Motorman
Member
- Joined
- Mar 20, 2005
- Location
- Chapel Hill, RTP, NC, US, China
As reported by Matthew Rudolf, Executive Director,Piedmont Biofuels
Okay everybody,
I have been crawling through this with a fine tooth comb since last
Friday so that when I finally reported back to everybody I would have
some useful information to share with everyone. I'm not a tax
lawyer, I'm a homebrewer, so pouring through these statutes is
horribly painful for me, but hopefully this information will provide
some clarity. This email will eventually be refined into a reference
for the new law, and for now here is the deal regarding the two new
laws as best as I can piece it together.
First of all, S540 (the bond requirement):
The requirement to post a $2000 bond in order to remit road tax has
been lifted for all biodiesel producers whose "average expected
annual tax liability under this Article, as determined by the
Secretary, is at least two thousand dollars ($2,000)". Currently
North Carolina motor fuels tax for biodiesel is $0.297/gal. $2000
divided by $0.297 = 6734 gallons of biodiesel. This means that if
you produce under 6734 gallons of biodiesel per year, you do NOT need
to post a bond in order to remit the motor fuels tax to the North
Carolina Department of Revenue, Motor Fuels Tax Division. The amount
of road taxes due changes from time to time, and you can always check
the current NC motor fuels road tax at: http://www.dor.state.nc.us/
taxes/motor/rates.html
Second of all, S1272 (the wavier of motor fuels tax):
This is an interesting one because it came completely out of the
blue. First of all, as Jurgen pointed out it did indeed morph from
an attempt to change the definition of biodiesel to more correctly
represent what biodiesel really is (ie. the ASTM spec). Currently,
according to the North Carolina State Statutes for motor fuels (see:
http://www.ncga.state.nc.us/EnactedLegislation/Statutes/HTML/
ByArticle/Chapter_105/Article_36C.html) Biodiesel is defined as
"Biodiesel. – Any fuel or mixture of fuels derived in whole or in
part from agricultural products or animal fats or wastes from these
products or fats."
Reading this, two things come to mind:
First off, this is an absolutely terrible definition of biodiesel,
and secondly, according to this definition SVO would be considered
biodiesel as far as the NC Dept. of Revenue is concerned.
At the last minute S1272 somehow morphed into a law that has exempted
"Biodiesel that is produced by an individual for use in a private
passenger vehicle registered in that individual's name" from paying
motor fuels tax. This means that individual homebrewers (and SVOers
under the current NC definition of biodiesel) do not need to pay
motor fuels taxes at all, so the bond wavier mentioned above is a
moot point for them. However, interestingly, this does not apply to
cooperatives, since the definition is very clear that this exemption
is for individuals, not business entities. That said, if a biodiesel
producer cooperative makes under the 6734 gallons per year, they no
longer need to post a bond (see above), even though they still need
to pay road tax. The motor fuels tax exemption law goes into effect
October 1, 2007.
Obviously this is wonderful and exciting news, however, why did the
DOR decide to completely change their course from altering the
definition to exempting homebrewers from road tax? In fact, there is
a rumor that Conocophillips has been talking to the DOR about getting
the same biodiesel tax breaks for their "biodiesel" that they produce
on a massive scale through a thermal depolymerization process and
then blending it in their current diesel fuel. This issue was
discussed on an earlier thread on the BIG list, or you can get more
information at: http://www.biodiesel.org/news/07clicktrhrus/
20070416_renewablediesel.shtm
A potential problem if we don't change the definition of biodiesel to
reflect the ASTM D6751 spec is that companies may take advantage of
tax credits that were specifically designed to benefit biodiesel
producers. Therefore, although the current definition is
advantageous to SVOers it is important that we continue to push to
update the definition. I know SVOers are going to cringe, but we
need to continue to push to update this definition.
Finally, as far as the Feds are concerned one, you still need to pay
the IRS your fuel tax on a quarterly basis if you are a homebrewer.
We are working on updating the taxes section of our website to
include information on how to file with the Feds, or you can give us
a call at Piedmont Biofuels and in exchange for becoming a member we
can help get you set up to file with the IRS. SVOers, unfortunately,
are still out of luck, as I still believe the EPA is not going to
consider SVO a legal fuel for use in the United States. See the
following link: http://www.epa.gov/smartway/growandgo/documents/
factsheet-biodiesel.htm
Hope this helps clear things up a bit.
