Regular Session 2019-2020 House Bill 2233 P.N. 3276

PRIOR PRINTER'S NO. 3174

PRINTER'S NO. 3276

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2233

Session of

2020

INTRODUCED BY GREINER, HILL-EVANS, ROTHMAN, NEILSON, DUNBAR,

RYAN, PICKETT, SAINATO, JAMES, FEE, LONGIETTI, HICKERNELL,

MENTZER, ZIMMERMAN, GALLOWAY, ROEBUCK, HERSHEY, CONKLIN,

CIRESI AND GILLEN, JANUARY 17, 2020

AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,

AS AMENDED, FEBRUARY 5, 2020

AN ACT

Amending Title 75 (Vehicles) of the Pennsylvania Consolidated

Statutes, in liquid fuels and fuels tax, further providing

for definitions, providing for exempt entity use, sale and

delivery POLITICAL SUBDIVISION AND VOLUNTEER SERVICE USE of

tax-free motor fuels and further providing for examination of

records and equipment.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 9002 of Title 75 of the Pennsylvania

Consolidated Statutes is amended by adding definitions to read:

§ 9002. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Motor fuels." Liquid fuels or fuels. This term does not

include alternative fuels.

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"Political subdivision." A county, city, borough,

incorporated town, township, school district, vocational school

district and county institution district.

"Registered distributor." A distributor that holds a valid

liquid fuels or fuels tax permit issued by the department.

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"Tax-free motor fuels." Motor fuels upon which the oil

company franchise tax has not been imposed.

"Volunteer service." A volunteer fire company, volunteer

ambulance service or volunteer rescue squad.

Section 2. Title 75 is amended by adding a section to read:

§ 9004.1. Exempt entity use, sale and delivery of tax-free

motor fuels.

(a) Limitations.--An exempt entity:

(1) May not be a distributor.

(2) May use tax-free motor fuels only for its own

official business purposes.

(3) May not sell or deliver tax-free motor fuels to any

other person or exempt entity except to political

subdivisions as provided under subsection (c).

(4) May purchase and take delivery of tax-free motor

fuels only from a registered distributor except for volunteer

services as provided under subsection (c).

(5) Shall cooperate with the department during an

investigation or audit related to the use, sale or delivery

of tax-free motor fuels provided for in this chapter.

(b) Penalties.--An exempt entity that improperly uses, sells

or delivers tax-free motor fuels shall:

(1) Pay to the Commonwealth the tax imposed by section

9004(b) (relating to imposition of tax, exemptions and

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deductions).

(2) Pay an additional penalty equal to 100% of the tax

imposed by section 9004(b).

(3) Become subject to any other penalties, summary

offenses or misdemeanors that may be imposed upon

distributors who violate the provisions of this chapter.

services.--A political subdivision may sell or deliver tax-free

motor fuels to a volunteer service if:

(1) The political subdivision's bulk storage tank from

which the volunteer service removes tax-free motor fuels

contains only tax-free motor fuels that are either owned

exclusively by the political subdivision or owned by both the

political subdivision and one or more volunteer services

pursuant to a valid commingling agreement as provided for in

subsection (d).

(2) The volunteer service provides services to the

political subdivision and the residents of the political

subdivision.

(3) The volunteer service takes delivery of the motor

fuel directly from a bulk storage tank owned by the political

subdivision.

(4) The withdrawal of tax-free motor fuels from the

political subdivision's bulk storage tank by a volunteer

service is considered a nontaxable use of the fuel by the

political subdivision and the fuel is placed directly into

the vehicle propulsion tank of a vehicle owned and operated

by the volunteer service.

(5) Prior to the volunteer service's withdrawal of tax-

free motor fuels from the political subdivision's bulk

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storage tank, the volunteer service and political subdivision

enters into a written agreement that contains:

(i) Controls and security procedures for the removal

of tax-free motor fuels from the bulk storage tank by the

volunteer service.

(ii) Recordkeeping compliance provisions similar to

this chapter's provisions that apply to distributors.

