SF 2103 (LSB 5213SS (6) 83)

SENATE FILE 2103

BY  KIBBIE

A BILL FOR

An Act relating to excise taxes imposed upon special fuel, including biodiesel fuel and diesel fuel used in the production of biodiesel blended fuel.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 452A.2, Code 2009, is amended by adding the following new subsection:
   NEW SUBSECTION.  9A.  “Diesel fuel” means the same as defined in section 214A.1.
    Sec. 2.  Section 452A.2, subsection 29, Code 2009, is amended to read as follows:
   29.  “Nonterminal storage facility” means a facility where motor fuel or special fuel, other than liquefied petroleum gas, is stored that is not supplied by a pipeline or a marine vessel. “Nonterminal storage facility” includes a facility that manufactures products such as ethanol as defined in section 214A.1, biofuel, blend stocks, or additives which may be used as motor fuel or special fuel, other than liquefied petroleum gas, for operating motor vehicles or aircraft.
    Sec. 3.  Section 452A.3, subsection 3, Code Supplement 2009, is amended to read as follows:
   3.  a.  For the privilege of operating motor vehicles or aircraft in this state, there is imposed an excise tax on the use of special fuel in a motor vehicle or aircraft.
   (1)  The tax rate on special fuel for diesel engines of motor vehicles is twenty-two and one-half cents per gallon. The tax rate on biodiesel fuel for diesel engines of motor vehicles shall be determined on a volume basis with the gross metered gallons adjusted in volume to sixty degrees Fahrenheit.
   (2)  The rate of tax on special fuel for aircraft is three cents per gallon.
   (3)  On all other special fuel, unless otherwise specified in this section, the per gallon rate is the same as the motor fuel tax.
   b.  Indelible dye meeting United States environmental protection agency and internal revenue service regulations must be added to special fuel before or upon withdrawal at a terminal or refinery rack for that special fuel to be exempt from tax and the dyed special fuel may be used only for an exempt purpose.
    Sec. 4.  Section 452A.17, subsection 1, paragraph a, Code Supplement 2009, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (11)  Diesel fuel used by a nonterminal storage facility to blend with biodiesel to produce biodiesel blended fuel, if the biodiesel blended fuel is distributed to a blender licensed pursuant to section 452A.6 who is also required to pay the excise tax on that same diesel fuel.
    Sec. 5.  Section 452A.86, Code 2009, is amended to read as follows:
   452A.86  Method of determining gallonage.
   1.  The exclusive method of determining gallonage of any purchases or sales of motor fuel, undyed special fuel, compressed natural gas, or liquefied petroleum gas as defined in this chapter and distillate fuels shall be on a gross volume basis. A temperature-adjusted or other method shall not be used, except as it applies to biodiesel fuel, liquefied petroleum gas and, or the sale or exchange of petroleum products between petroleum refiners. All invoices, bills of lading, or other records of sale or purchase and all returns or records required to be made, kept, and maintained by a supplier, restrictive supplier, importer, exporter, blender, or compressed natural gas or liquefied petroleum gas dealer or user shall be made, kept, and maintained on the gross volume basis.
   2.  For purposes of this section, “distillate fuels” means any fuel oil, gas oil, topped crude oil, or other petroleum oils derived by refining or processing crude oil or unfinished oils which have a boiling range at atmospheric pressure which falls completely or in part between five hundred fifty and twelve hundred degrees Fahrenheit.
EXPLANATION
   CALCULATING THE EXCISE TAX IMPOSED ON BIODIESEL FUEL. This bill applies to the excise tax imposed on biodiesel fuel, which includes biodiesel and biodiesel blended with diesel fuel, from B-1 to B-100 (see generally Code sections 214A.1 and 214A.2).
   Generally, an excise tax is imposed on each gallon of motor fuel, including biodiesel fuel (Code section 452A.3) on a gross volume basis without adjustment (Code section 452A.86). The bill does not directly change the excise tax imposed on biodiesel fuel, but changes how the gallonage is calculated at the meter, by requiring that the excise tax be assessed after adjusting the biodiesel’s fuel temperature to 60 degrees Fahrenheit.
   REFUND OF EXCISE TAX PAID ON DIESEL FUEL PAID BY NONTERMINAL STORAGE FACILITIES. A person who manufactures a biofuel, including ethanol or biodiesel for distribution, is classified as a nonterminal storage facility (Code section 452A.2). A nonterminal storage facility is required to pay an excise tax on diesel fuel used in producing biodiesel blended fuel. The bill provides that the nonterminal storage facility is entitled to a refund of the excise tax paid on diesel fuel if the biodiesel blended fuel is distributed to a licensed blender (Code section 452A.6) who must pay the excise tax on that same diesel fuel.