Vermont diesel fuel tax applies to all clear diesel.
- Clear diesel fuel is not dyed and has a low sulfur content.
- It may be used in all registered motor vehicles and off-highway equipment.
- Motor Fuel Tax Assessment.
- Motor Fuel Transportation Infrastructure Assessment Fee.
Vermont diesel fuel tax does not apply to dyed diesel. Dyed diesel is colored red and has either a high or low sulfur content.
- High Sulfur dyed diesel may be used only in unregistered equipment, stationary engines, tractors, etc. EPA regulations prohibit its use in motor vehicles.
- Low Sulfur dyed diesel may be used in stationary engines, tractors, equipment, and other vehicles that are not required to be registered. It may also be used in vehicles operated exclusively by state and local governments.
Diesel in Storage Tanks:
If you have only one diesel storage tank and use the fuel in both taxable and nontaxable ways, you must buy taxed clear diesel. When you use tax-paid diesel fuel in nontaxable ways, you may apply for a tax refund by filing the Vermont Diesel Fuel Refund Application. Records must be maintained for four years indicating the number of gallons withdrawn from the tank and put into each vehicle or piece of equipment.
Dyed diesel is exempt when purchased for any of the following uses:
- to power the types of forestry machinery and equipment listed below;
- to propel a vehicle off-road;
- for farming, if used directly and exclusively for farming purposes; and
- to manufacture tangible personal property for sale, whether used directly or indirectly.
The types of exempt forestry machinery and equipment are:
- skidders with grapple and cable
- feller bunchers
- cut-to-length processors
- forwarders, delimbers
- loader slashers
- log loaders
- whole-tree chippers
- stationary screening systems
- firewood processors
- and screens.
The exemption can be claimed by completing Form S-3F, Vermont Sales Tax Exemption Certificate For Fuel Or Electricity. Dyed diesel used off-road in stationary equipment (i.e., generators) when used for commercial purposes remains taxable.
Diesel Fuel Distributor License
It is unlawful for any person to act as a distributor or dealer without being licensed as such. A dealer’s or distributor’s license applicant shall apply with the Commissioner. The application shall not be under oath but shall contain a declaration that it is made under the penalties of perjury.
Upon review of the application and bond (see bond requirements below) to ensure all requirements and conditions are met, the Commissioner may issue a license to an applicant, which will remain in effect until surrendered or revoked.
Every distributor or dealer, on or before the 25th day of each month, shall file a report with the Commissioner for the preceding month, including the number of gallons of fuel sold or delivered. A distributor’s report shall also include the identity of the person to whom the fuel was sold or delivered, the amount of the tax collected and by whom, and the monthly total of fuel sold or delivered. The report shall be filed even though no fuel was sold or delivered.
Diesel Fuel Surety Bond Requirements:
The amount of surety bonds required shall be reviewed annually in September. If the Commissioner retains or reimposes a bond requirement, the amount required shall be the sum of the highest two months’ payment during the preceding year or $1,000.00, whichever is greater, but in no case shall it exceed $700,000.00.
A distributor may request the release or reduction of the bond if the distributor has complied with all licensing and reporting requirements for at least the last three consecutive years. If the Commissioner determines that the release or reduction of the bond will not unreasonably jeopardize State revenues, the bond shall be released or reduced. Upon a finding to the contrary, the Commissioner shall retain the bond.