Promoting the biodiesel and vegoil community in Alaska.
Yep, after a year’s reprieve from our lowest-in-the-nation $0.08 per gallon state motor fuel tax, we’re back to our monthly payments.
Alaskans who burn homebrew fuel in an internal combustion powered vehicle are supposed to submit form 04-530. I sent my $1.60 in today.
Check with the Alaska Department of Revenue for details.
State Gas Tax Chart
SVO and biodiesel are both considered diesel fuel for tax purposes, and although there are some tax-free uses of diesel, off-road driving is not one of them.
But hey, off-road vehicles, heavy equipment, portable generators, and the like get a 6 cent refund on the intial 8 cent Alaska state tax, so you’re only looking at paying two cents a gallon!
Now biodiesel or vegoil as heating fuel (bioheat) is tax free as far as the state is concerned. Heating fuel includes other “domestic purposes” like cooking, etc.
Basically, if fuel is used in an internal combustion engine, you pay Alaska tax on it. A small-scale exception is a permanently installed generator that “adds to the value of the property.”
In other words, if you’re off the grid and have a generator shed with a big old lister bolted to a concrete pad, you can generate electricity for personal use with your homebrewed biodiesel/vegoil state-tax free.
The emergency generator you pull out of the garage is not a part of the property’s value, and fuel used in that is taxed at the off-road rate.
It’s ridiculous that the state even collects tax on personal use biodiesel and vegoil, but it’s written into law, so only the legislature can change it. That means you all need to call your state representative and ask for a personal use exemption for biodiesel/vegoil!
Remember: You’ve still got the Federal Tax to deal with, and if you want to sell or distribute biodiesel you’ve got a whole lot of paperwork ahead of you.
Disclamer: Read the statutes or call Jamie Taylor 907-269-6948 at the Motor Fuels Tax Office if you need real tax advice.
Veg On!
Well, I spoke with the department of revenue and they didn’t know anything about the rumored tax bust, but they were going to check into it. Good News?
And, as of September 1st 2008 until August 31st 2009, I don’t have to file Alaska state motor fuel tax. (All state motor fuel taxes are suspended with the new energy relief package.)
The $0.08 a gallon isn’t much to pay, and it only takes five minutes to fill out the form, but it is annoying to file every month.
As a personal-use microproducer (of biodiesel and SVO “biodiesel”) I won’t be tracked or taxed this year, so the state revenue folks asked me not to report. And, in this land of libertarian leave-me-aloners, it’s not too surprising that I’m the only person statewide to be reporting biodiesel/SVO use. (My wild guess is that there are maybe 3-500 microproducers/vegburners statewide.)
Remember, we still have to pay quarterly FEDERAL tax to a tune of $0.244 a gallon. If you forgot, it’s form 720, line 60(c) and Schedule A (biweekly production). You’ll need a EIN for both state and federal filing.
Although motor fuels are tax-exempt for a year, the department of revenue is still tracking fuel supplies and use.
They are asking everyone producing/using biodiesel/SVO to please register. They did note that producers selling or distributing beyond their immediate family, biodiesel/svo coops and businesses producing for fleet use may still have to report this year, even if not paying taxes.
So, everyone producing biodiesel or burning SVO (“biodiesel”) please contact Jamie Taylor at 907-269-6948, and she’ll set you up.
She’s helpful and generally supportive of exempting personal use microproducers. But remember, it’s the legislature that has the authority to extend the tax holiday, exempt personal use, or change the filing schedule to quarterly. Tell your state representatives you want a permanent exemption for personal biodiesel/SVO production and use!
Veg On!
Yep, I got a call today from a new SVO driver who wanted to know about vegoil and taxes.
The rumor out in the Matsu Valley is that the State Troopers are checking fuel tanks for tax evasion.
Supposedly they found a guy with big svo sticker and slapped him with a $800 fine for not paying the Alaska motor fuel tax.
I’ve been wondering how many folks have actually taken my advice and started paying their 8 cents a gallon to the state.
Now, I don’t have a great source for this info. It came by way of a phone conversation by way of a gas station conversation in Palmer by way of a “my buddy” story. I’ve got a call in to the Department of Revenue to see if I can verify any of this, but heck.. the rumor is already started.
