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SENATE BILL NO. 310
INTRODUCED BY A. MOHL
A BILL FOR AN ACT ENTITLED: "AN ACT LIMITING THE ELIGIBILITY FOR SPECIAL FUEL TAX REFUNDS
AND CREDITS TO APPLICANTS WHO ARE ENGAGED IN THE BUSINESS OF FARMING
RANCHING, MINING, OR OPERATING A RAILROAD; INCLUDING THE HARVESTING AND TRANSPORT OF
TIMBER IN THE DEFINITION OF "FARMING OR RANCHING" "FARMING" FOR THE PURPOSES OF SPECIAL
FUEL TAX REFUNDS; SUBMITTING TO THE ELECTORATE THE SPECIAL FUEL TAX REFUND LIMITATION;
AMENDING SECTIONS 15-70-301, 15-70-328, 15-70-356, 15-70-361, AND 15-70-362, MCA; PROVIDING A
CONTINGENT VOIDNESS PROVISION; AND PROVIDING AN EFFECTIVE DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 15-70-301, MCA, is amended to read:
"15-70-301. Definitions. As used in this part, the following definitions apply:
(1) "Agricultural use" means use of special fuel by a person whose major endeavor is the business of farming or ranching and whose primary source of earned income is from the business of farming or ranching.
(2) "Bond" means:
(a) a bond executed by a special fuel user as principal with a corporate surety qualified under the laws of Montana, payable to the state of Montana, and conditioned upon faithful performance of all requirements of this part, including the payment of all taxes, penalties, and other obligations of the special fuel user arising out of this part; or
(b) a deposit with the department by the special fuel user, under terms and conditions that the department may prescribe, of certificates of deposit or irrevocable letters of credit issued by a bank and insured by the federal deposit insurance corporation.
(3) "Bulk delivery" means placing special fuel not intended for resale in storage or containers. The term does not mean special fuel delivered into the supply tank of a motor vehicle.
(4) "Cardtrol" or "keylock" means a unique device intended to allow access to a special fuel dealer's unattended pump or dispensing unit for the purpose of delivery of special fuel to an authorized user of the unique device.
(5) "Department" means the department of transportation.
(6) (a) "Distributed" means, at the time that special fuel is withdrawn, the withdrawal from a storage tank, a refinery, or a terminal storage in this state for sale or use in this state or for the transportation other than by pipeline to another refinery in this state or a pipeline terminal in this state of the following:
(i) special fuel refined, produced, manufactured, or compounded in this state and placed in storage tanks in this state;
(ii) special fuel transferred from a refinery or pipeline terminal in this state and placed in tanks at the refinery or terminal; or
(iii) special fuel imported into this state and placed in storage at a refinery or pipeline terminal.
(b) When withdrawn from the storage tanks, refinery, or terminal, the special fuel may be distributed only by a person who is the holder of a valid distributor's license.
(c) Special fuel imported into this state, other than that special fuel placed in storage at a refinery or pipeline terminal, is considered to be distributed after it has arrived in and is brought to rest in this state.
(7) "Distributor" means:
(a) a person who engages in the business in this state of producing, refining, manufacturing, or compounding special fuel for sale, use, or distribution;
(b) an importer who imports special fuel for sale, use, or distribution;
(c) a person who engages in the wholesale distribution of special fuel in this state and chooses to become licensed to assume the Montana state special fuel tax liability; and
(d) an exporter.
(8) "Export" means to transport out of Montana, by any means other than in the fuel supply tank of a motor vehicle, special fuel received from a refinery or pipeline terminal within Montana.
(9) "Exporter" means a person who transports, other than in the fuel supply tank of a motor vehicle, special fuel received from a refinery or pipeline terminal in Montana to a destination outside Montana for sale, use, or consumption outside Montana.
"Farming or ranching" "FARMING" means earning a living producing livestock, dairy products, poultry, fruit, or
vegetables or nursery, horticultural, or agricultural commodities. For the purposes of this part only, as it relates to special
fuel tax refunds, the phrase TERM also means earning a living through harvesting timber and transporting harvested
timber. (10)(11) "Import" means to first receive special fuel into possession or custody after its arrival and coming to rest at a
destination within the state or to first receive any special fuel shipped or transported into this state from a point of origin
outside this state other than in the fuel supply tank of a motor vehicle. (11)(12) "Importer" means a person who transports or arranges for the transportation of special fuel into Montana for
sale, use, or distribution. (12)(13) "Improperly imported fuel" means special fuel as defined in subsection (16) that is:
(a) consigned to a Montana destination and imported into the state without the distributor first having obtained a Montana special fuel distributor license as required in 15-70-341; or
(b) delivered, possessed, sold, or transferred in the state in any manner not authorized under Title 15, chapter 70.
