ARC 8739C

ARC 8739C

Proposing rulemaking related to fuel excise taxes
and providing an opportunity for public comment

The Administrative Rules Coordinator provided preclearance for publication of this Notice of Intended Action on December 10, 2024.

A Regulatory Analysis for this rulemaking was published in the Iowa Administrative Bulletin on November 13, 2024. A public hearing was held on the following date(s):

●December 3, 2024

No public comments on the Regulatory Analysis were received at the hearing or in writing. No changes have been made to the text since publication of the Regulatory Analysis.

Any persons who intend to attend a public hearing and have special requirements, such as those related to hearing or mobility impairments, should contact the Department and advise of specific needs.

ITEM 1.Rescind 701—Chapter 259 and adopt the following new chapter in lieu thereof:

CHAPTER 259

FUEL TAX ADMINISTRATION

701—259.1(452A) Definitions. For purposes of 701—Chapters 259, 260, 261, and 262, the following definitions apply:

“B-20” means biodiesel blended fuel formulated with a minimum percentage of 20 percent by volume of biodiesel, if the formulation meets the standards provided in Iowa Code section 214A.2. A similar notation refers to biodiesel blended fuel containing other percentages of biodiesel. For example, “B-5” means biodiesel blended fuel formulated with a minimum percentage of 5 percent by volume of biodiesel, if the formulation meets the standards provided in Iowa Code section 214A.2.

“Biodiesel distribution percentage” means the number of gallons of biodiesel blended fuel classified as B-20 or higher that is distributed in this state as expressed as a percentage of the number of gallons of special fuel for diesel engines of motor vehicles distributed in this state during the determination period. The determination period is the previous calendar year.

“Carrier” means and includes any person who operates or causes to be operated any commercial motor vehicle on any public highway in this state.

“End user” of special fuel means a person who has purchased a minimum of 240,000 gallons of special fuel each year in the two preceding years who elects to make delayed payments to a licensed supplier and must use electronic funds transfer.

“Ethanol distribution percentage” means the number of gallons of ethanol blended gasoline that is distributed in this state as expressed as a percentage of the number of gallons of motor fuel, excluding aviation gasoline, distributed in this state during the determination period. The determination period is the previous calendar year.

“Foreign supplier” means a person licensed as a supplier to collect and report the tax, but who does not have jurisdictional connections with this state.

“Fuel(s)” means and includes motor fuel, special fuel, and electric fuel as defined in Iowa Code chapter 452A.

“Invoiced gallons” means gross gallons as shown on the bill of lading or manifest.

“Motor fuel” means a substance or combination of substances that is intended to be or is capable of being used for the purpose of operating an internal combustion engine, including but not limited to a motor vehicle, and is kept for sale or sold for that purpose and includes the following:

1.All products commonly or commercially known or sold as gasoline (including ethanol blended gasoline, casinghead, and absorption or natural gasoline) regardless of their classifications or uses, and including transmix that serves as a buffer between fuel products in the pipeline distribution process.

2.Any liquid advertised, offered for sale, sold for use as, or commonly or commercially used as a fuel for propelling motor vehicles, which when subjected to distillation of gasoline, naphtha, kerosene, and similar petroleum products (American Society of Testing Materials designation D-86), shows not less than 10 percent distilled (recovered) below 347°F (175°C) and not less than 95 percent distilled (recovered) below 464°F (240°C).

“Motor fuel” does not include special fuel and does not include liquefied gases that would not exist as liquids at a temperature of 60°F and a pressure of 14 7/10 pounds per square inch absolute, or naphthas and solvents unless the liquefied gases or naphthas and solvents are used as a component in the manufacture, compounding, or blending of a liquid within paragraph “2,” in which event the resulting product shall be deemed to be motor fuel. “Motor fuel” also does not include methanol unless blended with other motor fuels for use in an aircraft or for propelling motor vehicles.

“Person” means and includes natural persons, partnerships, firms, associations, corporations, representatives appointed by any court, and political subdivisions of this state or any other group or combination acting as a unit and the plural as well as the singular number applies.

“Petrodiesel” means petroleum-based diesel fuel. Petrodiesel contains no biodiesel.

“Reefer” or “reefer unit” means a refrigeration unit powered by fuel.

“Taxpayer” means anyone responsible for paying fuel taxes directly to the department of revenue under Iowa Code chapter 452A.

“Withdrawn from terminal” means physical movement from a supplier to a distributor or eligible end user or from an alcohol manufacturer to a nonterminal location and includes an importer going out of state and obtaining fuel from a terminal and bringing the fuel into the state, and a restrictive supplier bringing fuel into the state even though not purchased directly from a terminal. Exchange of product by suppliers while in the distribution channel and the physical movement of alcohol from an alcohol manufacturer to an Iowa licensed supplier’s alcohol storage at a terminal are not to be considered “withdrawn from terminal.”

This rule is intended to implement Iowa Code sections 452A.2, 452A.57 and 452A.59.

701—259.2(452A) Taxpayers required to keep records.

259.2(1) The records required to be kept by this rule must be preserved for a period of three years and will be open for examination by the department during this period of time. The department, after an audit and examination of the records, may authorize the disposal of the records required to be kept upon written request by the taxpayer. 701—subrule 11.3(3) contains additional information for taxpayers using an electronic data interchange.

259.2(2) Every supplier or restrictive supplier required to file a monthly return under Iowa Code section 452A.8, every importer required to file a semimonthly return under Iowa Code section 452A.8, and every exporter, terminal or nonterminal storage facility operator, distributor, blender, and dealer is required to keep and preserve records in compliance with 701—Chapter 11. Such persons are also required to keep the following records relating to the purchase or sale of fuel:

a.Copies of bills of lading or manifests.

b.Copies of sales and purchase invoices.

c.Sales records and purchase records.

d.Copies of filed returns and supporting schedules.

e.Record of payment.

f.Export schedules.

g.Delivery tickets.

h.Copies of reports, returns, and supporting schedules filed with the importing state.

i.Exemption certificates.

This rule is intended to implement Iowa Code section 452A.8.

701—259.3(452A) Audit—costs.

259.3(1) The department has the right and duty to examine or cause to be examined the books, records, memoranda, or documents of a taxpayer for the purpose of verifying the correctness of a return filed or determining the tax liability of any taxpayer.

259.3(2) The costs incurred in examining the records of a taxpayer are at the taxpayer’s expense when the records are kept at an out-of-state location. Cost will include meals, lodging, and travel expenses, but will not include salaries of department personnel.

This rule is intended to implement Iowa Code sections 452A.10, 452A.62, 452A.55, and 452A.69.

701—259.4(452A) Estimate gallonage.

259.4(1) Inadequate records. In the event the taxpayer’s records are lacking or inadequate to support any return filed by the taxpayer, or to determine the taxpayer’s liability, the department has the power to estimate the gallonage upon which tax is due.

259.4(2) Determination of estimate. Estimated gallonage will be based upon such factors as, but not limited to, the following:

a.Prior experience of the taxpayer;

b.Taxpayers in similar situations;

c.Industry averages;

d.Records of suppliers or customers; and

e.Other pertinent information the department may possess, obtain or examine.

This rule is intended to implement Iowa Code section 452A.64.

701—259.5(452A) Timely filing of returns, reports, remittances, applications, or requests.

259.5(1) The returns, reports, remittances, applications, or requests required under Iowa Code chapter 452A or 701—Chapters 259 through 262 shall be filed through GovConnectIowa unless otherwise required by the department.

259.5(2) Such documents provided by mail are deemed filed within the required time if:

a.Postpaid,

b.Properly addressed, and

c.Postmarked on or before midnight of the day on which due and payable.

Any return that is not signed and any return that does not contain substantially all of the pertinent information are not considered “filed” until such time as the taxpayer signs or supplies the information to the department.

259.5(3) The filing of a return within the period prescribed by law and payment of the tax required to be shown thereon are simultaneous acts, unless remittance is required to be transmitted electronically; and if either condition is not met, a penalty will be assessed. Remittances transmitted electronically are considered to have been made on the date the remittance is added to the bank account designated by the treasurer of the state of Iowa. If the final filing date falls on a Saturday, Sunday, or holiday, the next day that is not a Saturday, Sunday, or holiday is the final filing date.

259.5(4) The director may require by rule that reports and returns be filed by electronic transmission.

259.5(5) All licensees must file returns by electronic transmission. All suppliers, restricted suppliers, importers, terminals, blenders, and nonterminal storage facilities with at least 5,000 gallons of product on their return or report must also file the schedules which support the return or report by electronic transmission.

259.5(6) All returns, reports, remittances, applications, or requests should be mailed to: Motor Fuel Refunds, Iowa Department of Revenue, Tax Management Division—Fuel Tax, P.O. Box 10465, Des Moines, Iowa 50306-0465, unless electronic transmission is required.

In the event a dispute arises as to the time of filing, or a return, report, or remittance is not received by the department, the provisions of Iowa Code section 622.105 are controlling. This rule applies only when the document is not received or the postmark on the envelope is illegible, erroneous, or omitted.

This rule is intended to implement Iowa Code sections 452A.8 and 452A.61.

701—259.6(452A) Statute of limitations, supplemental assessments and refund adjustments.

259.6(1) After a return is filed, the department must examine it, determine fuel taxes due, and give notice of assessment to the taxpayer. Iowa Code sections 452A.64 and 452A.67 and rule 701—259.5(452A) contain additional information on the failure to file returns and the period for examination.

259.6(2) The department may, at any time within the period prescribed for assessment or refund adjustment, make a supplemental assessment or refund adjustment whenever it is ascertained that any assessment or refund adjustment is imperfect or incomplete in any respect.

259.6(3)  If the assessment or refund adjustment is appealed (protested under rule 701—7.9(17A)) and is resolved, whether by informal proceedings or by adjudication, the department and the taxpayer are precluded from making a supplemental assessment or refund adjustment concerning the same issue involved in such appeal for the same tax period unless there is a showing of mathematical or clerical error or a showing of fraud or misrepresentation.

This rule is intended to implement Iowa Code section 452A.67.

701—259.7(452A) Extension of time to file. The department may grant an extension for the filing of any required return or tax payment or both.

259.7(1) Application for extension. In order for an extension to be granted, the application requesting the extension must be filed, in writing, with the department prior to the due date of the return or remittance. In determining whether an application for extension is timely filed, the provisions of rule 701—259.5(452A) shall apply. The application for extension must be accompanied by an explanation of the circumstances justifying such extension.

259.7(2) Length of extension. The extension period will not exceed 30 days.

259.7(3) Penalties in the event of an extension. In the event an extension is granted, the penalties under Iowa Code section 452A.65 applicable to late-filed returns or remittances will not accrue until the expiration of the extension period. The interest on tax due under the same section will accrue as of the original filing date.

This rule is intended to implement Iowa Code section 452A.61.

701—259.8(452A) Penalty and interest. Rules 701—10.6(421) and 701—10.2(421) contain information on failure to timely file a return or failure to timely pay the tax. Rule 701—10.8(421) contains information on penalty exceptions. Rule 701—10.72(452A) contains additional information on interest on refunds. Rule 701—10.71(421) contains additional information on penalty and enforcement provisions.

This rule is intended to implement Iowa Code chapter 452A.

701—259.9(452A) Application of remittance. All payments are to be first applied to the penalty and then to the interest. The balance, if any, will then be applied to the amount of tax due. If a taxpayer remits a payment on or before the due date, but the payment is insufficient to discharge the tax liability, the entire amount of the payment applies to the tax, and the penalty and interest are based on the unpaid portion of the tax. If the department determines there is additional tax due from a taxpayer, interest and penalty accrue on that amount from the date it should have been reported and paid.

This rule is intended to implement Iowa Code sections 452A.59, 452A.65 and 452A.66.

701—259.10(452A) Reports, returns, records—variations.

259.10(1) The department will prescribe and furnish forms upon which reports, returns, and applications are to be made to the department under Iowa Code chapter 452A. Claims for refund will be made on forms provided by the department or in any other manner as prescribed by the director. Licensees may substitute forms for their use, other than official forms, if all the requirements in department rule 701—8.3(17A) are met.

