Notice

Notice Number:06-06
Tax Type:Motor Vehicle Fuel Tax
Brief Description:Biodiesel Requirements and Questions and Answers - REVISED 9/11/2006
Keywords:
Approval Date:07/06/2006


Body:
Kansas Department of Revenue
Division of Taxation

NOTICE 06-06 *REVISED*


Biodiesel Requirements
And
Questions and Answers


Note: This notice addresses production, distribution and usage of biodiesel in Kansas and relates to the State of Kansas requirements only. This notice does not address biodiesel produced in another state and imported into Kansas.

Biodiesel (B100 or any blend) is a special fuel per K.S.A. 79-3401(s) and is taxable per K.S.A. 79-3408. Special fuels are defined at K.S.A. 79-3401(s):

K.S.A. 79-3401(s) "special fuels" means all combustible liquids suitable for the generation of power for the propulsion of motor vehicles including, but not limited to, diesel fuel, alcohol and such fuels not defined under the motor-vehicle fuels definition, hereinafter referred to as motor-vehicle fuel;

Motor fuel tax is imposed at K.S.A. 79-3408:
K.S.A. 79-3408. Tax imposed on use, sale or delivery of motor-vehicle fuels or special fuels; incidence of tax imposed on distributor; allowance for certain losses; exempt transactions; reports required. (a) A tax per gallon or fraction thereof, at the rate computed as prescribed in K.S.A. 79-34,141, and amendments thereto, is hereby imposed on the use, sale or delivery of all motor-vehicle fuels or special fuels which are used, sold or delivered in this state for any purpose whatsoever.

The exception to taxation would be K.S.A. 79-3408(c), which provides:
No tax is hereby imposed upon or with respect to the following transactions: . . .(6) The sale or delivery of special fuel which is indelibly dyed in accordance with regulations prescribed pursuant to 26 U.S.C. 4082 and such special fuel is only used for nonhighway purposes.

The following information indicates the current statutory requirements for the distribution and manufacturing of motor vehicle fuels or special fuels (biodiesel) in the state of Kansas.

K.S.A. 79-3401 defines distributor and manufacturer:

(f) "distributor" means any person, who:
(4) received and, in any manner, uses, sells or delivers motor-vehicle fuels or special fuels in the state of Kansas on which the tax provided for in this act has not been previously paid;
(j) "manufacturer" or "refiner" means any person who or which produces, refines, prepares, blends, distills, manufactures or compounds motor-vehicle fuels or special fuels in the state of Kansas for such person's own use therein, or for sale or delivery therein…

K.S.A. 79-3403 includes the licensing and bonding requirements:

It shall be unlawful for any distributor to use, sell or deliver any motor-vehicle fuels or special fuels within this state unless such distributor at the time of such use, sale, or delivery, is the holder of a valid, unrevoked motor-vehicle-fuels distributor's license or special fuels distributor's license issued to such distributor in accordance with the provisions of this act for each particular place of business at which such distributor shall use, sell or deliver motor-vehicle fuels or special fuels…

It shall be unlawful for any manufacturer to use, sell or deliver any motor-vehicle fuels or special fuels within this state unless such manufacturer at the time of such use, sale, or delivery is the holder of a valid, unsuspended and unrevoked motor-vehicle fuel manufacturer's license or special fuel manufacturer's license issued to such manufacturer in accordance with the provisions of this act for each particular place of business at which such manufacturer shall use, sell or deliver motor-vehicle fuels or special fuels…

No motor-vehicle-fuels distributor's license or special fuels distributor's license shall be granted and issued until the person applying has filed with the director a bond, payable to the state of Kansas, in such amount as shall be fixed by the director, but in no event less than $1,000…

No motor-vehicle fuel or special fuel manufacturer's license shall be granted and issued until the person applying has filed with the director a bond payable to the state of Kansas, in such amount as shall be fixed by the director, but in no event less than $5,000…


QUESTIONS AND ANSWERS

Producer:

Question
Does Kansas offer an incentive for biodiesel production sales?

Question
As a biodiesel producer, when is the Petroleum Products Inspection and Environmental Assurance Fee applicable to biodiesel?

Question
As a biodiesel producer in Kansas, am I required to be licensed and bonded with the State of Kansas?

Question
If I am a biodiesel producer in Kansas and will be transporting the biodiesel to my customers, am I required to be licensed?
Question
As a biodiesel producer in Kansas, if I hire a carrier to transport the biodiesel to my customers, or my customers transport the biodiesel they purchase themselves, am I required to have a Liquid Fuel Carriers license?

Question
Am I required to remit fuel tax when I produce and sell biodiesel to a terminal storage facility for resale?

Question
I am a biodiesel producer and a licensed distributor. Am I required to remit fuel tax when I sell the biodiesel I have produced, to another licensed distributor?

Question
Is biodiesel taxable if it is sold to a consumer/end user for off-road use?

Question
If I sell clear B100, should tax be remitted?

Question
If I produce biodiesel for my own use, is it taxable?


Distributor:

Question
How should biodiesel be reported on the Distributor return (MF-52) and schedules (MF-52A/MF-52B)?
Question
If I have paid the fuel tax on biodiesel because it was originally reported to be used for a taxable purpose, placed in bulk storage, then later sold blended with dyed diesel, how do I receive credit for the tax previously paid?

Consumer/End User:

Question
How do I receive a refund for fuel tax paid on biodiesel that I used off-road?


TAXPAYER ASSISTANCE
To obtain additional copies of this or any other notice call the Kansas Department of Revenue’s voice mail forms request line at 785-296-4937 or download them from our web site: www.ksrevenue.org. If you have any questions about this notice, please contact our Motor Fuel Tax Segment.
Motor Fuel Tax Correspondence
Docking State Office Building
915 SW Harrison St.
Topeka, KS 66625-8000
(785) 368-8222
Fax: (785) 296-4993
Notice 06-06
07/06/06 Revised 09/11/2006





Date Composed: 07/06/2006 Date Modified: 07/06/2006