(13)(14) "Motor vehicle" means all vehicles that are operated upon the public highways or streets of this state and that
are operated in whole or in part by the combustion of special fuel. (14)(15) "Person" includes any person, firm, association, joint-stock company, syndicate, partnership, or corporation.
Whenever the term is used in any a clause prescribing and imposing a fine or imprisonment, or both, as applied to a firm,
association, syndicate, or partnership, it includes the partners or members and, as applied to joint-stock companies and
corporations, the officers. (15)(16) "Public roads and highways of this state" means all streets, roads, highways, and related structures:
(a) built and maintained with appropriated funds of the United States, the state of Montana, or any political subdivision of the state;
(b) dedicated to public use;
(c) acquired by eminent domain; or
(d) acquired by adverse use by the public, jurisdiction having been assumed by the state or any political subdivision of the state.
(16)(17) "Special fuel" means those combustible gases and liquids commonly referred to as diesel fuel or any other
volatile liquid of less than 46 degrees A.P.I. (American petroleum institute) gravity test, except liquid petroleum gas, when
actually sold for use in motor vehicles operating upon the public roads and highways within the of this state of Montana.
The term special fuel includes all other types of additives when the additive is mixed or blended into special fuel, regardless
of the additive's classifications or uses. (17)(18) "Special fuel dealer" means:
(a) a person in the business of handling special fuel who delivers any part of the fuel into the fuel supply tank or tanks of a motor vehicle not then owned or controlled by the person;
(b) a person who sells special fuel at a location unattended by the dealer through an unattended pump by use of a cardtrol, keylock, or similar device; or
(c) a person who provides a facility, with or without attended services, from which more than one special fuel user obtains special fuel for use in the fuel supply tank of a motor vehicle not then controlled by the dealer.
(18)(19) "Special fuel user" means a person other than the U.S. government, a state, or a county, incorporated city or
town, or school district of this state who consumes in this state special fuel for the operation of motor vehicles owned or
controlled by the person upon the highways of this state. (19)(20) "Use", when the term relates to a special fuel user, means the consumption by a special fuel user of special fuels
in the operation of a motor vehicle on the highways of this state."
Section 2. Section 15-70-328, MCA, is amended to read:
"15-70-328. Credits. A licensed special fuel user who has paid a special fuel tax either directly or to the vendor from whom it was purchased must receive credit in the amount of:
(1) the tax paid on special fuel exported for use outside of this state or for
any farming or, ranching, MINING, OR
RAILROAD use off the public roads and highways of this state; or
(2) overpayment of special fuel taxes not due to the state."
Section 3. Section 15-70-356, MCA, is amended to read:
"15-70-356. Refund or credit authorized for farming
or, ranching, MINING, OR OPERATING RAILROAD. (1)
A person engaged in the business of farming or, ranching, MINING, OR OPERATING A RAILROAD who purchases and
uses any special fuel on which the Montana special fuel license tax has been paid for operating stationary special fuel
engines, for operating tractors used off the public highways and streets, or for any commercial use other than operating
vehicles upon any of the public highways or streets of this state operating other farming or, ranching, MINING, OR
RAILROAD equipment used off the public roads and highways of this state is allowed a refund of the amount of tax paid
directly or indirectly on the special fuel so used. The refund may not exceed the tax paid or to be paid to the state.
(2) (a) The United States government, the state of Montana, any other state, or any county, incorporated city, town, or school district of this state is entitled to a refund of the taxes paid on special fuel regardless of the use of the special fuel.
(b) (i) A nonpublic school may use dyed special fuel in buses that are owned by the nonpublic school if the buses are used for the transportation of pupils solely for nonsectarian school-related purposes.
(ii) For the purposes of this subsection (2)(b), nonpublic schools are those schools that have been accredited pursuant to 20-7-102.
(3) A distributor who pays the special fuel license tax to this state erroneously is allowed a credit or refund of the amount of tax paid.
(4) A PERSON WHO PAYS A SPECIAL FUEL LICENSE TAX ON A PURCHASE OF SPECIAL FUEL THAT IS USED FOR HEATING FUEL IS ENTITLED TO A REFUND OF THE AMOUNT OF TAX PAID.
