Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2010
 

Diesel Fuel Tax Law

CHAPTER 2. IMPOSITION OF TAX.


CHAPTER 2. IMPOSITION OF TAX.

60050. Levy of tax. (a) A tax of eighteen cents ($0.18) is hereby imposed upon each gallon of diesel fuel subject to the tax in Sections 60051, 60052, and 60058.

(b) If the federal fuel tax is reduced below the rate of fifteen cents ($0.15) per gallon and federal financial allocations to this state for highway and exclusive public mass transit guideway purposes are reduced or eliminated correspondingly, the tax rate imposed by this section, on and after the date of the reduction, shall be increased by an amount so that the combined state and federal tax rate per gallon equals thirty-three cents ($0.33) .

(c) If any person or entity is exempt or partially exempt from the federal fuel tax at the time of a reduction, the person or entity shall continue to be exempt under this section.

60050.1. Floor stock tax. (a) For the privilege of storing, for the purpose of removal, sales, or use, every wholesaler owning undyed diesel fuel on July 1, 1995, shall pay a tax of eighteen cents ($0.18) for each gallon of undyed diesel fuel according to the volumetric measure thereof, on which a tax has not been imposed under Part 3 (commencing with Section 8601) as in effect on June 30, 1995, and tax would have been imposed on any prior removal, entry, or sale of undyed diesel fuel had Sections 60050 to 60061, inclusive, applied to undyed diesel fuel for the period before July 1, 1995.

(b) For purposes of subdivision (a):

(1) "Storing" includes the possession in a storage facility, except an approved terminal or refinery, or a container of any kind, including the fuel tanks of motor vehicles, of undyed diesel fuel and the undyed diesel fuel purchased from and invoiced by the seller prior to July 1, 1995, and in transit on that date.

(2) "Owning" means having title to the undyed diesel fuel.

(3) "Wholesaler" means any person who sells diesel fuel in this state for resale to a retailer or to a person who is not a retailer and subsequently uses the diesel fuel and was required to be licensed under Part 3 (commencing with Section 8601) as a wholesaler as in effect on June 30, 1995.

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60051. Levy of tax; rack removal. The tax specified in Section 60050 is imposed on the removal of diesel fuel in this state from a terminal if the diesel fuel is removed at the rack.

Legal incidence of Kansas motor fuel excise tax on distributor.—U.S. Supreme Court held that Kansas motor fuel tax imposed on the receipt of fuel by distributors was a nondiscriminatory tax imposed on an off-reservation transaction between non-Indians and did not violate the Indian nation's sovereignty. The Kansas statute was dispositive that the legal incidence of the tax was on the distributor, and, even if the Kansas statute did not explicitly state the legal incidence was on the distributor, the Court would look to who was liable for the tax to decide who bears the legal incidence of the tax. Wagnon v. Prairie Band Potawatomi Nation, (2005) 546 U.S. __.

60052. Levy of tax; other. The tax specified in Section 60050 is also imposed on all of the following:

(a) The removal of diesel fuel in this state from any refinery if either of the following applies:

(1) The removal is by bulk transfer and the refiner or the owner of the diesel fuel immediately before the removal is not a diesel fuel registrant.

(2) The removal is at the refinery rack.

(b) The entry of diesel fuel into this state for sale, consumption, use, or warehousing if either of the following applies:

(1) The entry is by bulk transfer and the enterer is not a diesel fuel registrant.

(2) The entry is not by bulk transfer.

(c) The removal or sale of diesel fuel in this state to an unregistered person unless there was a prior taxable removal, entry, or sale of the diesel fuel.

(d) The removal or sale of blended diesel fuel in this state by the blender thereof. The number of gallons of blended diesel fuel subject to tax is the difference between the total number of gallons of blended diesel fuel removed or sold and the number of gallons of previously taxed diesel fuel used to produce the blended diesel fuel.

History.—Stats. 2001, Ch. 429 (AB 309), in effect January 1, 2002, added "or sale" after "The removal" in subdivision (c).

60053. Refiner liability. Every refiner shall pay tax on the removal of diesel fuel from a refinery as provided in subdivision (a) of Section 60052.

60054. Position holder liability. Every position holder shall pay the tax on the removal of diesel fuel from a terminal as defined under Section 60051.

60055. Blender liability. Any person that produces blended diesel fuel outside the bulk transfer/terminal system (the blender) shall pay tax as provided in subdivision (d) of Section 60052.

60056. Qualified highway vehicle operator liability. Every qualified highway vehicle operator is liable for the backup tax imposed under subdivision (a) of Section 60058.

History.—Stats. 2001, Ch. 429 (AB 309), in effect January 1, 2002, substituted "Every qualified" for "The" before "highway vehicle" and added "subdivision (a) of" after "backup tax imposed under".

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60057. Highway vehicle operator/fueler liability. Every highway vehicle operator/fueler is liable for the backup tax imposed under Section 60058.

History.—Stats. 2001, Ch. 429 (AB 309), in effect January 1, 2002, substituted "Every highway vehicle operator/fueler is" for "The end seller of diesel fuel generally is jointly and severally" before "liable for the backup" and deleted "if the end seller knows or has reason to know that the diesel fuel will be used in a diesel powered highway vehicle" after "Section 60058".

60058. Backup tax. The tax specified in Section 60050 is imposed as a backup tax as follows:

(a) On the delivery into the fuel tank of a diesel-powered highway vehicle of:

(1) Any diesel fuel that contains a dye.

