NJ Bill Spells Out Biodiesel Fuel Tax Exemptions

The New Jersey Assembly on Thursday unanimously passed bipartisan legislation that clarified biodiesel fuel exemptions under the Motor Fuels Tax Act, paving the way for an economic growth spurt in what legislators say is an expanding industry.

The law redefines the biodiesel fuel exemption to “more specifically apply to biobased liquid fuel and bidodiesel fuel,” according to its language, and lists dozens of exemptions for consumers and suppliers, who can claim tax refunds as a result. Currently, the biodiesel fuel exemption is “generally limited to any motor fuel that is derived from agricultural products or animal fats,” the law said. (Credit AP).

Assemblywomen Holly Schepisi, R- Bergen and Passaic, and L. Grace Spencer, D-Essex, sponsored the Assembly version, A4121, which was replaced by the Senate version, S-2599, and passed 76-0. The Senate had given the legislation 38-0 approval in March.

“New Jersey’s geographics makes it a perfect fit for the development of local biofuel production. The growing industry has its sights set on New Jersey, but we are one of only two states in the U.S. that does not have statutes in place for converting natural fats, greases and plants into renewable, clean biofuel in an environmentally friendly way,” Schepisi said in statement after the vote. (Credit AP).

The legislation sends a message to fuel producers that New Jersey is open for business, Schepisi said, and noted that one biodiesel plant can create 200 construction jobs, 35 to 40 “long-term, good-paying” jobs for plant employees and more than 800 jobs in related industries such as trucking and agriculture.

“The industry is experiencing rapid growth, and it is time for New Jersey to get in on the action,” she said. “The expansion of this new industry into our state will put thousands of people to work and ignite needed economic growth waterfront and trackside industrial areas.” (Credit AP).

The Assembly version of the bill was introduced in February and reviewed by the Assembly’s Environment and Solid Waste and Budget committees. The Senate version was sponsored by Sens. Bob Smith, D-Middlesex, and Christopher Bateman, R-Somerset.

Consumers can claim refunds for for fuel used in more than 18 ways, including aircraft, certain autobuses, ambulances, farm machinery, fire engines and motor boats, under the law. Refunds will be given provided there is proof that tax was paid and no refund was previously issued.

Suppliers and distributors can claim refunds for certain exported fuels; certain undyed kerosene; fuel sold to the a federal or state agency or its political subdivisions, departments and agencies; aviation fuel sold to a licensed aviation fuel dealer; liquefied petroleum gas except when delivered to the tank of a highway vehicle; contaminated motor fuel unsuitable for use; fuel returned to a refinery for further processing; certain fuel-grade alcohol or biobased liquid fuel; and fuel that could generate a second tax as result of being exported, sold or distributed, according to the legislation.

Making the state more business friendly to the fuel industries was one of the goals of sweeping changes that New Jersey made to the Motor Fuels Tax Act in 2010. According to a public notice about the changes, modifications would be made to the licensing, reporting and imposition and collection in order to create a more business-friendly environment, simplify tax collection and increase enforcement.

By: Martin J. Milita, Jr. Esq., Sr. Director.

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