Section 3.443 - Diesel Fuel Tax Exemption for Water, Fuel Ethanol, Biodiesel, Renewable Diesel, and Biodiesel and Renewable Diesel Mixtures(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Water-based diesel fuel--a combination of water, petroleum diesel fuel, emulsifier, and seasonal additives (when necessary) into an emulsion that is suitable or used for the propulsion of a diesel-powered motor vehicle.(2) Fuel grade ethanol--denatured ethanol meeting the requirements of American Society for Testing and Materials (ASTM) D-4806 used for blending with motor fuel.(3) Biodiesel--a fuel that: (A) meets the registration requirements for fuel or fuel additives established by the United States Environmental Agency under Section 211 of the Federal Clean Air Act (42 U.S.C. Section 7545);(B) is mono-alkyl esters of long chain fatty acids derived from vegetable oils and animal fats;(C) meets the requirements of ASTM D-6751;(D) is intended for use in engines that are designed to run on conventional, petroleum-derived diesel fuel; and(E) is derived from agricultural products, vegetable oils, recycled greases, biomass, or animal fats or the wastes of those products or fats.(4) Biodiesel blend--a blend of biodiesel meeting the requirements of paragraph (3) of this subsection, with petroleum based diesel fuel.(5) Renewable diesel--a fuel that: (A) meets the registration requirements for fuel or fuel additives established by the United States Environmental Agency under Section 211 of the Federal Clean Air Act (42 U.S.C. Section 7545);(C) meets the requirements of ASTM D-975;(D) is intended for use in engines that are designed to run on conventional, petroleum-derived diesel fuel; and(E) is derived from agricultural products, vegetable oils, recycled greases, biomass, or animal fats or the wastes of those products or fats.(6) Renewable diesel blend--a blend of renewable diesel fuel meeting the requirements of paragraph (5) of this subsection, with petroleum based diesel fuel. A renewable diesel blend may also be identified as a biomass-based diesel blend.(b) Diesel fuel tax exception. The tax imposed on diesel fuel pursuant to Tax Code, § 162.201, does not apply to biodiesel, renewable diesel or to the volume of water, fuel grade ethanol, biodiesel or renewable diesel that is blended with taxable petroleum based diesel fuel when the finished product meets the certification requirements of subsection (f) of this section and is clearly identified on the sales invoice, storage tank, and retail pump, as required by subsection (c), (d), or (e) of this section. The tax imposed pursuant to Tax Code, § 162.201, applies to the petroleum-based component of a renewable diesel blend that is the result of co-processing a renewable diesel feedstock with a petroleum-based feedstock in the same facility or refinery processing unit. The portion of the resulting co-processed product that is exempt from the tax imposed pursuant to Tax Code, § 162.201, as a renewable diesel is equal to the volume of renewable diesel used as a feedstock. The tax exemption on biodiesel, renewable diesel or to the volume of water, fuel grade ethanol, biodiesel or renewable diesel that is blended with taxable petroleum based diesel fuel provided by Tax Code, § 162.204, should be documented in each transaction so that the exemption is passed to the person ultimately using or consuming the diesel fuel.(c) Invoice documentation. (1) The volume of biodiesel or renewable diesel must be identified on the sales invoice on each sales transaction, and must continue to be identified on sales invoices until the product is sold to the ultimate consumer.(2) The volume of water, fuel grade ethanol, biodiesel, or renewable diesel that is combined with taxable petroleum based diesel fuel must be identified on the sales invoice on each sales transaction after the water, fuel grade ethanol, biodiesel, or renewable diesel is first blended with taxable petroleum based diesel fuel, and must continue to be identified on sales invoices until the blended product is sold to the ultimate consumer.(3) A sales invoice must: (A) identify a water-based diesel fuel, ethanol blended diesel fuel, biodiesel, renewable diesel, biodiesel blend, or renewable diesel blend by a commonly accepted commercial or industry name for the product being sold. For example, B100 for biodiesel or B20 for a biodiesel blend containing 80% taxable petroleum diesel fuel and 20% biodiesel;(B) list the volume in gallons (rounded to the nearest whole gallon) or the percentage (rounded to the nearest whole percentage; for example 1.4% becomes 1.0% and 1.5% becomes 2.0%) of the blended product that is water, fuel grade ethanol, biodiesel, or renewable diesel;(C) list the volume in gallons (rounded to the nearest whole gallon) or the percentage (rounded to the nearest whole percentage) of the blended product that is taxable petroleum based diesel fuel. Taxable diesel fuel includes emulsifiers and additives, but not water, fuel grade ethanol, biodiesel, or renewable diesel; and(D) list the basis of calculating the tax (if a taxable sale) as either $0.20 for each gallon of taxable petroleum based diesel fuel in the blended product or a ratable tax rate based on the percent of taxable petroleum based diesel in the blended product. For example, the invoice for the sale of 100 gallons that is a blend of 20% biodiesel and 80% taxable diesel fuel may list: state diesel fuel tax of $0.20 per gallon on 80 gallons taxable diesel fuel and no state tax on 20 gallons biodiesel, or state diesel fuel tax of $0.16 per gallon on 100 gallons of biodiesel blend.