NY State Senate Bill 2009-S300

Senate Bill S300

2009-2010 Legislative Session

Exempts from taxation, Diesel motor fuel and residual petroleum product which will be used at or by a non-road operation

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Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to investigations and government operations
Jan 07, 2009	referred to investigations and government operations

2009-S300 (ACTIVE) - Details

Current Committee:: Senate Investigations And Government Operations
Law Section:: Tax Law
Laws Affected:: Amd §§282-a, 285-b, 301-b & 1115, Tax L

2009-S300 (ACTIVE) - Summary

Exempts from taxation, diesel motor fuel and residual petroleum product which will be used at or by a non-road operation.

2009-S300 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S300

 TITLE OF BILL :
An act to amend the tax law, in relation to exempting Diesel motor
fuel and residual petroleum product used at or in a non-road operation
from taxation


 PURPOSE :
The purpose of this bill is to address an unintended taxation
consequence on farms and other small businesses due to the recent
implementation of federal regulations regarding the use of dyed
non-highway, locomotive or marine (NRLM) diesel fuel.

 SUMMARY OF PROVISIONS :
Section one makes changes to section 282-a of tax law with the intent
that purchasers of dyed NRLM diesel fuel will not be responsible for
payment of the diesel fuel excise tax at the time of purchase,
provided the end sales and uses of such fuel are specifically exempt
from taxation, such as use in farming.

Section two amends section 285-b of the tax law with the intent of
providing the Commissioner of Taxation & Finance the ability to
request reasonably necessary forms from the fuel distributors to
ensure the integrity of the new exemption system put in place under
the other sections of this bill.

Section three makes changes to section 301-b of the tax law with the
intent that purchasers of dyed NRLM diesel fuel will not be
responsible for payment of the petroleum business tax at the time of
purchase, provided the end sales and uses of such fuel are
specifically exempt from taxation, such as use in farming.

Section four makes changes to section 1115 the tax law with the intent
that purchases of dyed NRLM diesel fuel will not be responsible for
payment of state and local sales tax at the time of purchase, provided
the end sales and uses of such fuel are specifically exempt from
taxation, such as use in farming.

Section five authorizes and directs the Commissioner of Taxation &
Finance to promulgate any rules and regulations necessary to implement
the provisions of this act.

Section six contains the effective date.

 JUSTIFICATION :
In the fall of 2007, the United States Environment Protection Agency
implemented new regulations requiring that all non-road vehicles,
including farm tractors and farm equipment utilize a lower sulfur
diesel fuel than had been historically used in those vehicles. Due to
existing New York State tax law, the new lower sulfur diesel fuel is
considered enhanced diesel fuel and is taxed in a different manner
than the higher diesel fuel. Previously, uses of the dyed higher
sulfur diesel fuel were exempt from the State's three fuel taxes (the
petroleum business tax, diesel motor fuel excise tax and sales tax)
and fuel distributors were able to purchase the fuel without paying
tax. The distributor then forward on the tax exemption directly to the
exempt small businesses, such as farms.

The change in taxation status means that fuel distributors must pay
all taxes on the fuel at the time of purchase, regardless of whether
the end sale is an exempt use. This means small fuel distributors must
layout almost $0.40/gallon in taxes and then wait for four to five
months for a refund of those taxes. This creates a tremendous
cash-flow issue for these small businesses. In fact, many of them
cannot afford this cost and are now forwarding the up-front taxes to
the exempt businesses, including farmers. Farms and small businesses
must then front an additional $0.40/gallon for four to five months
until a refund can be obtained. This places a tremendous burden on
these businesses and family farms.

The bill seeks to address this business climate issue by clarifying
that none of the three state taxes will be required with the purchase
of dyed non-road diesel by a distributor where the end sales and uses
of the diesel fuel will be by the specifically exempt categories, such
as farms.

 LEGISLATIVE HISTORY :
2008:  S.7947-B, Passed Senate; A.11389-A Rules Committee

 FISCAL IMPLICATIONS :
None to the state.

 EFFECTIVE DATE :
This act shall take effect immediately.

2009-S300 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   300

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced  by  Sen.  LITTLE -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law, in relation to exempting Diesel motor  fuel
  and residual petroleum product used at or in a non-road operation from
  taxation

