House of Representatives

SB 1271

fuel taxes; revisions

Sponsors: Senator Aguirre; Representative Avelar

dp	Committee on Transportation
dp	Caucus and COW	This bill contains an Appropriation clause.
x	As Transmitted to the Governor

In addition to several substantive provisions, Senate Bill 1271 separates and reconstitutes current statutory provisions regarding fuel suppliers, vendors and fuel consumers by establishing a structure under Title 28, Chapter 16, Article 1 to address fuel supplier regulation and Article 2 to address fuel consumer (motor carriers) regulation. In addition, SB 1271 reorganizes the administrative hearing provisions under article 5.

History

ARS Title 28 was rewritten in 1995. In 1997, the weight-distance tax was repealed from Title 28, and further substantial changes were made pertaining to the incidence of fuel tax collection in the same year. As a result, Articles 1 and 2 of Chapter 16 contain provisions pertaining to fuel taxes, tax reporting, tax refund procedures, administrative hearing procedures; enforcement; licensing, bonding; assessments, etc. that either are duplicative or conflicting as they relate to fuel suppliers, vendors and motor carriers.

Although a large part of SB 1271 is technical and clarifying, the bill also contains several substantive provisions. These provisions include an increase in bonding levels for fuel suppliers, criminal penalty provisions for fuel tax evasion, requirements for fuel vendors to post diesel tax information on fuel pumps (dispensers) and a provision allowing ADOT to require electronic filing of fuel tax reports. In addition, $5,000 is appropriated from the state Highway Fund for fuel dispenser labels.

Senate Bill 1271 was introduced at the request of the Arizona Department of Transportation.

Provisions

Section 1: Conforms a section number (page 4, line 7) to the new definition of motor fuel which includes gasoline, diesel and aviation fuel.

Section 2: Provides the ADOT Director with an option to reimburse a third party collecting fees and taxes by alternative payment methods. Currently, third party collecting officers deduct the amount from the payment due to ADOT.

Sections 3 through 5 contain conforming changes.

Section 6: Adds the phrase "only for government purposes" pertaining to the current exemption for government vehicles from weight fees. This clarifies existing ADOT policy and procedure.

Section 7: Statutory heading changes. The section titled Motor Vehicle Fuel Tax is changed to Motor Fuel Taxes and the section titled Use Fuel Tax is changed to Interstate User Fuel Tax Responsibilities.

Section 8: This section combines definitions pertaining to gasoline and diesel regulations that are currently contained in Articles 1 and 2. There are several conforming changes and clarifications added to some definitions.

Section 9: Clarifies which agencies have enforcement authority pertaining to regulation of fuel suppliers, vendors, and reporting. The Department of Weights and Measures is added as having enforcement authority.

Section 10: Conforming changes.

Section 11: Changes the term distributor to person for the purpose of who may be reported to the ADOT director for tax evasion purposes.

Section 12: Transfers and renumber section 28-5605.

Section 13: This is a substantive change pertaining to posting of diesel fuel prices (including tax) by the fuel vendors for both light class and use class vehicles. Statutory changes in 1997 eliminating the weight/distance tax established two levels of tax on diesel fuel depending upon the type of vehicle. Although vendors are required by law to refund excess tax charged to light class vehicle owners, many vehicle owners and vendors are not aware of the requirement.

Section 14: Combines imposition of fuel taxes into one section. Subsection E is added at industry request to clarify that fuel transferred between a supplier and suppliers via tank truck is not subject to double taxation since the fuel will be taxed at the point it breaks bulk or is transferred to a distributor.

Sections 15 through 17 contain clarifying and conforming changes.

Section 18: Combines a number of existing statutory tax exemptions for the fuel types. Clarifies existing ADOT policy regarding tribal exemptions for individuals and tribal governments and specifies that commercial and non-governmental uses are not exempt.

Section 19: Conforms the tax refund application time-frame for motor vehicle fuel (gasoline) to use fuel (diesel) by reducing the 12 month refund provision for gasoline to six months.

Section 20: Conforms fuel tax refund procedures for all fuel types. Under current statute, each fuel type has a different methodology. This section also includes recommended changes from industry.

Section 21: Transfers and renumbers certain sections.

Section 22: Establishes a new section to clarify the time frame for fuel tax refunds. Also adds a definition of licensee to include suppliers, interstate users, restricted distributors or licensed fuel vendors.

Section 23: Repeals a section and combines language into another section.

Section 24: Transfers and renumbers certain sections.

Sections 25 and 26 contain conforming changes.

Section 27: This language is transferred from the current Article 2 and clarifies the information required on the receipt provided for the vendor for use fuel sales.

Section 28: Clarifies the time period for filing of amended reports by suppliers and distributor.

Section 29: Transfers record keeping requirements from 28-5731 and clarifies record retention requirements for suppliers and distributors.

Section 30: Clarifies that records retention requirements applies not only to suppliers, but also to distributors and vendors. Moves the tax records confidentiality requirements and makes conforming changes.

Section 31: 28-5622. Conforming changes.

