Friday, March 07, 2008


Vegwerks has a link to a great reference page concerning the fuel tax and legal requirements of most states.

California more or less considers WVO a hazardous waste and the transportation and handling of it requires a license. Fees are $100 annual for the "Blender" license and $100 per vehicle used to transport the oil. A 1 million dollar insurance policy or bond is required for the vehicle. I added an umbrella to my home owners policy and this gave me the million dollar coverage for approx. $250 annually. I guess their thinking is if there is an accident someone has to pay for the cleanup.

Additionally when one purchases fuel commercially the price includes road excise taxes. These taxes, as the name implies, help pay for the upkeep and such of the roads. (How does an electric vehicle fit into this equaton?). The federal tax rate is 24.4 cents a gallon and is paid quarterly (IRS form 720). The California tax it $.18 per gallon and also is to be paid quarterly to the BOE. The state refers to SVO and biodiesel users as "Blenders" and both are subject to the same tax liability.

Concerning the Federal liabilities, some folks refer to the quote below:

"An exclusion from tax on the "blended taxable fuel" mixture is provided in Treasury Regulations section 48.4081-1(c)(1)(ii) for minor blending if: during any calendar quarter the removal or sale of the mixture in aggregate by the blender is less than 400 gallons."

I have been informed (see comments) that this is a misconception and there is no Fed exemption for small blenders. Simply stated - you are liable for any untaxed fuel you use on public roads. Do your own research.

Some states (AR for example - AK?) have recently introduced legislature for an exemption for SVO drivers. Obviously one must check their own state's requirements of how it taxes SVO drivers/vehicles.

At a minimum keep a log of veggie gallons used and consult with your tax professional concerning the specifics of your situation. Don't take my babbling for fact, only as general information to get you started.

UPDATE (6/18/08)
California raised the fees to $100 per year for the license & $300 annual for the vehicle. However there is legislation in the state assembly to waive the $300 annual fee for small home biodiesel/wvo blenders. The insurance policy and $100 license fee would still be required. There is broad support for this measure and it is expected to pass.


  1. Hmmm.. are you talking about a 400 gallon exemption for California?? The Feds require you to pay on every gallon used on-road, even if it's less than 400 gallons.

    Quoting from

    "400 gallon per quarter Road Tax Exemption:
    That is a widely spread misunderstanding. IRS rules allow for blenders to not have to pay on the EVENT of blending/transfering less than 400 gallons biodiesel per quarter.

    The separate EVENT of introducing any fuel in the tank of a vehicle used on public roads is not exempted at all. This is covered in the apparently overlooked "backup tax" provision, and I have confirmed this with several IRS fuel tax agents."

  2. I was talking about Fed. It does seem like a large volume to exempt and why would the man not take his due share?

    I amend the post