificate
75     issued by the Federal Aviation Administration authorizing the person to conduct an all-cargo
76     operation or scheduled operation, as defined in 14 C.F.R. Sec. 110.2.
77          [(9)] (10) "Fuels" means any gas, liquid, solid, mixture, or other energy source which is
78     generally used in an engine or motor for the generation of power, including aviation fuel, clean
79     fuel, diesel fuel, motor fuel, and special fuel.
80          (11) "Gasoline gallon equivalent" means:
81          (a) 5.660 pounds of compressed natural gas; or
82          (b) 2.198 pounds of hydrogen.
83          [(10)] (12) "Highway" means every way or place, of whatever nature, generally open to
84     the use of the public for the purpose of vehicular travel notwithstanding that the way or place
85     may be temporarily closed for the purpose of construction, maintenance, or repair.
86          [(11)] (13) "Motor fuel" means fuel that is commonly or commercially known or sold
87     as gasoline or gasohol and is used for any purpose, but does not include aviation fuel.
88          [(12)] (14) "Motor fuels received" means:
89          (a) motor fuels that have been loaded at the refinery or other place into tank cars,
90     placed in any tank at the refinery from which any withdrawals are made directly into tank
91     trucks, tank wagons, or other types of transportation equipment, containers, or facilities other
92     than tank cars, or placed in any tank at the refinery from which any sales, uses, or deliveries not
93     involving transportation are made directly; or
94          (b) motor fuels that have been imported by any person into the state from any other
95     state or territory by tank car, tank truck, pipeline, or any other conveyance at the time when,
96     and the place where, the interstate transportation of the motor fuel is completed within the state
97     by the person who at the time of the delivery is the owner of the motor fuel.
98          [(13)] (15) (a) "Qualified motor vehicle" means a special fuel-powered motor vehicle
99     used, designed, or maintained for transportation of persons or property which:
100          (i) has a gross vehicle weight or registered gross vehicle weight exceeding 26,000
101     pounds;
102          (ii) has three or more axles regardless of weight; or
103          (iii) is used in a combination of vehicles when the weight of the combination of
104     vehicles exceeds 26,000 pounds gross vehicle weight.
105          (b) "Qualified motor vehicle" does not include a recreational vehicle not used in
106     connection with any business activity.
107          [(14)] (16) "Rack," as used in Part 3, Special Fuel, means a deck, platform, or open bay
108     which consists of a series of metered pipes and hoses for the delivery or removal of diesel fuel
109     from a refinery or terminal into a motor vehicle, rail car, or vessel.
110          [(15)] (17) "Removal," as used in Part 3, Special Fuel, means the physical transfer of
111     diesel fuel from a production, manufacturing, terminal, or refinery facility and includes use of
112     diesel fuel. Removal does not include:
113          (a) loss by evaporation or destruction; or
114          (b) transfers between refineries, racks, or terminals.
115          [(16)] (18) (a) "Special fuel" means any fuel regardless of name or character that:
116          (i) is usable as fuel to operate or propel a motor vehicle upon the public highways of
117     the state; and
118          (ii) is not taxed under the category of aviation or motor fuel.
119          (b) Special fuel includes:
120          (i) fuels that are not conveniently measurable on a gallonage basis; and
121          (ii) diesel fuel.
122          [(17)] (19) "Supplier," as used in Part 3, Special Fuel, means a person who:
123          (a) imports or acquires immediately upon importation into this state diesel fuel from
124     within or without a state, territory, or possession of the United States or the District of
125     Columbia;
126          (b) produces, manufactures, refines, or blends diesel fuel in this state;
127          (c) otherwise acquires for distribution or sale in this state, diesel fuel with respect to
128     which there has been no previous taxable sale or use; or
129          (d) is in a two party exchange where the receiving party is deemed to be the supplier.
130          [(18)] (20) "Terminal," as used in Part 3, Special Fuel, means a facility for the storage
131     of diesel fuel which is supplied by a motor vehicle, pipeline, or vessel and from which diesel
132     fuel is removed for distribution at a rack.
133          [(19)] (21) "Two party exchange" means a transaction in which special fuel is
134     transferred between licensed suppliers pursuant to an exchange agreement.
135          [(20)] (22) "Undyed diesel fuel" means diesel fuel that is not subject to the dyeing
136     requirements in accordance with 26 U.S.C. Sec. 4082 or United States Environmental
137     Protection Agency or Internal Revenue Service regulations.
138          [(21)] (23) "Use," as used in Part 3, Special Fuel, means the consumption of special
139     fuel for the operation or propulsion of a motor vehicle upon the public highways of the state
140     and includes the reception of special fuel into the fuel supply tank of a motor vehicle.
141          [(22)] (24) "User," as used in Part 3, Special Fuel, means any person who uses special
142     fuel within this state in an engine or motor for the generation of power to operate or propel a
143     motor vehicle upon the public highways of the state.
144          [(23)] (25) "Ute tribal member" means an enrolled member of the Ute tribe.
