Arizona state law allows for a certain type of diesel fuel to be exempt from motor fuel taxes. This fuel, called "red-dyed diesel fuel" because of the red dye added to it by the supplier, is designed for a non-highway-use vehicle, such as farm or roadway construction equipment.
Sometimes individuals and businesses use red-dyed diesel fuel in an on-highway-use vehicle, such as a personal pickup truck or commercial vehicle, to avoid paying motor fuel taxes. This is illegal per state law (the Arizona Revised Statutes) and reduces the amount of revenue available to fund the state transportation system.
Money collected from taxes on the sale of gasoline and normal, "clear" diesel fuel goes into the state highway fund to pay for the design, construction and maintenance of Arizona's roads and bridges. Red-dyed diesel fuel is not taxed because the vehicles that legally use it are not putting wear and tear on public roads.
Red-dyed diesel fuel is being illegally used in vehicles and equipment that should be using standard diesel fuel while traveling on public streets and highways. Violations of the red-dyed diesel regulations result in Arizona losing millions of dollars in revenue that is needed to pay for roadway maintenance and improvements. This is real money that could be used to repair or replace roadways, remodel highway rest areas and refurbish bridges.
The Arizona Department of Transportation Enforcement and Compliance Division, with other state and federal agencies, are responÂsible for the enforcement of federal and state laws governing dyed diesel fuels.
The price of red diesel is low if you buy it for off-road uses as opposed to other fuels. It is exempt from state excise duties and taxes, unlike automotive diesel fuel. To visually distinguish these two fuel types, heating diesel is colored with a unique red dye, making it red diesel fuel.
Fuel dyes are dyes added to fuel to identify it visually. The U.S. has its own laws regarding labeled fuels. The Environmental Protection Agency has mandated the use of red dye to identify high-sulfur fuels for off-road use. Solvent Red 26 is the standard dye in the U.S., although it can be replaced with a similar dye, Solvent Red 164. The Internal Revenue Service uses the same dye, but in a higher concentration, to label tax-free fuels such as fuel oils.
In Britain, for example, red diesel can only be used in vehicles registered as SORN (Statutory Off Road Notification) with the DVLA (Driver and Vehicle Licensing Agency), which means the vehicle is not to be used on public roads only on private property.
Specific laws vary from country to country, but dyed red diesel fuel generally indicates oil intended for off-road use or use as fuel oil and, therefore not subject to the higher consumer motor fuel tax.
Various vehicles can run on red diesel, while owners enjoy the low costs. Farmers use this diesel in harvesters, tractors, and other heavy equipment. Similarly, construction companies use red diesel in their engines for cranes, bobcats, bulldozers, backhoes, and generators.
Red diesel is used for off-road activities, such as harvesters, tractors, and other heavy equipment. Drivers who fill their trucks with red diesel are subject to significant fines. For on-road activities, you should only use approved types of fuel.
Petro Florida is a supplier of dyed red diesel fuel for existing fuel storage tanks, generators, construction equipment, agricultural equipment, boats, refrigerators, reefers and other stationary equipment. We can also fill up tankers at our facility.
Dyed red diesel is the same as clear diesel except it has been dyed red, which makes it exempt from highway taxes. If you operate equipment that does not drive on the highways, then you can buy dyed red diesel, witch is cheaper. The coloring is part of a new effort by two federal agencies, as well as Congress, to clean the air and collect fuel taxes.
If you buy large amounts of gas or diesel fuel, you probably know how supply, demand, international markets, and production impact fuel prices. However, did you know that taxes make up about 20% of the cost of gas and diesel? The federal government levies heavy taxes for both gas and diesel fuel. Moreover, states impose taxes that will vary, and even counties can impose local taxes.
Fuel taxes are collected to pay for public road maintenance and repair. That means these taxes are not imposed for diesel and gas that is used for off-road or non-public road purposes. These taxes pay for programs that are important to commercial shippers, but what about off-road fleets? If your business operates off-road, but you do not always use red diesel fuel, you must know how you can recoup those taxes.
