What renewable-fuel and biodiesel retail incentives did Kansas enact in 2007, and when could a consumer blend fuel without a manufacturer license?

Plain-English summary

Notice 07-04 summarized two motor-fuel bills enacted in 2007.

Renewable-fuel and biodiesel dealer incentives

House Bill 2145 created a Kansas retail dealer incentive program effective January 1, 2009. It established a dedicated fund for incentives paid to Kansas retailers that sold and dispensed renewable fuels or biodiesel through motor-fuel pumps, required quarterly electronic claims, and set the program to expire January 1, 2026.

For renewable fuel blended into gasoline:

• the threshold began at 10% in 2009, increased one percentage point each year, and reached 25% beginning in 2025;
• meeting the threshold produced a 6.5-cent-per-gallon incentive;
• missing it by no more than two percentage points produced 4.5 cents per gallon; and
• missing by more than two percentage points produced no incentive.

For biodiesel:

• the threshold began at 2% in 2009, increased two points annually through 16% in 2016, then one point annually to 25% in 2025; and
• meeting the threshold produced a three-cent-per-gallon incentive.

Retailers could calculate the incentives by individual Kansas site or across all their qualifying Kansas sites. Claims had to include the gallons sold.

Own-use fuel blending

House Bill 2013 amended K.S.A. 79-3403 effective March 22, 2007. A consumer did not need a motor-vehicle-fuel or special-fuel manufacturer's license when blending fuel purchased for the consumer's own use, not resale, from a distributor or retailer holding a valid, active fuel license.

What this means for you

Renewable-fuel and biodiesel retailers

Eligibility depended on actual gallons sold, threshold percentages, electronic quarterly filing, and compliance with Department requirements. Confirm later law and funding before assuming the incentive was available for another period.

Businesses blending fuel for their own use

The license exception was limited to own-use fuel, not resale, purchased from a properly licensed distributor or retailer.

Common questions

Q: What was the full renewable-fuel incentive rate?
A: 6.5 cents per gallon when the retailer met the threshold percentage.

Q: What if the retailer narrowly missed the renewable-fuel threshold?
A: A disparity of two percentage points or less reduced the rate to 4.5 cents; a larger disparity eliminated the incentive.

Q: What was the biodiesel incentive rate?
A: Three cents per gallon when the biodiesel threshold was met.

Q: When did the incentive program expire under this legislation?
A: January 1, 2026.

Citations and references

• 2007 House Bill 2145, §§ 7-13 — retail dealer incentive fund, thresholds, rates, filing, and expiration.
• 2007 House Bill 2013 and K.S.A. 79-3403 — own-use consumer fuel-blending license exception.

Subject

2007 Motor Fuel Legislative Update

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 07-04

Original ruling text

Notice
Notice Number: 07-04
Tax Type: Motor Vehicle Fuel Tax
Brief Description: 2007 Motor Fuel Legislative Update
Keywords:
Approval Date: 07/16/2007

Body:
KANSAS DEPARTMENT OF REVENUE

                                                       NOTICE 07-04

                                          2007 Motor Fuel Legislative Update

The following Bills were enacted by the 2007 Legislature:

House Bill 2145 creates the Kansas retail dealer incentive for renewable fuels and biodiesel, effective January 1, 2009. A
summarization of the bill is provided below.

New Section 7 includes definitions, as they pertain to the incentive.

New Section 8 (a) On January 1, 2009, and quarterly thereafter, the director of accounts and reports shall transfer $400,000 from the
state general fund to the Kansas retail dealer incentive fund. On and after July 1, 2009, the unobligated balance in the Kansas retail
dealer incentive fund shall not exceed $1.5 million. If the unobligated balance of the fund exceeds $1.1 million at the time of a
quarterly transfer, the transfer shall be limited to the amount necessary for the fund to reach a total of $1.5million.

(b) There is hereby created in the state treasury the Kansas retail dealer incentive fund. All moneys in the Kansas retail dealer
incentive fund shall be expended by the secretary of the department of revenue for the payment of incentives to Kansas retail dealers
who sell and dispense renewable fuels or biodiesel through a motor fuel pump in accordance with the provisions of sections 7
through 12, and amendments thereto.

(c) All moneys remaining in the Kansas retail dealer incentive fund upon the expiration of sections 7 through 12, and amendments
thereto, shall be credited by the state treasurer to the state general fund.

New Sec. 9 (a) and (b) provides that a retail dealer of motor fuel shall be paid an incentive for the selling or dispensing of renewable
fuels through a motor fuel pump, and in order to be eligible for such incentive all of the following must apply:

(1) The retail dealer sells and dispenses renewable fuels through a motor fuel pump in the quarter in which the incentive is claimed.

