GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

H	2 

HOUSE BILL 46
Committee Substitute Favorable 5/30/91

Short Title:  Special Fuels Reporting/Bond Changes.	(Public)
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Sponsors:
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Referred to:  
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February 11, 1991

A BILL TO BE ENTITLED
AN ACT TO REQUIRE SALES OF BOTH HIGHWAY AND NONHIGHWAY SPECIAL FUEL TO BE REPORTED, TO ELIMINATE THE REQUIREMENT THAT CERTAIN USERS OF SPECIAL FUEL FILE REPORTS SPECIFYING THEIR USE OF SPECIAL FUEL, TO CHANGE THE MAXIMUM BOND REQUIRED OF FUEL DISTRIBUTORS AND SUPPLIERS, AND TO CHANGE THE METHOD FOR DETERMINING THE AMOUNT OF A BOND PAYABLE BY CERTAIN FUEL IMPORTERS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-430 reads as rewritten:
"§ 105-430. "Definitions.
The following definitions apply in this Article:
(1)	Distributor. – A person who possesses motor fuel in this State for sale or other distribution in this State or another state.
(2)	Export. – To obtain motor fuel in this State for sale or other distribution in another state.
(3)	Import. – To do either of the following:
a.	Bring motor fuel into this State by pipeline, marine vessel, railroad tank car, or transport truck.
b.	Exchange motor fuel located in this State with motor fuel located inside or outside the State.
(4)	 " Motor fuel. – Any of the following:
	a. All products commonly or commercially known or sold as gasoline (including casinghead and absorption or natural gasoline) regardless of their classification or uses.
b.	Any liquid prepared, advertised, offered for sale or sold for use as or commonly and commercially used as a fuel in internal combustion engines, which when subjected to distillation in accordance with the standard method of test for distillation of gasoline, naphtha, kerosene and similar petroleum products (American Society for Testing Materials Designation D-86) shows not less than ten per centum (10%) distilled (recovered) below three hundred forty-seven degrees (347°) Fahrenheit (one hundred seventy-five degrees (175°) Centigrade) and not less than ninety-five per centum (95%) distilled (recovered) below four hundred sixty-four degrees (464°) Fahrenheit (two hundred forty degrees (240°) Centigrade); with the exception that the term 'motor fuel' shall not include commercial solvents which distill, by American Society for Testing Materials Method D-86, not more than nine per centum (9%) at 176° F. and which have a distillation range of 125° F. or less, of liquefied gases which would not exist as liquids at a temperature of 60° Fahrenheit and a pressure of 14.7 pounds per square inch absolute.
	 " ."
Sec. 2.  G.S. 105-433, as amended by Section 1 of Chapter 42 of the 1991 Session Laws, reads as rewritten:
"§ 105-433. Application for license as distributor; bond or letter of credit required.
(a)	Application. – Every distributor shall obtain a license from the Secretary of Revenue.  To obtain a license, an applicant must file an application with the Secretary of Revenue on a form provided by the Secretary and file with the Secretary a bond or an irrevocable letter of credit.  An application shall include the applicant's name and address and any other information required by the Secretary of Revenue.  If the applicant is a corporation, the applicant must either be incorporated in this State or be authorized to transact business in this State.  If the applicant is a limited partnership, the applicant must either be formed in this State or be authorized to transact business in this State.  If the applicant is an individual or a general partnership, the applicant must designate an agent for service of process and give the agent's name and address.
(b)	Bond. – Each applicant for a distributor's license must file with the Secretary of Revenue a bond or an irrevocable letter of credit.  The amount of the bond or irrevocable letter of credit shall be two times the following, subject to the maximum and minimum amounts set in this subsection:
(1)	For an applicant who intends to import motor fuel, the average monthly amount of tax for which the applicant would be liable under this Article, if the applicant's sale of imported motor fuel to a distributor were subject to the tax imposed by this Article, plus the applicant's average expected monthly tax liability under this Article.
(2)	For an applicant who does not intend to import fuel, the applicant's average expected monthly tax liability under this Article.
The Secretary shall determine the average monthly amount of tax for which an applicant who imports fuel would be subject and the average expected monthly tax liability of an applicant.  The amount of a bond or an irrevocable letter of credit may not exceed one hundred twenty-five thousand dollars ($125,000) and may not be less than two thousand dollars ($2,000).
An applicant who is also required to file a bond or an irrevocable letter of credit under G.S. 105-449.5 as a supplier of special fuel may file a single bond or irrevocable letter of credit under either this section or G.S. 105-449.5 for the combined amount.  A bond filed under this section shall be conditioned upon compliance with the requirements of Article 36 and Article 36A of this Subchapter, shall be payable to the State, and shall be in the form required by the Secretary of Revenue.
After filing a bond or an irrevocable letter of credit with an application for a distributor's license, a distributor shall, within 30 days after receiving a notice from the Secretary of Revenue, file an additional bond or irrevocable letter of credit in the amount requested by the Secretary.  The amount of the initial bond or irrevocable letter of credit and any additional bond or irrevocable letter of credit filed by the distributor, however, may not exceed the limits set in this subsection.
(c)	Issuance. – The Secretary of Revenue shall issue a distributor's license to an applicant who meets the requirements of this section and shall issue a duplicate copy of the license for each place of business of the distributor.  A distributor shall display a license issued under this section in a conspicuous place at each place of business of the distributor.  A distributor's license is not transferable and remains in effect until surrendered or cancelled.
(d)	Export Exception. – A distributor whose sale or other distribution of fuel consists only of exporting fuel is not required to be incorporated or formed in this State, authorized to transact business in this State, or have a designated agent for service of process in this State."
Sec. 3.  G.S. 105-449.5, as amended by Section 7 of Chapter 42 of the 1991 Session Laws, reads as rewritten:
"§ 105-449.5. Supplier of fuel for highway use to file bond.
The Secretary may not issue a supplier's license to an applicant who intends to sell or deliver fuel for use in a motor vehicle or to use fuel in a motor vehicle until the applicant has filed with the Secretary a bond or an irrevocable letter of credit.  The amount of the bond or irrevocable letter of credit shall be two times the applicant's average expected monthly tax liability under this Article, as determined by the Secretary.  The amount, however, may not exceed one hundred twenty-five thousand dollars ($125,000) and may not be less than five hundred dollars ($500.00).  An applicant who is also required to file a bond or an irrevocable letter of credit under G.S. 105-433 as a distributor of motor fuels may file a single bond or irrevocable letter of credit under either this section or G.S. 105-433 for the combined amount.  A bond filed under this section shall be conditioned upon compliance with the requirements of Article 36 and Article 36A of this Subchapter, shall be payable to the Secretary, and shall be in the form required by the Secretary.
After filing a bond or an irrevocable letter of credit with an application for a supplier's license, a supplier shall, within 30 days after receiving a notice from the Secretary, file an additional bond or irrevocable letter of credit in the amount requested by the Secretary. The amount of the initial bond or irrevocable letter of credit and any additional bond or irrevocable letter of credit filed by the supplier, however, may not exceed the limits set in this section."
Sec. 4.  G.S. 105-449.2, as amended by Section 5 of Chapter 42 of the 1991 Session Laws, reads as rewritten:
"§ 105-449.2. Definitions.
The following definitions apply in this Article:
(1)	Bulk user. – A person who maintains storage facilities for fuel and uses part or all of the stored fuel to propel a motor vehicle.
(2)	Diesel. – A liquid suitable for use as fuel in a diesel-powered motor vehicle.
(3)	Fuel. – A combustible gas or liquid that can be used to generate power to propel a motor vehicle and that is not subject to tax under Article 36 of this Chapter.
(4)	Highway. – Defined in G.S. 20-4.01(13).
(5)	Liquid. – A substance that is liquid at a temperature above 60 degrees F. and a pressure greater than 14.7 pounds per square inch absolute.
(6)	Motor vehicle. – A self-propelled vehicle that is designed for use on a highway.
(7)	Person. – An individual, a firm, a partnership, an association, a corporation, or any other organization or group acting as a unit.
(8)	Reseller. – Either of the following:
a.	A person who maintains storage facilities for diesel and who sells the diesel at retail or dispenses the diesel at a retail location.
b.	A person who maintains storage facilities for fuel, other than diesel, and who sells the fuel at retail or dispenses the fuel at retail location into the supply tank of, or attached to, a motor vehicle.
(9)	Secretary. – The Secretary of Revenue.
(10)	Supplier. – A person who does one or more of the following:
a.	Acquires fuel for sale or delivery to a user-seller.
b.	Maintains an inventory of fuel, part or all of which the person uses or sells to someone other than a user-seller.
c.	Imports fuel into the State, by a means other than the usual tank or receptacle connected with the engine of a motor vehicle, for use by that person.
(11)	Use. – The term includes the receipt of fuel in the fuel supply tank of a motor vehicle and the receipt of fuel in a receptacle from which fuel is supplied to a motor vehicle.
(12)	User. – A person who owns or operates a fuel-propelled motor vehicle licensed under Chapter 20 and who does not maintain storage facilities for fueling the motor vehicle.
(13)	User-seller. – A bulk-user or a reseller.
				."
Sec. 5.  G.S. 105-449.9 reads as rewritten:
"§ 105-449.9.  License required of user and user-seller.
(a)	License. –A user who uses fuel to propel a motor vehicle having a registered gross vehicle weight of at least 10,001 pounds must have a user's license.  A user-seller must have a user-seller's license unless the user-seller is also a supplier and is licensed as a supplier. A user's license or a user-seller's license remains in effect until cancelled.
(b)	Application. – To obtain a user's license or a user-seller's license, an applicant must file an application with the Secretary on a form provided by the Secretary.  An application must include the applicant's name and address and any other information required by the Secretary."
Sec. 6.  G.S. 105-449.10 reads as rewritten:
"§ 105-449.10. âReport of fuel use and payment of tax by user.
 		(a)	General. – A user who is required to have a user's license must keep records and comply with either subsection (b) or subsection (c), as appropriate.  The records must account for all fuel used by the user to propel a motor vehicle.
	(b)	Motor Carrier. – A user who is a motor carrier and who files a quarterly or an annual report under G.S. 105-449.45 does not have to file a report under this section.  A user who is a motor carrier and who does not file either a quarterly or an annual report under G.S. 105-449.45 must file a report under this section.  A report by a motor carrier must state the total number of miles driven during the reporting period by motor vehicles operated by the motor carrier and the total amount of fuel the motor carrier bought in the State during the reporting period for use in motor vehicles operated by the motor carrier.
A motor carrier who has to file a report must file a quarterly report unless the Secretary has given the motor carrier permission to file an annual report.  A quarterly report covers a calendar quarter and is due by the last day in April, July, October, and January.
The Secretary may authorize a motor carrier to file an annual report if the motor carrier is in compliance with this Article and Article 36B of this Subchapter.  An annual report covers a fiscal year beginning July 1 and ending the following June 30 and is due by July 31 after the end of a fiscal year.  To file an annual report, a motor carrier must apply to the Secretary for permission to file on an annual basis.  Once granted permission, a motor carrier may continue to file an annual report until notified by the Secretary to file a quarterly report.
(c)	Other Users. – A user who is required to have a user's license but is not a motor carrier must file an annual statement certifying that the user either did not use any nontaxpaid fuel in a motor vehicle during the preceding fiscal year or paid tax on any nontaxpaid fuel acquired during the preceding fiscal year for use in a motor vehicle.  A statement must be filed with the Secretary by July 31 of each year.
	(d)	Payment. – A user who acquires nontaxpaid fuel is liable for the tax levied by this Article on the fuel.  Tax due on nontaxpaid fuel acquired during a reporting period by a user who must file a report under this section or G.S. 105-449.45 is due when the report for that reporting period is due.  Tax due on nontaxpaid fuel acquired by a user who does not have to file a report under this section or G.S. 105-449.45 must be paid to the Secretary within 45 days after the fuel is acquired."
Sec. 7.  G.S. 105-449.12 reads as rewritten:
"§ 105-449.12. Record of applicants for a license and license holders.
The Secretary shall keep a record of the following:
(1)	Applicants for a license under this Article.
(2)	Persons to whom a license has been issued under this Article.
(3)	Persons who hold a current license issued under this Article, by license category."
Sec. 8.  G.S. 105-449.13 reads as rewritten:
"§ 105-449.13. Licensed supplier may obtain list of licensed users and user-sellers.
The Secretary shall give a list of licensed users, licensed user-sellers, or both to each licensed supplier who asks for a copy of the list.  The list shall state the name and business address of each of the requested group of license holders as of the first day of the fiscal year.  The Secretary shall send a monthly update of the appropriate list to each supplier who requested a copy of the list."
Sec. 9.  G.S. 105-449.16(a) reads as rewritten:
"(a)	A tax is imposed upon all of the following fuel:
(1)	Fuel sold or delivered by a supplier to a licensed user-seller.
(2)	Fuel used by a supplier in a motor vehicle owned, leased, or operated by the supplier.
(3)	Fuel delivered by a supplier directly into the fuel supply tank of a motor vehicle.
(4)	Fuel imported by a user-seller into this State, by a means other than carrying the fuel in a fuel supply tank of a motor vehicle, for resale or to propel a motor vehicle.
(5)	Fuel acquired tax free by a user-seller or user in this State for resale or to propel a motor vehicle.
The tax on liquid fuel is at the rate established under G.S. 105-434.  The tax on non-liquid fuel is at a rate equivalent to the rate of tax on liquid fuel, as determined by the Secretary.  A supplier who consigns fuel to a reseller may elect to report and pay the tax due on the fuel when the reseller sells or dispenses the fuel instead of when the supplier delivers the fuel to the reseller.
The primary purposes of this levy and this Article are to provide a more efficient and effective method of collecting the tax now imposed and collected pursuant to G.S. 105-435, by providing for the collection of the tax from the supplier instead of the user. The tax levied by this Article is in lieu of rather than in addition to the tax levied by G.S. 105-435; payment of the tax levied by this Article constitutes compliance with G.S. 105-435."
Sec. 10.  G.S. 105-449.17, as amended by Section 10 of Chapter 42 of the 1991 Session Laws, reads as rewritten:
"§ 105-449.17. Exemption for fuel sold for nonhighway use.
The tax imposed by this Article does not apply to fuel sold or delivered by a supplier to a user or user-seller when all of the following apply:
(1)	The fuel is for a purpose other than to propel a motor vehicle.
(2)	The supplier dispenses the fuel into a storage facility that is not required to be marked or is marked as follows with the phrase 'For Nonhighway Use' or a similar phrase that clearly indicates the fuel is not to be used to propel a motor vehicle:
a.	The storage tank of the storage facility must be marked if the storage tank is visible.
b.	The fillcap or spill containment box of the storage facility must be marked.
c.	The dispensing device that serves the storage facility must be marked.
	A storage facility must be marked unless it contains fuel used only in heating, drying crops, or a manufacturing process and is installed in a manner that makes use of the fuel for any other purpose improbable.
(3)	The supplier does not know or have reason to know the fuel is to be used to propel a motor vehicle.
A supplier is liable for the tax due on fuel dispensed into a storage facility of a user or user-seller that is required to be marked but is not marked to indicate the fuel is to be used for a purpose other than to propel a motor vehicle.  A user or user-seller is liable for the tax due on fuel dispensed by a supplier into a storage facility that is marked for nonhighway use and is subsequently used or sold for use to propel a motor vehicle."
Sec. 11.  G.S. 105-449.19 reads as rewritten:
"§ 105-449.19. Time when supplier must file return and pay any tax due.
(a)	Return. – A supplier of fuel who acquires, sells, delivers, or uses part or all of the fuel to propel a motor vehicle must file a monthly return.  A supplier of fuel who sells, delivers, or uses fuel only for a purpose other than to propel a motor vehicle must file a quarterly return.  A return must be filed with the Secretary on a form provided by the Secretary.  A monthly return covers a calendar month and is due within 25 days after the end of each month.  A quarterly return covers a calendar quarter and is due within 30 days after the end of each quarter.  A supplier must pay any tax due on fuel acquired, sold, delivered, or used by the supplier during a reporting period when filing a return for that period.
