HBA-GUM, RBT S.B. 1547 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1547
By: Bivins
Ways & Means
5/13/1999
Engrossed


BACKGROUND AND PURPOSE 

Currently, this state's objective is to increase compliance with the motor
fuel tax, resulting in increased state revenues of $50 million and
increased federal appropriations of $48 million. S.B. 1547 sets forth
provisions regarding the collection of the motor fuels tax and provides
penalties. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the comptroller of public accounts in
SECTION 2 (Section 153.003, Tax Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 153.001, Tax Code, by amending Subdivisions (8)
and (19) and adding Subdivisions (28) - (36), to redefine "diesel tax
prepaid user," and "motor fuel."  Defines "blended fuel," "blending,"
"diversion number," "dyed diesel fuel," "export," "import," "import
verification number," "shipping document," and "undyed diesel fuel." 

SECTION 2.  Amends Section 153.003(a), Tax Code, to require the records of
each intrastate and interstate transportation of motor fuel required under
Subsection (b) to be compiled into a report and supplements in a form or
manner determined by the comptroller of public accounts (comptroller).
Requires, on or before the 25th day of the month following the end of each
calendar quarter, a common or contract carrier to file a report showing
complete and detailed information on the transportation of motor fuel
during the preceding quarter.  Provides that the report must be executed by
the common or contract carrier or a representative of the carrier, and the
penalties provided by this chapter apply to any violation relating to the
report.  Requires the comptroller, by rule, to determine the registration
requirements for common or contract carriers transporting motor fuel. 

SECTION 3.  Amends Section 153.004(d), Tax Code, by adding language to
require each person, other than a common carrier transporting motor fuel,
to also carry a copy of the dyed diesel fuel bonded user, or agricultural
bonded user permit. 

SECTION 4.  Amends Section 153.006, Tax Code, by adding Subsection (e), to
authorize the comptroller to revoke a distributor's or supplier's permit if
the distributor or supplier purchases, for export, motor fuel in this state
on which the tax imposed by this chapter has not been paid and subsequently
diverts or causes the fuel to be diverted to a destination in this state or
to a destination in another state or country other than the originally
designated state or country without first obtaining a diversion number. 

SECTION 5.  Amends  Section 153.010, Tax Code, to authorize the comptroller
or a peace officer, in order to enforce the provisions of this chapter, to
stop a motor vehicle that appears to operating with or transporting fuel in
order to examine the shipping document, cargo manifest, or invoices
required to be carried and make any other investigation that could
reasonably be make to determine whether the taxes have been paid or
accounted for by a distributor, supplier, dealer, dyed diesel fuel bonded
user, agricultural bonded user, jobber, or any person required to be so
permitted.  Authorizes the certain persons to take samples of motor fuel
from any storage tank or container to draw certain conclusions. 

SECTION 6.  Amends  Section 153.013(a), Tax Code, by adding language to
provide that a dyed  diesel fuel bonded user, or agricultural bonded user
who fails to keep a record, issue an invoice, or file a report required by
this chapter, is presumed to have sold or used for taxable purposes all
motor fuel shown by an audit by the comptroller to have been sold to
certain entities.  Makes conforming changes. 

SECTION 7.  Amends  Subchapter A, Chapter 153, Tax Code, by adding Section
153.018, as follows: 

Sec.  153.018.  IMPORTATION AND EXPORTATION OF MOTOR FUEL.  (a)  Prohibits
a person from importing fuel to a destination in this state or export motor
fuel to a destination outside of this state by any means unless the person
possesses a shipping document for that fuel created by the terminal or bulk
plant at which the fuel was received.  Sets forth the information required
to be included in the shipping document. 

(b)  Requires the terminal or bulk plant to provide shipping documents to
the importer or exporter.  

(c)  Requires the terminal to document the split loads by issuing shipping
documents that list the destination state of each portion of the motor
fuel, if motor fuel is to be delivered to more than one state. 

(d)  Sets forth required actions to be taken by a terminal, a bulk plant,
the carrier, the permitted distributor or supplier, and the person that
received the motor fuel.   

(e)  Requires an importer or exporter to keep in the person's possession,
the shipping document issued by the terminal or bulk plant when
transporting motor fuel imported into this state or for export from this
state.  Requires the importer or exporter to show the document to the
comptroller or a peace officer on request.  Authorizes the comptroller to
delegate authority to inspect the document to other governmental agencies.
Requires the importer or exporter to provide a copy of the shipping
document to the person that receives the fuel when it is delivered.
Authorizes the importer or exporter to deliver motor fuel only to the
destination state or states indicated on the shipping document.   

