SECTION 3.441. Documentation of Imports and Exports, Import Verification Numbers, Export Sales, and Diversion Numbers

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Bulk plant--A motor fuel storage and distribution facility that:

(A) is not an Internal Revenue Service-approved (IRS-approved) terminal; and

(B) from which motor fuel may be removed at a rack.

(2) Bulk transfer/terminal system--The motor fuel distribution system consisting of refineries, pipelines, marine vessels, motor fuel storage facilities, and IRS-approved terminals.

(A) Motor fuel is in the bulk transfer/terminal system if the motor fuel is in a refinery, a pipeline, a motor fuel storage facility, a terminal, or a marine vessel transporting motor fuel owned by a licensed supplier or permissive supplier.

(B) Motor fuel is not in the bulk transfer/terminal system if the motor fuel is in:

(i) a bulk plant that is not part of a refinery or terminal;

(ii) the motor fuel supply tank of an engine or a motor vehicle; or

(iii) a tank car, railcar, trailer, truck, or other equipment suitable for ground transportation.

(3) Diesel fuel--Kerosene or another liquid, or a combination of liquids blended together, offered for sale, sold, used, or capable of use as fuel for the propulsion of a diesel-powered engine.

(A) The term includes products commonly referred to as kerosene, light cycle oil, #1 diesel fuel, #2 diesel fuel, dyed or undyed diesel fuel, aviation jet fuel, renewable diesel, biodiesel, distillate fuel, cutter stock, or heating oil.

(B) The term does not include compressed natural gas, liquefied natural gas, gasoline, aviation gasoline, or liquefied gas.

(4) Distributor--A person who makes sales of motor fuel at wholesale. A distributor's activities may also include sales of motor fuel at retail.

(5) Diversion number--The number assigned by the comptroller, or by a person to whom the comptroller delegates or appoints the authority to assign the number, that relates to a single cargo tank delivery of motor fuel that is diverted from the original destination state printed on the shipping document.

(6) Export--To obtain motor fuel in this state for sale or use in another state, territory, or foreign country.

(7) Exporter--A person who exports motor fuel from this state. The seller is the exporter of motor fuel delivered out of this state by or for the seller, and the purchaser is the exporter of motor fuel delivered out of this state by or for the purchaser.

(8) Gasoline--Any liquid or combination of liquids blended together, offered for sale, sold, used, or capable of use as fuel for a gasoline-powered engine.

(A) The term includes gasohol, aviation gasoline, and blending agents.

(B) The term does not include compressed natural gas, liquefied natural gas, racing gasoline, diesel fuel, aviation jet fuel, or liquefied gas.

(9) Import--To bring motor fuel into this state by motor vehicle, marine vessel, pipeline, or any other means. The term does not include bringing motor fuel into this state in the motor fuel supply tank of a motor vehicle if the motor is used to power that motor vehicle.

(10) Import verification number--The number assigned by the comptroller, or by a person to whom the comptroller delegates or appoints the authority to assign the number, that relates to a single cargo tank delivery into this state from another state after a request for an assigned number by an importer or by the motor fuel transporter carrying taxable motor fuel into this state for the account of an importer.

(11) Importer--A person that imports motor fuel into this state. The seller is the importer for motor fuel delivered into this state from outside of this state by or for the seller, and the purchaser is the importer for motor fuel delivered into this state from outside of this state by or for the purchaser.

(12) Marine vessel--Includes a marine barge.

(13) Motor fuel--Gasoline, diesel fuel, gasoline blended fuel, compressed natural gas, liquefied natural gas, and other products that are offered for sale, sold, used, or capable of use as fuel for a gasoline-powered engine or a diesel-powered engine.

(14) Motor fuel storage facility-- A storage facility supplied by pipeline or marine vessel that does not have a rack for removal of motor fuel by truck, railcar, or any other means of conveyance that is outside the bulk transfer/terminal system.

(15) Permissive supplier--A person who elects, but is not required, to have a supplier's license and who is registered under Internal Revenue Code, §4101, for transactions in motor fuel in the bulk transfer/terminal system and is a position holder in motor fuel located only in another state or a person who receives motor fuel only in another state under a two-party exchange.

(16) Position holder--The person who holds the inventory position in motor fuel in a terminal, as reflected on the records of the terminal operator. A person holds the inventory position in motor fuel when that person has a contract with the terminal operator for the use of storage facilities and terminaling services for motor fuel at the terminal. The term includes a terminal operator who owns motor fuel in the terminal.

(17) Rack--A mechanism for delivering motor fuel from a refinery, terminal, marine vessel, or bulk plant into a transport vehicle, railroad tank car, or other means of transfer that is outside the bulk transfer/terminal system.

(18) Sale--A transfer of title, exchange, or barter of motor fuel, other than the transfer of possession of motor fuel on consignment.

(19) Shipping document--A delivery document issued in conjunction with the sale, transfer, or transport of motor fuel. A shipping document issued by a terminal operator shall be machine printed. All other shipping documents shall be typed or handwritten on a preprinted form or machine printed.

