Assigned to TRANS                                                                                                                                AS ENACTED

ARIZONA STATE SENATE

Forty-seventh Legislature, Second Regular Session

FINAL AMENDED

FACT SHEET FOR S.B. 1445

use fuel taxes; civil penalties

Purpose

            Establishes penalties for a person who intentionally purchases use fuel for a use class motor vehicle while paying the use fuel tax rate for a light class motor vehicle.

Background

Use fuel includes all gases and liquids, including diesel fuel, used or suitable for use to propel motor vehicles.

A fuel vendor is a person who sells use fuel in Arizona and who is directly or indirectly responsible for the fuel being placed into a motor vehicle for use in propelling the vehicle.  Additionally, a person who is the owner of use fuel contained in bulk storage and who permits the fuel to be delivered into the fuel tank of a motor vehicle for which the person is not the owner or lessee is presumed to be a use fuel vendor.

A fuel vendor must be licensed and maintain separate business records.  A separate license is needed for each branch location.  Sample copies of clear (taxable) use fuel sales receipts for each location must be submitted with license applications, including the following information: the purchase date, the seller’s name and physical address, the number of gallons purchased, the fuel type purchased, the price per gallon and the tax rate per gallon. Vendors are also required to maintain records of fuel received, sold, or delivered in Arizona by the vendor for three years.

Use fuel in Arizona is taxed at two rates.  If the use fuel is used to propel a use class motor vehicle on a highway, the tax rate is $.26 per gallon.  A use class motor vehicle is a motor vehicle that uses use fuel on a highway in this state such as a road tractor, truck tractor or truck or passenger carrying vehicle having a declared gross vehicle weight of more than 26,000 pounds or having more than two axles.  If the use fuel is used in the propulsion of a light class motor vehicle such as a pickup truck, or for an exempt vehicle such as school buses and government and non-profit vehicles, the use fuel is taxed at a rate of $.18 per gallon.  Vendors are required to place decals on each use fuel dispenser notifying purchasers of the applicable tax rate included in the fuel price.

A vendor is required to refund the $.08 difference to the purchaser for fuel delivered from a $.26 per gallon dispenser into a vehicle qualifying for the $.18 light class rate.  The vendor can apply to the Motor Vehicle Division for a refund of the $.08 difference for gallons purchased by the vendor at $.26 per gallon, but dispensed into light class or exempt use class vehicles at a tax rate of $.18 per gallon.

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Establishes the following penalties for a person who intentionally purchases use fuel for a use class motor vehicle that is not exempt from the weight fee and who pays the use fuel tax rate prescribed for a light class motor vehicle:

1. a civil penalty of $1000 or $10 for each gallon of use fuel dispensed, whichever is greater. Civil penalties imposed for a second or subsequent offense are multiplied by the number of prior violations.
2. a payment to the Arizona Department of Transportation (ADOT) for the difference between the amount of light class motor vehicle use fuel tax paid and the amount of the use class motor vehicle use fuel tax on the same number of gallons purchased.

2. Exempts the vendor from the civil penalty provided the vendor is not the owner or operator of the vehicle or conspired with the fuel purchaser to evade the appropriate tax rate.

3. Prohibits ADOT from denying vendor refunds for unlawful use fuel purchases.

4. Prohibits ADOT from imposing penalties of any kind on a vendor for unlawful use fuel purchases if the purchase was determined as a result of any inquiry, including any audit process.

5. Becomes effective on the general effective date.

Amendments Adopted by the House of Representatives

1. States that a person must “intentionally” purchase diesel fuel at the lower tax rate for use in a motor vehicle required to pay the use fuel tax rate before ADOT can assess civil penalties.

2. Exempts the vendor from the civil penalty provided the vendor is not the owner or operator of the vehicle or conspired with the fuel purchase to evade the appropriated tax rate.

Senate Action House Action

TRANS           2/14/06     DP     5-0-0-0                     TRANS           3/16/06     DPA     7-2-0-0-0

3rd Read         3/7/06                 30-0-0-0                   3rd Read         4/13/06                  59-0-1-0

Final Read       4/19/06               27-0-3-0

Signed by the Governor 4/25/06

Chapter 224

Prepared by Senate Research

May 4, 2006

DG/RD/ac