By Gunnels, McDaniel, Davis, Stamps

SECTION 1. Chapter 3, Title 67, of the Tennessee Code Annotated, is amended by deleting Parts 1 through 11 in their entirety and by substituting instead the following new code sections:

CHAPTER 3

TAXES ON PETROLEUM PRODUCTS

AND ALTERNATIVE FUELS

PART 1 GENERAL PROVISIONS

It is the legislature's intent in enacting this chapter to:

(a) establish an efficient and effective motor fuel tax collection and enforcement system adequate to substantially deter motor fuel tax evasion emanating from sources inside and outside this state;

(b) amend prior Tennessee law to change the point of taxation of diesel fuel; and

(1) "Act" or "this Act" means the enactment by the legislature of this state of this chapter.

(2) "Agricultural purposes" means operating tractors or other farm equipment used exclusively, whether for hire or not, in plowing, planting, harvesting, raising or processing of farm products at a farm, nursery or greenhouse; or operating farm irrigation systems; when such vehicles or equipment are not operated upon the public highways of this state.

(3) "Alternative fuel" means a liquefied petroleum gas or compressed natural gas product used in an internal combustion engine or motor to propel any form of motor vehicle, machine, or mechanical contrivance. The term includes all forms of fuel commonly known as butane, propane, or compressed natural gas.

(4) "Blend stock" means any petroleum product component of gasoline, such as naphtha, reformate, or toluene, that can be blended for use in a motor fuel. However, the term does not include any substance that will be ultimately used for consumer non-motor fuel use and is sold or removed in drum quantities - not more than fifty-five (55) gallons - at the time of the removal or sale.

(5) "Blended fuel" means a mixture composed of gasoline or diesel fuel and another liquid, other than a minimal amount of a product such as carburetor detergent or oxidation inhibitor, that can be used as a fuel in a highway vehicle.

(6) "Blender" means any person that produces blended motor fuel outside the bulk transfer/terminal system.

(7) "Blending" means the mixing of one (1) or more petroleum products, with or without another product, regardless of the original character of the product blended, if the product obtained by the blending is capable of use or otherwise sold for use in the generation of power to propel a motor vehicle, an airplane, a motorboat, or other mechanical contrivance. The term does not include blending that occurs in the process of refining by the original refiner of crude petroleum or the blending of products known as lubricating oil and greases.

(8) "Bonded importer" means a person with a valid bonded importer's license under 67-3-606.

(9) "Bulk end user" means a person who receives into his own storage facilities, for his own consumption, transport lots of taxable motor fuel.

(10) "Bulk export" means the movement of petroleum products from a point in Tennessee to another state by means of transport truck, pipeline, marine vessel or rail, including any quantity of petroleum product placed by the manufacturer into the vehicle fuel supply tank of a newly manufactured motor vehicle.

(11) "Bulk plant" means a motor fuel storage and distribution facility that is not a terminal and from which motor fuel may be removed at a rack.

(12) "Bulk transfer" means any transfer of a petroleum product within the bulk transfer/terminal system from one location to another by pipeline or marine delivery.

(13) "Bulk transfer/terminal system" means the motor fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Thus, gasoline in a refinery, pipeline, vessel, or terminal is in the bulk transfer/terminal system. Taxable motor fuel in the fuel supply tank of any engine, or in any tank car, rail car, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system.

(14) "Commissioner" means the commissioner of revenue or the commissioner's designated subordinate official.

(15) "Computer-type pump" means a pump used to dispense fuel, which has meters for registering the total sales price and gallons sold, and displays the price per gallon on the dispenser.

(16) "Customer-controlled pump" means a pump used for dispensing motor fuel directly to a customer who can access the pump by way of a personal key, an identification number, or a customer card which is assigned to the customer by a licensed wholesaler.

(17) "Dead storage" means the amount of taxable motor fuel that will not be pumped out of a storage tank because the motor fuel is below the mouth of the draw pipe. For this purpose, a vendor may assume that the amount of motor fuel in dead storage is two hundred (200) gallons for a tank with a capacity of less than ten thousand (10,000) gallons, and four hundred (400) gallons for a tank with a capacity of ten thousand (10,000) gallons or more.

(18) "Department" means the Tennessee Department of Revenue.

(19) "Destination state" means the state, territory, or foreign country to which petroleum products are directed for resale or use.