(20) Supplier--A person subject to the general taxing jurisdiction of this state who:

(A) is registered under Internal Revenue Code, §4101, for transactions in motor fuel in the bulk transfer/terminal system; and

(i) is a position holder in motor fuel in a terminal or refinery in this state and may concurrently be a position holder in motor fuel in another state;

(ii) owns motor fuel in a marine vessel in this state; or

(iii) receives motor fuel in this state under a two-party exchange; and

(B) may also be a terminal operator, provided that a terminal operator is not considered to also be a "supplier" based solely on the fact that the terminal operator handles motor fuel consigned to it within a terminal.

(21) Terminal--An IRS-approved motor fuel storage and distribution facility to which a terminal control number has been assigned, to which motor fuel is supplied by pipeline or marine vessel, and from which motor fuel may be removed at a rack.

(b) Imports.

(1) Gasoline or diesel fuel imported into Texas by or for a seller constitutes an import by that seller. Gasoline or diesel fuel imported into Texas by or for a purchaser constitutes an import by that purchaser.

(2) An importer must obtain from the comptroller an import verification number for each load of gasoline or diesel fuel imported into Texas by truck or railroad tank car. An import verification number must be obtained within 72 hours before or after the gasoline or diesel fuel enters Texas. The importer must write the import verification number on the shipping document issued for that fuel.

(3) An importer must possess a shipping document created by the terminal or bulk plant where the gasoline or diesel fuel was loaded. See §3.439 of this title (relating to Motor Fuel Transportation Documents) for gasoline or diesel fuel imported by any means into Texas.

(c) Exports.

(1) A licensed supplier, permissive supplier, or distributor makes an export sale when it sells gasoline or diesel fuel in Texas to a licensed exporter, importer, distributor, supplier, or permissive supplier who then sends or transports the gasoline or diesel fuel outside the state. The bill of lading or shipping document must list the out of state destination.

(2) A licensed supplier, permissive supplier, or distributor who makes an export sale will not be liable for tax on gasoline or diesel fuel that the purchaser diverts provided that the seller issued a bill of lading or shipping document that shows that the gasoline or diesel fuel is to be delivered to a destination outside Texas.

(3) The comptroller may request proof of export from the exporter to verify that the gasoline or diesel fuel was exported from Texas. This proof may consist of:

(A) proof of export that a U.S. customs office has certified, if the gasoline or diesel fuel was exported from this state to a foreign country;

(B) proof of export that a port of entry of the state of importation has certified, if ports of entry are maintained by that state;

(C) proof from the tax officials of the state into which the gasoline or diesel fuel was imported, which shows that the exporter has accounted for the gasoline or diesel fuel on the state's tax report; or

(D) other proof that the gasoline or diesel fuel has been reported to the state into which the gasoline or diesel fuel was imported.

(d) Diversion Number. An importer or exporter who diverts the delivery of a load of gasoline or diesel fuel being transported by truck or railroad tank car from the destination state or country that is preprinted on the shipping document that has been issued for that fuel to another state or country must obtain a diversion number from the comptroller. A diversion number must be obtained within 72 hours before or after the diversion. The importer, exporter, or common or contract carrier must write the diversion number on the shipping document issued for that fuel.

(e) Reporting subsequent sales in this state of tax-free gasoline or diesel fuel purchased for export.

(1) A person who purchases or removes gasoline or diesel fuel tax-free for export to any other state or foreign country and, before export, sells the gasoline or diesel fuel in this state tax-free to a licensed supplier, permissive supplier, distributor, importer, or exporter shall report that transaction as required by this subsection.

(2) If the gasoline or diesel fuel is subsequently sold one or more times in this state before export and tax-free to a licensed supplier, permissive supplier, distributor, importer, or exporter, each seller shall report the transaction to the comptroller as required by this section.

(3) Each person who makes a sale described by paragraph (1) or (2) of this subsection must provide to the comptroller:

(A) the bill of lading number issued at the terminal;

(B) the terminal control number;

(C) the date the gasoline or diesel fuel was removed from the terminal;

(D) the number of gallons invoiced;

(E) date of sale; and

(F) any other information required by the comptroller.

(4) The sales invoice for each transaction described by paragraph (1) or (2) of this subsection must include:

(A) the name of the seller and purchaser; and

(B) the original bill of lading number.

(5) A person who is required to report a subsequent sale in this state of tax-free gasoline or diesel fuel purchased for export shall report the transaction with the required monthly motor fuels return as required under Tax Code, §162.114 (Returns and Payments) or §162.215 (Returns and Payments).

(f) Penalties.

(1) A person who fails to report a subsequent sale in this state of tax-free gasoline or diesel fuel purchased for export shall pay a penalty of $200 for each sale that was not reported on the original return, unless the person files an amended report that includes the sale not later than the 180th day after the due date of the original return.

(2) Failure to pay tax due on a subsequent sale of tax-free gasoline and diesel fuel purchased for export. A licensed supplier, permissive supplier, distributor, importer, or exporter who redirects a delivery of gasoline or diesel fuel to a location in this state prior to export and fails to pay the tax when due, shall pay a penalty equal to the greater of $2,000 or five times the amount of tax due.

(3) The penalties addressed in this subsection are in addition to any other penalty authorized under Tax Code, Chapter 162 (Motor Fuel Taxes).

Source Note: The provisions of this §3.441 adopted to be effective April 13, 2005, 30 TexReg 2093; amended to be effective March 16, 2020, 45 TexReg 1859