Motor Fuel - Biodiesel - Biofuel Frequently Asked Questions
Taxation of biofuels is governed by the California State Diesel Fuel Tax Law and administered by the Special Taxes and Fees Department of the Board of Equalization (BOE). This page is meant to provide answers to some of your frequently asked questions about biofuels, including biodiesel, straight vegetable oil (svo), waste vegetable oil (wvo), and the California diesel fuel tax.
What are biofuels?
Biofuels are transportation fuels that are made from biomass materials. Biodiesel is one of the most popular biofuels. These fuels are usually blended with petroleum fuels (gasoline and diesel fuel), but they can also be used on their own.
What is biodiesel?
Biodiesel is a fuel made fully or partially from vegetable oils or animal fats. It is typically produced by combining a vegetable oil or animal fat with an alcohol, such as methanol or ethanol, in the presence of a chemical catalyst to produce mono-alkyl esters and glycerin. Pure biodiesel must meet ASTM specification ASTM D6751. Biodiesel does not contains any petroleum, but can be blended at any level with diesel to create a biodiesel blend.
Is biofuels a taxable diesel fuel?
Yes. Under Revenue and Taxation Code section 60022, "Diesel fuel" means any liquid that is commonly or commercially known or sold as a fuel suitable for use in a diesel-powered highway vehicle. biofuels is included in this definition.
Is straight vegetable oil (svo) or waste vegetable oil (wvo) a taxable fuel?
Yes. Raw vegetable oil, whether it is svo (virgin oil, fresh, uncooked) or wvo (used cooking oil, "grease," fryer oil, including tallow fats), that is sold or used in powering a motor vehicle in California is subject to the California diesel fuel tax in the same manner as is petroleum-based diesel fuel.
How is the diesel tax used?
California fuel taxes pay for the construction and maintenance of state and local roads and highways. The taxes apply to all fuel used on roads and highways, whether the fuel is sold, given away, or made for your own use.
What is the rate of the California state diesel fuel tax?
Is the tax rate the same for biofuels?
Yes, in California biofuels are considered diesel fuel and are taxed at the diesel fuel Tax Rate.
Who must register and pay diesel fuel tax on biofuels?
In general, you must register with us if you do any of the following in California:
- Manufacture or produce biofuels.
- Blend biofuels with petroleum diesel.
- Sell or import biofuels from another state or country that has not been previously taxed as diesel fuel in California.
- Use biofuels that has not been previously taxed as diesel fuel to power a vehicle driven on the roads or highways.
- Use, sell, or import svo or wvo for use in a diesel-powered highway vehicle that has not been previously taxed as diesel fuel.
- Process or filter svo or wvo for use in a diesel-powered highway vehicle.
How do I register?
Go to our online registration system, and select "Register a business activity with BOE." The system is convenient, secure, and available 24 hours a day. Visit our Information Needed to Get Started webpage for help to complete your application.
You may also register in person at one of our field office locations by use of a kiosk or forms available upon request. If you have questions, please contact our Customer Service Center at 1-800-400-7115, Monday through Friday, 8:00 a.m. – 5:00 p.m. Pacific time, excluding state holidays.
If you sell both diesel fuel and motor vehicle fuel, you should register for both programs during the registration process.
A diesel fuel licensee may also need to obtain a Seller's Permit from the BOE. You will be able to register for both permits using BOE's online registration system.
If I only put SVO or WVO in my own fuel tank for my own use, do I need to register?
Yes, because the SVO and WVO are subject to the diesel fuel tax whenever they are used as fuel to power a diesel-powered vehicle on California highways. When you register with the BOE, you will be issued a diesel supplier account number which will allow you to pay the diesel fuel tax on the gallons of fuel you use during the year to power a vehicle driven on the roads and highways in California.
Is there a fee for this license?
There is no fee for the license.
Will I have to file a diesel fuel tax return?
Yes, you will be required to report on either a monthly, quarterly, or yearly basis. The Supplier of Diesel Fuel Tax Return is due on the last day of the month, following the close of your reporting period. For example, the return for year 2015 is due on January 31, 2016. You must file your return even if you have nothing to report for the period.
If I only put SVO and/or WVO directly into my vehicle, do I have to file a Supplier Diesel Fuel Tax Return?
Yes, svo and wvo are considered diesel fuel when used to power a diesel-powered highway vehicle. You will be placed on a yearly reporting basis and be required to report the number of gallons of svo or wvo you used in your diesel-powered highway vehicle during the reporting period.
When is the tax imposed on the transaction(s)?
The tax is imposed when the "biofuels" are imported into California, removed from a California, biofuel production facility, or terminal rack, or blended with tax-paid diesel below the rack. If you are producing your own biofuels or using svo or wvo, the tax is imposed when you put the fuel into the tank of your vehicle or sell it to another person. You must report this fuel on your Supplier of Diesel Fuel Tax Return for the period during which the transaction(s) took place.
How do I claim a credit on my Supplier of Diesel Fuel Tax Return, BOE-501-DD, for tax paid biodiesel blended with diesel fuel and removed as dyed blended biodiesel fuel?
To claim the credit, report the tax-paid biodiesel portion of the dyed blended biodiesel fuel removed, on Disbursement Schedule 13M, Tax-Paid Fuel Removed From a Terminal. Transactions may be summarized by day, week, or month. Report the full quantity of dyed biodiesel fuel blends on Schedule 6F, Reportable Products Removed Not Subject to Tax.
You need to maintain records to support the gallons claimed as being the tax-paid biodiesel portion of the dyed blended biodiesel fuel. You may be asked to supply supporting documentation for your claim for refund or credit. Supporting documentation may include, but is not limited to:
- Purchase invoice(s) showing the tax-paid biodiesel
- Proof that a blended dyed biodiesel fuel was produced, to a volume that equals or exceeds the volume necessary to support the diesel fuel tax refund
- Records supporting the disposition of the fuel produced
This credit is available for the tax-paid biodiesel portion of dyed blended biodiesel fuel removed from a terminal rack on and after January 1, 2016.
What if I sell the SVO, WVO or the biofuels I produce, to another person?
In addition to being a supplier of diesel fuel and being required to file a Supplier of Diesel Fuel Tax Return, BOE-501-DD you may be required to register for a California Seller’s Permit and collect and remit the sales and use tax to the BOE.
For more information please see Publication 96, biofuels and California Tax. Publication 96 addresses common questions regarding the application of diesel fuel tax as well as the sales and use tax on biofuels, including biodiesel, straight vegetable oil (svo), and waste vegetable oil (wvo) transactions in California. Additional information on biofuels may be found in the Special Taxes and Fees Newsletter or archive of Fuel Taxes Newsletters, or you may call the Customer Service Center at 1-800-400-7115.