(g)  Requires an importer or exporter who wants to divert the delivery of a
single cargo tank of motor fuel form the destination state printed on the
shipping document to obtain a diversion number from the comptroller before
diverting the delivery.  Provides that the importer, exporter, or common
carrier must write the diversion number on the shipping document issued for
the fuel. Requires a diversion number for each diverted delivery.
Authorizes the comptroller to appoint a person to assign diversion numbers,
or to delegate that authority to another person.   

(h)  Provides that an importer that acquires motor fuel for import by cargo
tank must obtain an import verification number from the comptroller before
importing the motor fuel.  Provides that the importer must write the import
verification number on the shipping document issued for the fuel.  Provides
that the importer must obtain a separate import confirmation number for
each cargo tank delivery of motor fuel into this state. Authorizes the
comptroller to appoint a person to assign import verification numbers, or
to delegate that authority to another person.   

(i)  Requires each terminal post to post a notice in a conspicuous location
proximate to the point of receipt of shipping papers that describes the
duties of importers and exporters. Authorizes the comptroller to prescribe
the language, type, style, and format of the notice. 

SECTION 8.  Amends Section 153.112(a), Tax Code, to require, rather than
authorize, the comptroller to cancel a distributor's permit if no purchase,
sale, or use of gasoline has been reported by the distributor for the prior
nine months, rather than 12 months.  

SECTION 9.  Amends Section 153.117(a), Tax Code, to require a distributor
to keep an itemized statement showing by load, the number of gallons of all
gasoline exported and imported during the  preceding calendar month, and
certain specified information related to the export or import of that fuel. 

SECTION 10.  Amends Section 153.118(a), Tax Code, to require a distributor
or other person liable to this state for payment of the tax imposed under
this chapter (Motor Fuel Taxes) to file all reports and supplements, on or
before the 25th day of each month.  Requires the report to be executed by
the distributor, the distributor's representative, or any other person
required to report and shall be filed with the comptroller in a manner or
on a form provided or approved by the comptroller. Provides that the
failure of a distributor or other person to obtain forms or software form
the comptroller is no excuse for the failure to file a report containing
all the information required to be reported. 

SECTION 11.  Amends Section 153.203, Tax Code, to provide that the tax
imposed by this subchapter (Diesel Fuel Tax) does not apply to diesel fuel
sold or delivered by a permitted supplier to another permitted supplier or
to the bulk storage facility of an agricultural bonded user, or dyed diesel
fuel sold or delivered by a permitted supplier to the bulk storage facility
of a dyed diesel fuel bonded user. 

SECTION 12.  Amends Section 153.205, Tax Code, by amending Subsections (a),
(b), (c), (e), (i), and (j), and by adding Subsection (k), as follows: 

(a)  Provides that the first sale or use of diesel fuel in this state is
taxable, except that sales of dyed diesel fuel, or of undyed diesel fuel if
the fuel will be used for an agricultural purpose, may be made without
collecting the tax if the purchaser furnishes to a permitted supplier a
signed statement, including an end user number or agricultural user
exemption number issued by the comptroller that includes certain
stipulations.  

(b)  Prohibits a person from making a tax-free purchase of any diesel fuel
under this section using a signed statement for the purchase of more than
3,000 gallons of dyed or undyed diesel fuel in a single transaction.  Makes
a conforming change. 

(c)  Provides that the signed statement and end user number or agricultural
user exemption number from the purchaser relieves the permitted supplier
from the burden of proof that the sale of diesel fuel was not taxable to
the purchaser and remains in effect unless certain conditions are met. 

(e)  Authorizes a person, however, to claim a refund of the tax paid on any
undyed diesel fuel used for nonhighway purposes under Section 153.222.
Makes conforming changes. 

(i)  Prohibits a supplier from making a tax-free sale of dyed diesel fuel,
or undyed diesel fuel for agricultural purposes, to a purchaser using a
signed statement.  Makes conforming changes. 

(j)  Authorizes the sale of dyed diesel fuel, or undyed diesel fuel for
agricultural purposes, to be made without collecting tax from a purchaser,
rather than to a purchaser, who operates one or more motor vehicles on the
public highway and who furnishes to a permitted supplier a signed statement
and end user number or agricultural user exemption number only as provided
in this subsection.  Makes conforming changes. 

