New York – Diesel Motor Fuel Exemption

SALT Report 1629 – The New York Department of Taxation recently amended the petroleum tax and sales tax laws that affect diesel motor fuels.   The amendment allows tax-free sales of un-dyed qualified biodiesel fuel and removes crude oil from the definition of qualified diesel motor fuel.  These changes took effect June 1, 2012.
Exempt Sales of Un-Dyed Biodiesel
A registered distributor may sell un-dyed qualified biodiesel to another registered distributor exempt from the excise tax, the petroleum business tax, and the prepaid sales tax. However, the exemption does not apply if the sale is a retail sale to another distributor, or if the sale involves delivery to a filling station or into a tank with a nozzle that is used to fuel a motor vehicle.
Qualified biodiesel is defined as a diesel motor fuel substitute that is produced from non-petroleum renewable resources and meets the following standards:
  • The registration requirements for fuels and fuel additives established by the Environmental Protection Agency under the Clean Air Act, and
  • The ASTM International active standard D6751 for biodiesel fuel
Diesel Motor Fuel
The definition of diesel motor fuel has been amended and now includes the following types of fuel:
  • No.1 diesel fuel
  • No.2 diesel fuel, biodiesel, kerosene, fuel oil or other middle distillate, and motor fuel for use in a diesel engine
Qualified diesel motor fuel does not include any product specifically designated No. 4 diesel fuel.
Crude Oil
Crude oil has been deleted from the definition of diesel motor fuel because in its unrefined state it is not a middle distillate and it is not motor fuel suitable for use in the operation of a diesel engine. Additionally, since crude oil is no longer considered a diesel motor fuel, the petroleum business tax exemption for crude oil has been removed.
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