259.10(2) If the information required in these documents is presented to the department on forms or in a manner other than the prescribed form, or approved substitute form, the return, application, or claim for refund or credit shall not be deemed “filed.” The forms may be furnished by the department (except those pertaining to division III interstate operations, which are available from the department of transportation) and, therefore, the fact that the reporting party does not have the prescribed form is not an excuse for failure to file.

259.10(3) The department may also prescribe the form of the records that the reporting parties are required to keep in support of the reports/returns they file. The department may approve the form of the records that are being kept by any reporting party and must approve the form of record being kept if that form contains all of the information on the prescribed form, the information is compiled in such a manner as to make it easily ascertainable by department personnel, and substantially complies with the prescribed form.

This rule is intended to implement Iowa Code section 452A.60.

701—259.11(452A) Invoices.

259.11(1) Requirements for invoices. Whenever an invoice is required to be kept or prepared by Iowa Code chapter 452A or these rules, the invoice must:

a.Be prepared by someone other than the purchaser and include the seller’s name, address, and identification number.

b.Include the purchaser’s name and address.

c.Contain a serial number of three or more digits.

d.Include the calendar date of purchase.

e.Indicate the type of fuel purchased. Diesel fuel must be designated as dyed or undyed.

f.Indicate the quantity of fuel purchased in gross gallons.

g.Indicate the total purchase price and show separately the amount of state and federal fuel tax included in the purchase price or include a statement that all state and applicable federal taxes are included in the purchase price.

h.For ethanol blended gasoline or biodiesel blended fuel, state its designation as provided in Iowa Code section 214A.2.

i.Be prepared on paper that will prevent erasure or alteration or on another form approved by the department.

259.11(2) Credit card invoices. Credit card invoices are acceptable if they meet substantially all the requirements of rule 701—259.11(452A). For refund purposes, presentation of a credit card invoice or billing statement is prima facie evidence that the fuel tax has been paid.

This rule is intended to implement Iowa Code sections 452A.10, 452A.12, and 452A.60.

701—259.12(452A) Taxes erroneously or illegally collected.

259.12(1) Generally. Licensees are entitled to a refund of taxes, penalty, and interest erroneously or illegally collected by the department.

259.12(2) Refund requests. The request for refund must be (1) in writing, (2) filed with the department within three years of the time the tax was paid (3) filed by the licensee who remitted the tax to the department, and (4) accompanied by documentation supporting the claim for refund.

a.Computational errors. If the erroneous collection was the result of a computational error on the part of the taxpayer and that error is discovered by the department during an examination of the taxpayer’s records within three years of the overpayment, the taxes will be refunded and a written request will not be necessary.

b.Penalties and interest. If the request includes the return of erroneously or illegally collected (assessed) penalty or interest, the interest or penalty shall be refunded in the same proportion as the tax.

c.Sales or use tax. A refund issued under this rule will be reduced by sales or use tax if applicable. There is no minimum refund amount for refunds claimed under the provisions of Iowa Code section 452A.72.

259.12(3) Amended returns.

a.Generally. Amended returns must be filed for the tax periods in which an error occurred.

b.Motor fuel and undyed special fuel suppliers. Motor fuel and undyed special fuel suppliers must inform the department upon which bill(s) of lading, by number, and upon which monthly return(s) the tax was erroneously paid. The gallonage upon which a refund is requested on motor fuel or undyed special fuel must be reduced by the distribution allowance provided in Iowa Code section 452A.5.

c.Restrictive suppliers, importers, and blenders. Restrictive suppliers, importers, and blenders must inform the department upon which bill(s) of lading or invoice, by number, and upon which monthly or semimonthly return(s) the tax was erroneously paid and an explanation of the erroneous payment. An amended return must be filed for the tax period in which the error occurred.

This rule is intended to implement Iowa Code section 452A.72.

701—259.13(452A) Information confidential.

259.13(1) Generally. Iowa Code section 452A.63, which makes all information obtained from reports, returns, or records required to be filed or kept under Iowa Code chapter 452A confidential, applies generally to the director, deputies, auditors, agents, officers, or other employees of the department. The information may be divulged to appropriate public officials, including:

a.Member(s) of the Iowa general assembly,

b.Committees of either chamber of the Iowa legislature,

c.State officers,

d.Persons who have responsibility for the enforcement of Iowa Code chapter 452A,

e.Officials of the federal government entrusted with enforcement of federal motor vehicle fuel tax laws, and

f.Officials of other states who have responsibility to enforce motor vehicle fuel tax laws and who will furnish like information to the department.

259.13(2) Exception. An exception to this rule is that the appropriate state agency may make available to the public the total gallons of motor fuel, undyed special fuel, and ethanol blended gasoline withdrawn from terminals or imported into the state by suppliers, restrictive suppliers, and importers. The public request must be made within 45 days following the last day of the month in which the tax is required to be paid.

This rule is intended to implement Iowa Code section 452A.63.

701—259.14(452A) Audit and examination. The compliance division of the department may examine reports, returns, and records; make audits; and determine the correct amount of tax, interest, penalties, and fines due and take all actions authorized to collect the same, subject to review by or appeal to the director.

This rule is intended to implement Iowa Code sections 452A.62 and 452A.76.

701—259.15(452A) Practice and procedure before the department of revenue. The practice and procedure before the department is governed by Iowa Code chapter 17A and 701—Chapter 7.

This rule is intended to implement Iowa Code chapter 17A.

701—259.16(452A) Time for filing an appeal. Any person wishing to contest an assessment, denial of all or any portion of a refund claim, or any other department action, except licensing, which may culminate in a contested case proceeding, must file an appeal as directed in 701—Chapter 7. If a taxpayer fails to timely appeal a notice of assessment, the taxpayer may make payments pursuant to 701—subrule 7.9(3) and file a refund claim within the period provided by law for filing claims.

This rule is intended to implement Iowa Code section 452A.64.

701—259.17(452A) Bonding procedure. The director may, when necessary and advisable in order to secure the collection of the tax, require any person subject to the tax to file with the department a bond in an amount as the director may fix, or in lieu of the bond, securities approved by the director in an amount as the director may prescribe. Pursuant to the statutory authorization in Iowa Code sections 423.35 and 452A.66, the director has determined that the following procedures will be instituted with regard to bonds:

259.17(1) When required.

a.Classes of business. When the director determines, based on departmental records, other state or federal agency statistics, or current economic conditions, that certain segments of the petroleum business community are experiencing above average financial failures such that the collection of the tax might be jeopardized, a bond or security will be required from every licensee operating a business within this class unless it is shown to the director’s satisfaction that a particular licensee within a designated class is solvent and that the licensee previously timely remitted the tax. If the director selects certain classes of licensees for posting a bond or security, rulemaking will be initiated to reflect a listing of the classes in the rules.

b.New applications for fuel tax permits. Notwithstanding the provisions of paragraph “a” above, the director has determined that importers will be required to post a bond in the amount of $25,000 and other applicants for a new fuel tax permit will be requested to post a bond or security if (1) it is determined upon a complete investigation of the applicant’s financial status that the applicant would likely not be able to timely remit the tax, or (2) the new applicant held a prior fuel tax license and the remittance record of the tax under the prior license falls within one of the conditions in paragraph “c” below, or (3) the department experienced collection problems while the applicant was engaged in business under the prior license, or (4) the applicant is substantially similar to a person who would have been required to post a bond under the guidelines as set forth in “c” or such person had a previous fuel tax permit revoked. The applicant is “substantially similar” to the extent that said applicant is owned or controlled by persons who owned or controlled the previous licensee. For example, X, a corporation, had a previous fuel tax permit revoked. X is dissolved and its shareholders create a new corporation, Y, which applies for a fuel tax permit. The persons or stockholders who controlled X now control Y. Therefore, Y will be requested to post a bond or security.

c.Existing licensees—amount of bond or security. The simultaneous late filing of the return and the late payment of the tax will count as one delinquency. See rule 701—259.24(452A). However, the late filing of the return or the late payment of the tax will not count as a delinquency if the license holder can satisfy one of the conditions set forth in Iowa Code section 421.27, penalty waiver.

(1)Suppliers will be requested to post a bond or security when they have had one or more delinquencies in remitting the fuel tax or timely filing monthly returns during the past six months. The bond or security will be an amount sufficient to cover six months’ fuel tax liability or $5,000, whichever is greater.

(2)Restrictive suppliers will be requested to post a bond or security when they have had two or more delinquencies in remitting the fuel tax or timely filing monthly returns during the past 12 months. The bond or security will be an amount sufficient to cover 12 months’ fuel tax liability or $2,000, whichever is greater.

(3)Blenders will be requested to post a bond or security when they have had two or more delinquencies in remitting the fuel tax or timely filing monthly returns during the past six months. The bond or security will be an amount sufficient to cover 12 months’ fuel tax liability or $2,000, whichever is greater.

(4)Compressed natural gas, liquefied natural gas, and liquefied petroleum gas dealers and users will be requested to post a bond or security when they have had two or more delinquencies in remitting the fuel tax or timely filing monthly returns during the past 12 months. The bond or security will be an amount sufficient to cover 12 months’ fuel tax liability or $500, whichever is greater.

d.Bond or security required. Eligible purchasers and end users will be required to post a bond or security when they have failed to pay the tax to a supplier. They will not be allowed to register as an eligible purchaser or end user again until the bond or security requirement has been complied with.

The bond or security will be an amount sufficient to cover six months’ fuel tax based on previous purchases.

e.Waiver of bond. If a licensee has been requested to post a bond or security or if an applicant for a license has been requested to post a bond or security, upon the filing of the bond or security if the licensee maintains a good filing record for a period of two years, the licensee may request that the department waive the continued bond or security requirement. Importer bonds will not be waived.

259.17(2) Type of security or bond. When it is determined that a licensee or applicant for a fuel tax permit is required to post collateral to secure the collection of the fuel tax, the following types of collateral will be considered as sufficient: cash, surety bonds, securities, or certificates of deposit. “Cash” means guaranteed funds including, but not limited to, cashier’s check, money order, or certified check. If cash is posted as a bond, the bond will not be considered filed until the final payment is made, if paid in installments. A certificate of deposit must have a maturity date of 24 months from the date of assignment to the department. An assignment from the bank must accompany the original certificate of deposit filed with the department for the bank to be released from liability. When a licensee elects to post cash rather than a certificate of deposit as a bond, conversion to a certificate of deposit will not be allowed. When the licensee is a corporation, an officer of the corporation may assume personal responsibility for the payment of fuel tax. Security requirements for the officer will be evaluated as provided in 259.17(1) above as if the officer applied for a fuel tax license as an individual.

259.17(3) Existing license holders. Existing license holders may be requested to post a bond or security when they have had two or more delinquencies in remitting the fuel tax or filing returns timely during the past 12 months when filing returns on a monthly basis. The bond or security will be an amount sufficient to cover 12 months’ fuel tax liability or $500, whichever is greater. The simultaneous late filing of the return and the late payment of the tax will count as one delinquency. However, the late filing of the return or late payment of the tax will not count as a delinquency if the license holder can satisfy one of the conditions set forth in Iowa Code section 421.27 (penalty waiver). The department may waive the bond under circumstances described in paragraph 259.17(1)“e.”

259.17(4) Type of security. The types of security or bond considered as sufficient are described in subrule 259.17(2).

This rule is intended to implement Iowa Code sections 423.35 and 452A.66.

701—259.18(452A) Supplier, restrictive supplier, importer, exporter, blender, dealer, or user licenses.

259.18(1) Requirements for license. In order to become licensed as a fuel supplier, restrictive supplier, importer, exporter, blender, dealer, or user, the person must electronically file an application with the department. The license is valid until revoked or canceled and is nonassignable. The application is to include but not be limited to the following information:

a.The name under which the licensee will transact business in the state.

b.The location of the principal place of business of the licensee and the mailing address if different.

c.The social security number or federal identification number of the licensee.

d.The type of ownership.

e.The name and complete residency address of the owner(s) of the business or, if a corporation or association, the names and addresses of the principal officers.

f.The type of license being requested.

g.Exporters only—the state and license number for that state in which the fuel is being exported.

259.18(2) Assignment of a license. Licenses are not assignable. A person must apply for a new license when:

a.Buying the business of another license holder, even if the new owner operates under the same name.

b.Changing of the name under which the licensee conducts business.

c.Merging or otherwise combining businesses, resulting in a new or different entity.