(20) "Diesel fuel" means any liquid that is commonly or commercially known or sold as a fuel that is suitable for use in a diesel-powered highway vehicle. A liquid meets this requirement if, without further processing or blending, the liquid has practical and commercial fitness for use in the propulsion engine of a diesel-powered highway vehicle. Diesel fuel does not include jet fuel or kerosene unless sold for use in a diesel-powered highway vehicle or used in such vehicles; in which case the fuel shall be deemed diesel fuel for taxation purposes. With regard to jet fuel, it is further provided that the buyer must be registered to purchase jet fuel subject to federal taxes applicable to jet fuel, and the vendor must obtain certification of such fact satisfactory to the department prior to making the sale.

(21) "Diesel-powered highway vehicle" means a motor vehicle, propelled by a diesel-powered engine, that is operated, or intended to be operated, on a highway.

(22) "Distributor report" means the report required under Section 67-3-701.

(23) "Diverted shipment" means any shipment of a petroleum product where the movement of that product by a transporter is changed from the original point of destination to another point of destination.

(24) "Dyed diesel fuel" means diesel fuel dyed under United States Environmental Protection Agency rules for high sulfur diesel fuel, or dyed under Internal Revenue Service rules for low sulphur fuel, or dyed pursuant to any other requirements subsequently set by the United States Environmental Protection Agency or Internal Revenue Service, including any invisible marker requirements.

(25) "Ethanol" means fuel grade ethanol.

(26) "Export" means to obtain petroleum products in this state for sale, use, or distribution in another state. In applying this definition, the delivery of petroleum products outside Tennessee by or for the vendor constitutes an export by the vendor, and the delivery of petroleum products outside Tennessee by or for the purchaser constitutes an export by the purchaser.

(27) "Exporter" means any person, other than a supplier, who purchases or otherwise holds title to taxable petroleum products in this state for the purpose of transporting or delivering the products to another state or country.

(28) "Farm products" means flowers and plants, including cut flowers, flowering plants, potted plants, vegetables and vegetable plants, trees, shrubs, vines, ornamentals, sod, and mushrooms. It also means livestock and poultry raised for food, including dairy products.

(29) "Fuel alcohol" means any alcohol used or intended for use as fuel in a combustion engine or heating oil system.

(30) "Fuel grade ethanol" means a product that meets the American Society for Testing and Materials (ASTM) standard in effect on January 1, 1995, and any successor rule, as the D-4806 specification for denatured fuel grade ethanol, for blending with gasoline for use as automatic spark-ignition engine fuels.

(31) "Fuel transportation vehicle" means a vehicle designed for highway use which is also designed or used to transport motor fuels, including transport trucks and tank wagons.

(32) "Gallon" or "net gallon" means the amount of petroleum product, corrected to a temperature of sixty (60) degrees Fahrenheit and a pressure of fourteen and seven tenths (14.7) pounds per square inch, necessary to completely fill a standard United States gallon liquid measure.

(33) "Gasohol" means a blended fuel composed of gasoline and ethanol.

(34) "Gasoline" means all products commonly or commercially known or sold as gasoline that are suitable for use as a motor fuel; but not including any product that is sold as a product other than gasoline and has an American Society for Testing Materials (ASTM) octane number of less than 75 as determined by the "motor method"; and not including aviation gasoline, provided that the buyer is registered to purchase aviation gasoline free of tax, and the vendor obtains certification of such fact satisfactory to the Department prior to making the sale.

(35) "Governmental agency" means a department of a local, state or federal government, where such department is organized by and accountable to the authority of the executive, legislative, or judicial branch of that government; but does not include a private organization, association, or contractor, whether for-profit or not, unless specifically identified in this chapter. For the purpose of this chapter, governmental agency shall include a rescue squad chartered by the state as a non-profit corporation or association and which is a member of the Tennessee Association of Rescue Squads, and a volunteer fire department chartered by the state as a non-profit corporation or association.

(36) "Gross gallons" means the total measured product, exclusive of any temperature or pressure adjustments, considerations or deductions.

(37) "Heating oil" means a motor fuel that is burned in a boiler, furnace, or stove for heating or industrial processing purposes.

(38) "Highway vehicle" means a self-propelled vehicle that is designed for use on a highway.