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 282-a of the tax law is amended  by  adding  a  new
subdivision 6 to read as follows:
  6. NOTWITHSTANDING ANY OTHER PROVISION, NO EXCISE TAX SHALL BE IMPOSED
PURSUANT  TO THIS SECTION ON SALES TRANSACTIONS OF ANY DIESEL MOTOR FUEL
OR RESIDUAL PETROLEUM PRODUCT  THAT  IS  DYED  NON-ROAD,  LOCOMOTIVE  OR
MARINE  DIESEL  FUEL  (NRLM) WHERE THE INTENDED END SALE AND USE OF SUCH
DIESEL MOTOR FUEL OR RESIDUAL PETROLEUM PRODUCT IS FOR A NON-ROAD OPERA-
TION SUCH AS FARMING.
  S 2. Subdivision 1 and paragraph (b) of subdivision 3 of section 285-b
of the tax law, subdivision 1 as added by chapter 261  of  the  laws  of
1988 and paragraph (b) of subdivision 3 as amended by chapter 245 of the
laws of 1989, are amended to read as follows:
  1. Except with respect to the exemptions from the excise tax on Diesel
motor  fuel  set  forth  in  [subdivision] SUBDIVISIONS three AND SIX of
section two hundred  eighty-two-a  of  this  article,  no  person  shall
purchase  Diesel  motor  fuel  in this state unless the taxes imposed by
this article have been assumed by a  registered  distributor  of  Diesel
motor  fuel in accordance with a certification under subdivision four of
this section or paid by such distributor and, in each of such instances,
except in the case of an exemption from the pass  through  of  such  tax
authorized in subdivision four of such section two hundred eighty-two-a,
are passed through to such purchaser. In addition to any other civil and

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD00964-01-9

S. 300                              2

criminal  penalties  which  may  apply,  any person who purchases Diesel
motor fuel without having received a certification from  the  seller  in
accordance  with  subdivision  four of this section shall be jointly and
severally  liable  to pay the taxes imposed by this article with respect
to such Diesel motor fuel.
  (b) A claim for the exemption from tax provided  for  in  subparagraph
(ii)  or  (viii)  of  paragraph (b) of subdivision three OR A CLAIM BY A
DISTRIBUTOR FOR THE EXEMPTION FROM TAX PROVIDED FOR IN  SUBDIVISION  SIX
of section two hundred eighty-two-a of this article shall be established
by  means  of an interdistributor sale certificate. If such exemption is
applicable, such certificate shall be provided by the purchaser  to  the
seller  at  the  time  of or prior to delivery of the Diesel motor fuel.
Such certificate shall set forth the name and address of the  purchaser,
the  purchaser's  registration  number, an affirmation by such purchaser
that the purchaser is registered as a distributor and that  such  regis-
tration  has not been suspended or cancelled and shall be signed by such
purchaser and by the seller. Such certificate shall be in such form  and
contain  such  other  information  as  the commissioner [of taxation and
finance] shall require. Where a  proper  and  complete  interdistributor
sale  certificate  has been furnished and accepted by the seller in good
faith, such certificate under such circumstance shall relieve the seller
of the burden of proving that the Diesel  motor  fuel  covered  by  such
certificate  is exempt from tax by reason of subparagraph (ii) or (viii)
of paragraph (b) of subdivision three OR SUBDIVISION SIX of such section
two hundred eighty-two-a. For purposes of this paragraph, a seller shall
not have accepted such certificate in  good  faith  if  the  purchaser's
registration  is  invalid because it has been suspended or cancelled, or
if the purchaser is not registered, and the  commissioner  [of  taxation
and  finance]  has  furnished  registered  distributors with information
identifying all those persons then validly registered as distributors of
Diesel motor fuel  and  those  persons  whose  registrations  have  been
suspended or cancelled. Any purchaser who furnishes to his OR HER seller
a  false or fraudulent interdistributor sale certificate for the purpose
of establishing an exemption from the tax imposed by section two hundred
eighty-two-a of this article shall be jointly and severally  liable  for
the tax imposed by such section.
  S  3. The opening paragraph of subdivision (g) of section 301-b of the
tax law is designated paragraph 1 and a new paragraph 2 is added to read
as follows:
  (2) SALES OF DIESEL MOTOR FUEL AND RESIDUAL  PETROLEUM  PRODUCT  WHERE
THE  INTENDED  END  SALE  AND  USE OF SUCH DIESEL MOTOR FUEL OR RESIDUAL
PETROLEUM PRODUCT IS FOR A NON-ROAD OPERATION SUCH AS FARMING.
  S 4. Subdivision (c) of section 1115 of the  tax  law  is  amended  by
adding a new paragraph 3 to read as follows:
  (3) DIESEL MOTOR FUEL AND RESIDUAL PETROLEUM PRODUCT SOLD IN ANY TRAN-
SACTION WHERE THE INTENDED END SALE AND USE OF SUCH DIESEL MOTOR FUEL OR
RESIDUAL PETROLEUM PRODUCT IS FOR A NON-ROAD OPERATION SUCH AS FARMING.
  S 5. The commissioner of taxation and finance is hereby authorized and
directed  to promulgate any rules and regulations necessary to implement
the provisions of this act.
  S 6. This act shall take effect immediately, except that sections one,
two, three and four of this act shall take effect on the first of  Janu-
ary next succeeding the date on which it shall have become a law.

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