(k)  Provides that a person who wants to use a signed statement to purchase
dyed diesel fuel must apply to the comptroller for an end user number to be
used in conjunction with a signed statement.  Provides that a person who
wants to use a signed statement to purchase dyed or undyed diesel fuel for
agricultural purposes must apply to the comptroller for an agricultural
user exemption number to be used in conjunction with a signed statement.
Prohibits a person from making a tax-free sale of any diesel fuel to a
purchaser using a signed statement unless the purchaser has an end user
number or agricultural user exemption number issued by the comptroller
under this subsection. 

SECTION 13.    Amends Section 153.206(i), Tax Code, to provide that a dyed
diesel fuel bonded  user, an agricultural bonded user, or a permitted
interstate trucker is entitled to deduct one-half of one percent of the
taxable gallons of diesel fuel on payment of the taxes to this state for
the expense of recordkeeping, reporting, and remitting the tax.   

SECTION 14.   Amends Section 153.207(a), Tax Code, to make a conforming
change. 

SECTION 15.   Amends Section 153.208(b), Tax Code, to make a conforming
change. 

SECTION 16.   Amends Section 153.209, Tax Code, as follows:

Sec. 153.209.  New title:  DYED DIESEL FUEL BONDED USER AND AGRICULTURAL
BONDED USER PERMITS.  Provides that a dyed diesel fuel bonded user permit
authorizes a user to purchase more than 10,000 gallons a month of dyed
diesel fuel for the user's own use.  Provides that an agricultural bonded
user permit authorizes a user to purchase more than 10,000  gallons of dyed
and undyed diesel fuel for the user's own use for agricultural purposes
only.  Deletes existing text relating to purchasing diesel fuel for
nonhighway use tax-free. 

SECTION 17.  Amends Section 153.210, Tax Code, to provide that a diesel tax
prepaid user permit authorizes a person whose use of diesel fuel is
predominantly for agricultural nonhighway use, but owns or operates one or
more passenger cars or light trucks only in the weight class shown in this
section to elect to prepay an annual tax on the fuel delivered form his own
tax-free storage rather than obtain an agricultural bonded user permit. 

SECTION 18.  Amends Section 153.214, Tax Code, to authorize a supplier to
operate under the supplier's permit as a dyed diesel fuel bonded user,
agricultural bonded user, dealer, or aviation fuel dealer. 

SECTION 19.   Amends Section 153.215, Tax Code, to provide that a
supplier's permit, a dyed diesel fuel bonded user permit, and an
agricultural bonded user permit are permanent and valid as long as the
permittee has in force and effect the required bond or security and
furnishes timely reports and supplements as required.  Requires the
comptroller to cancel a permit if no purchase, sale, or use of diesel fuel
has been reported by the permittee for 9 months.  Deletes text authorizing
the comptroller to cancel a supplier's or bonded user's permit if no
purchase, sale, or use of diesel fuel has been reported by the supplier or
bonded user for 12 months. 

SECTION 20.  Amends Section 153.217(a), Tax Code, to provide that a diesel
fuel bonded user on the list is qualified to purchase dyed diesel fuel tax
free during the following calendar year.  Makes conforming changes. 

SECTION 21.  Amends Section 153.217(a), (b), (c), and (j), Tax Code, to
require the comptroller to notify immediately the issuer of a letter of
credit of a final determination of the supplier's, dyed diesel fuel bonded
user's, or agricultural bonded user's delinquent liability or a judgment
secured in any action.  Makes conforming changes. 

SECTION 22.  Amends Section 153.219, Tax Code, by amending Subsections (a)
and (c), and adding Subsection (j), as follows: 

(a)  Requires a supplier to keep a record showing the number of gallons of
all diesel fuel sold, distributed, or used no which the tax was paid,
showing the name of each purchaser and the date of sale, distribution, or
use. 

 (c)  Makes conforming changes.

 (j)  Sets forth the information a supplier is required to keep in itemized
statements. 

SECTION 23.  Amends Section 153.220, Tax Code, to make conforming changes.