(39) "Import" means to bring petroleum products into this state by any means of conveyance other than in the fuel supply tank of a motor vehicle. In applying this definition, the delivery of petroleum products into this state from outside Tennessee by or for the vendor constitutes an import by the vendor, and the delivery of petroleum products into this state from outside Tennessee by or for the purchaser constitutes an import by the purchaser.

(41) "Invoiced gallons" means the gallons actually billed on an invoice from a vendor.

(42) "K-1 kerosene" means burner fuel designed for un-vented space heaters which meets ASTM standard D-3699, in effect on January 1, 1995, and any successor rule, as the specification for #1-K kerosene.

(43) "Kerosene" has the same meaning as defined by the American Society for Testing and Materials standards for kerosene.

(44) "Liquid" means any substance that is liquid at temperatures in excess of sixty (60) degrees Fahrenheit and at a pressure of fourteen and seven-tenths (14.7) pounds per square inch absolute.

(45) "Local transit company" means a person who is a scheduled, common carrier, public passenger, land transportation service; serving regular routes within a municipality and the territory adjacent thereto, or within a metropolitan government created under Title 7, Chapters 1-3; and who generates at least sixty percent (60%) of the total passenger fare from such routes; provided further that the operation is supervised, regulated, and controlled as a street railway company, under § 65-16-101, and all legislative and statutory provisions applicable thereto.

(46) "Local transit service" means service furnished by a local transit company as defined in this part.

(47) "Motor fuel" means gasoline, diesel fuel and blended fuel.

(48) "Motor fuel transporter" means a person who transports motor fuel by transport truck, railroad tank car, marine vessel or pipeline.

(49) "Motor vehicle" means a vehicle that is propelled by an internal combustion engine or motor and is designed to permit the vehicle's use on highways. The term does not include:

(a) farm machinery, including machinery designed for off-road use but capable of movement on roads at low speeds; or

(b) a vehicle operated on rails; or

(50) "Permissive supplier" means any person who is not subject to the general taxing jurisdiction of this state, but that (1) is a position holder in a federally qualified terminal located outside this state, and (2) is registered under section 4101 of the Internal Revenue Code for transactions in taxable motor fuels in the bulk transfer/terminal distribution system, and (3) who acquires product in such out-of-state terminals from position holders in transactions that otherwise qualify as two-party exchanges as defined in this chapter.

(51) "Person" means a natural person, partnership, firm, association, corporation, limited liability company, court appointed representative, state, political subdivision or any other entity, group, or syndicate.

(52) "Petroleum products" means all benzol, gasoline, burning oil, distillate, fuel oil, gas oil, kerosene, naphtha, or any other volatile substance, excluding propane, reflecting a gravity of sixteen degrees (16) or above on the American Petroleum Institute (API) scale; with the exception of those substances with a kinematic viscosity greater than seventy (70) centistokes at one hundred twenty-two (122) degrees Fahrenheit and a flash point greater than one hundred fifty (150) degrees Fahrenheit; produced from petroleum, natural gas, oil shale or coal, by whatever trade name known, or substitutes therefor, including fuel alcohol, sold or used or stored in this state, separately or in combination, for any purpose whatever, by any user or storer, whether or not manufactured in this state.

(53) "Position holder" means the person who holds the inventory position in petroleum products in a terminal, as reflected on the records of the terminal operator. A person holds the inventory position in petroleum products when that person has a contract with the operator for the use of storage facilities and terminaling services for petroleum products at the terminal. The term includes a terminal operator who owns petroleum products in the terminal.

(54) "Public highway" means the entire width between boundary lines of each public-maintained way in this state, including streets and alleys in cities and towns, when any part of the way is open to the public use for vehicle travel.

(55) "Qualified terminal" means a qualified terminal as defined under Internal Revenue Code, regulation and practices, and which has been assigned a terminal control number (TCN) by the Internal Revenue Service.

(56) "Rack" means a mechanism for delivering motor fuel from a refinery, terminal, or bulk plant into a railroad tank car, a transport truck or another means of bulk transfer outside of the bulk transfer/terminal system.

(57) "Refiner" means a person that owns, operates, or otherwise controls a refinery within the United States.