(d) Notice required on storage tank and retail pump. (1) A notice must be posted in a conspicuous location on each storage tank and retail pump from which biodiesel or renewable diesel is stored or sold. The notice must identify the product by the common industry or commercial name. For example, B100 for biodiesel.(2) A notice must be posted in a conspicuous location on each storage tank located outside the bulk terminal/transfer system and retail pump from which a blend product is stored or sold from the time that the water, fuel grade ethanol, biodiesel, or renewable diesel is first blended with taxable petroleum based diesel fuel until the blended product is sold to the ultimate consumer. The notice must identify the blended product by the common industry or commercial name, and state the volume percentage (rounded to the nearest whole percentage) of water, fuel grade ethanol, biodiesel, or renewable diesel that is blended with petroleum diesel fuel. For example, "B5 - 5.0% Biodiesel", or similar wording, for a 5.0% biodiesel blend.(e) As an alternative to subsections (c) and (d) of this section, a dealer dispensing a biodiesel blend or renewable diesel blend at a retail location to the ultimate consumer may elect to identify on the storage tank, retail pump and sales invoice the blended product sold in the following manner: (1) blends containing a total percentage of up to 5.0% biodiesel or renewable diesel by volume may be identified as "Contains Up To 5.0% Biodiesel or Renewable Diesel" or similar wording. Each component that is biodiesel or renewable diesel is added together to determine the total percentage. The sales invoice must list the basis for collecting the state tax as though the blended product sold is a 5.0% blend. For example, a blended product that contains 2.0% biodiesel and 2.0% renewable diesel has a total blend percentage of 4.0% and may be identified on the retail pump as "Contains Up To 5.0% Biodiesel or Renewable Diesel", or similar wording, and identified on the sales invoice with the statement "Contains up to 5.0% biodiesel or renewable diesel - state diesel tax $0.19 per gallon", or similar wording;(2) blends containing a total percentage greater than 5.0% biodiesel or renewable diesel by volume but no more than 10% biodiesel or renewable diesel by volume may be identified as "Contains Up To 10% Biodiesel or Renewable Diesel" or similar wording. Each component that is biodiesel and renewable diesel is added together to determine the total percentage. The sales invoice must list the basis for collecting the state tax as though the blended product sold is a 10% blend. For example, a blend that contains 2.0% biodiesel and 5.0% renewable diesel has a total blend of 7.0% and may be identified on the retail pump as "Contains Up To 10% Biodiesel or Renewable Diesel", or similar wording, and identified on the sales invoice with the statement "Contains up to 10% biodiesel or renewable diesel - state diesel tax $0.18 per gallon", or similar wording;(3) blends containing a total percentage greater than 10% biodiesel or renewable diesel by volume but no more than 15% biodiesel or renewable diesel by volume may be identified as "Contains Up To 15% Biodiesel or Renewable Diesel" or similar wording. Each component that is biodiesel and renewable diesel is added together to determine the total percentage. The sales invoice must list the basis for collecting the state tax as though the blended product sold is a 15% blend. For example, a blend that contains 5.0% biodiesel and 7.0% renewable diesel has a total blend of 12% and may be identified on the retail pump as "Contains Up To 15% Biodiesel or Renewable Diesel", or similar wording, and identified on the sales invoice with the statement "Contains up to 15% biodiesel or renewable diesel - state diesel tax $0.17 per gallon", or similar wording;(4) blends containing a total percentage greater than 15% biodiesel or renewable diesel by volume but no more than 20% biodiesel or renewable diesel by volume may be identified as "Contains Up To 20% Biodiesel or Renewable Diesel" or similar wording. Each component that is biodiesel and renewable diesel is added together to determine the total percentage. The sales invoice must list the basis for collecting the state tax as though the blended product sold is a 20% blend. For example, a blend that contains 8.0% biodiesel and 8.0% renewable diesel has a total blend