Bill Text: MI HB4359 | 2013-2014 | 97th Legislature | Introduced

---

Bill Title: Transportation; motor fuel tax; motor fuel tax; modify, and implement a wholesale tax. Amends secs. 2, 6, 8 & 152 of 2000 PA 403 (MCL 207.1002 et seq.).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2013-03-05 - Printed Bill Filed 03/01/2013 [HB4359 Detail]

Download: Michigan-2013-HB4359-Introduced.html

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 4359

 

February 28, 2013, Introduced by Rep. Schmidt and referred to the Committee on Transportation and Infrastructure.

 

     A bill to amend 2000 PA 403, entitled

 

"Motor fuel tax act,"

 

by amending sections 2, 6, 8, and 152 (MCL 207.1002, 207.1006,

 

207.1008, and 207.1152), section 2 as amended by 2002 PA 668 and

 

section 8 as amended by 2006 PA 268.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2. As used in this act:

 

     (a) "Alcohol" means fuel grade ethanol or a mixture of fuel

 

grade ethanol and another product.

 

     (b) "Applicable percentage" means 10.1%.

 

     (c) "Average wholesale price" means the statewide average

 

wholesale price as determined by the department based upon a 12-

 

month rolling average of the wholesale price. The 12-month rolling

 

average period ends on the last day of the month that is 3 months

 

prior to the month in which the rate is determined by the

 

department under section 8(1)(d).

 

     (d) (b) "Blendstock" means and includes any petroleum product

 

component of motor fuel, such as naphtha, reformate, or toluene; or

 

any oxygenate that can be blended for use in a motor fuel.

 

     (e) (c) "Blended motor fuel" means a mixture of motor fuel and

 

another liquid, other than a de minimis amount of a product

 

including, but not limited to, carburetor detergent or oxidation

 

inhibitor, that can be used as motor fuel in a motor vehicle.

 

     (f) (d) "Blender" means and includes any person who produces

 

blended motor fuel outside of the bulk transfer/terminal system.

 

     (g) (e) "Blends" or "blending" means the mixing of 1 or more

 

petroleum products, with or without another product, regardless of

 

the original character of the product blended, if the product

 

obtained by the blending is capable of use in the generation of

 

power for the propulsion of a motor vehicle, an airplane, or a

 

marine vessel. Blending does not include mixing that occurs in the

 

process of refining by the original refiner of crude petroleum or

 

the blending of products known as lubricating oil in the production

 

of lubricating oils and greases.

 

     (h) (f) "Bulk end user" means a person who receives into the

 

person's own storage facilities by transport truck or tank wagon

 

motor fuel for the person's own consumption.

 

     (i) (g) "Bulk plant" means a motor fuel storage and

 

distribution facility that is not a terminal and from which motor

 

fuel may be withdrawn by a tank wagon, a transport truck, or a

 

marine vessel.

 

     (j) (h) "Bulk transfer" means a transfer of motor fuel from 1

 

location to another by pipeline tender or marine delivery within

 

the bulk transfer/terminal system, including, but not limited to,

 

all of the following transfers:

 

     (i) A marine vessel movement of motor fuel from a refinery or

 

terminal to a terminal.

 

     (ii) Pipeline movements of motor fuel from a refinery or

 

terminal to a terminal.

 

     (iii) Book transfers of motor fuel within a terminal between

 

licensed suppliers before completion of removal across the terminal

 

rack.

 

     (iv) Two-party exchanges between licensed suppliers.

 

     (k) (i) "Bulk transfer/terminal system" means the motor fuel

 

distribution system consisting of refineries, pipelines, marine

 

vessels, and terminals. Motor fuel in a refinery, pipeline,

 

terminal, or a marine vessel transporting motor fuel to a refinery

 

or terminal is in the bulk transfer/terminal system. Motor fuel in

 

a fuel storage facility including, but not limited to, a bulk plant

 

that is not part of a refinery or terminal, in the fuel supply tank

 

of any engine or motor vehicle, in a marine vessel transporting

 

motor fuel to a fuel storage facility that is not in the bulk

 

transfer/terminal system, or in any tank car, rail car, trailer,

 

truck, or other equipment suitable for ground transportation is not

 

in the bulk transfer/terminal system.

