Biodiesel & Taxes

Recently we've seen a few people get fined for running SVO/WVO or Biodiesel in their vehicles without paying the excise tax.

While running Biodiesel is great, in most states it's considered a fuel that's run in a vehicle on a public road and will require being taxed in one form or another.

The Federal Government allows for a federal excise tax exemption of up to 400 gallons of fuel run per quarter if it is used for non-commercial use.

State tax varies from state to state but in most cases, you're required to either complete paperwork (for a possible state excise fuel tax exemption) or required to log your biodiesel use and pay it on your income taxes at the end of the year.

Also, here's my take on the people that are getting fined and how they can avoid it:

1. If you use Biodiesel, track your miles.
2. At the end of the year if you feel like doing your part, there's a section on your taxes where you can "pay your excise tax for untaxed fuel you used on a public road"
3. If you get pulled over, pull out the log & tell em you're logging all of your miles & plan to "true up" at tax time
4. If you really feel "anal" about it, go download the tax forms & look for the box (I remember it quite well from tax time).

Also, if you're worried about the state tax thing, do the same. In Utah we have this nice little box on my quarterly sales tax form whereI can indicate how much "untaxed fuel I used on a public road".

More information can be found at your local state website or at the National Biodiesel Board (http://www.nbb.org)  

[EDIT] 7/12/07
Thought I'd add a few more things to this....

A company called EZ Biodiesel (http://www.ezbiodiesel.com) has a really good website on taxes & biodiesel.

It has more of a slant of selling the stuff rather than paying your taxes on using it, but it has a lot of good info none-the-less.

Here's the link to it:
http://www.ezbiodiesel.com/biodiesel_tax_credits.htm

Also, here's the NBB's page on Taxes:
http://www.biodiesel.org/news/taxincentive/ 

Interesting none-the-less. 

-Graydon