Fuel Tax Evasion

What is fuel tax evasion?

Under the California Revenue and Taxation Code, any person who evades the reporting, assessment or payment of fuel taxes that would otherwise be due may be guilty of fuel tax evasion. Violators are subject to fines and/or jail time.

The State of California imposes the following excise taxes on fuel:

• 18 cents per gallon of diesel fuel.
• 18 cents per gallon of motor vehicle fuel (gasoline).
• 6 cents per gallon of liquefied petroleum gas.
• 7 cents per 100 cubic feet of compressed natural gas.
• 9 cents per gallon of ethanol or methanol containing not more than 15 percent gasoline or diesel fuels.

Examples of fuel tax evasion:

• Using dyed (untaxed) diesel fuel in a vehicle operated on California highways without being licensed to remit the tax.
• Intentionally importing fuel from outside the state without remitting the appropriate California State fuel taxes.
• Blending taxable fuel with an untaxed product to increase volume without paying tax on the increase.

Why is fuel tax evasion harmful?

• When fuel taxes are not paid, those dollars are not available for a variety of transportation uses. Fuel taxes are primarily used for the construction and upkeep of our roads and highways.
• Fuel tax evasion is bad for the environment. Illegally blended fuels can cause increased soil and air pollution. These result from poor combustion and contamination from toxic or waste chemicals used as blending agents. In addition, illegally blended fuels often cause increased engine wear and can lead to vehicle breakdowns.
• Fuel tax evasion hurts honest businesses. Fuel can be sold at a lower price since the tax was not paid, which allows the seller to gain more customers and earn increased profits through criminal activity.

Report Fuel Tax Evasion

Public awareness and involvement are essential in eliminating fuel tax evasion. To report suspected fuel tax evasion, contact the Board of Equalization Investigations Division at 916-324-0105 or the Tax Evasion Hotline at 888-334-3300. To submit a complaint by e-mail, please click here.