 

     (l) (j) "Carrier" means an operator of a pipeline or marine

 

vessel engaged in the business of transporting motor fuel above the

 

terminal rack.

 

     (m) (k) "Commercial motor vehicle" means a motor vehicle

 

licensed as a qualified commercial motor vehicle under the motor

 

carrier fuel tax act, 1980 PA 119, MCL 207.211 to 207.234, or a

 

motor vehicle licensed under an international fuel tax agreement

 

under section 2a of the motor carrier fuel tax act, 1980 PA 119,

 

MCL 207.212a.

 

     (n) (l) "Dead storage" is the amount of motor fuel that cannot

 

be pumped out of a motor fuel storage tank because the motor fuel

 

is below the mouth of the tank's draw pipe. The amount of motor

 

fuel in dead storage is 200 gallons for a tank with a capacity of

 

less than 10,000 gallons and 400 gallons for a tank with a capacity

 

of 10,000 gallons or more.

 

     (o) (m) "Denaturants" means and includes gasoline, natural

 

gasoline, gasoline components, or toxic or noxious materials added

 

to fuel grade ethanol to make it unsuitable for beverage use but

 

not unsuitable for automotive use.

 

     (p) (n) "Department" means the bureau of revenue within the

 

department of treasury or its designee.

 

     (q) (o) "Destination state" means the a state, Canadian

 

province or territory, or foreign country to which motor fuel is

 

directed for export.

 

     (r) (p) "Diesel fuel" means any liquid other than gasoline

 

that is capable of use as a fuel or a component of a fuel in a

 

motor vehicle that is propelled by a diesel-powered engine or in a

 

diesel-powered train. Diesel fuel includes number 1 and number 2

 

fuel oils, kerosene, dyed diesel fuel, and mineral spirits. Diesel

 

fuel also includes any blendstock or additive that is sold for

 

blending with diesel fuel, any liquid prepared, advertised, offered

 

for sale, sold for use as, or used in the generation of power for

 

the propulsion of a diesel-powered engine, airplane, or marine

 

vessel. An additive or blendstock is presumed to be sold for

 

blending unless a certification is obtained for federal purposes

 

that the substance is for a use other than blending for diesel

 

fuel. Diesel fuel does not include an excluded liquid.

 

     (s) (q) "Dyed diesel fuel" means diesel fuel that is dyed in

 

accordance with internal revenue service rules or pursuant to any

 

other internal revenue service requirements, including any

 

invisible marker requirements.

 

     (t) (r) "Eligible purchaser" means a person who has been

 

authorized by the department under section 75 to make the an

 

election under section 74.

 

     (u) (s) "Excluded liquid" means that term as defined in 26

 

C.F.R. CFR 48.4081-1.

 

     (v) (t) "Export" means to obtain motor fuel in this state for

 

sale or other distribution outside of this state. Motor fuel

 

delivered outside of this state by or for the seller constitutes an

 

export by the seller and motor fuel delivered outside of this state

 

by or for the purchaser constitutes an export by the purchaser.

 

     (w) (u) "Exporter" means a person who exports motor fuel.

 

     Sec. 6. As used in this act:

 

     (a) "Tank wagon" means a straight truck having 1 or more

 

compartments other than the fuel supply tank designed or used to

 

carry motor fuel.

 

     (b) "Tank wagon operator-importer" means a person who operates

 

a tank wagon and imports motor fuel into this state from another

 

state.

 

     (c) "Tax" means a tax, interest, or penalty levied under this

 

act.

 

     (d) "Terminal" means a motor fuel storage and distribution

 

facility that meets all of the following requirements:

 

     (i) Is registered as a qualified terminal by the internal

 

revenue service.

 

     (ii) Is supplied by pipeline or marine vessel.

 

     (iii) Has a rack from which motor fuel may be removed.

 

     (e) "Terminal operator" means a person who owns, operates, or

 

otherwise controls a terminal.

 

     (f) "Transmix" means the mixed product that results from the

 

buffer or interface of 2 different products in a pipeline shipment,

 

or a mixture of 2 different products within a refinery or terminal

 

that results in an off-grade mixture.