Regards,
Matt
Matthew Rudolf
Executive Director
Piedmont Biofuels
www.biofuels.coop
919-533-0172
Okay everybody,
I have been crawling through this with a fine tooth comb since last
Friday so that when I finally reported back to everybody I would have
some useful information to share with everyone. I'm not a tax
lawyer, I'm a homebrewer, so pouring through these statutes is
horribly painful for me, but hopefully this information will provide
some clarity. This email will eventually be refined into a reference
for the new law, and for now here is the deal regarding the two new
laws as best as I can piece it together.
First of all, S540 (the bond requirement):
The requirement to post a $2000 bond in order to remit road tax has
been lifted for all biodiesel producers whose "average expected
annual tax liability under this Article, as determined by the
Secretary, is at least two thousand dollars ($2,000)". Currently
North Carolina motor fuels tax for biodiesel is $0.297/gal. $2000
divided by $0.297 = 6734 gallons of biodiesel. This means that if
you produce under 6734 gallons of biodiesel per year, you do NOT need
to post a bond in order to remit the motor fuels tax to the North
Carolina Department of Revenue, Motor Fuels Tax Division. The amount
of road taxes due changes from time to time, and you can always check
the current NC motor fuels road tax at: http://www.dor.state.nc.us/
taxes/motor/rates.html
Second of all, S1272 (the wavier of motor fuels tax):
This is an interesting one because it came completely out of the
blue. First of all, as Jurgen pointed out it did indeed morph from
an attempt to change the definition of biodiesel to more correctly
represent what biodiesel really is (ie. the ASTM spec). Currently,
according to the North Carolina State Statutes for motor fuels (see:
http://www.ncga.state.nc.us/EnactedLegislation/Statutes/HTML/
ByArticle/Chapter_105/Article_36C.html) Biodiesel is defined as
"Biodiesel. – Any fuel or mixture of fuels derived in whole or in
part from agricultural products or animal fats or wastes from these
products or fats."
Reading this, two things come to mind:
First off, this is an absolutely terrible definition of biodiesel,
and secondly, according to this definition SVO would be considered
biodiesel as far as the NC Dept. of Revenue is concerned.
At the last minute S1272 somehow morphed into a law that has exempted
"Biodiesel that is produced by an individual for use in a private
passenger vehicle registered in that individual's name" from paying
motor fuels tax. This means that individual homebrewers (and SVOers
under the current NC definition of biodiesel) do not need to pay
motor fuels taxes at all, so the bond wavier mentioned above is a
moot point for them. However, interestingly, this does not apply to
cooperatives, since the definition is very clear that this exemption
is for individuals, not business entities. That said, if a biodiesel
producer cooperative makes under the 6734 gallons per year, they no
longer need to post a bond (see above), even though they still need
to pay road tax. The motor fuels tax exemption law goes into effect
October 1, 2007.
Obviously this is wonderful and exciting news, however, why did the
DOR decide to completely change their course from altering the
definition to exempting homebrewers from road tax? In fact, there is
a rumor that Conocophillips has been talking to the DOR about getting
the same biodiesel tax breaks for their "biodiesel" that they produce
on a massive scale through a thermal depolymerization process and
then blending it in their current diesel fuel. This issue was
discussed on an earlier thread on the BIG list, or you can get more
information at: http://www.biodiesel.org/news/07clicktrhrus/
20070416_renewablediesel.shtm
A potential problem if we don't change the definition of biodiesel to
reflect the ASTM D6751 spec is that companies may take advantage of
tax credits that were specifically designed to benefit biodiesel
producers. Therefore, although the current definition is
advantageous to SVOers it is important that we continue to push to
update the definition. I know SVOers are going to cringe, but we
need to continue to push to update this definition.
Finally, as far as the Feds are concerned one, you still need to pay
the IRS your fuel tax on a quarterly basis if you are a homebrewer.
We are working on updating the taxes section of our website to
include information on how to file with the Feds, or you can give us
a call at Piedmont Biofuels and in exchange for becoming a member we
can help get you set up to file with the IRS. SVOers, unfortunately,
are still out of luck, as I still believe the EPA is not going to
consider SVO a legal fuel for use in the United States. See the
following link: http://www.epa.gov/smartway/growandgo/documents/
factsheet-biodiesel.htm
Hope this helps clear things up a bit.
Regards,
Matt
Matthew Rudolf
Executive Director
Piedmont Biofuels
www.biofuels.coop
919-533-0172