145          [(24)] (26) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray
146     Reservation.
147          [(25)] (27) "Ute trust land" means the lands:
148          (a) of the Uintah and Ouray Reservation that are held in trust by the United States for
149     the benefit of:
150          (i) the Ute tribe;
151          (ii) an individual; or
152          (iii) a group of individuals; or
153          (b) specified as trust land by agreement between the governor and the Ute tribe meeting
154     the requirements of Subsections 59-13-201.5(3) and 59-13-301.5(3).
155          Section 2. Section 59-13-301 is amended to read:
156          59-13-301. Tax basis -- Rate -- Exemptions -- Revenue deposited with treasurer
157     and credited to Transportation Fund -- Reduction of tax in limited circumstances.
158          (1) (a) Except as provided in Subsections (2), (3), (11), and (12) and Section
159     59-13-304, a tax is imposed at the same rate imposed under Subsection 59-13-201(1)(a) on the:
160          (i) removal of undyed diesel fuel from any refinery;
161          (ii) removal of undyed diesel fuel from any terminal;
162          (iii) entry into the state of any undyed diesel fuel for consumption, use, sale, or
163     warehousing;
164          (iv) sale of undyed diesel fuel to any person who is not registered as a supplier under
165     this part unless the tax has been collected under this section;
166          (v) any untaxed special fuel blended with undyed diesel fuel; or
167          (vi) use of untaxed special fuel other than propane or electricity.
168          (b) The tax imposed under this section shall only be imposed once upon any special
169     fuel.
170          (2) (a) No special fuel tax is imposed or collected upon dyed diesel fuel which:
171          (i) is sold or used for any purpose other than to operate or propel a motor vehicle upon
172     the public highways of the state, but this exemption applies only in those cases where the
173     purchasers or the users of special fuel establish to the satisfaction of the commission that the
174     special fuel was used for purposes other than to operate a motor vehicle upon the public
175     highways of the state; or
176          (ii) is sold to this state or any of its political subdivisions.
177          (b) No special fuel tax is imposed on undyed diesel fuel or clean fuel that is:
178          (i) sold to the United States government or any of its instrumentalities or to this state or
179     any of its political subdivisions;
180          (ii) exported from this state if proof of actual exportation on forms prescribed by the
181     commission is made within 180 days after exportation;
182          (iii) used in a vehicle off-highway;
183          (iv) used to operate a power take-off unit of a vehicle;
184          (v) used for off-highway agricultural uses;
185          (vi) used in a separately fueled engine on a vehicle that does not propel the vehicle
186     upon the highways of the state; or
187          (vii) used in machinery and equipment not registered and not required to be registered
188     for highway use.
189          (3) No tax is imposed or collected on special fuel if it is:
190          (a) (i) purchased for business use in machinery and equipment not registered and not
191     required to be registered for highway use; and
192          (ii) used pursuant to the conditions of a state implementation plan approved under Title
193     19, Chapter 2, Air Conservation Act; or
194          (b) propane or electricity.
195          (4) Upon request of a buyer meeting the requirements under Subsection (3), the
196     Division of Air Quality shall issue an exemption certificate that may be shown to a seller.
197          (5) The special fuel tax shall be paid by the supplier.
198          (6) (a) The special fuel tax shall be paid by every user who is required by Sections
199     59-13-303 and 59-13-305 to obtain a special fuel user permit and file special fuel tax reports.
200          (b) The user shall receive a refundable credit for special fuel taxes paid on purchases
201     which are delivered into vehicles and for which special fuel tax liability is reported.
202          (7) (a) Except as provided under Subsections (7)(b) and (c), all revenue received by the
203     commission from taxes and license fees under this part shall be deposited daily with the state
204     treasurer and credited to the Transportation Fund.
205          (b) An appropriation from the Transportation Fund shall be made to the commission to
206     cover expenses incurred in the administration and enforcement of this part and the collection of
207     the special fuel tax.
208          (c) Five dollars of each special fuel user trip permit fee paid under Section 59-13-303
209     may be used by the commission as a dedicated credit to cover the costs of electronic
210     credentialing as provided in Section 41-1a-303.
211          (8) The commission may either collect no tax on special fuel exported from the state
212     or, upon application, refund the tax paid.
213          (9) (a) The United States government or any of its instrumentalities, this state, or a
214     political subdivision of this state that has purchased special fuel from a supplier or from a retail
215     dealer of special fuel and has paid the tax on the special fuel as provided in this section is
216     entitled to a refund of the tax and may file with the commission for a quarterly refund in a
217     manner prescribed by the commission.
218          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
219     commission shall make rules governing the application and refund provided for in Subsection
220     (9)(a).
221          (10) (a) The purchaser shall pay the tax on diesel fuel or clean fuel purchased for uses
222     under Subsections (2)(b)(i), (iii), (iv), (v), (vi), and (vii) and apply for a refund for the tax paid
223     as provided in Subsection (9) and this Subsection (10).
224          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
225     commission shall make rules governing the application and refund for off-highway and
226     nonhighway uses provided under Subsections (2)(b)(iii), (iv), (vi), and (vii).
227          (c) A refund of tax paid under this part on diesel fuel used for nonhighway agricultural
228     uses shall be made in accordance with the tax return procedures under Section 59-13-202.
