Dyed diesel law could be an issue again in Idaho

A sugar beet field near Nampa, Idaho, is sprayed in late August. Idaho lawmakers could again be asked to debate stricter enforcement of the state's dyed diesel laws. The fuel is used in off-road vehicles such as farm equipment.

BOISE — Stricter enforcement of Idaho’s dyed diesel law could again be an issue during the next legislative session.

But the state’s major farm groups will oppose any effort to change the law and move to a rebate system that requires users to pay state fuel taxes and claim a refund.

Dyed diesel, also known as off-road diesel, is a higher sulfur fuel colored red that is untaxed and allowed in non-registered vehicles that are not used on public roads, such as farm and construction equipment.

People who use this fuel don’t pay state and federal fuel taxes. The Idaho tax on diesel fuel is 25 cents per gallon and the federal tax is 24.4 cents.

The state penalty for misusing dyed diesel is a $250 fine for a first offense, $500 for second offense and $1,000 for each subsequent offense. The Internal Revenue Service can fine dyed diesel cheaters $1,000 or $10 per gallon, whichever is greater.

Idaho farm groups have generally supported greater enforcement of the dyed diesel law, but they have opposed legislation that would require people who use off-road diesel to pay the taxes on it up front and then apply for a rebate on their income tax return.

The issue has been debated off and on by the Idaho Legislature over the past seven years and was discussed in September during a state transportation funding task force meeting.

“It may well come up again during the next session,” said Sen. Bert Brackett, a Republican rancher from Rogerson.

Idaho Farm Bureau Federation helped kill an effort during the 2011 legislative session to introduce a rebate system.

That would create a major paperwork burden for farmers who use dyed diesel, said IFBF Director of Governmental Affairs Russ Hendricks, who points out that the Federal Highway Administration abandoned that type of system in 1993 in favor of the current one because of widespread cheating.

“Not only would it be a bigger administrative (burden) to deal with, both for the state and for farmers, but that’s the system we went away from 20 years ago because it was full of fraud,” he said.

Hendricks said IFBF supports enforcement of existing laws but would oppose any proposal to switch to a rebate system.

Sen. Jim Patrick, a Republican farmer from Twin Falls, agrees with IFBF that changing to a rebate system would not be wise.

“You can cheat on that system just as easily as you can put dyed diesel in your pickup,” he said. “It just creates more paperwork.”

But Patrick said he would support greater enforcement efforts. “Some of us think it’s the right thing to do,” he said.

Brackett agrees.

“I’m a rancher and I make great effort to make sure my dyed diesel is separate from highway diesel,” he said. “I can’t defend anyone who’s cheating the system. If you’re complying with the law, what’s the problem?”

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