(d) Exempt entity use of commingled tax-free motor fuels.--

An exempt entity may withdraw tax-free motor fuels from a bulk

storage tank containing only commingled tax-free motor fuels if:

(1) The bulk storage tank is located on property owned

by one of the exempt entities that owns tax-free motor fuels

placed into the tank and the exempt entity owning the

property is the owner of the bulk storage tank.

(2) Each exempt entity commingling tax-free motor fuels

in the bulk storage tank contracts separately with a

distributor for purchase and delivery of tax-free motor fuels

placed into the tank.

(3) Each exempt entity owning tax-free motor fuels in

the bulk storage tank enters into an agreement with the

exempt entity that owns the bulk storage tank and the

agreement includes provisions pertaining to:

(i) Purchase from distributors of tax-free motor

fuels placed into the bulk storage tank.

(ii) Method of delivery of tax-free motor fuels into

the bulk storage tank.

(iii) Storage of tax-free motor fuels in the bulk

storage tank.

(iv) Removal of tax-free motor fuels from the bulk

storage tank.

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(v) Compliance with all of the recordkeeping

requirements for liquid fuels and fuels as provided in

this chapter.

(vi) Acknowledgment of joint and several liability

for loss, misuse or undocumented withdrawals of tax-free

motor fuels from the bulk storage tank.

(4) The exempt entity does not withdraw from the bulk

storage tank any amount of commingled tax-free motor fuels

for which the exempt entity has not previously paid a

distributor to deliver into the tank.

(5) Tax-paid motor fuels are not placed into a bulk

storage tank containing commingled fuels.

(6) Only exempt entities may own tax-free motor fuels

placed into or removed from the bulk storage tank containing

commingled tax-free motor fuels.

(7) All of the recordkeeping compliance provisions of

this chapter are satisfied by each entity owning commingled

tax-free motor fuels in the bulk storage tank.

(e) Distributors not liable.--A registered distributor

holding a permit that sold or delivered tax-free motor fuels to

an exempt entity under this section shall not be responsible for

the tax imposed by this chapter if:

(1) the purchaser subsequently sells or delivers the

tax-free motor fuels to another entity; or

(2) the purchaser subsequently uses the motor fuels for

a taxable purpose.

SECTION 1. TITLE 75 OF THE PENNSYLVANIA CONSOLIDATED

STATUTES IS AMENDED BY ADDING A SECTION TO READ:

§ 9004.1. POLITICAL SUBDIVISION AND VOLUNTEER SERVICE USE OF

TAX-FREE MOTOR FUELS.

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(A) LIMITATIONS.--AN EXEMPT ENTITY:

(1) MAY NOT BE A DISTRIBUTOR.

(2) MAY USE TAX-FREE MOTOR FUELS ONLY FOR ITS OWN

OFFICIAL BUSINESS PURPOSES.

(3) MAY NOT SELL OR DELIVER TAX-FREE MOTOR FUELS TO ANY

OTHER PERSON OR EXEMPT ENTITY.

(4) MAY PURCHASE AND TAKE DELIVERY OF TAX-FREE MOTOR

FUELS ONLY FROM A DISTRIBUTOR.

(5) SHALL COOPERATE WITH THE DEPARTMENT DURING AN

INVESTIGATION OR AUDIT RELATED TO THE USE, SALE OR DELIVERY

OF TAX-FREE MOTOR FUELS PROVIDED FOR IN THIS CHAPTER.

(B) PENALTY.--AN EXEMPT ENTITY THAT IMPROPERLY USES, SELLS

OR DELIVERS TAX-FREE MOTOR FUELS SHALL:

(1) PAY THE TAX IMPOSED UNDER SECTION 9004(B) (RELATING

TO IMPOSITION OF TAX, EXEMPTIONS AND DEDUCTIONS).

(2) PAY AN ADDITIONAL PENALTY EQUAL TO 100% OF THE TAX

IMPOSED UNDER SECTION 9004(B).

