AN ACT Relating to dyed
special fuel; amending RCW 82.38.020, 82.38.030, 82.38.065, and 82.38.170; and
prescribing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
Sec. 1. RCW 82.38.020 and 2001 c
270 s 4 are each amended to read as follows:
The definitions in this
section apply throughout this chapter unless the context clearly requires
otherwise.
(1) "Blended
special fuel" means a mixture of undyed diesel fuel and another liquid,
other than a de minimis amount of the liquid, that can be used as a fuel to
propel a motor vehicle.
(2) "Blender"
means a person who produces blended special fuel outside the bulk
transfer-terminal system.
(3) "Bond"
means a bond duly executed with a corporate surety qualified under chapter
48.28 RCW, which bond is payable to the state of Washington conditioned upon
faithful performance of all requirements of this chapter, including the payment
of all taxes, penalties, and other obligations arising out of this chapter.
(4) "Bulk
transfer-terminal system" means the special fuel distribution system
consisting of refineries, pipelines, vessels, and terminals. Special fuel in a
refinery, pipeline, vessel, or terminal is in the bulk transfer-terminal
system. Special fuel in the fuel tank of an engine, motor vehicle, or in a
railcar, trailer, truck, or other equipment suitable for ground transportation
is not in the bulk transfer-terminal system.
(5) "Bulk
transfer" means a transfer of special fuel by pipeline or vessel.
(6) "Bulk
storage" means the placing of special fuel into a receptacle other than
the fuel supply tank of a motor vehicle.
(7)
"Department" means the department of licensing.
(8) "Dyed special
fuel user" means a person authorized by the internal revenue code to
operate a motor vehicle on the highway using dyed special fuel, in which the
use is not exempt from the special fuel tax.
(9) "Evasion"
or "evade" means to diminish or avoid the computation, assessment, or
payment of authorized taxes or fees through:
(a) A knowing: False
statement; omission; misrepresentation of fact; or other act of
deception; ((or))
(b) An intentional: ((Omission;))
Failure to file a return or report; or other act of deception; or
(c) The unlawful use
of dyed special fuel.
(10) "Export"
means to obtain special fuel in this state for sales or distribution outside
the state.
(11)
"Highway" means every way or place open to the use of the public, as
a matter of right, for the purpose of vehicular travel.
(12) "Import"
means to bring special fuel into this state by a means of conveyance other than
the fuel supply tank of a motor vehicle.
(13)
"International fuel tax agreement licensee" means a special fuel user
operating qualified motor vehicles in interstate commerce and licensed by the
department under the international fuel tax agreement.
(14) "Lessor"
means a person: (a) Whose principal business is the bona fide leasing or
renting of motor vehicles without drivers for compensation to the general
public; and (b) who maintains established places of business and whose lease or
rental contracts require the motor vehicles to be returned to the established
places of business.
(15)
"Licensee" means a person holding a license issued under this
chapter.
(16) "Motor
vehicle" means a self-propelled vehicle designed for operation upon land
utilizing special fuel as the means of propulsion.
(17) "Natural
gas" means naturally occurring mixtures of hydrocarbon gases and vapors
consisting principally of methane, whether in gaseous or liquid form.
(18) "Person"
means a natural person, fiduciary, association, or corporation. The term
"person" as applied to an association means and includes the partners
or members thereof, and as applied to corporations, the officers thereof.
(19) "Position
holder" means a person who holds the inventory position in special fuel,
as reflected by the records of the terminal operator. A person holds the
inventory position in special fuel if the person has a contractual agreement
with the terminal for the use of storage facilities and terminating services at
a terminal with respect to special fuel. "Position holder" includes
a terminal operator that owns special fuel in their terminal.
(20) "Rack"
means a mechanism for delivering special fuel from a refinery or terminal into
a truck, trailer, railcar, or other means of nonbulk transfer.
(21)
"Refiner" means a person who owns, operates, or otherwise controls a
refinery.
(22)
"Removal" means a physical transfer of special fuel other than by
evaporation, loss, or destruction.