259.18(3) Denial of a license. The department may deny a license to any applicant who may be denied a sales tax permit under rule 701—201.10(423). Rule 701—201.10(423) also contains a characterization of the terms “tax administered by the department” and “substantially delinquent” in paying a tax. Rule 701—7.9(17A) contains information about rights to appeal denial of an application for a license.

259.18(4) Revocation of a license. The department may revoke the license of any licensee whose sales tax permit may be revoked under rule 701—201.11(423). Rule 701—201.10(423) contains characterizations of the terms “tax administered by the department” and “substantially delinquent” in paying a tax. The department may also revoke the license of any licensee who abuses the privileges for which the license was issued; who files a false return; or who fails to file a return (including supporting schedules), pay the full amount of tax due, produce records requested, or extend cooperation to the department. Rule 701—7.9(17A) contains more information about rights to appeal.

259.18(5) Efficient administration of motor fuel laws. When necessary for the efficient administration of Iowa Code chapter 452A, the director may regard persons or facilities in possession of motor fuel, special fuel, biofuel, alcohol, or alcohol derivative substances as blenders, dealers, eligible purchasers, exporters, importers, restrictive suppliers, suppliers, terminal operators, or nonterminal storage facility operators. The department will notify the person or facility of the various requirements under the motor vehicle fuel tax laws and will ensure that a license is issued.

This rule is intended to implement Iowa Code sections 452A.4 and 452A.6.

701—259.19(452A) Reinstatement of license canceled for cause.

259.19(1) Reinstatement generally. A license canceled for cause will be reinstated only on such terms and conditions as the cause may warrant. Terms and conditions will include payments of any applicable fuel tax liability including interest and penalty that is due the department.

259.19(2) Requirements after cancellation. Upon the cancellation of a motor vehicle fuel tax license, the licensee will be required to pay all delinquent fuel tax liabilities including interest and penalty, to file returns, and to post a bond and have refrained from activities requiring a license under Iowa Code sections 452A.4 and 452A.6 during the waiting period as required by the director prior to the reinstatement or issuance of a new motor vehicle fuel tax license.

259.19(3) Waiting periods. The director may impose a waiting period during which the licensee must refrain from activities requiring a license pursuant to the penalties provided in Iowa Code section 452A.74.

a.Waiting periods of up to 90 days may be imposed as a condition for the restoration of a license or the issuance of a new license after cancellation for cause.

b.The department may require a statement that the licensee has fulfilled all requirements of said order canceling the license for cause and the dates on which the license holder refrained from restricted activities.

259.19(4) Offenses. Each of the following situations will be considered one offense for the purpose of determining the waiting period to reinstate a license canceled for cause or issuing a new license after being canceled for cause unless otherwise noted.

a.Failure to post a bond as required.

b.Failure to file a report or return timely.

c.Failure to pay tax timely (including unhonored payments, failure to pay and late payments).

d.Failure to file a return and pay tax as shown on the return (counts as one offense).

259.19(5) Length of waiting period. The hearing officer or director of revenue may order a waiting period after the cancellation for cause not to exceed:

a.Waiting periods for multiple offenses.

(1)Five days for one through five offenses.

(2)Seven days for six or seven offenses.

(3)Ten days for eight or nine offenses.

(4)Thirty days for ten offenses or more.

b.Waiting periods for multiple cancellations. The hearing officer or director of revenue may order a waiting period not to exceed:

(1)Forty-five days if the second cancellation for cause occurs within 24 months of the first cancellation for cause.

(2)Sixty days if the second cancellation for cause occurs within 18 months of the first cancellation for cause.

(3)Ninety days if the second cancellation for cause occurs within 12 months of the first cancellation for cause.

(4)Ninety days if the third cancellation for cause occurs within 36 months of the second cancellation for cause.

This rule is intended to implement Iowa Code section 452A.68.

701—259.20(452A) Fuel used in implements of husbandry. Dyed special fuel is exempt from tax. Motor fuel or undyed special fuel is subject to refund when used in implements of husbandry as defined in Iowa Code section 321.1(32). A vehicle as defined in Iowa Code section 321.1(90) is not an implement of husbandry. The department of revenue, the state department of transportation, the department of public safety, and any other peace officer as requested by such department is empowered to enforce the use of special fuel or motor fuel in any illegal manner, including the inspection and testing of fuel in the fuel supply tank of an implement of husbandry.

This rule is intended to implement Iowa Code section 452A.76.

701—259.21(452A) Excess tax collected. If a licensee collects tax on exempt fuel or collects more tax than is due, the licensee must return the excess tax paid to the purchaser if the tax has not been paid to the department. If the tax has been paid to the department, the department will return the excess tax paid to the consumer upon appropriate documentation.

This rule is intended to implement Iowa Code section 452A.22.

701—259.22(452A) Retailer gallons report.

259.22(1) The department is required to compile information reported to it by retail dealers regarding the number of gallons of the various fuel classifications sold by retail dealers in the previous calendar year and submit a report to the governor and the legislative services agency by April 1 of each year.

a.Each retail dealer is required to file a report with the department detailing the number of motor fuel gallons sold during the previous calendar year on both a companywide basis and a site-by-site basis as required by the department.

b.The retail dealer report is due by January 31 following the close of the calendar year.

259.22(2) The report filed by the department will include information in the aggregate relating to total sales of gasoline, ethanol blended gasoline, diesel fuel, and biofuels. The report will also include appropriate percentage sales of various fuel products. The report will not include individual retail dealer information, trade secret information, or confidential information.

259.22(3) Any entity selling or otherwise providing gasoline, ethanol blended gasoline, diesel fuel, or biofuels in this state to an end user will be presumed to be a retail dealer under Iowa Code section 452A.2(40).

This rule is intended to implement Iowa Code section 452A.33.

ITEM 2.Rescind 701—Chapter 260 and adopt the following new chapter in lieu thereof:

CHAPTER 260

MOTOR FUEL AND UNDYED SPECIAL FUEL

701—260.1(452A) Tax rates—time tax attaches—responsible party.

260.1(1) Fuel distribution percentages.

a.Ethanol distribution percentage.

(1)Except as otherwise provided in this paragraph, this paragraph shall apply to the excise tax imposed on each gallon of motor fuel used for any purpose for the privilege of operating motor vehicles in this state. An excise tax of 30 cents is imposed on each gallon of motor fuel other than ethanol blended gasoline classified as E-15 or higher.

(2)On and after July 1, 2030, an excise tax of 30 cents is imposed on each gallon of ethanol blended gasoline classified as E-15 or higher.

(3)Before July 1, 2030, the rate of the excise tax on ethanol blended gasoline classified as E-15 or higher shall be based on the ethanol distribution percentage as specified in Iowa Code section 452A.3 and subparagraph 260.1(1)“a”(4). The ethanol distribution percentage is the number of gallons of ethanol blended gasoline classified as E-15 or higher that are distributed in this state as expressed as a percentage of the number of gallons of motor fuel, excluding aviation gasoline, distributed in this state. The department shall determine the percentage for each determination period beginning January 1 and ending December 31 based on data from reports filed pursuant to Iowa Code section 452A.33. The rate for the excise tax shall apply for the period beginning July 1 and ending June 30 following the end of the determination period.

(4)The rate of the excise tax on ethanol blended gasoline classified as E-15 or higher is as follows:

b.Biodiesel distribution percentage.

(1)Except as otherwise provided in this paragraph, the rate of the excise tax on each gallon of special fuel for diesel engines of motor vehicles used for any purpose for the privilege of operating motor vehicles in this state, other than biodiesel blended fuel classified as B-20 or higher, is 32.5 cents.

1.Except as otherwise provided in this paragraph, this paragraph shall apply to the excise tax imposed on each gallon of biodiesel blended fuel classified as B-20 or higher used for any purpose for the privilege of operating motor vehicles in this state.

2.On and after July 1, 2030, the rate of the excise tax on each gallon of biodiesel blended fuel classified as B-20 or higher is 32.5 cents.

3. Before July 1, 2030, the rate of the excise tax shall be based on the biodiesel distribution percentage as specified in Iowa Code section 452A.3 and subparagraph 260.1(1)“b”(3). The biodiesel distribution percentage is the number of gallons of biodiesel blended fuel classified as B-20 or higher that is distributed in this state as expressed as a percentage of the number of gallons of special fuel for diesel engines of motor vehicles distributed in this state. The department shall determine the percentage for each determination period beginning January 1 and ending December 31 based on data from reports filed pursuant to Iowa Code section 452A.33. The rate for the excise tax shall apply for the period beginning July 1 and ending June 30 following the end of the determination period.

(2)The determination period for the biodiesel distribution percentage is January through December each calendar year.

(3)The rate of the excise tax on biodiesel blended fuel classified as B-20 or higher is as follows:

260.1(2) Attachment, payment, and remittance of tax.

a.Attachment of tax. The tax attaches when the fuel is withdrawn from a terminal or imported into Iowa.

b.Payment of tax. The tax is payable to the department by the supplier, restrictive supplier, importer, blender, or any person who owns the fuel at the time it is brought into the state by a restrictive supplier or importer or any other person who possesses taxable fuel upon which the tax has not been paid. In the event a licensee sells fuel upon which the tax has not been paid to a second licensee of the same license type, the first licensee, which would be the seller, shall remit the tax to the department unless mutually agreed upon by both licensees of the transaction that the second licensee shall remit the tax to the department.

c.Remittance of tax.

(1)Suppliers, restrictive suppliers, and blenders. The tax is to be remitted to the department by a supplier, restrictive supplier, or blender by the last day of the month following the month in which the fuel is withdrawn from a terminal or imported.

(2)Importers. The tax is to be remitted by an importer by the last day of the month for fuel imported in the first 15 days of the month and by the fifteenth day of the following month for fuel imported after the fifteenth day of the previous month.

(3)Nonlicensees. Nonlicensees who possess taxable fuel upon which the tax has not been paid must file returns and pay the tax the same as a restrictive supplier (monthly). All licensees must make payment by electronic funds transfer.

260.1(3) Inventory tax. Retailers, eligible purchasers, and other persons having title to motor fuel, undyed special fuel, or hydrogen in storage and held for sale on the effective date of an increase in the excise tax rate, including an increase in the excise tax rate due to a reclassification of fuel types, imposed on motor fuel, undyed special fuel, or hydrogen are subject to an inventory tax based upon the gallonage in storage as of the close of the business day preceding the effective date of the increased excise tax rate of motor fuel or undyed special fuel that will be subject to the increased excise tax rate. Suppliers and other persons holding fuel that has not yet been taxed are not subject to the inventory tax.

a.Persons subject to the tax imposed under this subrule shall take an inventory to determine the gallonage in storage for purposes of determining the tax and shall report the gallonage and pay the tax due within 30 days of the prescribed inventory date.

b.The amount of the inventory tax is equal to the inventory tax rate times the gallonage in storage. The inventory tax rate is equal to the increased excise tax rate less the previous excise tax rate. The inventory tax does not apply to an increase in the tax rate of a specified fuel, except for compressed natural gas, unless the increase in the tax rate of that fuel is in excess of one-half cent per gallon.

This rule is intended to implement Iowa Code sections 452A.3, 452A.8 and 452A.85.

701—260.2(452A) Exemption.

260.2(1) Exported fuel. Motor fuel or undyed special fuel sold for export or exported from this state to another state, territory, or foreign country is exempt from the excise tax.

a.The fuel is deemed sold for export or exported only if the bill of lading or manifest indicates that the destination of the fuel withdrawn from the terminal is outside the state of Iowa. The mode of transportation is not of consequence.

b.In the event fuel is taxed and then subsequently exported, an amount equal to the tax previously paid will be allowable as a refund, upon receipt by the department of the appropriate documents, to the party who originally paid the tax.

c.If the sale of exported fuel is completed in Iowa, then the sale is subject to Iowa sales tax if it is not exported for resale or otherwise exempt from sales tax. The sale is completed in Iowa if the foreign purchaser takes physical possession of the fuel in this state (rule 701—220.2(423)).

260.2(2) Exempt purposes. “Exempt purposes” as they relate to dyed fuel requirements in Iowa Code section 452A.3(3)“b” are described in Iowa Code section 452A.17(1)“a.” This exemption does not apply to fuel used for idle time, power takeoffs, reefer units, or pumping credits, or fuel used by contract carriers.