(3) BE SUBJECT TO ANY OTHER PENALTY, SUMMARY OFFENSE OR

MISDEMEANOR THAT MAY BE IMPOSED UPON DISTRIBUTORS WHO VIOLATE

THE PROVISIONS OF THIS CHAPTER.

AN EXEMPT ENTITY MAY WITHDRAW TAX-FREE MOTOR FUELS FROM A BULK

STORAGE TANK CONTAINING ONLY COMMINGLED TAX-FREE MOTOR FUELS IF

THE FOLLOWING APPLY:

(1) THE BULK STORAGE TANK IS LOCATED ON PROPERTY OWNED

BY ONE OF THE EXEMPT ENTITIES THAT OWNS TAX-FREE MOTOR FUELS

PLACED INTO THE TANK AND THE EXEMPT ENTITY OWNING THE

PROPERTY IS THE OWNER OF THE BULK STORAGE TANK.

(2) EACH EXEMPT ENTITY COMMINGLING TAX-FREE MOTOR FUELS

IN THE BULK STORAGE TANK CONTRACTS SEPARATELY WITH A

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DISTRIBUTOR FOR PURCHASE AND DELIVERY OF TAX-FREE MOTOR FUELS

PLACED INTO THE TANK.

(3) EACH EXEMPT ENTITY OWNING TAX-FREE MOTOR FUELS IN

THE BULK STORAGE TANK ENTERS INTO AN AGREEMENT WITH THE

EXEMPT ENTITY THAT OWNS THE BULK STORAGE TANK AND THE

AGREEMENT INCLUDES PROVISIONS PERTAINING TO:

(I) PURCHASE FROM DISTRIBUTORS OF TAX-FREE MOTOR

FUELS PLACED INTO THE BULK STORAGE TANK;

(II) METHOD OF DELIVERY OF TAX-FREE MOTOR FUELS INTO

THE BULK STORAGE TANK;

(III) CONTROLS AND SECURITY PROCEDURES FOR THE

REMOVAL OF TAX-FREE MOTOR FUELS FROM THE BULK STORAGE

TANK BY THE VOLUNTEER SERVICE;

(IV) STORAGE OF TAX-FREE MOTOR FUELS IN THE BULK

STORAGE TANK;

(V) REMOVAL OF TAX-FREE MOTOR FUELS FROM THE BULK

STORAGE TANK;

(VI) COMPLIANCE WITH ALL OF THE RECORDKEEPING

REQUIREMENTS FOR LIQUID FUELS AND FUELS AS PROVIDED UNDER

THIS CHAPTER; AND

(VII) ACKNOWLEDGMENT OF JOINT AND SEVERAL LIABILITY

FOR LOSS, MISUSE OR UNDOCUMENTED WITHDRAWALS OF TAX-FREE

MOTOR FUELS FROM THE BULK STORAGE TANK.

(4) THE EXEMPT ENTITY DOES NOT WITHDRAW FROM THE BULK

STORAGE TANK ANY AMOUNT OF COMMINGLED TAX-FREE MOTOR FUELS

FOR WHICH THE EXEMPT ENTITY HAS NOT PREVIOUSLY PAID A

DISTRIBUTOR TO DELIVER INTO THE TANK, EXCEPT AS PROVIDED FOR

VOLUNTEER SERVICES UNDER SUBSECTION (D).

(5) TAX-PAID MOTOR FUELS ARE NOT PLACED INTO A BULK

STORAGE TANK CONTAINING COMMINGLED TAX-FREE MOTOR FUELS.

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(6) ONLY EXEMPT ENTITIES MAY OWN TAX-FREE MOTOR FUELS

PLACED INTO OR REMOVED FROM THE BULK STORAGE TANK CONTAINING

COMMINGLED TAX-FREE MOTOR FUELS.

(7) ALL OF THE RECORDKEEPING COMPLIANCE PROVISIONS OF

THIS CHAPTER ARE SATISFIED BY EACH ENTITY OWNING COMMINGLED

TAX-FREE MOTOR FUELS IN THE BULK STORAGE TANK.