(4)(5) (a) A distributor is entitled to a credit for the tax paid to the department on those sales of special
fuel with a tax liability of $200 or greater for which the distributor has not received consideration from
or on behalf of the purchaser and for which the distributor has not forgiven any liability. The distributor
shall must have declared the accounts of the purchaser worthless not more than once during a 3-year
period and claimed those accounts as bad debts for federal income tax purposes.
(b) If a credit has been granted under subsection
(4)(a) (5)(A), any amount collected on the accounts
declared worthless must be reported to the department and the tax due must be prorated on the collected
amount and must be paid to the department.
(c) The department may require a distributor to submit periodic reports listing accounts that are delinquent for 90 days or more.
(5)(6) A person who purchases and exports for sale, use, or consumption outside Montana any special fuel
on which the Montana special fuel tax has been paid is entitled to a credit or refund of the amount of tax
paid unless the person is not licensed and is not paying the tax to the state where fuel is destined. Upon
completion of the reports required under 15-70-351, the department shall authorize the credit or refund."
Section 4. Section 15-70-361, MCA, is amended to read:
"15-70-361. Required records. (1) Except as provided in subsection (5), special fuel purchased and delivered into bulk storage for use in motor vehicles on the public roads and highways of this state and nonhighway use must be fully accounted for by detailed withdrawal records to accurately show the manner in which it was used. Special fuel on hand, determined by actual measurement, must be deducted from a claim and must be reported as an opening inventory on the next claim.
(2) Service stations, bulk dealers, and marinas shall prepare a separate and complete invoice for each withdrawal of special fuel for which a refund is to be claimed.
(3) When a highway use of special fuel is not deducted from the claim, the applicant shall substantiate
purchases of special fuel and miles traveled for licensed motor vehicles upon request of the department
Any A person who operates a licensed motor vehicle on and off the public roads and highways of this
state for commercial the purposes of harvesting timber and transporting harvested timber may claim a
refund of the state license tax on the special fuel used to operate the vehicle on roads or property in
private ownership off the public roads and highways of this state if the person has maintained the
(a) the total number of miles traveled on and off the public roads and highways of this state by each licensed vehicle;
(b) the total number of gallons of special fuel used in each vehicle; and
(c) purchase invoices supporting all special fuel handled through bulk storage.
(5) The United States government, the state of Montana, any other state, or any county, incorporated city, town, or school district of this state is not required to keep dispersal records in order to claim a refund of special fuel taxes.
(6) An exporter or any other person who transports special fuel out of Montana for sale, use, or consumption outside Montana shall maintain detailed and current records of withdrawal, transportation, ownership, and delivery of the special fuel to destinations outside Montana as required by the department."
Section 5. Section 15-70-362, MCA, is amended to read:
"15-70-362. Estimate allowed for agricultural use -- seller's signed statement acceptable on
keylock or cardtrol purchases. (1)
An Except as provided in 15-70-361(4), an applicant whose use qualifies
as agricultural use may apply for a refund of 60% of the applicable tax on the gallons of special fuel as
indicated by bulk delivery invoices or by evidence of keylock or cardtrol purchases as an estimate of
(2) If any invoice or evidence is either lost or destroyed, the purchaser may support the purchaser's claim
for refund by submitting an affidavit relating the circumstances of the loss or destruction and by
producing other evidence as may be required by the department
(3) An applicant whose use does not qualify as agricultural use
may not estimate and shall maintain
records as required by 15-70-361 is not eligible for a refund under this part."
NEW SECTION. Section 6. Submission to electorate. This act shall be submitted to the qualified electors of Montana at the tax election to be held in 1999 by printing on the ballot the full title of this act and the following:
SHALL THE SPECIAL FUEL TAX BE INCREASED ANNUALLY BY
RESTRICTING ELIMINATING REFUNDS FOR
OFF-ROAD USE TO PERSONS ENGAGED IN THE CONSTRUCTION BUSINESS OF FARMING OR RANCHING?
limiting ELIMINATING special fuel tax refunds to persons engaged in the CONSTRUCTION business
of farming or ranching.
limiting ELIMINATING special fuel tax refunds to persons engaged in the CONSTRUCTION
business of farming or ranching.
NEW SECTION. Section 7. Contingent voidness. If Constitutional Initiative No. 75, enacting Article VIII, section 17, of the Montana constitution, is declared invalid, then sections 6 and 8(1) are void.
NEW SECTION. Section 8. Effective date. (1) If approved by the electorate, this act is effective July 1, 1999.
(2) If the contingency provided for in section 7 occurs, then this act is effective July 1, 1999.
- END -
Latest Version of SB 310 (SB0310.02)
Processed for the Web on February 17, 1999 (2:34PM)
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