 

     (g) "Transport truck" means a semitrailer combination rig

 

designed or used for the purpose of transporting motor fuel over

 

the public roads or highways.

 

     (h) "Transporter" means an operator of a railroad or rail car,

 

tank wagon, transport truck, or other fuel transportation vehicle

 

engaged in the business of transporting motor fuel below the

 

terminal rack.

 

     (i) "Two-party exchange" means a transaction in which motor

 

fuel is transferred from 1 licensed supplier or licensed permissive

 

supplier to another licensed supplier or licensed permissive

 

supplier where all of the following occur:

 

     (i) The transaction includes a transfer from the person who

 

holds the original inventory position for motor fuel in the

 

terminal as reflected in the records of the terminal operator.

 

     (ii) The exchange transaction is completed before removal

 

across the rack from the terminal by the receiving licensed

 

supplier or licensed permissive supplier.

 

     (iii) The terminal operator in its books and records treats the

 

receiving exchange party as the supplier that removes the product

 

across a terminal rack for purposes of reporting the transaction to

 

the department.

 

     (j) "Ultimate vendor" means the person who sells motor fuel to

 

the end user of the fuel.

 

     (k) "Wholesale price" means the price per gallon of unleaded

 

regular gasoline charged by a licensed supplier to a purchaser at

 

the time of removal from a terminal across the rack, as determined

 

by the department. Wholesale price does not include the tax imposed

 

by this act, prepaid sales tax under section 6a of the general

 

sales tax act, 1933 PA 167, MCL 205.56a, federal excise tax under

 

section 4081 of the internal revenue code, 26 USC 4081, any other

 

federal tax upon motor fuel, or an environmental protection

 

regulatory fee imposed under section 21508 of the natural resources

 

and environmental protection act, 1994 PA 451, MCL 324.21508.

 

     (l) (k) "Wholesaler" means a person who acquires motor fuel

 

from a supplier or from another wholesaler for subsequent sale and

 

distribution at wholesale by a fuel transportation vehicle, rail

 

car, or other motor vehicle.

 

     Sec. 8. (1) Subject Except as otherwise provided in this act

 

and subject to the exemptions provided for in this act, tax is

 

imposed on motor fuel imported into or sold, delivered, or used in

 

this state at the following rates:

 

     (a) Except as otherwise provided in subdivision subdivisions

 

(c) and (d), 19 cents per gallon on gasoline.

 

     (b) Except as otherwise provided in subdivision (d),

 

subdivisions (c) and (d), 15 cents per gallon on diesel fuel.

 

     (c) Subject to subsections (10) and (11), 12 cents per gallon

 

on gasoline that is at least 70% ethanol. Under this subdivision,

 

blenders of ethanol and gasoline outside of the bulk transfer

 

terminal system shall obtain a blender's license and are subject to

 

the blender reporting requirements under this act. A licensed

 

supplier who blends ethanol and gasoline shall also obtain a

 

blender's license.

 

     (d) Subject to subsections (10) and (11), 12 cents per gallon

 

on diesel fuel that contains at least 5% biodiesel. Under this

 

subdivision, blenders of biodiesel and diesel fuel outside of the

 

bulk transfer terminal system are required to obtain a blender's

 

license and are subject to the blender reporting requirements under

 

this act. A licensed supplier who blends biodiesel and diesel fuel

 

shall also obtain a blender's license.

 

     (c) Subject to subdivision (d), beginning on the effective

 

date of the amendatory act that added this subdivision, 12% of the

 

wholesale price as calculated by the department on the effective

 

date of the amendatory act that added this sentence.

 

     (d) Beginning the first day of the second calendar quarter

 

following the effective date of the amendatory act that added this

 

sentence, the rate per gallon on motor fuel shall be determined by

 

the department on a quarterly basis. The rate shall be equal to the

 

product of the average wholesale price and the applicable

 

percentage, rounded up to the nearest 1/10 of 1 cent.

 

     (2) Tax shall not be imposed under this section on motor fuel

 

that is in the bulk transfer/terminal system.

 

     (3) The collection, payment, and remittance of the tax imposed

 

by this section shall be accomplished in the manner and at the time

 

provided for in this act.