229          (11) (a) Beginning on April 1, 2001, a tax imposed under this section on special fuel is
230     reduced to the extent provided in Subsection (11)(b) if:
231          (i) the Navajo Nation imposes a tax on the special fuel;
232          (ii) the tax described in Subsection (11)(a)(i) is imposed without regard to whether the
233     person required to pay the tax is an enrolled member of the Navajo Nation; and
234          (iii) the commission and the Navajo Nation execute and maintain an agreement as
235     provided in this Subsection (11) for the administration of the reduction of tax.
236          (b) (i) If but for Subsection (11)(a) the special fuel is subject to a tax imposed by this
237     section:
238          (A) the state shall be paid the difference described in Subsection (11)(b)(ii) if that
239     difference is greater than $0; and
240          (B) a person may not require the state to provide a refund, a credit, or similar tax relief
241     if the difference described in Subsection (11)(b)(ii) is less than or equal to $0.
242          (ii) The difference described in Subsection (11)(b)(i) is equal to the difference
243     between:
244          (A) the amount of tax imposed on the special fuel by this section; less
245          (B) the tax imposed and collected by the Navajo Nation on the special fuel.
246          (c) For purposes of Subsections (11)(a) and (b), the tax paid to the Navajo Nation on
247     the special fuel does not include any interest or penalties a taxpayer may be required to pay to
248     the Navajo Nation.
249          (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
250     commission shall make rules governing the procedures for administering the reduction of tax
251     provided under this Subsection (11).
252          (e) The agreement required under Subsection (11)(a):
253          (i) may not:
254          (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
255          (B) provide a reduction of taxes greater than or different from the reduction described
256     in this Subsection (11); or
257          (C) affect the power of the state to establish rates of taxation;
258          (ii) shall:
259          (A) be in writing;
260          (B) be signed by:
261          (I) the chair of the commission or the chair's designee; and
262          (II) a person designated by the Navajo Nation that may bind the Navajo Nation;
263          (C) be conditioned on obtaining any approval required by federal law;
264          (D) state the effective date of the agreement; and
265          (E) state any accommodation the Navajo Nation makes related to the construction and
266     maintenance of state highways and other infrastructure within the Utah portion of the Navajo
267     Nation; and
268          (iii) may:
269          (A) notwithstanding Section 59-1-403, authorize the commission to disclose to the
270     Navajo Nation information that is:
271          (I) contained in a document filed with the commission; and
272          (II) related to the tax imposed under this section;
273          (B) provide for maintaining records by the commission or the Navajo Nation; or
274          (C) provide for inspections or audits of suppliers, distributors, carriers, or retailers
275     located or doing business within the Utah portion of the Navajo Nation.
276          (f) (i) If, on or after April 1, 2001, the Navajo Nation changes the tax rate of a tax
277     imposed on special fuel, any change in the amount of the reduction of taxes under this
278     Subsection (11) as a result of the change in the tax rate is not effective until the first day of the
279     calendar quarter after a 60-day period beginning on the date the commission receives notice:
280          (A) from the Navajo Nation; and
281          (B) meeting the requirements of Subsection (11)(f)(ii).
282          (ii) The notice described in Subsection (11)(f)(i) shall state:
283          (A) that the Navajo Nation has changed or will change the tax rate of a tax imposed on
284     special fuel;
285          (B) the effective date of the rate change of the tax described in Subsection
286     (11)(f)(ii)(A); and
287          (C) the new rate of the tax described in Subsection (11)(f)(ii)(A).
288          (g) If the agreement required by Subsection (11)(a) terminates, a reduction of tax is not
289     permitted under this Subsection (11) beginning on the first day of the calendar quarter after a
290     30-day period beginning on the day the agreement terminates.
291          (h) If there is a conflict between this Subsection (11) and the agreement required by
292     Subsection (11)(a), this Subsection (11) governs.
293          (12) (a) Beginning on [January] July 1, [2009] 2015, a tax imposed under this section
294     on compressed natural gas is imposed at [a reduced rate of 8-1/2 cents] the same rate imposed
295     under Subsection (1)(a) per gasoline gallon equivalent [to be increased or decreased
296     proportionately with any increase or decrease in the rate in Subsection 59-13-201(1)(a)].
297          (b) Beginning on July 1, [2011] 2015, a tax imposed under this section on liquified
298     natural gas is imposed at [a reduced rate of 8-1/2 cents] the same rate imposed under
299     Subsection (1)(a) per [gasoline] diesel gallon equivalent [to be increased or decreased
300     proportionately with any increase or decrease in the rate in Subsection 59-13-201(1)(a)].
301          (c) Beginning on July 1, 2015, a tax imposed under this section on hydrogen used to
302     operate or propel a motor vehicle upon the public highways of the state is imposed at the same
303     rate imposed under Subsection (1)(a) per gasoline gallon equivalent.
304          Section 3. Repealer.
305          This bill repeals:
306          Section 59-13-104, Tax rate decals -- Posted on pump.
307          Section 4. Effective date.
308          This bill takes effect July 1, 2015.




Legislative Review Note
     as of 2-5-15 3:14 PM

Office of Legislative Research and General Counsel