(23) "Special
fuel" means and includes all combustible gases and liquids suitable for
the generation of power for propulsion of motor vehicles, except that it does
not include motor vehicle fuel as defined in chapter 82.36 RCW, nor does it
include dyed special fuel as defined by federal regulations, unless the use
is in violation of this chapter. ((However, if the federal regulations
authorize dyed special fuel to be used in highway vehicles, that usage is
considered taxable under this chapter, unless otherwise exempted.)) If
a person holds for sale, sells, purchases, or uses any dyed special fuel in
violation of this chapter, all dyed special fuel held for sale, sold,
purchased, stored, or used by that person is considered special fuel, and the
person is subject to all presumptions, reporting, and recordkeeping
requirements and other obligations which apply to special fuel, along with
payment of any applicable taxes, penalties, or interest for illegal use.
(24) "Special fuel
distributor" means a person who acquires special fuel from a supplier, distributor,
or licensee for subsequent sale and distribution.
(25) "Special fuel
exporter" means a person who purchases special fuel in this state and
directly exports the fuel by a means other than the bulk transfer-terminal
system to a destination outside of the state.
(26) "Special fuel
importer" means a person who imports special fuel into the state by a
means other than the bulk transfer-terminal system. If the importer of record
is acting as an agent, the person for whom the agent is acting is the importer.
If there is no importer of record, the owner of the special fuel at the time of
importation is the importer.
(27) "Special fuel
supplier" means a person who holds a federal certificate issued under the
internal revenue code and authorizes the person to tax-free transactions on
special fuel in the bulk transfer-terminal system.
(28) "Special fuel
user" means a person engaged in uses of special fuel that are not
specifically exempted from the special fuel tax imposed under this chapter.
(29) "Terminal"
means a special fuel storage and distribution facility that has been assigned a
terminal control number by the internal revenue service, is supplied by
pipeline or vessel, and from which reportable special fuel is removed at a
rack.
(30) "Terminal operator"
means a person who owns, operates, or otherwise controls a terminal.
(31) "Two-party
exchange" or "buy-sell agreement" means a transaction in which
taxable special fuel is transferred from one licensed supplier to another
licensed supplier under an exchange or buy-sell agreement whereby the supplier
that is the position holder agrees to deliver taxable special fuel to the other
supplier or the other supplier's customer at the rack of the terminal at which
the delivering supplier is the position holder.
Sec. 2. RCW 82.38.030 and 2001 c
270 s 6 are each amended to read as follows:
(1) There is hereby
levied and imposed upon special fuel users a tax at the rate computed in the
manner provided in RCW 82.36.025 on each gallon of special fuel, or each one
hundred cubic feet of compressed natural gas, measured at standard pressure and
temperature.
(2) The tax imposed by
subsection (1) of this section is imposed when:
(a) Special fuel is
removed in this state from a terminal if the special fuel is removed at the
rack unless the removal is to a licensed exporter for direct delivery to a
destination outside of the state, or the removal is to a special fuel
distributor for direct delivery to an international fuel tax agreement licensee
under RCW 82.38.320;
(b) Special fuel is
removed in this state from a refinery if either of the following applies:
(i) The removal is by
bulk transfer and the refiner or the owner of the special fuel immediately
before the removal is not a licensee; or
(ii) The removal is at
the refinery rack unless the removal is to a licensed exporter for direct
delivery to a destination outside of the state, or the removal is to a special
fuel distributor for direct delivery to an international fuel tax agreement
licensee under RCW 82.38.320;
(c) Special fuel enters
into this state for sale, consumption, use, or storage if either of the
following applies:
(i) The entry is by
bulk transfer and the importer is not a licensee; or
(ii) The entry is not
by bulk transfer;
(d) Special fuel is
sold or removed in this state to an unlicensed entity unless there was a prior
taxable removal, entry, or sale of the special fuel;
(e) Blended special
fuel is removed or sold in this state by the blender of the fuel. The number
of gallons of blended special fuel subject to tax is the difference between the
total number of gallons of blended special fuel removed or sold and the number
of gallons of previously taxed special fuel used to produce the blended special
fuel;
(f) Dyed special fuel
is used on a highway, as authorized by the internal revenue code, unless the
use is exempt from the special fuel tax;
(g) Dyed special
fuel is held for sale, sold, used, or is intended to be used in violation of
this chapter;
(h) Special fuel
purchased by an international fuel tax agreement licensee under RCW 82.38.320
is used on a highway; and
(((h))) (i)
Special fuel is sold by a licensed special fuel supplier to a special fuel
distributor, special fuel importer, or special fuel blender and the special
fuel is not removed from the bulk transfer-terminal system.
