HBA-EDN H.B. 1241 77(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 1241
By: Counts
Ways & Means
7/26/2001
Enrolled



BACKGROUND AND PURPOSE 

Prior to the 77th Legislature, state law prohibited a tax-free purchase or
sale of any diesel fuel of more than 3,000 gallons in a single transaction
or in a calendar month in which the person had purchased more than 10,000
gallons of diesel fuel unless the person held a bonded user permit.  The
regulations associated with the purchase or sale of diesel fuel, such as
requiring a bonded user permit, were becoming increasingly burdensome to
both purchasers and suppliers while doing little to control the illegal use
of diesel fuel by the consumer.  House Bill 1241 changes the minimum
bonding requirement for the purchase of red dyed tax exempt diesel fuel for
certain agricultural and oil and gas users.   

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 1241 amends the Tax Code to increase, from up to 3,000 to up to
7,400, the number of gallons of dyed or undyed diesel fuel that a person
may purchase tax-free in a single transaction.  This increase also applies
to the number of gallons of dyed diesel fuel, or undyed diesel fuel for
agricultural purposes, that a permitted supplier may sell tax-free in a
single transaction.   

The bill prohibits the above transactions from occurring in a calendar
month in which the person has previously purchased or the supplier has
previously sold more than: 


_10,000 gallons of dyed diesel fuel;

_25,000 gallons of dyed diesel fuel if the purchaser stipulates in a signed
statement that all of the fuel will be consumed by the purchaser in oil or
gas production; 

_25,000 gallons of dyed or undyed diesel fuel if purchased for agricultural
purposes and the purchaser furnishes to the permitted supplier, in
conjunction with a signed statement, an agricultural exemption number
issued by the comptroller of public accounts.   

The bill provides that the requirement for a bonded user permit does not
affect the right of a purchaser to purchase not more than 25,000 gallons of
dyed diesel fuel for the purchaser's own use in oil or gas production, or
of dyed or undyed diesel fuel for the purchaser's own use for agricultural
purposes only, using a signed statement.      

EFFECTIVE DATE

September 1, 2001.