This rule is intended to implement Iowa Code sections 452A.3 and 452A.17.

701—260.3(452A) Responsibilities of blenders at nonterminal locations.

260.3(1) Generally. A person who blends ethanol blended gasoline or biodiesel blended fuel at a nonterminal location must:

a.Obtain a blender’s license. Blending ethanol with gasoline, or blending biodiesel with petrodiesel, may result in additional tax due or an allowable refund depending on the ethanol content of the mixture and the tax paid on its components.

b.Make payments of any additional tax due that may result from blending depending on the content of the mixture.

c.Obtain a refund permit to receive allowable refunds of any overpayment of tax that may result from blending depending on the content of the mixture.

EXAMPLE 1: A blender blends three parts ethanol E-100 with 17 parts gasoline to create ethanol blended gasoline classified as E-15 or higher. The blended product is taxed as ethanol blended gasoline E-15 or higher, and the blender may be due a refund for excess tax paid on the gasoline used to create the blended product.

EXAMPLE 2: A blender blends one-part biodiesel B-100 with four parts petrodiesel to create biodiesel blended fuel classified as B-20 or higher. The blended product is taxed as biodiesel B-20 or higher undyed, and the blender may be due a refund for excess tax paid on the petrodiesel used to create the blended product.

EXAMPLE 3: A blender blends one part biodiesel B-100 with 19 parts petrodiesel to create biodiesel blended fuel classified asB-5. The blended product is taxed as special fuel undyed, and the blender may owe additional tax to the department on the biodiesel B-100 used to create the blended product.

EXAMPLE 4: A blender blends one part biodiesel blended fuel classified as B-20 with five parts biodiesel blended fuel classified as B-2 to create biodiesel blended fuel classified as B-5. The blended product is taxed as special fuel undyed other than B-20 or higher, and the blender may owe additional tax to the department on the biodiesel blended fuel classified as B-20 used to create the blended product.

260.3(2) Blenders of ethanol blended gasoline.

a. E-15 or higher additional tax due example where ethanol is owned by a blender and gasoline is purchased by the blender from a supplier.

(1)A blender who owns the ethanol (supplier) being used to blend with gasoline must purchase the gasoline from a supplier and pay the appropriate tax to the supplier.

(2)The blender must obtain a blender’s license and compute the tax due on the total gallons of blended product and make payment to the department for the additional amount due.

(3)Example. For purposes of the following example, the tax rate for gasoline is presumed to be 30¢ per gallon and the tax rate for ethanol blended gasoline E-15 or higher is presumed to be 24¢ per gallon. The actual tax rates for the appropriate period may be found on the department’s website at revenue.iowa.gov.

b.E-15 or higher refund example where ethanol and gasoline are purchased by a blender from a supplier. A blender who purchases ethanol and gasoline from a supplier must pay tax on both the ethanol purchased and the gasoline purchased. The blender must obtain a refund permit to receive a refund of the overpayment of tax on the blended product. Example: For purposes of the following example, the tax rate for gasoline is presumed to be 30¢ per gallon and the tax rate for ethanol blended gasoline E-15 or higher is presumed to be 24¢ per gallon. The actual tax rates for the appropriate period may be found on the department’s website at revenue.iowa.gov.

c.E-10 to E-14 example where ethanol and gasoline are purchased by a blender from any source. A blender who purchases ethanol and gasoline from any source must pay tax on both the ethanol purchased and the gasoline purchased. The blender must obtain a blender’s license and compute the tax due on the total gallons of blended product and make payment to the department for the additional amount due. Example. For purposes of the following example, the tax rate for gasoline is presumed to be 30¢ per gallon, the tax rate for ethanol is presumed to be 24¢ per gallon, and the tax rate for ethanol blended gasoline E-10 is presumed to be 30¢ per gallon. The actual tax rates for the appropriate period may be found on the department’s website at revenue.iowa.gov.

d.E-15 or higher refund example where ethanol blended gasoline E-10 to E-14 and ethanol blended gasoline E-15 or higher are purchased by a blender from a supplier. A blender who purchases ethanol blended gasoline E-10 to E-14 and ethanol blended gasoline E-15 or higher from a supplier must pay tax on both the ethanol blended gasoline E-10 to E-14 purchased and the ethanol blended gasoline E-15 purchased. The blender must obtain a refund permit to receive a refund of the overpayment of tax on the blended product. Example: For purposes of the following example, the tax rate for E-10 to E-14 purchased is presumed to be 30¢ per gallon and the tax rate for ethanol blended gasoline E-15 or higher is presumed to be 24¢ per gallon. The actual tax rates for the appropriate period may be found on the department’s website at revenue.iowa.gov.

e.Ethanol blended gasoline E-15 or higher blending errors. Where a blending error occurs and an insufficient amount of ethanol has been blended with gasoline so that the mixture fails to qualify as ethanol blended gasoline E-15 or higher, a 1 percent tolerance applies in determining the tax on the blended product as described below:

(1)If the amount of the ethanol erroneously blended with gasoline is at least 14 percent of the total blended product by volume, the ethanol and gasoline blended product is considered ethanol blended gasoline E-15 or higher and there is no penalty or assessment of additional tax.

(2)If the amount of ethanol erroneously blended with gasoline is less than 14 percent of the total blended product by volume, the total blend of gasoline and ethanol is subject to tax as motor fuel other than ethanol blended gasoline E-15 or higher at the prevailing rate of tax.

1.Blending errors occur only if a blender intends to produce ethanol blended gasoline E-15 or higher. If a blender does not intend to produce ethanol blended gasoline when blending ethanol and gasoline, and the mixture contains less than 14 percent ethanol by volume, no error has occurred and the mixture is subject to tax as motor fuel other than ethanol blended gasoline E-15 or higher.

2.The following formulas are used to compute blending errors:

Actual gasoline + actual ethanol = total gallons of blended product

Total gallons of blended product × .14 = required ethanol

3.Examples. The following factors are assumed for all examples:

The blender in each example intends to blend ethanol blended gasoline E-15 or higher. Figures are rounded to the nearest whole gallon; ethanol blended gasoline E-15 or higher is taxed at 24¢ per gallon; gasoline is taxed at 30¢ per gallon. The actual tax rates for the appropriate period may be found on the department’s website at revenue.iowa.gov. Penalty and interest charges are not computed in the examples.

The actual ethanol (1,500 gallons) is more than the required ethanol (1,400 gallons), which means that the tax is applied according to subparagraph 260.4(2)“e”(1) as follows:

The actual ethanol (800 gallons) is less than the required ethanol (1,400 gallons), which means that the entire blend is considered motor fuel other than ethanol blended gasoline E-15 or higher and the tax is applied according to subparagraph 260.4(2)“e”(2) as follows:

260.3(3) Blenders of biodiesel blended fuel.

a.Biodiesel B-20 or higher additional tax due.

(1)A blender who owns the biodiesel being used to blend with diesel must purchase the diesel from a supplier and pay the appropriate tax to the supplier.

(2)The blender must obtain a blender’s license and compute the tax due on the total gallons of blended product and make payment to the department for the additional amount due.

(3)Examples. For purposes of the following examples, the tax rate for B-20 or higher is presumed to be 29.5¢ per gallon and the tax rate for special fuel other than B-20 or higher is presumed to be 32.5¢ per gallon. The actual tax rates for the appropriate period may be found on the department’s website at revenue.iowa.gov.

The blended product is 10,000 gallons of special fuel, which includes 2,000 gallons (20 percent by volume) of biodiesel. Thus, the product is taxed as B-20 or higher.

The blended product is 8,000 gallons of special fuel, which includes 400 gallons (5 percent by volume) of biodiesel. Thus, the product is taxed as special fuel undyed classified as other than B-20 or higher.

7,750 gallons of B-2 contains 155 gallons (2 percent) of biodiesel. The blended product is 8,000 gallons of special fuel, which includes 405 gallons (155 + 250, or 5 percent by volume) of biodiesel. Thus, the product is taxed as special fuel undyed classified as other than B-20 or higher.

b.Diesel purchased by blender.

(1)A blender who purchases diesel products from a supplier must pay the appropriate tax on all diesel products purchased.

(2)The blender must obtain a blender’s license and compute the tax due on the total gallons of blended product and make payment to the department for any additional amount due.

(3)The blender must also obtain a refund permit to receive a refund of any overpayment of tax on the blended product.

(4)Examples. For purposes of the following examples, the tax rate for B-20 or higher is presumed to be 29.5¢ per gallon and the tax rate for special fuel other than B-20 or higher is presumed to be 32.5¢ per gallon. The actual tax rates for the appropriate period may be found on the department’s website at revenue.iowa.gov.

The blended product is 10,000 gallons of biodiesel blended fuel classified as B-20 or higher, which includes 2,000 gallons (20 percent by volume) of biodiesel. Thus, the product is taxed as biodiesel blended fuel classified as B-20 or higher.

The blended product is 8,000 gallons of biodiesel blended fuel classified as other than B-20 or higher, which includes 400 gallons (5 percent by volume) of biodiesel. Thus, the product is taxed as special fuel other than B-20 or higher.

4,000 gallons of B-2 contains 80 gallons (2 percent) of biodiesel, and 4,000 gallons of B-20 contains 800 gallons (20 percent) of biodiesel. The blended product is 8,000 gallons of special fuel, which includes 880 gallons (80 + 800, or 11 percent by volume) of biodiesel. Thus, the product is taxed as special fuel other than B-20 or higher.

260.3(4) Blending errors.

a.Blending tolerance. Where a blending error occurs and an insufficient amount of biodiesel has been blended with petrodiesel so that the mixture fails to qualify as B-20 or higher as defined in rule 701—259.1(452A), a 1 percent tolerance applies in determining the tax on the blended product as described below:

(1)If the amount of the biodiesel erroneously blended with petrodiesel is at least 19 percent of the total blended product by volume, the biodiesel and petrodiesel blended product is considered B-20 or higher and there is no penalty or assessment of additional tax.

(2)If the amount of biodiesel blended with petrodiesel is less than 19 percent of the total blended product by volume, the entire mixture is considered taxable diesel other than B-20 or higher and subject to tax at the prevailing rate.

b.Intention to blend. Blending errors occur only if a blender intends to produce B-20 or higher. If a blender does not intend to produce B-20 or higher when blending biodiesel and petrodiesel, and the mixture contains less than 19 percent biodiesel by volume, no error has occurred and the mixture is subject to tax as diesel other than B-20 or higher.

c.Computation of blending errors. The following formulas are used to compute blending errors:

Actual biodiesel + actual petrodiesel = total gallons of blended product

Total gallons of blended product × .19 = required biodiesel

d.Examples. The following factors are assumed for all examples:

The blender in each example intends to blend B-20 or higher. Figures are rounded to the nearest whole gallon; B-20 or higher is taxed at .295¢ per gallon; diesel other than B-20 or higher is taxed at .325¢ per gallon. The actual tax rates for the appropriate period may be found on the department’s website at revenue.iowa.gov. Penalty and interest charges are not computed in the examples.

The actual biodiesel (1,600 gallons) is more than the required biodiesel (1,520 gallons). Thus, the tax is applied according to subparagraph 260.4(3)“c”(1) as follows:

The actual biodiesel (1,400 gallons) is less than the required biodiesel (1,520 gallons). Thus, the tax is applied according to subparagraph 260.4(3)“c”(2) as follows:

The actual biodiesel (1,560 gallons) is greater than the required biodiesel (1,520 gallons), which means that the entire blend is considered B-20 or higher and the tax is applied according to subparagraph 260.4(3)“c”(1) as follows:

This rule is intended to implement Iowa Code section 452A.8.

701—260.4(452A) Tax returns—computations.

