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Introduced by Representative Johnson of Canaan

Referred to Committee on


Subject:  Taxation; diesel fuel; agricultural exemption

Statement of purpose:  This bill proposes to create a program whereby agricultural users of diesel fuel that are forced to purchase nondyed diesel due to availability can be certified by the tax department allowing fuel dealers to not charge the tax when making bulk deliveries, rather than requiring the customer to seek periodic refunds from the tax department.


It is hereby enacted by the General Assembly of the State of Vermont:


The general assembly finds:

(1)  Purchasers of diesel for on-farm use are currently exempt from paying sales and use tax on that fuel.

(2)  The environmental protection agency has implemented new standards for on-road and off-road diesel fuel, requiring on-road diesel to have been ultra-low sulfur since October 2006, but transitioning off-road diesel to 500 parts per million by 2007 and ultra-low sulfur by 2010.

(3)  The interim off-road fuel with a sulfur content of 500 parts per million is not widely available due to low utilization in some areas of Vermont and also due to a lack of storage tanks because of the increased number of diesel variations in the marketplace.

(4)  Many agricultural users are forced to pay the sales and use tax when purchasing diesel fuel and then seek a rebate from the tax department.

(5)  Agricultural diesel users, many of whom use a large quantity of diesel fuel to operate tractors and other machinery, should not be forced to pay the tax and then wait for a refund from the tax department.

(6)  Allowing agricultural users to receive a certificate of exemption from the tax department that they could file with their fuel dealer would provide a mechanism whereby the sales and use tax would not be collected on bulk deliveries to on-farm pumps.

Sec. 2.  23 V.S.A. § 3032 is added to read:


(a)  A user of diesel fuel for agricultural purposes that is exempt under subdivision 3003(d)(1)(B) or (F) of this title may apply to the commissioner for a certificate of exemption which he or she may file with his or her fuel distributor or dealer so that the diesel fuel tax may not be collected upon delivery of nondyed fuel when market availability so requires.

(b)  A distributor or dealer in receipt of a certificate of exemption from a user under this section shall not be required to collect the diesel tax from that user for deliveries of nondyed diesel to on-farm fuel pumps.  Vendors shall retain a copy of each certificate of exemption provided by each purchaser for a period of three years.  Vendors shall maintain records of the number of gallons sold and the amount of the diesel fuel tax not collected under this section and report those amounts to the commissioner along with those reports required under section 3014 of this title.

(c)  A distributor or dealer who paid the diesel fuel tax upon receiving delivery of the nondyed diesel fuel into bulk tanks and subsequently sells that fuel to a certified exempt user shall have the same right of credit or refund granted to users under section 3020 of this title.

(d)  The commissioner may adopt rules for the implementation of this section.

(e)  Nothing in this section shall be interpreted to prevent an exempt user from seeking a refund under section 3020 of this title.

(f)  Nothing in this section shall be interpreted to allow users to seek reimbursement of the federal diesel fuel tax imposed pursuant to 25 U.S.C. § 4082.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont