Agriculture and Timber Industries
Frequently Asked Questions
Agricultural Fuels Tax
1. What kind of license or permit do I need to purchase dyed diesel for agricultural use?
"Agricultural use" means use of diesel fuel to power non-highway agricultural equipment, such as a tractor or combine, on a farm or ranch. The farm or ranch can be a feedlot, dairy farm, poultry farm, commercial orchard, commercial nursery, timber operation or similar commercial agricultural operation. A home garden does not qualify. Agricultural use includes use of fuel for wildlife management as defined by Property Tax Code Section 23.51(7), but does not include the processing, packaging or marketing of agricultural products by anyone other than the original producer.
If the fuel is used exclusively for agricultural purposes, an applicant may obtain an Agricultural End User Number, which allows the user to buy up to 25,000 gallons of tax-free dyed diesel per month. The agricultural producer must give its diesel fuel suppliers and distributors the assigned Agricultural End User Number along with signed statements (Form 06-710, Texas End User Agricultural Signed Statement for Purchasing Tax-Free Dyed Diesel Fuel) (PDF, 59KB).
If the fuel will be used for some non-agricultural purposes, the applicant will receive an End User Number, which allows the user to buy up to 10,000 gallons of tax-free dyed diesel per month. The end user must give suppliers and distributors the assigned End User Number along with signed statements (Form 06-352, Texas End User Signed Statement for Purchasing Tax-Free Dyed Diesel Fuel) (PDF, 61KB).
If an agricultural user needs to exceed the signed statement limit, the user must apply for a Dyed Diesel Fuel Bonded User license (PDF, 333KB) to purchase unlimited amounts of tax-free dyed diesel fuel for use in non-highway equipment. License holders must file a quarterly or yearly report (PDF, 89KB) that includes dyed diesel fuel inventories, purchases and uses. Under the law, the Comptroller's office may require a minimum bond of $10,000.
Dyed diesel fuel may not be put into the fuel tanks of motor vehicles operating on Texas public highways. A farm-plated motor vehicle is not agricultural equipment.
2. Can an agricultural end user purchase gasoline tax free for use in agricultural equipment?
A farmer or rancher cannot purchase gasoline tax free. A farmer or rancher can, however, request a refund of tax paid on gasoline used in power take-off equipment or auxiliary power units, off-highway equipment, stationary engines and for other non-highway purposes. All claims for refunds must be supported by appropriate records and documentation, which have to be kept available for inspection for four years. Taxpayers who use a distribution log to record removals from bulk storage should note deliveries for off-highway purposes with a description of the equipment. Each entry should show the date and number of gallons, and must be signed. The log must include the taxpayer's stamped or preprinted name and address.
A refund claim must be postmarked within one year from the first day of the month following the date of use (if withdrawn from storage) or purchase, whichever is later. For example, if the gasoline was purchased or used on Jan. 18, 2011, the claim must be filed by Feb. 1, 2012.
Taxpayers can request a refund using the Comptroller's Texas Claim for Refund of Gasoline or Diesel Fuel Taxes(Form 06-106) (PDF, 234KB). The claim should not include original invoices or other supporting documentation unless requested.