260.4(1) Supplier—nexus.

a.Determination of tax liability amount. The fuel tax liability for a supplier is computed by multiplying the per gallon fuel tax rate by the total number of invoiced gallons of motor fuel or undyed special fuel withdrawn from the terminal by the supplier within the state or by the supplier with an Iowa nexus from a terminal outside the state during the preceding calendar month, less deductions for fuel exported in the case of in-state withdrawals and the distribution allowance provided for in Iowa Code section 452A.5.

b.Supplier responsibility. Tax shall not be paid when the sale of ethanol occurs within a terminal from an ethanol manufacturer to a licensed supplier. The tax shall be paid by the licensed supplier when the invoiced gross gallonage of the ethanol or the ethanol part of the ethanol blended gasoline is withdrawn from a terminal for delivery in this state. This makes the licensed supplier responsible for the tax on both the ethanol and the gasoline portions of the ethanol blended gasoline and for the reporting and accounting of this fuel as ethanol blended gasoline on the supplier report.

c.Terminals outside of Iowa. If fuel is withdrawn by a supplier with no nexus in Iowa, but who voluntarily agrees to collect and report the tax, from a terminal outside of Iowa for importation into Iowa, the tax liability is computed in the same manner as in paragraph 260.4(1)“a” with the exception that no deduction is allowable for exports.

260.4(2) Restrictive supplier. The fuel tax liability for a restrictive supplier is to be computed by multiplying the per gallon fuel tax rate by the total number of invoiced gallons of motor fuel or undyed special fuel imported into Iowa during the preceding calendar month.

260.4(3) Importer. The fuel tax liability for an importer is computed by multiplying the per gallon fuel tax rate by the total number of invoiced gallons of motor fuel or undyed special fuel imported into Iowa during the applicable reporting period.

260.4(4) Nonlicensee. The tax liability for a nonlicensee is computed the same as for a restrictive supplier. If motor fuel or undyed special fuel is exported from this state with no tax paid and subsequently returned to this state because all or a portion of it was not delivered where destined, the tax must be paid to the department by the nonlicensee.

All gallon entries on the return for determining the tax liability must be rounded to the nearest whole gallon.

This rule is intended to implement Iowa Code sections 452A.3, 452A.5, 452A.8, and 452A.9.

701—260.5(452A) Distribution allowance. The tax computation for a supplier includes a distribution allowance of 1.6 percent of the motor fuel gallonage and 0.7 percent of the undyed special fuel gallonage removed from the terminal during the reporting period. The distributor purchasing the fuel from the supplier is entitled to 1.2 percent of the motor fuel distribution allowance. The distributor or dealer purchasing fuel from a supplier is entitled to 0.35 percent of the undyed special fuel distribution allowance. The distribution allowance does not apply to fuel exported.

This rule is intended to implement Iowa Code sections 452A.5 and 452A.8.

701—260.6(452A) Supplier credit—uncollectible account.

260.6(1) Generally. A licensed supplier who is unable to recover the tax from an eligible purchaser or end user is not liable for the tax and may credit the amount of unpaid tax against a later remittance of tax.

260.6(2) Qualification for credit.

a.To qualify for the credit, the supplier must notify the department in writing of the uncollectible account no later than ten calendar days after the due date for payment of the tax.

b.Notification is to be provided to the department via email at idrmotorfuel@iowa.gov. The notification must include all information required by the department.

c.Disqualification for credit.

(1)A supplier does not qualify for the credit if the purchaser did not elect to apply for the eligible purchaser or end user status or did not qualify to be an eligible purchaser.

(2)The credit does not apply if the supplier sells additional fuel to a delinquent eligible purchaser or end user after notifying the department that the supplier has an uncollectible debt with an eligible purchaser.

260.6(3) Cancellation of eligible status. Upon notification from the supplier that an eligible purchaser is in default of the tax payment, that person’s eligible purchaser or end user status will be canceled by the department. The eligible purchaser or end user status will not be reinstated until such time as the purchaser posts securities to guarantee future tax payments as provided in 701—paragraph 259.17(1)“d.”

260.6(4) Eligible purchasers.

a.Registration. Any distributor of motor fuel or special fuel or end user of special fuel who requests authorization to make delayed payments of the motor vehicle fuel tax must first register with the department to become an eligible purchaser.

b.Payment of tax. The eligible purchaser must pay the tax to the supplier by electronic funds transfer one business day prior to the date the tax is to be paid by the supplier.

c.Validity. Once approved, the eligible purchaser status is valid until voluntarily canceled by the eligible purchaser or canceled by the department of revenue. More information is contained in 701—subrule 259.18(4).

This rule is intended to implement Iowa Code section 452A.8.

701—260.7(452A) Refunds. Refunds are allowable for the tax paid on motor fuel and undyed special fuel as identified in Iowa Code section 452A.17. Iowa Code section 452A.17(1)“a” contains the complete list of allowable refunds.

260.7(1) Federal government. For fuel sold to the United States or to any agency or instrumentality of the United States, the tax is subject to refund regardless of how the fuel is used. The name of the federal agency or instrumentality must appear on the invoice as the purchaser of the fuel for the purchase to be eligible for a refund.

a.The department will consider the factors found in 701—subrule 212.12(3) to determine whether an organization is an instrumentality of the United States government.

b.The American Red Cross, Project Head Start, Federal Land Banks and Federal Land Bank Associations, among others, have been determined to be instrumentalities of the federal government.

c.Ineligible for refunds. Receivers or trustees appointed in the federal bankruptcy proceedings are subject to the excise tax and ineligible for refund. The refund is not available to employees of the federal government who purchase fuel individually and are later reimbursed by the federal government.

260.7(2) The state and political subdivisions.

a.Generally. Fuel sold to the state of Iowa, agencies of the state, or any political subdivision of the state and that is used for public purposes may be eligible for a refund. This refund is not available to agencies or instrumentalities of political subdivisions.

b.Political subdivision attributes. The general attributes and factors in determining if an entity is a political subdivision of the state of Iowa are whether the entity has:

(1)A specific geographic area;

(2)Public officials elected at public elections;

(3)Taxing power;

(4)A general public purpose or benefit; and

(5)The attributes, factors or powers listed in subparagraphs 260.7(2)“a”(1) to “a”(4) delegated to it by the state of Iowa.

c.Employees. The refund is not available to employees of a governmental unit who purchase fuel individually and are later reimbursed by the governmental unit. The name of the governmental unit must appear on the invoice as the purchaser of the fuel or the refund will not be allowed.

260.7(3) Contract carriers.

a.Fuel sold to a contract carrier who has a contract with a public school under Iowa Code section 285.5 for the transportation of pupils of an approved public or nonpublic school is refundable.

b.If the contract carrier also uses fuel for purposes other than the transportation of pupils, the refund will be based on that percentage of the total amount of fuel purchased which reflects the pupil transportation usage.

c.A refund requested by a contract carrier will be reduced by the applicable sales tax unless otherwise exempt. The name of the contract carrier must appear on the invoice as the purchaser of the fuel or the refund will not be allowed.

260.7(4) Unlicensed vehicles, stationary engines, machinery and equipment used for nonhighway purposes, implements used in agricultural production, and home heating. Fuel used in unlicensed vehicles, stationary engines, machinery and equipment used for nonhighway purposes, implements used in agricultural production, and fuel used for home heating.

260.7(5) Idle time.

a.Claims. Persons who wish to claim a refund for idle time (the engine is running but not propelling the vehicle) must first apply to the department and provide statistical information on how the refund amount will be calculated.

b.Qualification.

(1)Normally, to qualify for a refund the vehicle must be equipped with an on-board monitoring device that records the actual time the engine is idling and the amount of fuel consumed while idling.

(2)If the device only records the idle time and not fuel used, the refund amount will be calculated at one-half gallon of fuel consumed per one hour of idle time.

(3)The computation must also consider the miles driven in Iowa versus total miles driven. The department will require a review of interstate carrier reports before approval of the computation method.

260.7(6) Power takeoff.

a.Generally. Persons operating vehicles that have auxiliary equipment powered by the power takeoff may apply for a refund for that portion of the fuel used for powering the auxiliary equipment.

b.Exempt percentage. The person requesting the refund must furnish the department with statistical information on how the exempt percentage is established. The percentage can be established by using the following methods:

(1)Determine the actual fuel usage by the hour while the auxiliary equipment is in use compared to total hours the engine is running.

(2)Establish total miles per gallon for the vehicle when auxiliary equipment is not in use compared to miles per gallon while the equipment is in use.

(3)Other computation methods to be reviewed by the department prior to approval.

260.7(7) Fuel used in relation to cement and solid waste. It has been predetermined that tax on fuel used in the mixing of cement into concrete, the off-loading of the concrete, and the loading and off-loading of solid waste will be refunded on the basis of 30 percent of the fuel placed in the fuel supply tank of the vehicle provided proper records are maintained. Proper records shall consist of records of fills for each vehicle from tax-paid bulk storage tanks or sales tickets where fuel is purchased directly from a service station. Each vehicle must be identifiable by a unit number so the department can trace fuel usage to specific vehicles. An additional allowance will be granted where it can be substantiated through the use of separate meters that operate to measure the fuel when the vehicle is stationary or the use of separate tanks that fuel the vehicle only when the vehicle is stationary that the actual nonhighway fuel usage exceeds 30 percent.

260.7(8) Refrigeration units (reefers).

a.Generally. Tax paid on fuel for reefer units is subject to refund.

b.Documentation. The person must maintain records of fuel purchases to substantiate the tax-paid purchases. Invoices must meet the criteria set forth in rule 701—259.11(452A). In addition, the invoices must separately state fuel purchased and placed in the reefer unit.

260.7(9) Pumping credits.

a.Generally. A refund will be allowed for taxes paid on fuel once that fuel has been placed in the fuel supply tank of a motor vehicle when the motor of that vehicle is used as a power source for off-loading procedures.

b.Documentation. Meter readings from the pump used in the off-loading procedure or the invoice, manifest, or bill of lading number covering the product off-loaded must be retained.

c.Claim amounts. Unless a different amount can be proven, the claims for refund will be:

(1)One-half gallon credit for each 1,000 gallons of liquid products pumped and three-tenths of a gallon credit for each ton of dry products off-loaded when using motor fuel or undyed diesel fuel to power the motor; and

(2)One gallon credit for each 1,000 gallons of liquid products pumped and three-tenths of a gallon credit for each ton of dry products off-loaded when using L.P.G. to power the motor.

260.7(10) Transport diversions.

a.Generally. When a transport load of fuel is sold tax-paid with a destination in this state and later diverted to a destination outside the state, the person who actually paid the Iowa tax is entitled to a refund.

b.Refund claims. To secure a refund, the person must file a completed claim form provided by the department with supporting documentation including a copy of the bill of lading, invoices, or document showing where and to whom the fuel was delivered, a copy of the reporting form, and evidence of payment to the state where the fuel was actually delivered.

260.7(11) Casualty loss.

a.Notification. In the event fuel is lost or destroyed through fire, explosion, lightning, flood, storm, earthquake, terrorist attack, or other casualty, the taxpayer has ten days from the discovery of the loss to inform the department in writing of such loss. The notification must contain the amount of gallonage lost or destroyed, which must be in excess of 100 gallons.

b.Refund. An application for refund must be submitted to the department within 60 days of the notification. This application must contain a notarized affidavit sworn to by the person having immediate custody of the fuel at the time of the loss or destruction setting forth, in full detail, the circumstances of the loss or destruction and the number of gallons.

c.Presumption when fuel is in storage. If the fuel was in storage where several fuel purchases were commingled, it is a rebuttable presumption that the fuel lost through casualty was a part of the last delivery into the storage just prior to the loss.

d.Exclusion from refund. No refund is allowed for fuel lost through evaporation, theft, normal leakage, or unknown causes. However, leakage resulting from a major accident or catastrophe is subject to refund.

260.7(12) Exports by eligible purchasers (distributors). Distributors who have purchased tax-paid fuel and sell the fuel to consumers outside the state may apply for a refund of the Iowa tax paid. The distributor must retain records as provided in rule 701—259.2(452A) to support the request for refund.

260.7(13)  Blending errors for special fuel.

a.Dyed special fuel commingled with undyed special fuel.

(1)If dyed special fuel is inadvertently mixed with tax-paid undyed special fuel to the extent that the undyed fuel must have additional dye added to meet federal dying requirements to qualify as exempt dyed fuel, the tax is refundable on the undyed special fuel. The refund request must contain the number of gallons of undyed fuel lost through the mixing error and documentation as to how the gallonage was determined.

(2)The request for refund must contain documentation that the commingled product was destroyed or sold for purposes of refinement at a terminal.

b.Motor fuel commingled with special fuel.

c.If motor fuel is blended in error with dyed special fuel to produce a commingled product that must be destroyed or refined for subsequent use, the tax-paid fuel is subject to refund.

d.The request for refund must contain documentation that the commingled product was destroyed or sold for purposes of refinement at a terminal.

