Notice Required for Biodiesel and Renewable Diesel

Texas law provides a tax exemption for biodiesel, renewable diesel and for the volume of biodiesel or renewable diesel blended with taxable diesel fuel. This exemption is intended to be passed to the ultimate consumer.

The volume of biodiesel and renewable diesel and the volume of biodiesel or renewable diesel that is combined with taxable diesel fuel must be identified on the sales invoice on each sales transaction after the biodiesel or renewable diesel is produced and is first blended with taxable diesel fuel, and must continue to be identified on sales invoices until sold to the ultimate consumer. Comptroller Rule 3.433 details the information required on each sales invoice issued by wholesalers (refiners, producers, blenders, importers resellers) and retail dealers.

A wholesaler must identify on each sales invoice the volume of biodiesel or renewable diesel that is combined with taxable diesel fuel showing the number of gallons of biodiesel or renewable diesel, rounded to the nearest whole gallon, or by the percentage of biodiesel or renewable diesel, rounded to the nearest whole percentage. This is not an option. The sales invoice must also indicate the state tax collected on each sale based on the volume that is taxable petroleum-based diesel fuel.

Dealers are required to identify on each sales invoice the volume of biodiesel and renewable diesel sold through a retail pump to the ultimate consumer. On retail sales to the ultimate consumer that contain 20% or less biodiesel or renewable diesel, the dealer may identify the blended product sold as “Contains up to 5% biodiesel or renewable diesel – state diesel tax $0.19 per gallon” or “Contains up to 10% biodiesel or renewable diesel – state diesel tax $0.18 per gallon” or “Contains up to 15% biodiesel or renewable diesel – state diesel tax $0.17 per gallon” or “Contains up to 20% biodiesel or renewable diesel – state diesel tax $0.16 per gallon.”

On blends that contain more than 20% biodiesel or renewable diesel fuel, the volume must be identified to the nearest whole gallon or nearest whole percentage, with the appropriate state diesel tax rate. Identifying the volume of biodiesel and renewable diesel fuel on a sales invoice when sold by a dealer through a retail pump is not an option.

*Originally published in the May edition of Tax Policy News – a monthly newsletter about Texas tax policy at http://www.window.state.tx.us/taxinfo/taxpnw/tpn2012/tpn1205.html

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