PRESS RELEASE: Comptroller’s Office Secures Temporary Waiver of Restrictions to Help with Diesel Fuel Supply

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March 7, 2024              

Comptroller’s Office Secures Temporary Waiver of Restrictions to Help with Diesel Fuel Supply

(AUSTIN) — Texas Comptroller Glenn Hegar announced today, in partnership with Gov. Greg Abbott, the Comptroller’s office has secured a temporary waiver of state restrictions on the use of dyed diesel fuel for vehicles on Texas roadways and suspended requirements to pay the state motor fuels tax on dyed diesel. The move is in response to the recent wildfires that swept across the Texas Panhandle.

Hegar also announced that the Comptroller’s office has secured a temporary waiver from the Internal Revenue Service (IRS) to waive penalties and help clear the way for off-road diesel fuel to be used by on-road vehicles in counties affected by the wildfires to ensure the availability of reliable fuel sources for disaster relief.

Diesel fuel meant for off-road use only, such as in farm and construction equipment, is not taxed. Since 1994, federal law has required such diesel fuel to be dyed bright red to signify its taxability status. Using dyed diesel on the highway, or knowingly selling it for such use, is illegal under both Texas and federal law.

If vehicles powered by dyed diesel fuel are used on highways, the operator or the person selling the fuel must pay the federal tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use. The IRS will not impose penalties for failure to make semimonthly deposits of this tax. The state motor fuels tax of 20.0 cents per gallon is temporarily waived.

“The situation in the communities impacted by this disaster is heartbreaking, and we still have a long way to go before we understand the scope of the devastation wrought by this fire," Hegar said. "These waivers will help ensure fuel supplies remain readily available for vehicles used by emergency responders and others to transport supplies and respond to the needs of Texans affected by this unprecedented disaster.

“The taxability of diesel fuel is the last thing that should be on the minds of our relief workers, emergency responders and the Texans who have lost everything and must now rebuild. These waivers guarantee our disaster recovery is not hampered by concerns about whether the diesel has been taxed for on-road use.”

The IRS penalty waiver is retroactive to the beginning of the wildfire disaster and covers the period of Feb. 23 through March 22 for certain Texas counties. The suspension of state restrictions and the suspension of the requirement to pay state motor fuels taxes on dyed diesel is also in effect from Feb. 23 through March 22, unless otherwise terminated by the Office of the Governor or until the disaster declaration is lifted or expires.

Hegar also announced the temporary suspension of certain requirements for motor vehicles engaged in interstate disaster relief efforts due to the Texas wildfires.

To respond to the wildfires and speed up the delivery of fuel into Texas from March 7 through March 22, the Comptroller’s office will issue expedited licenses to motor fuel distributors, importers and transporters to import fuel. The Comptroller’s office will waive the bond requirement for these distributors and importers. There is no bond requirement for transporters.

Distributors, importers and transporters should electronically submit their applications (PDF) to FuelsTax@cpa.texas.gov. The application will be processed within one business day of receipt. Once processed, the license status will be available through the Comptroller’s online Fuels License Search tool.

The agency also will accept refund claims from people who paid tax on clear diesel fuel purchased and used in off-highway equipment for wildfire relief and recovery efforts within declared disaster areas. The refund claim, Form 06-106 (PDF), is valid for clear diesel fuel used from Feb. 23 through March 22.

The Office of the Governor also issued a temporary waiver to suspend licensing requirements of the International Fuel Tax Agreement when needed relief supplies and fuel are delivered into Texas by truck.

This waiver will be in effect until March 22, at which point the Comptroller’s office, in conjunction with the Office of the Governor, will determine whether the waiver should be extended.

For more information on the Comptroller’s role in disaster relief efforts, including information on the use of dyed diesel fuel, see Disaster Relief Information on the Comptroller’s website.