SECTION 24.  Amends Section 153.221(a) and (b), Tax Code, as follows:
 
(a)  Requires a supplier, a dealer required to collect the tax under
Section 153.206(b) (relating to tax imposed on diesel fuel delivered by the
dealer), or a user required to pay the tax under Section 153.206(c)
(relating to tax imposed on diesel fuel delivered by the user) to file a
report of diesel fuel transactions or of diesel fuel delivered by a user
into the fuel tank of a motor vehicle owned or operated by the user and
such supplements as the comptroller may require, and remit the amount of
tax required to be collected or to be paid during the preceding month, on
or before the 25th day of each month.  Requires a report to be filed on a
form or in a manner provided by the comptroller and to contain information
required by the comptroller, showing complete and detailed information of
diesel fuel transactions or use during the preceding month.  Provides that
the failure of a supplier, dealer, or user to obtain forms or software from
the comptroller is no excuse for the failure to file a report.   

(b)  Requires a dyed diesel fuel bonded user, an agricultural bonded user,
or an interstate trucker to file a report and remit the amount of tax due
on or before the 25th day of each month following the end of each calendar
quarter.   Deletes text requiring, on or before the 25th day of each month
following the end of each calendar quarter, a bonded user or interstate
trucker to file a report and remit the amount of tax due.  Makes conforming
changes. 

SECTION 25.  Amends Section 153.222(d), Tax Code, to make conforming
changes. 

SECTION 26.  Amends Section 153.223(a), Tax Code, to prohibit a permitted
supplier from filing a claim for refund of taxes paid by a purchaser of
undyed diesel fuel. 

SECTION 27.  Amends Section 153.224(d), Tax Code, to make conforming
changes. 

SECTION 28.  Amends Subchapter C, Chapter 153, Tax Code, by adding Sections
1653.226153.230, as follows: 

Sec. 153.226.  NOTICE REGARDING DYED DIESEL FUEL.  Sets forth the required
uses of a notice stating "DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY
FOR TAXABLE USE." 

Sec. 153.227.  DYED DIESEL FUEL NOTICE REQUIRED ON SHIPPING DOCUMENTS,
BILLS OF LADING, AND INVOICES.  Provides that the form of notice required
by Sections 153.226(1) and (2) must be provided when the dyed diesel fuel
is removed or sold and must appear on each shipping document, bill of
lading, cargo manifest, and invoice accompanying the sale or removal of the
dyed diesel fuel. 

Sec. 153.228.  UNAUTHORIZED SALE OR USE OF DYED DIESEL FUEL.  Prohibits a
person from selling or holding for sale dyed diesel fuel for any use that
the person knows or has reason to know is a taxable use of the diesel fuel.
Prohibits a person from using or holding for use dyed diesel fuel for a use
other than a nontaxable use if the person knows or has reason to know that
the diesel fuel is dyed diesel fuel. 

Sec. 153.229.  ALTERATION OF DYE OR MARKER IN DYED DIESEL FUEL PROHIBITED.
Prohibits a person, with the intent to evade payment of tax, from altering
or attempting to alter the strength or composition of a dye or marker in
dyed diesel fuel.     
   
Sec. 153.230.  USE OF DYED FUEL PROHIBITED.  Prohibits a person from
operating a motor vehicle on a public highway in this state with taxable
motor fuel that contains dye in the fuel supply tank of the motor vehicle.
Provides that this section does not apply to a use of dyed fuel that is
lawful under the Internal Revenue Code and implementing regulations.
SECTION 29.  Amends Section 153.401(a), Tax Code, to make a conforming
change. 

SECTION 30.  Amends Section 153.402, Tax Code, as follows:

 Sec. 153.402.  PROHIBITED ACTS; CIVIL PENALTIES.  (a)  Provides that a
person forfeits to the state a civil penalty of not less than $25 nor more
than $200, if the person is an importer who does not obtain an import
verification number when required by this chapter, or purchases motor fuel
for export, on which the tax imposed by this chapter has not been paid, and
subsequently diverts or causes to motor fuel to be diverted to a
destination in this state or any other state or country other than the
originally designated state or country without first obtaining a diversion
number.   

(b)  Provides that an importer or exporter that violates a requirement of
Section 153.018 is liable to this state for a civil penalty of $2,000 or
five times the amount of the unpaid tax, whichever is greater, for each
violation.   

(c)  Provides that a person receiving motor fuel who accepts a shipping
document that does not conform with the requirements of Section 153.018(a)
is liable to this state for a civil penalty of $2,000 or five times the
amount of the unpaid tax, whichever is greater, for each occurrence.   