 

     (4) Tax is also imposed at the rate described in subsection

 

(1) on net gallons of motor fuel, including transmix, lost or

 

unaccounted for, at each terminal in this state. The tax shall be

 

measured annually and shall apply to the net gallons of motor fuel

 

lost or unaccounted for that are in excess of 1/2 of 1% of all net

 

gallons of fuel removed from the terminal across the rack or in

 

bulk.

 

     (5) It is the intent of this act:

 

     (a) To require persons who operate a motor vehicle on the

 

public roads or highways of this state to pay for the privilege of

 

using those roads or highways.

 

     (b) To impose on suppliers a requirement to collect and remit

 

the tax imposed by this act at the time of removal of motor fuel

 

unless otherwise specifically provided in this act.

 

     (c) To allow persons who pay the tax imposed by this act and

 

who use the fuel for a nontaxable purpose to seek a refund or claim

 

a deduction as provided in this act.

 

     (d) That the tax imposed by this act be collected and paid at

 

those times, in the manner, and by those persons specified in this

 

act.

 

     (6) Bills of lading and invoices shall identify the blended

 

product and the correct fuel product code. The motor fuel tax rate

 

for each product shall be listed separately on each invoice.

 

Licensees shall report the correct fuel product code for the

 

blended product as required by the department. When fuel is blended

 

below the terminal rack, new bills of lading and invoices shall be

 

generated and submitted to the department upon request. All bills

 

of lading and invoices shall meet the requirements provided under

 

this act.

 

     (7) Notwithstanding any other provision of this act, all

 

facilities a facility in this state that produce produces motor

 

fuel and distribute distributes the fuel from a rack for purposes

 

of this act are is a terminal, and shall obtain a terminal operator

 

license, and shall comply with all terminal operator reporting

 

requirements under this act. All A position holders holder in these

 

facilities a facility shall be licensed as a supplier and shall

 

comply with all supplier requirements under this act.

 

     (8) If the tax on gasoline that contains at least 70% ethanol

 

or diesel fuel that contains at least 5% biodiesel held in storage

 

outside of the bulk transfer/terminal system on the effective date

 

of the amendatory act that added this subsection has previously

 

been paid at the rates imposed by subsection (1)(a) and (b), the

 

person who paid the tax may claim a refund for the difference

 

between the rates imposed by subsection (1)(a) and (b) and the

 

rates imposed by subsection (1)(c) and (d). All of the following

 

shall apply to a refund claimed under this subsection:

 

     (a) The refund shall be claimed on a form prescribed by the

 

department.

 

     (b) The refund shall apply only to:

 

     (i) Previously taxed gasoline containing at least 70% ethanol

 

or diesel fuel containing at least 5% biodiesel in excess of 3,000

 

gallons held in storage by an end user.

 

     (ii) Previously taxed gasoline containing at least 70% ethanol

 

or diesel fuel containing at least 5% biodiesel held for sale that

 

is in excess of dead storage.

 

     (9) A refund request shall be filed within 60 days after the

 

last day of the month in which the amendatory act that added this

 

subsection took effect. A taxpayer shall provide documentation that

 

the department requires in order to verify the request for refund.

 

A person who may claim a refund under subsection (8) shall do all

 

of the following to claim the refund:

 

     (a) Not later than 12 a.m. on the effective date of the

 

amendatory act that added this subsection, take an inventory of

 

gasoline containing at least 70% ethanol or undyed diesel fuel

 

containing at least 5% biodiesel.

 

     (b) Deduct 3,000 gallons if the person claiming the refund is

 

an end user.

 

     (c) Deduct the number of gallons in dead storage if the

 

gasoline containing at least 70% ethanol or the undyed diesel fuel

 

containing at least 5% biodiesel is held for subsequent sale.

 

     (10) Beginning on the effective date of the amendatory act

 

that added this subsection, the state treasurer shall annually

 

determine, for the 12-month period ending May 1 and for any

 

additional times that the treasurer may determine, the difference

 

between the amount of motor fuel tax collected and the amount of

 

motor fuel tax that would have been collected but for the

 

differential rates on gasoline pursuant to subsection (1)(c) and

 

biodiesel pursuant to subsection (1)(d). Subsection (1)(c) and (d)

 

is no longer effective the earlier of 10 years after the effective

 

date of the amendatory act that added this subsection or the first

 

day of the first month that is not less than 90 days after the

 

state treasurer certifies that the total cumulative rate

 

differential from the effective date of this amendatory act is

 

greater than $2,500,000.00.

