1. (a) This rule applies only to motor fuel transactions that take place on or after January 1, 2004. Motor fuel transactions that occur prior to January 1, 2004, will be governed by sections in Texas Administrative Code, Title 34, Part 1, Chapter 3, Subchapter L.
2. (b) End User Number. A person who wants to use a signed statement to purchase dyed diesel fuel tax free for use in nonhighway equipment must apply to the comptroller for an End User Number. The comptroller will issue to a qualified applicant an End User Number with a prefix of DD (for non-agriculture off road equipment) or AG (for agriculture off road equipment) depending on the manner in which the applicant will use the dyed diesel fuel. A person cannot use a signed statement to purchase tax-free dyed diesel fuel unless the person holds an End User Number issued by the comptroller.

3. (c) Signed Statement. A person with a valid End User Number may purchase dyed diesel fuel tax free for nonhighway use by providing the seller with a signed statement subject to the limitations that are stated in paragraphs (2), (3) and (4) of this subsection. Copies of the blank signed statements are available for inspection at the office of the Texas Register. Copies may be obtained from the Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711-3528 or requested by calling 512/463-4600, or our toll-free number 1-800-252-1383. (From a Telecommunication Device for the Deaf (TDD) only, call 512/463-4621 or 1-800-248-4099 toll free) Taxpayers may download copies at www.window.state.tx.us.

   1. (1) The signed statement must include the purchaser's End User Number, must be signed by the buyer or the buyer's authorized representative, and must specify that:

      1. (A) only dyed diesel fuel will be purchased using the signed statement;
      2. (B) all dyed diesel fuel will be used by the buyer and will not be resold; and
      3. (C) none of the dyed diesel fuel will be delivered into the fuel supply tanks of motor vehicles operated on public highways.

   2. (2) A person issued an End User Number beginning with DD may buy, and a licensed diesel fuel supplier, permissive supplier, or distributor may sell, dyed diesel fuel tax free using a signed statement subject to the following limitations:

      1. (A) not more than 7,400 gallons of dyed diesel fuel may be purchased or sold in a single delivery; or
      2. (B) not more that 10,000 gallons of dyed diesel fuel may be purchased or sold to a purchaser during a month. The purchase, sale, or delivery that causes the 10,000 gallon limit to be exceeded during a month is not taxable. Any subsequent purchase, sale, or delivery made during the same month is taxable.

   3. (3) A person who has been issued an end user number beginning with DD and who uses the dyed diesel fuel exclusively in the original production of oil and gas, or to increase the production of oil and gas, must obtain a letter of exception authorizing the person to exceed the 10,000 gallon limit. Examples of uses that may occur in the original production or to increase production of oil and gas include the use of dyed diesel fuel to drill, fracture, perforate, squeeze cement, acidize, log, plug back, complete, plug and abandon, install a casing liner, pull or reset a casing liner, swab, drill out a plug, jet, pack gravel or workover, and perform a hot oil treatment on a formation. Oil and gas production does not include maintaining the site, mowing, painting, gauging tanks, changing pumps, performing rod or tubing jobs, fishing for rods or tubing, repairing a tubing leak, changing a packer or anchor, performing hot oil or water treatment on casing, tubing or flow lines, and transporting. A person who uses dyed diesel fuel exclusively in the original production of oil and gas or to increase the production of oil and gas, may buy, and a licensed diesel fuel supplier, permissive supplier, or distributor may sell, dyed diesel fuel tax free by using a letter of exception and a signed statement, subject to the following limitations:

      1. (A) not more than 7,400 gallons of dyed diesel fuel may be purchased or sold in a single delivery; or
      2. (B) not more than 25,000 gallons of dyed diesel fuel may be purchased or sold to a purchaser during a calendar month. The purchase, sale, or delivery that causes the 25,000 gallon limit to be exceeded during a calendar month is not taxable. Any subsequent purchase, sale, or delivery made during the same calendar month is taxable.

   4. (4) A person who has been issued an end user number beginning with AG and who uses dyed diesel fuel exclusively for an agricultural purpose as described in Tax Code, §162.001, may buy, and a diesel fuel licensed supplier, permissive supplier, or distributor may sell, dyed diesel fuel tax free using a signed statement subject to the following limitations:

      1. (A) not more that 7,400 gallons of dyed diesel fuel may be purchased or sold in a single delivery; or
      2. (B) not more than 25,000 gallons of dyed diesel fuel may be purchased or sold to an end user during a calendar month. The purchase, sale, or delivery that causes the 25,000 gallon limit to be exceeded during a calendar month is not taxable. Any subsequent purchase, sale, or delivery made during the same calendar month is taxable.
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4. (d) A person who exceeds the limitations in subsection (c) of this section shall be required to obtain a dyed diesel fuel bonded user license.

5. (e) A separate operating division of a corporation may apply for and receive an End User Number to buy dyed diesel fuel tax free using a signed statement if the division:

   1. (1) does not resell the fuel;
   2. (2) consumes the fuel; and
   3. (3) maintains separate storage apart from other corporate divisions.

6. (f) The signed statement remains in effect until:

   1. (1) it is revoked in writing by either the buyer or seller; or
   2. (2) the comptroller notifies the supplier or distributor in writing or by means of electronic transmission that the buyer may no longer make tax-free purchases.

Source Note:The provisions of this §3.438 adopted to be effective September 2, 2004, 29 TexReg 8374.