(d)  Provides that a person operating a bulk plant or terminal who issues a
shipping document that does not conform with the requirements of Section
153.018(a) is liable to this state for a civil penalty of $2,000 or five
times the amount of the unpaid tax, whichever is greater, for each
occurrence. 

(e)  Provides that a person operating a terminal or bulk plant who does not
post notice as required by Section 153.018(i) is liable to this state for a
civil penalty of $100 for each day the notice is not posted as required by
Section 153.018(i). 

SECTION 31.  Amends Section 153.403, Tax Code, to provide that, except a
provided by Section 153.404 (Criminal Offenses: Special Provisions and
Exceptions), a person commits an offense if the person:  

 _uses dyed diesel fuel, on which a tax is required to be paid, for the
operation of a motor vehicle on a public highway;  
 _is an importer who does not obtain an import verification number when
required by this chapter; purchases motor fuel for export, on which the tax
imposed by this chapter has not been paid, and subsequently diverts or
causes to be diverted to a destination in this state or any other state or
country other than the originally designated state or country without first
obtaining a diversion number;  
 _is a distributor, supplier, dyed diesel fuel bonded user, agricultural
bonded user, dealer, interstate trucker, aviation fuel dealer, jobber, or
other person required to hold a permit under this chapter who fails to
retain a document as required by this chapter; 
 _transports in any manner motor fuel under a false cargo manifest or
shipping document, or transports in any manner motor fuel to a location
without delivering at the same time a shipping document relating to that
shipment;  
 _is a dealer who purchases motor fuel with the intent to evade any tax
imposed by this chapter, or who accepts delivery of motor fuel by any means
and does not at the same time accept or receive a shipping document
relating to the delivery;  
 _transports motor fuel for which a cargo manifest or shipping document is
required to be carried without possessing or exhibiting on demand by an
officer authorized to make the demand, a cargo manifest or shipping
document containing the information required to be shown on the manifest or
shipping document;  
 _imports, sells,  uses, distributes, or store motor fuel within this state
on which the taxes imposed by this chapter are owed but have not been first
paid to or reported by the holder of a distributor, supplier, liquefied gas
dealer, interstate trucker, diesel tax prepaid user, dyed diesel fuel
bonded user, or agricultural bonded user permit;  
 _blends products together to produce a blended fuel that is offered for
sale, sold, or used that expands the volume of the original product to
evade paying applicable motor fuel taxes; or  
 _evades or attempts to evade in any manner, a tax imposed on motor fuel by
this chapter.   
 Deletes text providing that, except as provided by Section 153.404 of this
code, a person commits an offense, if the person transports motor fuel for
which a cargo manifest is required to carried. Makes conforming changes. 

SECTION 32.  Amends Article 12.01, Code of Criminal Procedure, to establish
that the statute of limitations for a violation under Sections
153.403(22)-(39) is ten years. 

SECTION 33.  Amends Sections 153.404(b), (c), and (d), Tax Code, to make
conforming changes. 

SECTION 34. Amends Section 153.405, Tax Code, as follows:

 (a)  Provides that an offense under Section 153.403(8), is a Class C
misdemeanor. 

(b)  Provides that an offense under Sections 153.403(9), (16), (17), or
(18) is a Class B misdemeanor.  Deletes text providing that an offense
under Section 153.403(8) of this code is a Class B misdemeanor. 

(c)  Provides that an offense under Sections 153.403(19), (20) or (21) is a
Class A misdemeanor.  Deletes text providing that an offense under Section
153.403(16), (17), (18), or (19) of this code is a Class A misdemeanor. 

(d)  Provides that an offense under Sections 153.403(22), (23), (28) or
(29) is a felony of the third degree.  Deletes text providing that an
offense under Sections 153.403(20), (21),  or (22) of this code is a felony
of the third degree. 

(e)  Makes conforming changes.

(f)  Makes conforming changes.

SECTION 35.  Provides that the change in law made by this Act does not
apply to an offense if the prosecution of the offense became barred by
limitation before the effective date of this Act.  The prosecution of that
offense remains barred as though this Act had not taken effect. 

SECTION 36.  Provides that if Article 12.01 (Felonies), Code of Criminal
Procedure, as amended by this bill conflicts with Article 12.01, as amended
by S.B. 70, the change in law made by the amendment of this Act in Article
12.01 controls over the change made by S.B. 70. 

SECTION 37. Effective date: September 1, 1999.
  Makes application of this Act prospective.

SECTION 38.Emergency clause.