Section 32: 28-5624. Eliminates conflicting provisions regarding documentation required of fuel transporters based on input from industry stakeholders. Raises the penalty for not having appropriate documentation from $25 to $100 but grants the ability to request abatement of the penalty.

Section 33: Repeals 28-5625 and moves these provisions to 28-5624.

Section 34: Codifies current practices of the department by establishing a new section pertaining to restricted distributors and requires restricted distributors to be licensed. Currently, restricted distributors register with the department.

Section 35: Clarifies supplier and vendor license requirements.

Section 36: Moves a provision from 28-5741 regarding duplicate licenses.

Section 37: Increases the bonding requirements for suppliers to two times the director’s estimate of the suppliers monthly tax liability and deletes provisions regarding weekly payment of taxes. This section also adds a provision to release a supplier from bonding requirements subject to agency approval. According to ADOT, the new bond requirement is consistent with surrounding states and based on industry recommendations.

Section 38: Repeals 28-5632 regarding weekly payment of taxes.

Sections 39 through 43 contain conforming changes.

Section 44: Transfers and renumbers dyed diesel provisions into article 1.

Section 45: Conforming changes.

Section 46: Codifies penalties for improper use of dyed-diesel rather than incorporating federal law by reference.

Section 47: Repeals use fuel provisions and moves them to Article 1.

Section 48: Section renumber.

Section 49: Conforming changes.

Section 50: Conforms current statutory language to federal requirements regarding the International Fuel Tax Agreement (IFTA).

Section 51: Transfers and renumbers the section regarding measures the director may take to enforce tax and tax reporting statutes light class motor vehicles.

Section 52: Conforming changes.

Section 53: Repeals use fuel provisions now included in article 1.

Section 54: Transfers and renumbers statutes for light class motor vehicles.

Section 55: Cleans up the prior combination statutes pertaining to fuel suppliers and fuel users by placing them in appropriate articles. Clarifies interstate and intrastate tax payment responsibilities for motor carriers.

Section 56: Conforming changes.

Section 57: Repeals current refund provisions and includes them in article 1 or in new 28-5725.

Section 58: Clarifies the authority of ADOT regarding a taxpayer’s failure to file reports and conforms to IFTA provisions.

Section 59: Combines current statutes into a new section to clarify time-frames, requirements and provisions regarding interstate refunds or credits for taxes paid.

Section 60: Conforming changes.

Section 61: Repeals section 28-5729 regarding legal remedies for taxpayers.

Section 62: Clarifies statute of limitations provisions. Deletes language that is now included in article 1.

Section 63: Deletes supplier and vendor reporting requirements now in article 1 but retains the motor carrier reporting (user) requirements.

Section 64: Repeals 28-5733, regarding licensing requirements for suppliers and vendors and moves the requirements to article 1.

Section 65: Conforms and clarifies licensing requirements for an interstate vehicles operating on use-fuel (commercial carriers).

Section 66: Conforming changes.

Sections 67 and 68 repeal bonding provisions for suppliers which is now in article 1 and adds a new section regarding bonding provisions allowing the director to require bonds for an interstate user/IFTA carrier.

Section 69: Conforming changes.

Section 70: Adds a provision conforming to the International Fuel Tax Agreement.

Section 71: Repeals provisions that are now in article 1.

Section 72: Transfers and renumbers current administrative hearing and legal remedy process for interstate carriers to article 5.

Section 73: Adds new section to consolidate motor carrier appeals.

Section 74: Changes article 5 heading from Tax Collection to Tax Administration.

Section 75: Establishes new penalty provisions to 28-5921 for fuel tax evasion as follows:

Class 4 felony for intimidating, obstructing, bribing, injuring or damaging property in an effort to evade motor fuel taxes.

a) Class 5 felony for persons who knowingly fail to pay any motor fuel tax, knowingly prepares or files false tax documents, produces fraudulent documents, knowingly fails to file a tax return or transports or possesses motor fuel with the intent to evade taxation.

b) Adds an additional 50 percent assessment to the total amount of the tax due if the deficiency is due to fraud.

c) Prescribes a civil penalty of $500 for a frivolous tax claim filed with the intent to impede tax administration.

Section 76: Combines enforcement provisions from article 1 and 2 in one place.

Section 77: Conforming changes.

Section 78: Combines administrative hearing provisions from article 1 and 2 in addition to extending the appeal period from 10 to 30 days (industry request consistent with IFTA provisions).

Sections 79 through section 83 contain conforming changes.

Section 84: Establishes a new section authorizing ADOT to require electronic filing of reports by administrative rule.

Section 85: Includes confidentiality provisions from article 1.

Section 86: Clarifies and updates the definition of diesel fuel for the purposes of Underground Storage Tank tax payments and per industry request. The Motor Fuel Tax Section Uniformity Committee of the Federation of Tax Administrators uses the proposed definition.

Sections 87 through section 92 contain conforming changes.

Section 93: Establishes session law to cover taxpayer issues currently in process, as new sections of law become effective.

Section 94: Appropriates $5,000 from the State Highway Fund in fiscal year 2001-2002 and fiscal year 20002-2003 for the purpose of providing fuel dispenser labels.

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45th Legislature

First Regular Session 5 May 14, 2001

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