(58) "Refinery" means a facility used to produce motor fuel from crude oil, unfinished oils, natural gas liquids, or other hydrocarbons, and from which motor fuel may be removed by pipeline, by marine vessel, or at a rack; provided further, refinery shall also mean a facility used to produce fuel alcohol.

(59) "Removal" means any physical transfer other than by evaporation, loss, or destruction, of petroleum products from a terminal, manufacturing plant, customs custody, pipeline, marine vessel (e.g., barge or tanker), refinery or any receptacle that stores petroleum products.

(60) "Retail station" means any service station, garage, truckstop or other outlet dispensing motor fuel from a container equipped with a computer-type pump that measures fuel passing through it.

(61) "Retailer" means a person who engages in the business of selling or distributing petroleum products to the end user within this state through a retail station.

(62) "State" means the State of Tennessee.

(63) "Supplier" means a person that meets all the following conditions: (a) is subject to the general taxing jurisdiction of this state, (b) is registered under section 4101 of the Internal Revenue Code for transactions in taxable motor fuels in the bulk transfer/terminal system, and (c) is one of the following: (1) the "position holder" in a terminal or refinery in this state, or is one who receives fuel or fuel alcohol from a position holder within a terminal or refinery in this state, or (2) imports taxable petroleum products into this state from a foreign country, or (3) acquires taxable petroleum products from a terminal or refinery outside this state for import into this state on his account, or (4) produces fuel alcohol or alcohol derivative substances in this state, or (5) the receiving supplier on a two-party exchange.

A terminal operator shall not be considered a supplier merely because the terminal operator handles taxable petroleum products consigned to it within a terminal. When the term "supplier" is used in this chapter, other than in this section, it shall be deemed to also refer to the term "permissive supplier" unless provided otherwise.

(64) "Tank wagon" means a straight truck having multiple compartments designed or used to carry petroleum products.

(65) "Taxable motor fuel" means gasoline, diesel fuel, kerosene, and blends thereof, and any other substance blended with any of the foregoing.

(66) "Terminal" means a storage and distribution facility for taxable motor fuel, supplied by pipeline or marine vessel, which is registered as a qualified terminal by the Internal Revenue Service.

(a) Marine barge movements of fuel from a refinery or terminal to a refinery or terminal;

(b) Pipeline movements of fuel from a refinery or terminal to a refinery or terminal;

(c) Rail movements of fuel from a refinery or terminal to a refinery or terminal;

(68) "Terminal operator" means a person that (1) owns, operates, or otherwise controls a terminal, and (2) does not use a substantial portion of the taxable motor fuel that is transferred through or stored in the terminal for its own use (i.e., for its own consumption or in the manufacture of products other than motor fuel). A terminal operator may own the taxable motor fuel that is transferred through or stored in the terminal.

(69) "Transmix" means the buffer or interface between two (2) different products in a pipeline shipment, or a mix of two (2) different products within a refinery or terminal that results in an off-grade mixture.

(70) "Transport truck" means a semi-trailer combination rig or tank wagon designed or used for the purpose of transporting petroleum products over the highways.

(71) "Transporter" means any operator of a pipeline, barge, railroad or transport truck engaged in the business of transporting petroleum products.

(72) "Two-party exchange" means a transaction in which petroleum product is transferred from one licensed supplier or licensed permissive supplier to another licensed supplier or licensed permissive supplier pursuant to an exchange agreement: (1) which transaction includes a transfer from the person that holds the inventory position for taxable motor fuel in the terminal as reflected on the records of the terminal operator, and (2) the exchange transaction is completed prior to removal of the product from the terminal by the receiving exchange partner.

(73) "Undyed diesel fuel" means diesel fuel not dyed under United States Environmental Protection Agency rules for high sulfur diesel fuel nor dyed under Internal Revenue Service rules for low sulphur fuel nor pursuant to any other requirements subsequently set by the United States Environmental Protection Agency or Internal Revenue Service.

(74) "Vehicle fuel supply tank" means any receptacle on a motor vehicle designed to supply fuel for the propulsion of the motor vehicle or from which fuel is supplied for the propulsion of the motor vehicle.

(75) "Vessel" means a barge or other marine conveyance used to transport petroleum products in bulk.