Seems kinds funny this would happen now, as the latest petroleum profit payoff plan includes suspending the state motor fuel tax. (Yep, for you who don’t live in the last frontier, it’s true: every man, woman and child in Alaska is getting about three grand this fall from our oil investment “dividend” with a one-time “energy relief” bonus tacked on. That’s in addition to no income tax, no sales tax, and now no fuel tax!)
The other thing that doesn’t make sense is that I was told by a local petroleum distributor that Alaska is exempt from off-road dye requirements. How would the State Troopers test fuel if not by color?
Anyone know any more about this?
Veg On!
Well, today I got a letter from the State of Alaska Department of Revenue. Surprisingly it included an official Qualified Dealer Motor Fuel License. It is unsigned, and under the address section it says “Biodiesel Refining for Personal Use.”
Needless to say, I did not apply for a Qualified Dealer (Fuel Distributor) license.
Accompanying the License was a very nice letter from Jamie Taylor at the Department of Revenue. Here’s some excerpts:
Enclosed is an Alaska Department of Revenue Motor Fuel License… This has been issued solely as an instrument for filling your Motor Fuel taxes. The license number… should appear in the “Qualified Dealer Number” box on your tax return.
Please note that this license does not enable you to act as a State of Alaska Motor Fuel Qualified Dealer.
Thank you for taking the initiative to report your taxable biodiesel refinement and use.
It’s so refreshing to have helpful and reasonable folks at the tax department.
I do have the feeling that this is more for their benefit than mine, but now I can use the electronic payment system, since it requires a dealer number. I’ll let you all know how it goes when this month’s taxes are due.
Veg On!
SVO/WVO/vegoil and/or biodiesel users in Alaska legally must pay $0.08 per gallon state taxes and $0.244 per gallon federal taxes.
The user must submit their Alaska Motor Fuel Tax on a monthly basis. Yeah, the tax office would really prefer it wasn’t so often, but it’s written into law. Seems like they would lose money processing a whole bunch of $5 checks every month! Some states exempt the first 2500 gallons, and the feds only require quarterly taxes, so lobby your Alaska legislators if you want to improve the law!
Summary:
Using fuel in a combustion engine in Alaska is taxed, it doesn’t matter what the fuel is. Taking something that is not a fuel and turning it into a fuel, such as filtering vegoil or making biodiesel is fuel considered manufacturing/refining. As long as you are not selling or distributing the fuel you are a fuel “user” and not a “fuel distributor,” therefore you are NOT required to pay a $5000 bond and license as a distributor in Alaska.
How do I pay the tax?
For the $0.244 per gallon quarterly federal taxes see the National Vegoil Board’s Legal Page.
For state taxes, fill out Form 04-530, the Alaska Motor Fuel Tax Return for diesel. I talked with Jamie Taylor at the Alaska Motor Fuel Tax office, and this is basically what she told me:
Excerpts from The Law:
15 AAC 40.300 Fuel Subject to tax; Incidence of tax.
(a)(2) the use of motor fuel in the state. [you pay tax when you use motor fuel]
15 AAC 40.400 Tax Return Filing Requirements.
(a) Each person subject to AS 43.40.010(c) [that's vegoil/biodiesel users] shall file the tax return, under penalty of unsworn falsification, on a form [submit on the diesel form] or in a format prescribed by the department…
Sec 43.40.010 Tax on transfers or consumption of motor fuel and expenditure of proceeds.
(a) There is levied a tax of eight cents a gallon on all motor fuel sold or otherwise transferred within the state..
(c) …Every user [that includes vegoil/biodiesel users] shall likewise remit the tax accrued on motor fuel actually used by the user during each month..
Sec 43.40.100 Definition.
(2) “motor fuel” means fuel used in an engine for the propulsion of a motor vehicle or aircraft, and fuel used in and on watercraft for any purpose, or in a stationary engine, machine, or mechanical contrivance that is run by an internal combustion motor… [domestic use, such as heating fuel is exempt from the tax under 15 AAC 40.310 (4)]
(4) “user” means person consuming or using motor fuel who either:
(A) purchases the fuel out of the state and ships it into the state for personal use in the state;
(B) manufactures fuel in the state; or [turning vegetable oil into filtered vegoil or biodiesel is considered fuel manufacturing]
(C) purchases or receives fuel in the state that is not taxed at the time of purchase or receipt or is taxed at a rate that is less than the rate prescribed by AS 43.40.010 [since the vegetable oil is NOT fuel when we receive it we do not fall under this section]
Veg On!