 

     (11) The legislature shall annually appropriate to the

 

Michigan transportation fund created in 1951 PA 51, MCL 247.651 to

 

247.675, the amount determined as the rate differential certified

 

by the state treasurer for the 12-month period ending on May 1 of

 

the calendar year in which the fiscal year begins. Subsection

 

(1)(c) and (d) shall not be effective beginning January of any

 

fiscal year for which the appropriation required under this

 

subsection has not been made by the first day of the fiscal year.

 

     (12) As used in this section:

 

     (a) "Biodiesel" means a fuel composed of mono-alkyl esters of

 

long chain fatty acids derived from vegetable oils or animal fats

 

and, in accordance with standards specified by the American society

 

for testing and materials, designated B100 and meeting the

 

requirements of D-6751, as approved by the department of

 

agriculture.

 

     (b) "Ethanol" means denatured fuel ethanol that is suitable

 

for use in a spark-ignition engine when mixed with gasoline so long

 

as the mixture meets the American society for testing and materials

 

D-5798 specifications.

 

     (8) The department shall publish notice of the applicable tax

 

rate calculated under subsection (1)(d) not later than 30 days

 

before the effective date of the rate.

 

     (9) A departmental determination of the applicable percentage,

 

the average wholesale price, the wholesale price, or the rate under

 

subsection (1)(d) by the department is presumed to be correct and

 

will not be set aside unless an administrative tribunal or a court

 

of competent jurisdiction finds the department's determination to

 

be clearly erroneous.

 

     Sec. 152. (1) A Except as provided in subsections (3) and (4),

 

tax at a rate of 15 cents per gallon is imposed upon all liquefied

 

petroleum gas used in this state. The tax shall be paid at the

 

times and in the manner specified in this section. The tax on

 

liquefied petroleum gas fuel sold or delivered either by placing

 

into a permanently attached fuel supply tank on a motor vehicle, or

 

exchanging or replacing the fuel supply tank of a motor vehicle,

 

shall be collected by the LPG dealer from the purchaser and paid

 

over quarterly to the department quarterly as provided in this act.

 

Liquefied petroleum gas fuel delivered in this state into the

 

storage facility of any person when the exclusive purpose of the

 

storage facility is for resale or use in a motor vehicle on the

 

public roads or highways of this state, shall, upon delivery to

 

storage facility, be subject to tax. An LPG dealer shall, upon

 

delivery of the liquefied petroleum gas, collect and remit the tax

 

to the department as provided in this act.

 

     (2) A person shall not operate a motor vehicle on the public

 

roads or highways of this state from the cargo containers of a

 

truck, trailer, or semitrailer with liquefied petroleum gas in

 

vapor or liquid form, except when the fuel in the liquid or vapor

 

phase is withdrawn from the cargo container for use in motor

 

vehicles through a permanently installed and approved metering

 

device. The tax on liquefied petroleum gas withdrawn from a cargo

 

container through a permanently installed and approved metering

 

device shall apply be applied in accordance with measured gallons

 

as reflected by meter reading, and shall be paid quarterly by the

 

LPG dealer to the department as provided in this act.

 

     (3) Subject to subsection (4), beginning on the first day of

 

the first calendar quarter following the effective date of the

 

amendatory act that added this subsection, the tax described in

 

subsections (1) and (2) shall be imposed at a rate equal to the

 

rate per gallon for motor fuel under section 8(1)(c).

 

     (4) Beginning on the first day of the second calendar quarter

 

following the effective date of the amendatory act that added this

 

subsection, the tax described in subsections (1) and (2) shall be

 

imposed at a rate equal to the rate per gallon for motor fuel

 

established under section 8(1)(d).

 

     Enacting section 1. This amendatory act takes effect on the

 

first day of the first calendar quarter following the date of its

 

enactment.