PART 2 IMPOSITION OF TAXES AND FEES

T.C.A. 67-3-202. Diesel tax. (a) Subject to exemptions provided in part 4 of this chapter, a use tax of seventeen cents (17) per gallon is imposed upon all diesel fuel and all fuel other than gasoline that is suitable for use in a diesel-powered vehicle or which is used or consumed in this state to produce power for propelling motor vehicles; it being the purpose and intent of this section that the taxes being levied on taxable motor fuels under the provisions of this chapter are in fact a levy and assessment on the consumer, and the levy and assessment on other persons as specified in this chapter are as agents of the State for the collection of such tax.

T.C.A. 67-3-203. Special privilege tax. Subject to exemptions provided in part 4 of this chapter, in addition to the taxes imposed on motor fuels in 67-3-201 and 67-3-202, a special privilege tax of one cent (1) per gallon is imposed on all petroleum products. The tax imposed by this section shall be collected and paid at those times, in the manner, and by those persons specified in this chapter.

T.C.A. 67-3-204. Environmental assurance fee. Subject to exemptions provided in part 4 of this chapter, in addition to the taxes imposed on petroleum products in 67-3-201, 67-3-202 and 67-3-203, an environmental assurance fee as provided in 68-215-110 is imposed on all petroleum products. The fee imposed by this section shall be collected and paid at those times, in the manner, and by those persons specified in this chapter.

T.C.A. 67-3-205. Export tax. An export tax of one-twentieth of one cent (1/20th of 1 cent) per gallon is levied upon all of the petroleum products, subject to the special privilege tax provided at 67-3-203, which are stored in this state, or have come to rest after shipment in interstate commerce and are stored in this state, and are subsequently exported to points outside of this state. If with respect to these petroleum products the special privilege tax has already been paid, then nineteen-twentieths (19/20ths) of the special privilege tax may be credited on a monthly return, or in the alternative, refunded.

PART 3 MEASUREMENT OF TAX

T.C.A. 67-3-301. Measurement of gasoline tax. The tax imposed by 67-3-201 on taxable gallons imported into this state by a licensed importer shall be measured and levied at the time the product first comes to rest in this state. On product refined, produced, or compounded in this state, the tax shall be measured and levied on any finished product when first placed into storage for sale or use. For products removed from a qualified terminal or refinery outside this state, destined for this state under a tax pre-collection election provided in 67-3-503, the tax shall be measured and levied at the time the product is removed across the terminal rack of such out-of-state facility, as if the product were imported and came to rest in Tennessee.

T.C.A. 67-3-302. Measurement of diesel tax. (a) The tax imposed by 67-3-202 shall be measured by taxable gallons removed, other than through a bulk transfer, by a licensed supplier:

(1) from the bulk transfer/terminal system or from a qualified terminal or refinery within this state;

(2) from the bulk transfer/terminal system or from a qualified terminal or refinery outside this state for delivery to a location in this state as represented on the shipping papers; provided that the supplier imports such taxable motor fuel for his own account, or such supplier has made a tax pre-collection election under 67-3-503;

(3) upon sale in a qualified terminal or refinery in this state to an unlicensed supplier; or

(1) from the bulk transfer/terminal system or from a qualified terminal or refinery within this state;

(2) from the bulk transfer/terminal system or from a qualified terminal or refinery outside this state for delivery to a location in this state as represented on the shipping papers; provided that the supplier imports such taxable petroleum products for his own account, or such supplier has made a tax pre-collection election under 67-3-503;

(3) upon sale in qualified terminal or refinery in this state to an unlicensed supplier; or

(b) Anything to the contrary notwithstanding, the Special Privilege Tax and the Environmental Assurance Fee on gasoline shall be measured and levied at the time the product first comes to rest in this state.

(c) With respect to the operator of a terminal in this state, the tax imposed by 67-3-203 and the fee imposed by 67-3-204, shall be measured and levied annually on petroleum products other than gasoline by the amount by which net gallons lost or unaccounted for, including transmix, within the terminal exceed the sum of net gallon gains, plus one-half of one percent (0.5%) times the number of all net gallons removed from such terminal across the rack or in bulk.

T.C.A. 67-3-304. Measurement of floorstock tax. (a) The taxes and fees imposed by 67-3-202, 67-3-203 and 67-3-204, on the date of an increase in the tax rate, shall be applicable to previously taxed petroleum products in inventory held for sale by a wholesaler.