It is illegal for anyone to use dyed fuel for public road uses. If you are caught using it for a commercial truck, you could be subject to fines and other criminal penalties. These penalties include paying the unpaid taxes and interest. Even if the dyed variants are mixed with regular diesel, you will be forced to pay the taxes on the full tank. The government will not differentiate between the dyed and undyed diesel if you use it illegally. Investigators are permitted to pull over your vehicle and test the fuel to see if any dye is present in the tank at any time.
Dyed diesel is unavailable for consumer purchase. Most of it is sold by special retailers in bulk to commercial firms. Therefore, if a consumer gas producer tries to sell your company dyed diesel fuel, it may not be legal.
Given the risks stated above, you may opt to file for a fuel tax refund rather than use dyed diesel fuel for off-road business purposes. Alternatively, what if you use dyed diesel for both on- and off-road purposes? It can be complicated to store almost identical fuels in separate tanks to avoid violating excise tax rules. Some companies purchase taxed diesel fuel and then request a refund to make their processes more efficient.
To obtain a refund, you must report the diesel your company has used for off-road purposes and file with both federal and state government agencies. Each state has its guidelines on what uses are approved for tax-exempt dyed diesel, which can differ from federal regulations. Make sure you carefully review both federal and state rules regarding fuel refunds and prepare your reports accordingly.
To prepare your tax report efficiently, your company should implement a tracking system for the use and consumption of all your fuels. The system should track how much fuel is used, when it is used, and for what purposes. Although it should provide you with the data you need, you should always speak with a tax professional about your system to make sure everything is correct.
If you would like to purchase red diesel or other fuel products, contact the experts at Kendrick Oil today. We offer a wide variety of bulk fuel products and related services in Texas, Kansas, New Mexico, Oklahoma, Colorado, and Louisiana. Call us at (806) 250-3991 or Contact Us by email to learn more about What We Offer.
Red diesel, also known as gas oil, is a fuel that is used in off-road vehicles and machinery. Red diesel is the same as regular diesel, but with a red marker (dye) added to it to prevent illegal use on road-going vehicles, hence the name!
Red diesel tax has changed to encourage businesses to use alternative low emission fuels to help the UK achieve its net-zero targets. From 1st April 2022, Crown Oil can only supply red diesel to the following sectors:
Gas oil is taxed differently to regular road diesel, due to it being an off-road fuel. As such, according to HMRC list of fuel duties, you can expect to pay Â0.1114 per litre for marked gas oil (red diesel), including rebates.
To request a repayment or apply for a tax rebate for your fuel, HMRC must first approve it. To apply for approval, fill in form HO27, available from the Gov.uk website and return it to them. Read further and understand more about it on the Gov.uk website.
No, you do not need a licence to buy gas oil, but you will need to sign an RDCO form (found here). However, the company selling red diesel or any other controlled oils (rebated bio blend, kerosene and aviation turbine fuel) must be registered with HMRC.
It is the responsibility of the dealer of controlled oils to make sure the fuel is being used legitimately, and they may pass on details about the transactions to HMRC which can be further used by the Road Fuel Testing Units (RFTU).
Until recently agricultural vehicles, i.e. tractors were not allowed to use red diesel on public highways. Only purpose-built gritters had been allowed to run red diesel on public roads. However, due to local councils only being able to grit main roads, rural roads would remain unsafe to travel on.
Yes, it can be used for heating and powering electricity on a pleasure craft. However, as of the 1st November 2008, the rules for using it for propulsion have changed, and the fuel is no longer eligible for a reduced rate of duty.
There is another alternative to red diesel, but for heating applications only, called Industrial heating oil and is a zero VAT fuel. This fuel can only be used in heating applications. Learn more about the benefits of switching from red diesel to industrial heating oil.
Yes, it is also known as gas oil, cherry juice, cherry red, agricultural diesel, 35 seconds, medium diesel, tractor diesel, marine diesel and rebated kerosene. All of these are the same fuel and have the same laws regarding their usage.
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