(D) CONDITIONS ON USE OF MOTOR FUELS TRANSFERRED TO

VOLUNTEER SERVICES FROM POLITICAL SUBDIVISIONS.--A VOLUNTEER

SERVICE MAY USE TAX-FREE MOTOR FUELS TRANSFERRED TO THE

VOLUNTEER SERVICE FROM A POLITICAL SUBDIVISION IF THE FOLLOWING

APPLY:

(1) THE POLITICAL SUBDIVISION'S BULK STORAGE TANK FROM

WHICH THE VOLUNTEER SERVICE REMOVES TAX-FREE MOTOR FUELS

CONTAINS ONLY TAX-FREE MOTOR FUELS THAT ARE EITHER OWNED

EXCLUSIVELY BY THE POLITICAL SUBDIVISION OR OWNED BY BOTH THE

POLITICAL SUBDIVISION AND ONE OR MORE VOLUNTEER SERVICES

PURSUANT TO A VALID COMMINGLING AGREEMENT AS PROVIDED FOR

UNDER SUBSECTION (C)(3).

(2) THE VOLUNTEER SERVICE PROVIDES SERVICES TO THE

POLITICAL SUBDIVISION AND THE RESIDENTS OF THE POLITICAL

SUBDIVISION.

(3) THE VOLUNTEER SERVICE TAKES DELIVERY OF THE MOTOR

FUEL DIRECTLY FROM A BULK STORAGE TANK OWNED BY THE POLITICAL

SUBDIVISION.

(4) TAX-FREE MOTOR FUELS WITHDRAWN FROM THE POLITICAL

SUBDIVISION'S BULK STORAGE TANK BY A VOLUNTEER SERVICE MUST

BE PLACED DIRECTLY INTO THE VEHICLE PROPULSION TANK OF A

VEHICLE OWNED AND OPERATED BY THE VOLUNTEER SERVICE.

(E) DEFINITIONS.--THE FOLLOWING WORDS AND PHRASES WHEN USED

IN THIS SECTION SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS

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SUBSECTION UNLESS THE CONTEXT CLEARLY INDICATES OTHERWISE:

"EXEMPT ENTITY." A POLITICAL SUBDIVISION OR VOLUNTEER

SERVICE IN ACCORDANCE WITH SECTION 9004(E).

"MOTOR FUELS." LIQUID FUELS OR FUELS. THE TERM DOES NOT

INCLUDE ALTERNATIVE FUELS.

"POLITICAL SUBDIVISION." A COUNTY, CITY, BOROUGH,

INCORPORATED TOWN, TOWNSHIP, SCHOOL DISTRICT, VOCATIONAL SCHOOL

DISTRICT OR COUNTY INSTITUTION DISTRICT.

"TAX-FREE MOTOR FUELS." MOTOR FUELS UPON WHICH THE OIL

COMPANY FRANCHISE TAX UNDER 9004(B) HAS NOT BEEN IMPOSED.

"VOLUNTEER SERVICE." A VOLUNTEER FIRE COMPANY, VOLUNTEER

AMBULANCE SERVICE OR VOLUNTEER RESCUE SQUAD.

Section 3 2. Section 9008 of Title 75 is amended by adding

subsections to read:

§ 9008. Examination of records and equipment.

* * *

(b) or section 731 of the act of April 9, 1929 (P.L.343,

No.176), known as The Fiscal Code, incorrect liquid fuel, fuel

or alternative fuel composition information, including octane

values, discovered by the department upon examination of storage

tank contents or related records may be disclosed to an

appropriate enforcement authority for investigation.

(d) Public safety.-- Notwithstanding subsection (a) or (b) or

section 731 of The Fiscal Code, any suspected violation that

could pose a threat to public safety discovered by the

department during an examination authorized by this section may

be disclosed to an appropriate enforcement authority for

investigation.

Section 4 3. This act shall take effect immediately.

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