260.7(14) Native Americans.

a.Generally. Sales by Native Americans to others of their own tribe located on federally recognized Native American reservations or settlements of which they are tribal members are exempt from the tax.

b.Purchases of fuel by seller. Fuel must be purchased by the Native American seller with the tax included in the purchase price unless the seller’s status under a particular license authorizes the seller to purchase tax-free fuel.

c.Purchase of fuel by purchasers. Exempt sales from a Native American seller who purchased fuel with the tax attached to a Native American purchaser are eligible for refund of tax paid. Either the purchasers can file a claim for refund of the tax paid or the purchaser’s tribe can file a claim for refund of the tax paid by the tribe on the fuel sold to the purchaser.

d.Recordkeeping. Native American sellers are subject to the recordkeeping requirements of Iowa Code chapter 452A.

This rule is intended to implement Iowa Code section 452A.17.

701—260.8(452A) Claim for refund—payment of claim.

260.8(1) Generally. Only claimants holding a refund permit may receive refunds.

260.8(2) Proof of claim.

a.Exempt purpose. Requests for refunds for fuel used for an exempt purpose should include the following information:

(1)Refund permit number,

(2)Type of fuel,

(3)Total number of gallons/tons of fuel used to calculate the refund amount,

(4)The beginning and ending dates of the tax period,

(5)Net cost of fuel,

(6)Iowa sales tax due (net cost of fuel times sales tax rate),

(7)Other items depending on the type of permit and claim type,

(8)The total amount of refund claimed, and

(9)Additional information as required.

b.Other refunds types. Persons requesting a refund for casualty loss, transport diversions, blending errors of motor fuel and ethanol, and blending errors of special fuel must file in writing on the forms provided by the department and must attach supporting documents explaining why a refund is due.

260.8(3) Designation of agent.

a.Generally. Refunds are made and the amount of the refund is paid to the person who actually paid the tax.

b.Designation. Persons requesting a refund for idle time, power takeoff, reefer units, pumping credits, or transport diversions may designate another person as an agent to file the claim and receive the refund.

(1)Documentation. The person acting as an agent for others must provide the department with the following information including, but not limited to, the name, address, and federal identification number or social security number of the person on whose behalf they are requesting the refund.

(2)Duration. Once a person is designated as an agent, this designation remains in force until the department is notified in writing that the agency agreement is no longer enforceable. A governmental agency may designate another governmental agency as an agent for filing and receiving any tax refund authorized in Iowa Code section 452A.17.

260.8(4) Deposit of refund. If the person so designates, the department will direct deposit the refund in the person’s designated bank account. In lieu of direct deposit, the permit holder will receive a state warrant.

This rule is intended to implement Iowa Code sections 452A.17, 452A.19, 452A.21, and 452A.72.

701—260.9(452A) Refund permit.

260.9(1) Generally. To obtain the refund provided for in Iowa Code chapter 452A and rule 701—260.7(452A), the claimant must have an active refund permit.

260.9(2) Application. The application for a refund permit is provided by the department and will contain, but not be limited to, the following information:

a.The name and location of the business and the mailing address if different,

b.The type of ownership,

c.The social security number or federal identification number of the applicant, and

d.The type of refund requested.

260.9(3) Cost and effective dates. The refund permit remains in effect until revoked or canceled or until the permit becomes invalid.

260.9(4) Recordkeeping. All refund permit holders are required to keep invoices and copies of returns if filed, supporting schedules, and studies for documentation to support the refund.

This rule is intended to implement Iowa Code section 452A.18.

701—260.10(452A) Revocation of refund permit.

260.10(1) Revocation. Iowa Code section 452A.19(1) provides the circumstances under which a refund permit may be revoked.

260.10(2) Waiting period for reissuance. If a permit is revoked for reasons provided in Iowa Code section 452A.19(1), the permit will not be reissued for a period of at least one year after the revocation.

260.10(3) Nonuse. Permits that have not been used to claim a refund for at least three years will be invalidated but are subject to reinstatement or issuance of a new permit without a waiting period upon proper application.

260.10(4) Procedure. Rule 701—7.39(17A) provides more information about the revocation or invalidation of permits.

This rule is intended to implement Iowa Code section 452A.19.

701—260.11(452A) Income tax credit in lieu of refund.

260.11(1) Tax credit in lieu of refund permit. A person or corporation may claim the refund allowable under Iowa Code section 452A.17(2) as an income tax credit rather than apply for a refund permit.

260.11(2) Cancellation of refund permit. If a person or corporation holds a refund permit and elects to receive an income tax credit, the person or corporation must cancel the refund permit within 30 days after the first day of its year or the permit becomes invalid and application must be made for a new permit.

260.11(3) Effective dates. Once the election to receive an income tax credit has been made, it remains in effect until the election is changed.

260.11(4) Exclusions from credit. The income tax credit is not available for refunds relating to casualty losses, transport diversions, pumping credits, blending errors, idle time, power takeoffs, reefer units, exports by distributors, and excess tax paid on ethanol blended gasoline.

This rule is intended to implement Iowa Code sections 422.110, 452A.17(2), and 452A.21.

701—260.12(452A) Reduction of refund—sales and use tax.

260.12(1) Generally. Refunds of the fuel tax paid on sales of fuel will be reduced by any applicable sales or use tax. Iowa Code section 423.3(56) and rule 701—218.11(423) provide more information on the exemption from sales or use tax when the fuel tax has been imposed and paid.

260.12(2) Exclusion from reduction of refund. Refunds of the fuel tax paid on sales of fuel used for other exempt purposes under Iowa Code chapter 423 and fuel lost through casualty will not be reduced by the applicable sales or use tax.

260.12(3) Applicable sale price. The sales price upon which the sales and use tax will be applied shall include all federal excise taxes but will not include the Iowa fuel tax.

This rule is intended to implement Iowa Code sections 423.3(356) and 452A.17.

701—260.13(452A) Terminal withdrawals—meters. Any refinery or terminal within this state must be fixed with meters that totalize the gross gallons withdrawn. All bills of lading or manifests must show the gross gallons withdrawn. A temperature-adjusted or other method shall not be used except as it applies to liquefied petroleum gas and the sale or exchange of petroleum products between petroleum refiners. All fuel withdrawn from a refinery or terminal within this state must pass through these meters.

This rule is intended to implement Iowa Code sections 452A.2, 452A.8, 452A.15(2), and 452A.59.

701—260.14(452A) Terminal and nonterminal storage facility reports and records.

260.14(1) Generally. Each terminal and nonterminal storage facility operating in Iowa must file a monthly inventory report with the department.

260.14(2) Report information. The report shall include, but not be limited to, the following information:

a.Name and license number of the company that owns and operates the terminal or nonterminal storage facility.

b.Location of the terminal or nonterminal storage facility.

c.Month and year covered by the report.

d.Terminal code assigned by the Internal Revenue Service or the storage facility license number assigned by the department.

e.Beginning inventory.

f.Total receipts for the month with each receipt providing the following information:

(1)Gross gallons received by schedule code and fuel type and, if diesel fuel, whether dyed or undyed fuel,

(2)Bill of lading number,

(3)Date of receipt,

(4)Seller,

(5)Carrier,

(6)Mode of transportation, and

(7)Destination state.

g.Total withdrawals for the month, with each withdrawal providing the following information:

(1)Gross gallons withdrawn by schedule code and by fuel type and, if diesel fuel, whether dyed or undyed fuel,

(2)Bill of lading number,

(3)Date of withdrawal,

(4)Consignor,

(5)Consignee,

(6)Mode of transportation,

(7)Destination state,

(8)Origin state, and

(9)Carrier.

h.The actual ending inventory and any gains or losses.

i.The signature or electronic signature of the person responsible for preparing the report.

j.Any additional information as the department may require.

260.14(3) Civil penalty.

a.Failure to file. The director may impose a civil penalty against any person who fails to file the reports required underIowa Code section 452A.15(2) or 452A.15(3).

b.Amount. The penalty is $100 for the first violation and increases by $100 for each additional violation occurring in the calendar year in which the first violation occurred.

This rule is intended to implement Iowa Code section 452A.15(2).

701—260.15(452A) Transportation reports.

260.15(1) Generally. The reports required under Iowa Code section 452A.15(1) are to be filed by railroad carriers, common carriers, contract carriers, distributors transporting fuel for others, and anyone else transporting fuel from without the state and unloading it at other than terminal storage within the state.

260.15(2) Report information.

a.Reports are to be filed monthly.

b.Reports must include all fuel that was imported into Iowa and unloaded at other than terminal storage, all fuel withdrawn from Iowa terminal storage and delivered in Iowa, and all fuel withdrawn from Iowa terminal storage and exported from Iowa.

c.For each report, the following information for each delivery is to be included:

(1)The name, address, and federal identification number or social security number of the person to whom actually delivered.

(2)The name, address, and federal identification number or social security number of the originally named consignee, if delivered to anyone other than the originally named consignee.

(3)The point of origin, the point of delivery, and the date of delivery.

(4)The number and initials of each tank car and the number of gallons contained therein, if shipped by rail.

(5)The name of the boat, barge, or vessel, and the number of gallons contained therein, if shipped by water.

(6)The registration number of each tank truck and the number of gallons contained therein, if transported by motor truck.

(7)The manner, if delivered by other means, in which the delivery is made.

(8)Such additional information relative to shipments of motor fuel or special fuel as the department may require.

260.15(3) Civil penalties.

a.Failure to file. The director may impose a civil penalty against any person who fails to file the reports required under Iowa Code section 452A.15(1).

b.Penalty amount. The penalty is $100 for the first violation and increases by $100 for each additional violation occurring in the calendar year in which the first violation occurred.

This rule is intended to implement Iowa Code section 452A.15.

701—260.16(452A) Bill of lading or manifest requirements. Whenever a bill of lading or manifest is required to be issued, carried, retained, or submitted by these rules, it shall contain the following information:

1.Name and address of the refinery, terminal, ethanol plant, biodiesel plant or point of origin.

2.Date of withdrawal or import.

3.Name of the shipper-supplier-consignor.

4.Name of the purchaser-consignee.

5.Place of actual destination.

6.Name of the transporter.

7.Gross gallons by fuel type.

8.Designation for ethanol blended gasoline or biodiesel blended fuel as provided in Iowa Code section 214A.2.

9.Statement designating whether diesel fuel is dyed or undyed.

10.Machine printed serial number of not less than four digits.

This rule is intended to implement Iowa Code sections 452A.10, 452A.12, 452A.60, and 452A.76.

ITEM 3.Rescind 701—Chapter 261 and adopt the following new chapter in lieu thereof:

CHAPTER 261

LIQUEFIED PETROLEUM GAS—COMPRESSED
NATURAL GAS—LIQUEFIED NATURAL GAS—HYDROGEN

701—261.1(452A) Definitions and applicability.

261.1(1) For the purpose of this chapter, terms have the same meaning as provided in Iowa Code sections 452A.2 and 452A.57 and rule 701—259.1(452A). Additionally, the following definitions apply:

“C.N.G.” means compressed natural gas.

“Invoiced gallons” means gross gallons as shown on the bill of lading or invoice. A temperature-adjusted method may be used as it applies to liquefied petroleum gas.

“Licensed metered pumps or metered pumps” means pumps that have been metered, inspected, tested for accuracy, sealed and licensed by the state department of agriculture pursuant to Iowa Code section 452A.8(2).

“Licensed metered storage or metered storage” means storage facilities containing “licensed metered pumps.”

“L.N.G.” means liquefied natural gas.

“L.P.G.” means liquefied petroleum gas.

“Owner” means and includes the owner or the employees, agents, or persons under the control of the owner.

“Special fuel” means liquefied petroleum gas, liquefied natural gas, compressed natural gas, or hydrogen.

261.1(2) Applicability of other rules. All rules in 701—Chapters 259 and 260 apply if not specifically stated in this chapter.

This rule is intended to implement Iowa Code chapter 452A.

701—261.2(452A) Tax rates—time tax attaches—responsible party—payment of the tax.

261.2(1) Attachment of tax.

a.L.P.G. The excise tax on L.P.G. attaches when the special fuel is placed in a fuel supply tank of a motor vehicle.

b.C.N.G., L.N.G., and hydrogen. The excise tax on C.N.G. and L.N.G. attaches at the time of delivery into equipment for compressing the gas for subsequent delivery into the fuel supply tank of a motor vehicle.