(2) The retail dealer complies with requirements of the department of revenue to administer this section.

(c) In order to receive the incentive, the retail dealer must calculate their renewable fuels distribution percentage which is the sum of
the retail dealer’s total renewable fuels blended into gasoline expressed as a percentage of the retail dealer’s total gasoline gallonage,
in the retail dealer’s applicable determination period. The retail dealer’s renewable fuels threshold percentage is 10% for any quarter
of the determination period beginning on January 1, 2009, and ending December 31, 2009. Each year, the percentage increases by
1% and ends with a total of 25% beginning on and after January 1, 2025.

(d) The incentive may be calculated separately for each retail motor fuel site from which the retail dealer sells and dispenses
renewable fuel or may be calculated for all retail motor fuel sites which the retail dealer has in Kansas that sells and dispenses
renewable fuels.

(e) The retail dealer’s incentive is calculated by multiplying the retail dealer’s total renewable fuel gallonage by an incentive rate,
which may be adjusted based on the retail dealer’s renewable fuels threshold percentage disparity. The incentive rate is as follows:

(1) For any quarter in which the retail dealer has attained a renewable fuels threshold percentage for the determination period, the
incentive rate is 6.5 cents.

(2) For any quarter in which the retail dealer has not attained a renewable fuels threshold percentage for the determination period, the

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incentive rate shall be adjusted based on the retail dealer’s renewable fuels threshold percentage disparity. The amount of the
adjusted incentive rate is as follows:

(A) If the retail dealer’s renewable fuels threshold percentage disparity equals 2% or less, the incentive rate is 4.5 cents.

(B) A retail dealer is not eligible for an incentive if the retail dealer’s renewable fuels threshold percentage disparity equals more
than 2%.

New Sec. 10. (a) and (b) provides that a retail dealer of biodiesel shall be paid an incentive for the selling or dispensing of biodiesel
and in order to be eligible for such incentive all of the following must apply:

(1) The retail dealer sells and dispenses biodiesel in the quarter in which the incentive is claimed.

(2) The retail dealer complies with requirements of the department of revenue to administer this section.

(c) and (1) In order to receive the incentive, the retail dealer must calculate their distribution percentage which is the sum of the retail
dealer’s total biodiesel gallonage expressed as a percentage of the retail dealer’s total diesel and biodiesel gallonage, in the retail
dealer’s applicable determination period.

(2) The retail dealer’s biodiesel threshold percentage is 2% for any quarter of the determination period beginning January 1, 2009
and ending December 31, 2009. Each year thereafter, up to and including 2016, the percentage increases by 2%, for a percentage of
16% for 2016. Beginning on January 1, 2017 the percentage increases by 1% each year and ends with a total of 25% January 1, 2025
through December 31, 2025.

(d) The incentive may be calculated separately for each retail motor fuel site from which the retail dealer sells and dispenses
biodiesel or may be calculated for all retail motor fuel sites which the retail dealer has in
Kansas that sells and dispenses biodiesel.

(e) The retail dealer’s incentive is calculated by multiplying the retail dealer’s biodiesel gallonage by the incentive rate for any
quarter in which the retail dealer has attained a biodiesel threshold percentage for the
determination period, the incentive rate is three cents.

New Sec. 11. (a) The retail dealer shall file electronically for the incentive for selling or dispensing of renewable fuels or biodiesel
beginning January 1, 2009, and quarterly thereafter in the manner required by the department of revenue. The retail dealer shall file
such information as the secretary of revenue may require by rules and regulations, but shall include the total number of gallons of
renewable fuels or biodiesel sold.

New Sec. 13. The incentive expires January 1, 2026.

House Bill 2013 amends K.S.A. 79-3403 and indicates that ‘No motor-vehicle fuels or special fuel manufacturer’s
license shall be required for any consumer who is blending motor-vehicle fuel or special fuel purchased for such
consumer’s own use, and not for resale, from a distributor or retailer who is the holder of a valid, unsuspended and
unrevoked motor-vehicle fuels or special fuels distributor’s or retailer’s license’. This bill was effective 3/22/07, upon
publication in the Kansas Register.

For a detailed, full text copy of each bill, please visit the Kansas Legislature’s website at www.kslegislature.org.

TAXPAYER ASSISTANCE
To obtain additional copies of this or any other notice call the Kansas Department of Revenue’s voice mail forms request line at 785-
296-4937 or download them from our web site: www.ksrevenue.org. If you have any questions about this notice, please contact our
Motor Fuel Tax Unit.
Motor Fuel Tax Correspondence
Docking State Office Building
915 SW Harrison St.
Topeka, KS 66625-8000
(785) 368-8222
Fax: (785) 296-4993

Notice 07-04
July 16, 2007