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!
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:
- Where it asks for company information, fill in your personal information. Leave the qualified dealer number blank, since you’re a “user” not a “dealer”. [UPDATE: the Alaska Department of Revenue sent me a Qualified Dealer number, for filing purposes.] You can get your Federal EIN online in a few minutes, you need it to send in the federal tax too. I applied as a sole proprietor for banking purposes under manufacturing: biodiesel. Make sure to say yes to excise tax (form 720) as that’s what you’ll send in for your federal tax.
- On page 2, under Section II, Receipts, (1) In-State Refinery Production: list the number of gallons of fuel you produced that month (biodiesel made or vegoil filtered).
- II(2-4) leave blank, so just copy II(1)to II(5).
- Section III, Disbursements, (1a) Gallons Used: List the number of gallons used that month (i.e. gallons biodiesel or vegoil put in your vehicle).
- III(1b-1c) leave blank, so just copy III(1a) to III(1d).
- Assuming you’re only using SVO/biodiesel as on-road fuel, skip III(2-12) and copy III(1d) to III(13).
- Copy info from the back to the appropriate places on the front, write a check to the “State of Alaska,” SIGN the bottom and send it in before the end of the next month!
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]