261.2(2) Responsibility for collection and remittance. The person responsible for the tax must collect the tax from the purchaser and remit the tax to the department. Iowa Code section 452A.8(2)“e” contains more information on the person responsible for the tax.

261.2(3) Licensing. The person responsible for placing L.P.G. into the fuel supply tank of a motor vehicle and the person responsible for placing C.N.G., L.N.G., or hydrogen into compressing equipment must hold a license as a dealer or user as defined in Iowa Code section 452A.4.

261.2(4) Returns. The return and tax are due no later than the last day of the month following the month the L.P.G. was placed in a vehicle or C.N.G., L.N.G., or hydrogen was placed into compressing equipment. The tax must be remitted by means of electronic funds transfer, unless the licensee can show that this method of payment would cause undue hardship on the licensee. The return must be remitted by means of electronic transmission.

261.2(5) Penalty and interest. Rule 701—259.8(452A) provides information on penalty and interest.

This rule is intended to implement Iowa Code section 452A.8.

701—261.3(452A) Persons authorized to place L.P.G., L.N.G., C.N.G., or hydrogen in the fuel supply tank of a motor vehicle.

261.3(1) Generally. The only persons authorized to place L.P.G., L.N.G., C.N.G., or hydrogen into the fuel supply tank of a motor vehicle are: licensed L.P.G., L.N.G., C.N.G., or hydrogen dealers, or licensed L.P.G., L.N.G., C.N.G., or hydrogen users.

261.3(2) L.P.G., L.N.G., C.N.G., or hydrogen dealer’s license. Anyone who delivers untaxed L.P.G. into the fuel supply tank of a motor vehicle or places untaxed C.N.G., L.N.G., or hydrogen into compression equipment must be licensed as an L.P.G., L.N.G., C.N.G., or hydrogen dealer. A dealer may also fuel the dealer’s own vehicles under this license.

261.3(3) L.P.G., L.N.G., C.N.G., or hydrogen user’s license. Anyone who delivers untaxed L.P.G., L.N.G., C.N.G., or hydrogen upon which fuel tax has not been previously paid, into the fuel supply tank of a motor vehicle, which tank is owned or leased by the person delivering it and which vehicle will be for highway use, must be licensed as an L.P.G., L.N.G., or C.N.G. user. If that same person delivers the fuel into tanks owned by others, that person must be licensed as a dealer in lieu of being licensed as a user.

261.3(4) L.P.G. “mobile” tank authorization.

a.When a person has an L.P.G. storage tank which is “mobile” and the storage is moved from location to location, that person may be issued an L.P.G. user’s license.

(1)This licensee will be allowed to move the storage tank to a new location without procuring a new license for each new location.

(2)The issuance of this license is discretionary with the director, and the license will be issued only when the person requesting the license shows a need for mobile storage.

(3)The license will be issued to the licensee at the licensee’s principal place of business, and each mobile storage tank is deemed a separate pump at that location.

b.The operation of such licensed mobile storage shall be subject to the following conditions:

(1)Each mobile storage tank must:

1.Be fixed with licensed, metered pumps.

2.Be assigned a separate number.

3.Have the gallonage reported on a per-tank basis.

4.Display in a size no smaller than six inches in height and ¾ inches in width, the unit number and licensee’s license number.

(2)There may be a total of only nine mobile storage tanks operated under a single license. If the licensee operates more than nine such storage tanks, the licensee must obtain a separate license for each multiple of nine or fraction thereof.

(3)When a licensee changes the licensee’s principal place of business, the licensee is responsible for canceling the license and must apply for a new license for the new principal place of business.

(4)All records required to be kept shall be maintained at the licensee’s principal place of business.

(5)Except for the requirement of having a separate license for each location where L.P.G. is used, the licensee is subject to all the requirements of other licensed L.P.G. users.

261.3(5) Authorization for emergency filling by distributors.

a.Upon request from a stranded motorist, L.P.G. distributors may place up to 20 gallons of L.P.G. into the fuel supply tank of a stranded vehicle without being considered an unlicensed L.P.G. dealer in violation of Iowa Code section 452A.74(1).

b.For emergency fills, distributors must remit the tax on a licensed dealer form and pay the tax before the last day of the month following the month of the emergency fill.

This rule is intended to implement Iowa Code section 452A.8.

701—261.4(452A) Requirements to be licensed. To become licensed as an L.P.G., L.N.G., C.N.G., or hydrogen user or dealer, a person must file with the department a completed application form for the appropriate license. A separate license is required for each place of business or location where L.P.G., L.N.G., C.N.G., or hydrogen is regularly delivered or placed into the fuel supply tank of motor vehicles. Iowa Code section 452A.4 and 701—subrule 259.18(1) contain licensing requirements.

This rule is intended to implement Iowa Code section 452A.8.

701—261.5(452A) Licensed metered pumps.

261.5(1) Location pumps.

a.Criteria. In order for the department to grant a L.P.G, L.N.G, C.N.G, or hydrogen dealer or user license, all pumps designed to fuel motor vehicles at a location must be:

(1)Metered,

(2)Inspected,

(3)Tested for accuracy,

(4)Sealed, and

(5)Licensed by the department of agriculture and land stewardship.

b.Multiple pumps. If there is more than one pump at a location to be licensed, each pump will be assigned a separate pump number, and the licensee will report the gallonage each month with reference to such number.

261.5(2) Temperature correction.

a.Each L.P.G. distributor, dealer, or user may elect to measure L.P.G. for the tax purposes either temperature compensated to 60°F, or without temperature compensation.

b.If the L.P.G. distributor, dealer, or user elects to measure L.P.G. temperature compensated to 60°F for tax purposes, the L.P.G. distributor, dealer or user must use meters that are of an automatic temperature compensating type that compute gross gallons corrected to 60°F.

This rule is intended to implement Iowa Code section 452A.8.

701—261.6(452A) Single license for each location.

261.6(1) Place of business or location. A single license is required for each separate place of business or location where L.P.G., L.N.G., C.N.G., or hydrogen is delivered into the fuel supply tank of a motor vehicle.

a.All dealer or user operations at that location will be conducted under that license.

b.A licensee may have a different type of license (dealer, user) for each separate location where L.P.G., L.N.G., C.N.G., or hydrogen is dispensed.

EXAMPLE: If a licensee holds an L.P.G., L.N.G., C.N.G., or hydrogen dealer’s license for location A and an L.P.G., L.N.G., C.N.G., or hydrogen user’s license for location B, the licensee may sell fuel to others or fuel the licensee’s own vehicles at location A, but the licensee may only fuel the licensee’s own vehicles at location B.

261.6(2) Reports.

a.For reporting purposes, a licensee may file a separate return for each license.

b.Consolidated returns.

(1)A licensee may file a consolidated return reporting all sales made at all locations for which a license is held if authorized by the department.

(2)A consolidated return may not be used to combine dealer and user operations. All working papers used in the preparation of the information required must be available for examination by the department.

This rule is intended to implement Iowa Code section 452A.4.

701—261.7(452A) Dealer’s and user’s license nonassignable.

261.7(1) Generally. An L.P.G., L.N.G., C.N.G., or hydrogen dealer’s license or user’s license cannot be assigned.

261.7(2) Situations considered assignments. The following is a nonexclusive list of situations that will be considered an assignment and therefore require an application for a new license:

a.A change in the name under which the licensee conducts business.

b.A change in the location where the business is conducted.

c.A sale of the business, even if the new owner(s) operates under the same business name.

d.A merger or other business combination that results in a new or different entity.

This rule is intended to implement Iowa Code section 452A.4.

701—261.8(452A) Separate storage—bulk sales—highway use.

261.8(1)  If a person is operating as an L.P.G. dealer’s or user’s licensee and also makes bulk sales for nonhighway use, the licensee must maintain separate storage for bulk sales and sales for highway use.

261.8(2) If any amount of L.P.G. in a storage facility is used directly from bulk storage for highway purposes or if the storage is connected to a device which is designed in such a way as to be able to fuel motor vehicles, all fuel dispensed from the storage shall be dispensed through licensed metered pumps.

261.8(3) Tax is due on all fuel dispensed through licensed metered pumps unless such fuel is exempt as evidenced by exemption certificates.

This rule is intended to implement Iowa Code section 452A.8.

701—261.9(452A) Combined storage—bulk sales—highway sales or use.

261.9(1) Generally. If a person is operating as an L.P.G. dealer’s or user’s licensee, L.P.G. may be dispensed for bulk nontaxable sales and for taxable highway sales from the same storage if, and only if, the following requirements are complied with:

a.All pumps that are of such a design to be able to fuel motor vehicles must be licensed, sealed, metered, and inspected as provided in rule 701—261.3(452A).

b.All fuel passing through the pumps is taxed unless supported by exemption certificates.

c.All pumps that are not licensed, sealed, metered, and inspected are of such a design that it is impossible to use them to place fuel into the fuel supply tank of a motor vehicle.

d.Accurate records are kept showing all purchases of fuel and all nontaxable bulk sales of fuel.

261.9(2) Presumption. All L.P.G. placed in this combined storage is presumed to be for highway use and taxable unless supported by exemption certificates (for fuel passing through the licensed pumps) or detailed records showing bulk sales for nonhighway use or to other users or dealers (for fuel passing through the nonlicensed pumps).

261.9(3) Separate storage. If at any time the licensee fails to comply with the requirements of this rule, separate storage for taxable sales and nontaxable bulk sales will be required under rule 701—261.8(452A).

This rule is intended to implement Iowa Code section 452A.8.

701—261.10(452A) Exemption certificates.

261.10(1) Certificate use.

a.If L.P.G. is dispensed from metered highway storage for other than highway purposes, an exemption certificate must be completed by the seller and signed by the purchaser.

b.The dealer or user must retain completed exemption certificates.

c.Certificate information. The exemption certificate must include but is not limited to the following information:

(1)Date,

(2)Seller’s name and license number,

(3)Invoice number covering the fuel sold if sold by a dealer,

(4)Identification of fuel’s intended use,

(5)Name, address, and signature of the purchaser or user.

d.The exemption certificate will be provided by the department, or a dealer or user may provide the exemption certificate if it contains all information required by the director.

261.10(2) Exempt sales.

a.Exempt sale types. Exempt sales of L.P.G. from metered highway storage are limited to the following uses:

(1)Placed directly into a fuel supply tank that is connected to the heating or cooling unit installed on a highway “reefer” unit, provided the fuel supply tank is not connected nor has provisions for connection directly or indirectly to the power source of the highway motor vehicle.

(2)Placed directly into the fuel supply tank of a nonhighway motor vehicle.

(3)Placed into carryout containers.

b.Nonexempt sales. All other sales for other than highway use must be from bulk storage and not from metered highway storage.

This rule is intended to implement Iowa Code section 452A.8.

701—261.11(452A) L.P.G. sold to the state of Iowa, its political subdivisions, contract carriers under contract with public schools to transport pupils or regional transit systems.

261.11(1) Exempt sales.

a.If L.P.G. is sold to the state of Iowa, its agencies, a political subdivision of the state, or a regional transit system for public use, or a use specified in Iowa Code section 452A.57(11), and placed in storage, it may be sold tax-free.

b.Fuel sold by a dealer and delivered directly into the fuel supply tank of a motor vehicle must be sold tax-paid.

c.Since the L.P.G. delivered into storage is not subject to tax, the governmental unit or regional transit system need not be licensed as a special fuel user. However, if the L.P.G. is used by a governmental unit or regional transit system for other than “public purposes,” it must obtain a user’s license and pay the tax on all highway L.P.G. used from the storage.

261.11(2) L.P.G. sold to a contract carrier under contract with public schools to transport pupils.

a.When special fuel is sold directly to contract carriers who have a contract with a public school under Iowa Code section 285.5 for the transportation of pupils of an approved public or nonpublic school, the fuel shall be sold tax-paid.

b.If the contract carrier is licensed as an L.P.G. fuel dealer or user, the licensee may buy the fuel tax-free, but the tax must be remitted on the monthly dealer or user return.

c.Any contract carrier who has paid the tax is entitled to a refund.