(3) The tax imposed by
this chapter, if required to be collected by the licensee, is held in trust by
the licensee until paid to the department, and a licensee who appropriates or
converts the tax collected to his or her own use or to any use other than the
payment of the tax to the extent that the money required to be collected is not
available for payment on the due date as prescribed in this chapter is guilty
of a felony, or gross misdemeanor in accordance with the theft and anticipatory
provisions of Title 9A RCW. A person, partnership, corporation, or corporate
officer who fails to collect the tax imposed by this section, or who has
collected the tax and fails to pay it to the department in the manner
prescribed by this chapter, is personally liable to the state for the amount of
the tax.
Sec. 3. RCW 82.38.065 and 1998 c
176 s 56 are each amended to read as follows:
A person may ((not))
operate or maintain a licensed or required to be licensed motor vehicle
((on a public highway of this state)) with dyed special fuel in the fuel
supply tank ((unless)) only if the use is authorized by the
internal revenue code and the person is either the holder of an
uncanceled dyed special fuel user license issued ((to him or her by the
department)) or the use is exempt from the special fuel tax. A person
may maintain dyed special fuel for a taxable use in bulk storage if the person
is the holder of an uncanceled dyed special fuel user license issued under this
chapter. The special fuel tax set forth in RCW 82.38.030 is imposed on
users of dyed special fuel authorized by the internal revenue code to operate
on-highway motor vehicles using dyed special fuel, unless the use is exempt
from the special fuel tax. It is unlawful for any person to sell, use, hold
for sale, or hold for intended use dyed special fuel in a manner in violation
of this chapter.
Sec. 4. RCW 82.38.170 and 1998 c
176 s 70 are each amended to read as follows:
(1) If any licensee
fails to pay any taxes collected or due the state of Washington within the time
prescribed by RCW 82.38.150 and 82.38.160, the licensee shall pay in addition
to such tax a penalty of ten percent of the amount thereof.
(2) If it be determined
by the department that the tax reported by any licensee is deficient it may
proceed to assess the deficiency on the basis of information available to it
and there shall be added to this deficiency a penalty of ten percent of the
amount of the deficiency.
(3) If any licensee,
whether or not he or she is licensed as such, fails, neglects, or refuses to
file a special fuel tax report required under this chapter, the department may,
on the basis of information available to it, determine the tax liability of the
licensee for the period during which no report was filed, and to the tax as
thus determined, the department shall add the penalty and interest provided in
subsection (2) of this section. An assessment made by the department pursuant
to this subsection or to subsection (2) of this section shall be presumed to be
correct, and in any case where the validity of the assessment is drawn in
question, the burden shall be on the person who challenges the assessment to
establish by a fair preponderance of the evidence that it is erroneous or
excessive as the case may be.
(4) If any licensee
establishes by a fair preponderance of evidence that his or her failure to file
a report or pay the proper amount of tax within the time prescribed was due to
reasonable cause and was not intentional or willful, the department may waive
the penalty prescribed in subsections (1), (2), and (3) of this section.
(5) If any licensee
files a false or fraudulent report with intent to evade the tax imposed by this
chapter, there shall be added to the amount of deficiency determined by the
department a penalty equal to twenty-five percent of the deficiency, in
addition to the penalty provided in subsection (2) of this section and all
other penalties prescribed by law.
