Road Tax

Coming up for air a bit … we have some big projects going on, like getting our house ready to put on the market (to sell it) and looking for a new place to live. We’re planning to stay here in Durham, we just need a third bedroom, and a change in scenery.

Anyway – one of the projects I am working on is my biodiesel road tax. Figuring out how to “be legal” when using homebrew is turning out to be more complicated than actually making the stuff. And I am not even necessarily the trailblazer here. A lot of the groundwork seems to have been done by Piedmont Biofuels and other homebrewers. At this point, my biggest hurdle appears to be to convince a bonding company to post a $2000 bond with the state.

To be very clear: please do not take any of this information as legal advice. I am just documenting my experience for the benefit of a public discussion. I AM NOT A LAWYER.

In North Carolina, when one operates a licensed vehicle on public highways, one is required to pay road tax. (NC General Statute, Chapter 105, Article 36C) That tax is collected as part of the cost of the fuel for that vehicle, and all commercial retailers of fuel are required to collect that tax. But what happens if you don’t buy fuel from a retailer, and make your own instead? Do you still have to pay the road tax?

Well, the law is based on your use of North Carolina highways, not on the source of the fuel. If you use the highways, you have to pay taxes. If you don’t use the highways, you don’t have to pay taxes. That’s why you can get dyed, off-road fuel, which is not taxed, and which is only for use in off-road equipment, like farm vehicles, construction vehicles, recreational vehicles, etc. So if you make fuel yourself and use it in a vehicle on the highway, you have to pay road tax.

To be able to pay that tax to the NC Dept. of Revenue (NCDOR), you have to become a licensed and bonded “Biodiesel Provider.” So I emailed the NCDOR and today I received in the mail my very own form GAS-1262 – the NC Motor Fuels Tax License Application. Many of the NC DOR forms can be downloaded from the DOR website, but currently this one is not available online. So that’s about 20 pages of “light reading” and some trivia questions, like “Are you a shipper of record on one of the commercial pipelines serving North Carolina?”

No problem.

The other piece of this equation is the bond. Article 36C requires that Biodiesel Providers post a $2000 bond with the state. One of the most common ways to do this is to pay a bonding agency. So I contacted a friend of mine who is an insurance broker and also an agent for CNA Surety. Boy, those bonding folks are not easy to please. They wanted to know exactly what statute of NC law requires me to get a bond, and they said something about wanting an “official financial statement” from me. Can’t they just run a credit check? Well, we’ll see how that turns out.

So if I can get the bonding guys to do their thing (to the tune of $100/year!), I’ll just have to fill out the application, and I should be legal, and able to pay road tax to the state.

2 Responses to “Road Tax”

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  2. Erlene Rawhouser Says:

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