Red Dye Diesel Fuel Authorized For Use On Public Roads in TN
Not sure if anyone is aware of this or if this has already been discussed, but I figured it was good information to have for folks in TN that live in areas where supplies of diesel are low or out. I called the TN Dept. Of Revenue and confirmed that authenticity of this announcement. There currently are NO web links to go to to verify this. The only reason I got the notification is that I enrolled my email address to receive Dept. of Revenue updates and notices. You can call the TN Dept. Of Revenue and verify yourself. 1-800-342-1003
STATE OF TENNESSEE
PHIL BREDESEN DEPARTMENT OF REVENUE LOREN L. CHUMLEY
Governor ANDREW JACKSON STATE OFFICE BUILDING Commissioner
NASHVILLE, TENNESSEE 37242
FOR IMMEDIATE RELEASE
SEPTEMBER 2, 2005
EMERGENCY NOTICE INSTRUCTIONS ON SALE OF DYED DIESEL FUEL
Following Governor Bredesen's announcement yesterday that the state is taking steps to increase the availability of diesel fuel in the aftermath of Hurricane Katrina, this is to address Tennessee's treatment on the sale of dyed diesel fuel. The Internal Revenue Service is expected to issue guidance for federal tax purposes later today.
The injection of red dye into diesel fuel indicates that no motor fuel tax has been paid on the diesel. There are generally broad restrictions on the sale and use of this fuel. The restrictions that generally apply to the sale of this dyed diesel fuel are relaxed for state law purposes for fuel that is sold from September 1 through September 15, 2005.
Tennessee is suspending enforcement of provisions of its law governing the use of dyed fuel for on-road purposes from now until September 15. Tennessee's inspectors will be removed from the field and assigned to other duties. Retailers, suppliers and other sellers of dyed fuel are expected to collect and pay over the sales tax on the sale of dyed fuel. If tax is not collected, the consumer is expected to pay use tax on the fuel.
As a general rule, retail sales of dyed diesel fuel will be subject to the 7. 00% state sales tax and are exempt from local sales tax. Examples of taxable sales include:
• Sales of dyed diesel to contractors for use in machinery and equipment
• Sales of dyed diesel to contract bus or other transportation providers,
• even for government contracts
• Sales of dyed diesel to loggers
• Sales of dyed diesel for use in boats, vessels, and railroad locomotives
• Sales of dyed diesel to all other consumers, for any purpose, who do not have a
sales and use tax exemption certificate
• Sales of dyed diesel for on-road use during the period established by the U. S.
Environmental Protection Agency (September 1 – September 15, 2005).
However, a limited number of exemptions from the 7. 00% state sales tax may apply.
Examples of exempt sales include:
• Sales of dyed diesel to farmers for use in qualified farm equipment.
• The vendor must have the farmer’s exemption certificate on file to support the
exemption.
• Sales of dyed diesel to the federal government, the state of Tennessee, and
counties and cities within Tennessee. The billing for the dyed diesel must be
made in the name of the government, paid for directly for the government and
covered by the governmental exemption certificate.
• Sales of dyed diesel to qualified exempt organizations. Again, the billing must be
made in the name of the organization, paid for by the exempt organization and
covered by the appropriate exemption certificate.
• Sales to manufacturers. Diesel-powered industrial machinery used in
the production of a product for sale on the premises of the manufacturer is subject
to a 1. 50% state sales tax, but no local tax.
• The vendor must have the manufacturer’s industrial machinery authorization
certificate to support the reduced rate.
If a proper exemption is submitted, the seller DOES NOT need to collect sales tax.
A penalty will not be levied by the State of Tennessee for red dyed fuel found as long as sales tax has been paid. The purchaser should maintain receipts to verify that appropriate sales tax has been paid or that an exemption applies.
Attention: TDR Forum Junkies 
George
