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History
- Referred to investigations and government operations
- Referred to investigations and government operations
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to exempting Diesel motor fuel and residual petroleum product used at or in a non-road operation from taxation
Purpose
The purpose of this bill is to address an unintended taxation consequence on farms and other small businesses due to the recent implementation of federal regulations regarding the use of dyed non-highway, locomotive or marine (NRLM) diesel fuel.
Summary of provisions
Section one makes changes to section 282-a of tax law with the intent that purchasers of dyed NRLM diesel fuel will not be responsible for payment of the diesel fuel excise tax at the time of purchase, provided the end sales and uses of such fuel are specifically exempt from taxation, such as use in farming.
Read the full memo (654 words)
Section two amends section 285-b of the tax law with the intent of providing the Commissioner of Taxation & Finance the ability to request reasonably necessary forms from the fuel distributors to ensure the integrity of the new exemption system put in place under the other sections of this bill.
Section three makes changes to section 301-b of the tax law with the intent that purchasers of dyed NRLM diesel fuel will not be responsible for payment of the petroleum business tax at the time of purchase, provided the end sales and uses of such fuel are specifically exempt from taxation, such as use in farming.
Section four makes changes to section 1115 the tax law with the intent that purchases of dyed NRLM diesel fuel will not be responsible for payment of state and local sales tax at the time of purchase, provided the end sales and uses of such fuel are specifically exempt from taxation, such as use in farming.
Section five authorizes and directs the Commissioner of Taxation & Finance to promulgate any rules and regulations necessary to implement the provisions of this act.
Section six contains the effective date.
Justification
In the fall of 2007, the United States Environment Protection Agency implemented new regulations requiring that all non-road vehicles, including farm tractors and farm equipment utilize a lower sulfur diesel fuel than had been historically used in those vehicles. Due to existing New York State tax law, the new lower sulfur diesel fuel is considered enhanced diesel fuel and is taxed in a different manner than the higher diesel fuel. Previously, uses of the dyed higher sulfur diesel fuel were exempt from the State's three fuel taxes (the petroleum business tax, diesel motor fuel excise tax and sales tax) and fuel distributors were able to purchase the fuel without paying tax. The distributor then forward on the tax exemption directly to the exempt small businesses, such as farms.
The change in taxation status means that fuel distributors must pay all taxes on the fuel at the time of purchase, regardless of whether the end sale is an exempt use. This means small fuel distributors must layout almost $0.40/gallon in taxes and then wait for four to five months for a refund of those taxes. This creates a tremendous cash-flow issue for these small businesses. In fact, many of them cannot afford this cost and are now forwarding the up-front taxes to the exempt businesses, including farmers. Farms and small businesses must then front an additional $0.40/gallon for four to five months until a refund can be obtained. This places a tremendous burden on these businesses and family farms.
The bill seeks to address this business climate issue by clarifying that none of the three state taxes will be required with the purchase of dyed non-road diesel by a distributor where the end sales and uses of the diesel fuel will be by the specifically exempt categories, such as farms.
Legislative history
2008: S.7947-B, Passed Senate; A.11389-A Rules Committee
Fiscal implications
None to the state.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.