of 16% and may be identified on the retail pump as "Contains Up To 20% Biodiesel or Renewable Diesel", or similar wording, and identified on the sales invoice with the statement "Contains up to 20% biodiesel or renewable diesel - state diesel tax $0.16 per gallon", or similar wording;(5) blends containing a total percentage greater than 20% biodiesel or renewable diesel by volume must follow the sales invoice, storage and retail pump requirements as described in subsections (c) and (d) of this section;(6) a dealer who uses this subsection must pay state diesel fuel tax on their purchases of a biodiesel blend or renewable diesel blend based on the actual volume of the petroleum diesel in the blend;(7) this subsection does not apply to wholesale sales of biodiesel or renewable diesel blends.(f) Certification. The refiner, producer, importer, blender, or reseller of biodiesel, renewable diesel, biodiesel blend, or renewable diesel blend must provide on each transfer to a person who is not the ultimate consumer a delivery ticket, certificate, letter, or other written statement (e.g.; invoice, bill of sale, bill of lading, or product transfer document) that contains the name of the seller, the name of the purchaser, date of transfer and the volume in gallons (rounded to the nearest whole gallon) or the percentage (rounded to the nearest whole percentage) of the biodiesel or renewable diesel component of the blend. Certification records required by this subsection must be maintained for four years.(g) Refund of diesel fuel tax paid. The ultimate consumer who has paid diesel fuel tax on biodiesel, renewable diesel, or on the percentage of water, fuel grade ethanol, biodiesel, or renewable diesel that is blended with taxable petroleum based diesel may file a claim for refund of taxes paid as provided by § 3.432 of this title (relating to Refunds on Gasoline and Diesel Fuel Tax). The refund claim must be supported with purchase invoice(s) as described in subsection (c) of this section. The total volume of diesel fuel that is purchased is presumed to be taxable diesel fuel if the purchase invoice does not meet the requirements of subsection (c) of this section.(h) Commercial motor vehicles licensed under the International Fuel Tax Agreement (IFTA). (1) A water-based diesel fuel, ethanol blended diesel fuel, biodiesel, renewable diesel, biodiesel blend, or renewable diesel blend that is delivered into the fuel supply tank(s) of a motor vehicle that is licensed under the IFTA is presumed to be used in the jurisdiction in which it was purchased. This presumption may be overcome if it is shown that the total amount of water-based diesel fuel, ethanol blended diesel fuel, biodiesel, renewable diesel, biodiesel blend, or renewable diesel blend that is purchased in other IFTA jurisdictions is greater than the amount of total diesel fuel used in other IFTA jurisdictions by all diesel-powered motor vehicles that the IFTA licensee operates.(2) In calculating the IFTA fleet average mile-per-gallon, the total gallons of diesel fuel that are consumed includes the total gallons of water-based diesel fuel, ethanol blended diesel fuel, biodiesel, renewable diesel, biodiesel blend, or renewable diesel blend.(3) An IFTA licensee who overpays the tax on a water-based diesel fuel, ethanol blended diesel fuel, biodiesel, renewable diesel, biodiesel blend, or renewable diesel blend by way of an IFTA tax return may request a refund from the comptroller. A refund claim must be supported with purchase invoice(s) as described in subsection (c) of this section. The total volume of diesel fuel that is purchased is presumed to be taxable diesel fuel if the purchase invoice(s) do not meet the requirements of subsection (c) of this section.(i) A license holder who makes the first sale in Texas or import into Texas of biodiesel, renewable diesel, or a mixture of water, fuel grade ethanol, biodiesel, or renewable diesel that is blended with taxable petroleum-based diesel fuel, may elect to collect and remit the tax imposed on diesel fuel pursuant to Tax Code, § 162.201, rather than complying with subsections (c), (d), and (e) of this section. Biodiesel, renewable diesel, or the volume of water, fuel grade ethanol, biodiesel, or renewable diesel that is blended with taxable petroleum-based diesel fuel, on which tax has been paid is not exempt from tax on a subsequent sale and subsections (c), (d), and (e) of this section do not apply to a subsequent sale. A license holder, dealer, or other purchaser who pays tax on biodiesel, renewable diesel, or the volume of water, fuel grade ethanol, biodiesel, or renewable diesel that is blended with taxable petroleum-based diesel fuel, is not entitled to a credit or refund.34 Tex. Admin. Code § 3.443
The provisions of this §3.443 adopted to be effective September 2, 2004, 29 TexReg 8374; amended to be effective August 24, 2010, 35 TexReg 7446; amended to be effective August 1, 2011, 36 TexReg 4805; amended to be effective December 5, 2013, 38 TexReg 8671