(b)	Information. – A return filed by a supplier must contain all of the following information:
(1)	The amount of fuel the supplier had on hand on the first and last days of the reporting period.
(2)	The amount of fuel the supplier received during the reporting period.
(3)	The amount of fuel the supplier used during the reporting period to propel a motor vehicle and the amount of fuel the supplier used during the reporting period for a purpose other than to propel a motor vehicle, stated separately.
(4)	The amount of fuel the supplier sold or delivered to a licensed bulk-user, a licensed reseller, a licensed user, or other persons, stated separately."
Sec. 12.  G.S. 105-449.20, as amended by Section 11 of Chapter 42 of the 1991 Session Laws, reads as rewritten:
"§ 105-449.20. When Secretary may estimate tax liability of supplier or user-seller.
Whenever a supplier or a user-seller fails to file a report under G.S. 105-449.19 or 105-449.21 or files a false report under one of those statutes, the Secretary shall determine, from any information obtainable, the number of gallons of fuel with respect to which the supplier or user-seller owes tax under this Article. When a user-seller sells or uses more fuel to propel a motor vehicle than the user-seller reports to the Secretary as having been purchased from a supplier to propel a motor vehicle, the user-seller is presumed to have acquired the additional fuel tax-free to propel a motor vehicle."
Sec. 13.  G.S. 105-449.26 reads as rewritten:
"§ 105-449.26. User-sellers and certain suppliers must give receipts for fuel sold at retail.
(a)	Receipt. –A user-seller and a supplier who is also a reseller but is licensed only as a supplier must give a receipt to each person who buys at retail from any of the following locations either 25 gallons or more of fuel to propel a motor vehicle or any amount of diesel for any other purpose:
(1)	A retail service station or other retail establishment operated by the user-seller or supplier.
(2)	A bulk storage facility of the user-seller or supplier to which the buyer came to buy the fuel.
(3)	Any other location at which the user-seller or supplier dispenses fuel into a motor vehicle.
A user-seller or supplier shall prepare only one original receipt for each sale of fuel, shall give the original to the buyer at the time of the sale, and shall keep a copy of the receipt.  A user-seller or supplier who gives a person a copy of a receipt shall clearly mark the copy as a duplicate.  If the Secretary determines that a user-seller or a supplier has sold nontaxpaid fuel at retail to propel a motor vehicle, the Secretary may require the user-seller or supplier to give a receipt to each person who buys any amount of fuel at retail to propel a motor vehicle.  A user-seller or supplier is liable for tax and the inspection fee on diesel sold for a purpose other than to propel a motor vehicle if the user-seller or supplier does not have a receipt for the diesel sold.
(b)	Content. –  " A receipt shall include all of the following information:
(1)	The name and address of the user-seller or supplier.
(2)	The name and address of the person buying the fuel.
(3)	The date the fuel was sold.
(4)	The amount of fuel sold.
(5)	The type of fuel sold.
(6)	The total sales price of the fuel.
(7)	Either of the following:
a.	The company name and company unit number of the motor vehicle into which the fuel was dispensed.
b.	The license plate number of the motor vehicle into which the fuel was dispensed and the state that issued the license plate."
Sec. 14.  G.S. 105-449.33 reads as rewritten:
"§ 105-449.33. Equipment of vehicle transporting diesel.
A motor vehicle that transports diesel in a tank that is separate from the fuel supply tank of the motor vehicle may not have a connection from the transporting tank to the supply tank."
Sec. 15.  Notwithstanding G.S. 105-449.17, a storage facility for special fuel is not required to be marked for nonhighway use if it contains fuel used only in heating, drying crops, or a manufacturing process and is installed in a manner that makes use of the fuel for any other purpose improbable.
Sec. 16.  Sections 3 through 14 of this act become effective January 1, 1992.  The remaining sections of this act are effective upon ratification.