SECTION 3.438. Signed Statements for Purchasing Dyed Diesel Fuel Tax Free

(a) End User Number. A person who wants to use a signed statement to purchase dyed diesel fuel tax free for use in nonhighway equipment must apply to the comptroller for an End User Number. The comptroller will issue to a qualified applicant an End User Number with a prefix of DD (for non-agriculture off-highway equipment) or AG (for agriculture off-highway equipment) depending on the manner in which the applicant will use the dyed diesel fuel. A person cannot use a signed statement to purchase tax-free dyed diesel fuel unless the person holds an End User Number issued by the comptroller.

(b) Signed Statement. A person with a valid End User Number may purchase dyed diesel fuel tax free for nonhighway use by providing the seller with a signed statement. The signed statement must be substantially in the form provided by the comptroller and is subject to the limitations that are stated in paragraphs (2), (3) and (4) of this subsection. Copies of the blank signed statements may be obtained from the Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711-3528 or requested by calling [phone], or our toll-free number 1-800-252-1383. Taxpayers may download copies at www.window.state.tx.us.

(1) The signed statement must include the purchaser's End User Number, must be signed by the buyer or the buyer's authorized representative, and must specify that:

(A) only dyed diesel fuel will be purchased using the signed statement;

(B) all dyed diesel fuel will be used by the buyer and will not be resold; and

(C) none of the dyed diesel fuel will be delivered into the fuel supply tanks of motor vehicles operated on public highways.

(2) A person issued an End User Number beginning with DD may buy, and a licensed diesel fuel supplier, permissive supplier, or distributor may sell, dyed diesel fuel tax free using a signed statement for not more than 10,000 gallons of dyed diesel fuel during a calendar month regardless of whether the dyed diesel fuel is purchased in a single transaction during that month or in multiple transactions during that month. The purchase, sale, or delivery that causes the 10,000 gallon limit to be exceeded during a month is not taxable. Any subsequent purchase, sale, or delivery made during the same month is taxable.

(3) A person who has been issued an end user number beginning with DD and who uses the dyed diesel fuel exclusively in the original production of oil and gas, or to increase the production of oil and gas, must obtain a letter of exception authorizing the person to exceed the 10,000 gallon limit. Examples of uses that may occur in the original production or to increase production of oil and gas include the use of dyed diesel fuel to drill, fracture, perforate, squeeze cement, acidize, log, plug back, complete, plug and abandon, install a casing liner, pull or reset a casing liner, swab, drill out a plug, jet, pack gravel or workover, and perform a hot oil treatment on a formation. Oil and gas production does not include maintaining the site, mowing, painting, gauging tanks, changing pumps, performing rod or tubing jobs, fishing for rods or tubing, repairing a tubing leak, changing a packer or anchor, performing hot oil or water treatment on casing, tubing or flow lines, and transporting. A person who uses dyed diesel fuel exclusively in the original production of oil and gas or to increase the production of oil and gas, may buy, and a licensed diesel fuel supplier, permissive supplier, or distributor may sell, dyed diesel fuel tax free by using a letter of exception and a signed statement for not more than 25,000 gallons of dyed diesel fuel during a calendar month regardless of whether the dyed diesel fuel is purchased in a single transaction during that month or in multiple transactions during that month. The purchase, sale, or delivery that causes the 25,000 gallon limit to be exceeded during a calendar month is not taxable. Any subsequent purchase, sale, or delivery made during the same calendar month is taxable.

(4) A person who has been issued an end user number beginning with AG and who uses dyed diesel fuel exclusively for an agricultural purpose as described in Tax Code, §162.001, may buy, and a diesel fuel licensed supplier, permissive supplier, or distributor may sell, dyed diesel fuel tax free using a signed statement for not more than 25,000 gallons of dyed diesel fuel during a calendar month regardless of whether the dyed diesel fuel is purchased in a single transaction during that month or in multiple transactions during that month. The purchase, sale, or delivery that causes the 25,000 gallon limit to be exceeded during a calendar month is not taxable. Any subsequent purchase, sale, or delivery made during the same calendar month is taxable.

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(c) A person who exceeds the limitations in subsection (b) of this section shall be required to obtain a dyed diesel fuel bonded user license.

(d) A separate operating division of a corporation may apply for and receive an End User Number to buy dyed diesel fuel tax free using a signed statement if the division:

(1) does not resell the fuel;

(2) consumes the fuel; and

(3) maintains separate storage apart from other corporate divisions.

(e) The signed statement remains in effect until:

(1) it is revoked in writing by either the buyer or seller;

(2) it is revoked by the comptroller upon receipt of an electronic notification of a final judgment issued on or after September 1, 2013, for failure to pay an amount owed to a licensed supplier or distributor for the purchase of dyed diesel fuel and the comptroller notifies the supplier or distributor in writing or by means of electronic transmission that the buyer may no longer make tax-free purchases. The comptroller may reinstate the end user number upon receipt of an electronic notification that the judgment, including all costs and other amounts awarded in the judgment, has been satisfied; or

(3) the comptroller notifies the supplier or distributor in writing or by means of electronic transmission that the buyer may no longer make tax-free purchases.

Source Note: The provisions of this §3.438 adopted to be effective September 2, 2004, 29 TexReg 8374; amended to be effective May 18, 2008, 33 TexReg 3774; amended to be effective January 3, 2010, 34 TexReg 9463; amended to be effective December 2, 2013, 38 TexReg 8669