(2) Any diesel fuel on which a claim for refund has been allowed. (3) Any liquid on which tax has not been imposed by this part, Part 2 (commencing with Section 7301), or Part 3 (commencing with Section 8601).

(b) On the sale of any diesel fuel on which a claim for refund has been allowed.

(c) On the sale and delivery into the fuel tank of a diesel-powered highway vehicle of any diesel fuel that contains a dye or any liquid on which tax has not been imposed by this part, Part 2 (commencing with Section 7301), or Part 3 (commencing with Section 8601).

(d) For the purposes of this section, aircraft jet fuel on which tax has been imposed only pursuant to Part 2, Chapter 2.5 (commencing with Section 7385) shall be deemed to be a liquid on which tax has not been imposed by Part 2 (commencing with Section 7301).

History.—Stats. 1995, Ch. 555, in effect January 1, 1996, deleted "in this state" after "on the delivery" in the first paragraph. Stats. 2001, Ch. 429 (AB 309), in effect January 1, 2002, added "as follows:" after "as a backup tax" in the first paragraph; added subdivision letter designation (a) before "On the delivery into"; substituted "On" for "on" before "the delivery into", deleted "any of the following" after "highway vehicle of" in subdivision (a); relettered former subdivisions (a), (b) and (c) as subdivision (a) paragraphs (1), (2) and (3), respectively; and added subdivisions (c) and (d).

60059. Terminal operator liability. The terminal operator is jointly and severally liable for the tax imposed under Section 60051 if both of the following apply:

(a) The position holder with respect to the diesel fuel is a person other than the terminal operator and is not a diesel fuel registrant.

(b) The terminal operator has not met the conditions of Section 60060.

60060. Terminal operator exclusion. A terminal operator is not liable for tax under Section 60059, if at the time of the removal, all of the following apply:

(a) The terminal operator is a diesel fuel registrant.

(b) The terminal operator has an unexpired notification certificate from the position holder as required by the Internal Revenue Service.

(c) The terminal operator has no reason to believe that any information in the certificate is false.

60061. Enterer liability. Every enterer shall pay tax on diesel fuel imported into this state as provided in subdivision (b) of Section 60052.

60062. Terminal operator joint liability. The terminal operator is jointly and severally liable for the tax imposed under Section 60051 if, in connection with the removal of diesel fuel that is not dyed or marked in accordance with the United States Environmental Protection Agency or Internal Revenue Service requirements, the terminal operator provides any person with any bill of lading, shipping paper, or similar document indicating that the diesel fuel is dyed or marked in accordance with the United States Environmental Protection Agency or Internal Revenue Service requirements.

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60063. Two-party exchange. (a) The board may accept from the person who receives diesel fuel removed at a refinery or terminal rack an amount equal to the tax due and required to be paid by the refiner or positionholder upon the removal of the diesel fuel from a refinery or terminal rack, as if the amount were payment of the tax by the refiner or positionholder under Section 60051 or 60052, as the case may be, if the Internal Revenue Service authorizes payment of federal fuel taxes by the receiving party under a two-party exchange agreement or similar arrangement.

(b) The refiner or positionholder shall remain primarily liable for payment of the tax imposed by Section 60051 or 60052 for diesel fuel removed at the refinery or terminal rack, as the case may be, plus any penalty or interest, until the amount is finally paid and credited to the account of the responsible refiner or positionholder; provided, however, that the board, at its discretion, may relieve the refiner or positionholder from primary liability for payment of tax imposed by Section 60051 or 60052 and hold another person primarily liable for the tax if (i) the Internal Revenue Service authorizes payment of fuel taxes by the receiving party under a two-party exchange agreement, and (ii) under the Internal Revenue Service approach to a two-party exchange agreement, another person is primarily liable for payment of the tax, and (iii) the board elects to follow the Internal Revenue Service approach.

(c) The board may adopt those regulations as it deems appropriate to carry out this section.

History.—Added by Stats. 2001, Ch. 429 (AB 309), in effect January 1, 2002. Stats. 2006, Ch. 364 (AB 3076), in effect January 1, 2007, substituted "60051" for "7362" after the second reference to "imposed by Section", substituted "60052" for "7363" after the second reference to "60051 or", and substituted "primarily" for "primary" after "another person", in subdivision (b).

60064. Presumption of removal. (a) For the purpose of the proper administration of this part and to prevent evasion of the tax, unless the contrary is established, it shall be presumed that all diesel fuel received at a terminal in this state, imported into this state, or refined and placed into storage for removal at a refinery in this state or blended diesel fuel blended or converted in this state and no longer in the possession of the supplier has been removed or sold by the supplier.

(b) The presumption shall not apply if the supplier proves to the satisfaction of the board that both:

(1) The supplier has exercised ordinary care in entrusting control or possession of the diesel fuel to another person.

(2) The person to whom the supplier has entrusted the control or possession of the diesel fuel as bailee, consignee, employee, or agent, caused a removal or sale by the act of converting to that person's own use the diesel fuel so entrusted to that person by the supplier.

(c) If the supplier proves to the satisfaction of the board, the existence of both of the circumstances in paragraphs (1) and (2) of subdivision (b), then the person who converted the diesel fuel to his or her own use, as well as any other person receiving that diesel fuel with the knowledge that it was so converted, shall be liable for payment of the tax imposed upon the removal or sale, and all those persons shall be considered as suppliers for the purpose of Chapter 6 (commencing with Section 60201) or Chapter 7 (commencing with Section 60401) of this part.

History.—Added by Stats. 2001, Ch. 429 (AB 309), in effect January 1, 2002.

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