(6) Any special fuel
tax, penalties, and interest payable under this chapter shall bear interest at
the rate of one percent per month, or fraction thereof, from the first day of
the calendar month after the amount or any portion thereof should have been
paid until the date of payment: PROVIDED, That the department may waive the
interest when it determines that the cost of processing the collection of the
interest exceeds the amount of interest due.
(7) Except in the case
of violations of filing a false or fraudulent report, if the department deems
mitigation of penalties and interest to be reasonable and in the best interests
of carrying out the purpose of this chapter, it may mitigate such assessments
upon whatever terms the department deems proper, giving consideration to the
degree and extent of the lack of records and reporting errors. The department
may ascertain the facts regarding recordkeeping and payment penalties in lieu
of more elaborate proceedings under this chapter.
(8) Except in the case
of a fraudulent report or of neglect or refusal to make a report, every
deficiency shall be assessed under subsection (2) of this section within five
years from the twenty-fifth day of the next succeeding calendar month following
the reporting period for which the amount is proposed to be determined or
within five years after the return is filed, whichever period expires the later.
(9) Any licensee
against whom an assessment is made under the provisions of subsection((s))
(2) or (3) of this section may petition for a reassessment thereof within
thirty days after service upon the licensee of notice thereof. If such
petition is not filed within such thirty day period, the amount of the
assessment becomes final at the expiration thereof.
If a petition for
reassessment is filed within the thirty day period, the department shall
reconsider the assessment and, if the licensee has so requested in his or her
petition, shall grant such licensee an oral hearing and give the licensee ten
days' notice of the time and place thereof. The department may continue the
hearing from time to time. The decision of the department upon a petition for reassessment
shall become final thirty days after service upon the licensee of notice
thereof.
Every assessment made
by the department shall become due and payable at the time it becomes final and
if not paid to the department when due and payable, there shall be added
thereto a penalty of ten percent of the amount of the tax.
(10) Any notice of
assessment required by this section shall be served personally or by certified
or registered mail; if by mail, service shall be made by depositing such notice
in the United States mail, postage prepaid addressed to the licensee at his or
her address as the same appears in the records of the department.
(11) Any licensee who
has had the licensee's special fuel license revoked shall pay a one hundred
dollar penalty prior to the issuance of a new license.
(12) Any person who,
upon audit or investigation by the department, is found to have not paid
special fuel taxes as required by this chapter shall be subject to cancellation
of all vehicle registrations for vehicles utilizing special fuel as a means of
propulsion. Any unexpired Washington tonnage on the vehicles in question may
be transferred to a purchaser of the vehicles upon application to the
department who shall hold such tonnage in its custody until a sale of the
vehicle is made or the tonnage has expired.
(13) Unless the use
is exempt from the special fuel tax, or expressly authorized by the
internal revenue code and this chapter, a person ((using)) having
dyed special fuel in the ((propulsion)) fuel supply tank of a
motor vehicle ((upon the highways of this state)) that is licensed or
required to be licensed is subject to a civil penalty of ten dollars for
each gallon of dyed special fuel placed into the supply tank of the motor
vehicle, or one thousand dollars, whichever is greater. The civil penalty
collected as a result of this subsection must be deposited in the motor vehicle
fund. The penalties must be collected and administered under this chapter.
(14) A person who
maintains dyed special fuel in bulk storage for an intended sale or use in
violation of this chapter is subject to a civil penalty of ten dollars for each
gallon of dyed special fuel, or one thousand dollars, whichever is greater,
currently or previously maintained in bulk storage by the person. The civil
penalty collected as a result of this subsection must be deposited in the motor
vehicle fund. The penalties must be collected and administered under this
chapter.
(15) For the
purposes of enforcement of this section, the Washington state patrol or other
commercial vehicle safety alliance-certified officers may inspect, collect, and
secure samples of special fuel used in the propulsion of a vehicle operated
upon the highways of this state to detect the presence of dye or other chemical
compounds.
(((15))) (16)
The Washington state patrol shall, by January 1, 1999, develop and implement
procedures for collection, analysis, and storage of fuel samples collected
under this chapter.
(((16)))
(17) RCW 43.05.110 does not apply to the civil penalties imposed under
subsection (13) of this section.