(1)A refund requested by contract carriers will be reduced by the applicable sales tax, unless otherwise exempt.

(2)All contract carriers must apply to the department for a refund registration even if they currently hold a motor fuel tax license.

(3)701—subrule 260.8(4) provides more information about this refund type.

This rule is intended to implement Iowa Code sections 452A.3 and 452A.17.

701—261.12(452A) Refunds.

261.12(1) Availability. Refunds of taxes paid on L.P.G., C.N.G., or hydrogen used for other than highway use are available if the tax has been paid.

261.12(2) Refund process.

a.To qualify for a refund, all of the following need to be met:

(1)The special fuel was used for a purpose other than to propel motor vehicles,

(2)The person requesting the refund has a refund permit,

(3)The claim is filed within the appropriate time and in the appropriate manner.

b.The income tax credit set forth in rule 701—260.11(452A) applies equally to special fuel.

This rule is intended to implement Iowa Code section 452A.17.

701—261.13(452A) Notice of meter seal breakage.

261.13(1) Notice. The department must be notified within 24 hours when the seal of any sealed meter is broken. The reason for the breakage does not affect this notification requirement.

261.13(2) Content of notice. Notice must contain but is not limited to the following information:

a.The name, address, and license number of the person who controls the meter.

b.The meter number.

c.The type of fuel pumped through the meter.

d.The date of seal breakage.

e.The name and address of the person(s) responsible for the seal breakage, if known.

f.The reason for seal breakage.

g.The meter reading before seal breakage.

h.The meter reading after the meter is resealed.

i.The signature of the person who controls the meter.

261.13(3) Reports.

a.For reporting purposes, the meter is be considered two meters, one before the seal breakage and one after. The return must note the seal breakage.

b.Meter readings.

(1)The meter readings of the meter before the seal breakage must be reported by meter number as usual.

(2)The meter readings after the meter was resealed must be reported by using the meter number plus the letter “A.”

(3)The two readings must appear on the same return schedule.

This rule is intended to implement Iowa Code sections 452A.3, 452A.8, 452A.59, and 452A.62.

701—261.14(452A) Location of records—special fuel users and dealers.

261.14(1) Generally. The records required to be prepared and kept by special fuel dealers and users under Iowa Code section 452A.10 and 701—subrule 259.3(5) must be maintained at the location that appears on the license unless the licensee keeps the records at a central location as described in 701—subrule 261.16(2).

261.14(2) Central location.

a.If the licensee has more than one license, all of the records for each separate license may be kept at a central location so long as the records for each license are kept separated.

b.The central location where the records must be kept is within the state unless:

(1)The licensee brings the records into the state when requested to do so by the department for purposes of audit, or

(2)The licensee agrees to pay the cost (as defined in rule 701—259.3(452A)) of an out-of-state audit.

This rule is intended to implement Iowa Code sections 452A.10 and 452A.74(2).

ITEM 4.Rescind 701—Chapter 262 and adopt the following new chapter in lieu thereof:

CHAPTER 262

ELECTRIC FUEL EXCISE TAX

701—262.1(452A) Definitions and applicability.

262.1(1) Definitions. For the purpose of this chapter, terms have the same meaning as provided in Iowa Code sections 452A.2 and 452A.40 and rule 701—259.1(452A).

262.1(2) Applicability of other rules. All rules in 701—Chapters 259 and 260 apply if not specifically stated in this chapter.

This rule is intended to implement Iowa Code section 452A.41.

701—262.2(452A) Tax imposed. Electric fuel excise tax must be remitted to the department by a license holder regardless of whether the licensed electric fuel dealer or licensed electric fuel user sells the fuel or gives the fuel to customers for no charge. This tax shall be calculated based on the kilowatt-hours of electric fuel delivered.

This rule is intended to implement Iowa Code section 452A.41.

701—262.3(452A) Licensing.

262.3(1) License requirements.

a.License required. A person shall not sell or dispense electric fuel within this state at a location other than a residence or otherwise act as a licensed electric fuel dealer or user without a license. The holder of an electric fuel user’s license is authorized to dispense electric fuel, measured in kilowatt-hours, into the batteries or other energy storage devices of electric motor vehicles owned or controlled by the holder.

b.No license required for residential charging. A person may dispense electric fuel at a residence without a license. “Residence” is defined in Iowa Code section 452A.40. For purposes of this rule, “residence” includes apartment buildings or other multiresidential facilities and houses regardless of whether the owner lives in the house. “Residence” does not include hotels, including extended-stay hotels, motels, or other facilities rented to transient guests.

EXAMPLE 1: Hotel A owns and operates an electric fuel charging station in its parking lot and offers electric fuel to its guests at no charge. Hotel A also owns an electric vehicle it uses as a shuttle for its guests and charges the vehicle at its charging station. Hotel A must obtain an electric fuel dealer’s license because it dispenses fuel to customers as well as an electric fuel user’s license because it charges its own vehicle at its charging station.

EXAMPLE 2: Hotel B hosts an electric fuel charging station in its parking lot and offers electric fuel to its guests for a fee. Hotel B owns an electric vehicle it uses as a shuttle for its guests and charges the vehicle at the charging station in its parking lot. The charging station in Hotel B’s parking lot is owned by Station Retailer C. Station Retailer C must obtain an electric fuel dealer’s license. Hotel B does not need to obtain an electric fuel license.

EXAMPLE 3: Homeowner D lists Homeowner D’s house on a short-term home rental online platform. Homeowner D has an electric fuel charging station installed in the garage attached to the house. Guest E agrees to rent Homeowner D’s house for a week. Guest E charges an electric vehicle using Homeowner D’s charging station. Homeowner D does not need to obtain an electric fuel license.

EXAMPLE 4: Person F owns ten houses that each have electric fuel charging stations installed. Person F only resides in one of the houses and uses the other nine as rental properties. Person F does not need to obtain an electric fuel dealer license for any of the ten houses Person F owns.

EXAMPLE 5: Person G operates a motor carrier business as a sole proprietor. Person G owns an electric vehicle and uses the electric vehicle for the business. Person G operates the business from Person G’s residence and charges the electric vehicle at that residence. Because Person G charges the electric vehicle at a residence, Person G does not need to obtain an electric fuel user license.

c.No license required for entities only dispensing nontaxable electric fuel. A person that only sells or dispenses electric fuel for which an exemption or refund may be claimed is not required to obtain a license to dispense such fuel.

EXAMPLE 1: Utility A is a municipal utility, wholly controlled by a municipality in Iowa. Utility A owns electric vehicle charging stations and only charges its own fleet of vehicles or other municipally owned vehicles at the charging stations. Utility A does not need an electric fuel user license since such sale or dispensing of electric fuel is not subject to tax pursuant to Iowa Code section 452A.17(1)“a”(3).

EXAMPLE 2: Utility B is a municipal utility, wholly controlled by a municipality in Iowa. Utility B owns electric vehicle charging stations where it charges its own fleet of vehicles. Utility B also allows individuals or private businesses to charge electric vehicles at its charging stations. Because Utility B is selling or dispensing fuel for nonpublic purposes when individuals or private businesses use its charging stations, Utility B must obtain an electric fuel dealer license.

262.3(2) License applications. Applications for a license must be filed electronically via GovConnectIowa and must be complete with all information required under Iowa Code section 452A.42(2). Applications must indicate the date on which the applicant began or plans to begin selling or dispensing electric fuel.

262.3(3) Electric fuel users. An electric fuel user’s license does not grant authority to the holder of the license to sell or dispense electric fuel to consumers. A person wishing to sell or dispense fuel for vehicles the person owns or controls as well as to a consumer must obtain both an electric fuel user’s license and an electric fuel dealer’s license for each location from which electric fuel will be sold or dispensed.

262.3(4) No fee imposed. There is no fee to apply for or hold a license to sell or dispense electric fuel.

262.3(5) License for each place of business or location. A license is required for each separate place of business or location where electric fuel is placed into the battery or other storage device of an electric vehicle.

262.3(6) Denial of license application. The department may deny a license for any of the reasons provided in Iowa Code section 452A.42(4).

262.3(7) Bonding procedures. Existing license holders may be required to post a bond or security when they have had two or more delinquencies in remitting the electric fuel tax or filing returns timely during the past 12 months. The bond or security will be an amount sufficient to cover 12 months’ electric fuel tax liability or $500, whichever is greater. The simultaneous late filing of the return and late payment of the tax will count as one delinquency. However, the late filing of the return or late payment of the tax will not count as a delinquency if the license holder can satisfy one of the penalty waiver conditions set forth in Iowa Code section 421.27. More information regarding waiver of bond is available in 701—paragraph 259.21(1)“e.”

This rule is intended to implement Iowa Code sections 452A.17 and 452A.42.

701—262.4(452A) Filing of returns and payment of tax.

262.4(1) Required information on returns. Licensed dealers and users of electric fuel must file with the department a biannual electric fuel excise tax return. For each location where electric fuel is placed into the battery or other storage device of an electric vehicle, the return must include the following information:

a.The name and license number of the entity that owns the charging facility.

b.In the case of a sole proprietorship, the individual owner’s name.

c.In the case of a partnership, the names of all partners.

d.The address of the location.

e.Total number of kilowatt-hours delivered or placed into the battery or other storage device of an electric vehicle.

262.4(2) Return and payment due date. The electric fuel excise tax return must be filed with the department no later than the last date of the month following the close of the tax periods prescribed in Iowa Code section 452A.41. The return must be accompanied by remittance of the tax due for the period of the return.

262.4(3) Electronic filing required. Returns must be filed and payments must be remitted electronically through govconnect.iowa.gov.

262.4(4) Consolidated return. A license holder that holds more than one electric fuel license must file one consolidated return reporting sales made at all locations for which a license is held.

262.4(5) International Fuel Tax Agreement returns not impacted. The electric fuel excise tax return is separate and independent from the tax returns required under the International Fuel Tax Agreement.

This rule is intended to implement Iowa Code section 452A.41.

701—262.5(452A) Charging station verification and testing.

262.5(1) Reporting of kilowatt-hours.

a.Licensed dealers and users may rely upon the following methods to determine kilowatt-hours sold for reporting on a return:

(1)Electric meters that measure only electricity sold as electric fuel.

(2)Software included in a charging station that tracks kilowatt-hours that flow through the station.

b.If neither subparagraph 262.5(1)“a”(1) or 262.5(1)“a”(2) is available, prior to filing any returns, licensed dealers and users shall contact the department for approval of a method to calculate electricity used as electric fuel as determined by an electricity study.

262.5(2) Testing of charging stations. The department of agriculture and land stewardship tests all charging stations owned by licensed dealers and users pursuant to standards set forth in Iowa Code section 452A.41. The department of agriculture and land stewardship will report to the department any charging station that is not compliant with those standards.

This rule is intended to implement Iowa Code section 452A.41.

701—262.6(452A) Refunds.

262.6(1) Filing of refund claim. Taxpayers seeking to claim a refund of electric fuel tax must obtain a refund permit pursuant to Iowa Code section 452A.44. Because returns will be filed and tax paid on a biannual basis, refund claims may be filed and will only be processed on a biannual basis after the tax period for which the refund is sought has closed.

262.6(2) Sales tax. Electric fuel used in an exempt manner may be subject to sales tax. Rule 701—260.13(452A) contains more information regarding reductions in refunds due to the applicability of sales or use tax on exempt electric fuel sales.

262.6(3) International Fuel Tax Agreement refunds not impacted. This refund process is separate and independent from any refund process authorized under 761—Chapter 505 related to the International Fuel Tax Agreement.

This rule is intended to implement Iowa Code section 452A.44.

701—262.7(452A) Exemption certificates.

262.7(1) If electric fuel is sold or dispensed for a nontaxable purpose, the purchaser may complete and provide an exemption certificate produced by the department to the license holder. The certificate is to be retained by the license holder consistent with Iowa Code section 452A.43.

262.7(2) The exemption certificate must include but not be limited to the following information:

a.The date.

b.The license holder’s name.

c.The license holder’s electric fuel dealer or electric fuel user license number applicable to the sale.

d.The invoice number covering the fuel sold if it is sold by an electric fuel dealer.

e.An indication of the use to which the fuel will be put.

f.The name, address, and signature of the purchaser.

This rule is intended to implement Iowa Code sections 452A.17 and 452A.43.