(b) The tax imposed by 67-3-201, on the date of an increase in the tax rate, shall be applicable to previously taxed gasoline in inventory held by a supplier, bonded importer, importer or wholesaler, except inventory held at retail.

(c) The tax imposed by 67-3-202 shall be applicable to all non-exempt inventory held by any person outside of the bulk transfer/terminal system in this state to the extent such inventory has not previously been subject to the tax imposed by this state under the predecessor motor fuel tax statute. Provided, however, no tax shall be payable with respect to dyed diesel fuel or fuel held by an exempt user, including governmental agencies described under 67-3-401.

(d) Persons in possession of taxable petroleum products subject to this section shall take an inventory at the start of business on the date which the increased tax rate becomes effective and on the effective date of this Act, to determine the gallons in storage for purposes of determining the taxes and/or fees. Provided, however, in determining the amount of taxable petroleum products taxes and fees due under this section:

(1) the person may exclude the amount of taxable petroleum products in dead storage;

(2) for the inventory taken on the effective date of this Act, the person may exclude gallons on which taxes and fees at the full rate have previously been paid;

(3) the person may exclude gallons of dyed diesel fuel from the tax imposed by section 67-3-202 only; and

(4) the person shall report the gallons listed in this section on forms provided by the commissioner.

(e) Where gallons in taxable inventory have not previously been subject to the predecessor motor fuel tax statute, the amount of the inventory tax is equal to the tax rate times the gallons in storage, as determined under subsection (c). In the case of an increase in the tax rate, the inventory tax is equal to the new tax rate minus the previous tax rate times the number of gallons previously taxed.

(f) Payment of this floorstock tax shall be made in accordance with 67-3-511.

PART 4 EXEMPTIONS AND REFUNDS

T.C.A. 67-3-401. Governmental agency exemption.

(b) Each governmental agency making purchases of petroleum products shall, prior to the purchase of such products, acquire a valid exemption permit issued by the commissioner. The exemption permit shall be numbered and shall entitle such governmental agency to purchase petroleum products tax exempt for a period of three (3) years from the date of issuance. The permittee shall make application for renewal prior to the expiration of the permit.

(c) If any governmental agency, to which an exemption permit has been issued, loses its status as a governmental agency during the effective period of any such permit, the permit shall be void and shall be immediately surrendered to the department.

(d) In order to be entitled to the exemption, the governmental agency shall receive, store, handle and use the petroleum products strictly in the following manner:

(2) Store in a storage facility either owned or leased by such agency. In the event the facility is leased, it shall be separate and apart from the commercial storage facilities of any motor fuel vendor, and the storage facility must be kept under the exclusive control of the governmental agency at all times. In order for the leased facility to comply with the provisions of this subsection, a copy of the lease must be filed with and approved by the commissioner;

(3) Remove from the storage facility in equipment either owned or leased by the governmental agency.

(4) Use exclusively for governmental purposes, in equipment either owned or leased by the governmental agency and operated by governmental employees.

(e) It is unlawful for any person to use petroleum products sold to a governmental agency for any purpose other than governmental.

(f) For the purposes of this part only, a motor vehicle used exclusively in a driver education program approved by the state board of education shall be considered to have met the requirements of (d)(4).

(1) a motor vehicle used exclusively for the purpose of providing mass transportation services; paratransit service to or for the benefit of elderly and handicapped persons; or other specialized mass transportation services of a public transportation system or transit authority organized and existing under and by virtue of title 7, chapter 56, and operated by non-governmental employees; shall be considered to have met the requirements of (d)(4); and

(2) petroleum products stored by the governmental agency in a storage facility or tank(s) leased by the governmental agency on the premises of a person providing the transportation services referred to in subsection (g)(1), pursuant to contract with such public transportation system or transit authority, shall be considered to have met the requirements of (d)(2); provided that such leased storage facility or tank(s) shall be separate and apart from the other commercial storage facilities and tank(s) on the premises, and the leased storage facility or tank(s) must be kept and maintained for the exclusive use and storage of petroleum products stored by the governmental agency for operation of such mass transportation services, paratransit service to or for the benefit of elderly and handicapped persons, or other specialized mass transportation services at all times, and for no other purpose.

(h) An independent contractor operating a local transit company and providing local transit services is exempt from the petroleum products taxes and fees imposed in part 2, subject to the same restrictions imposed on governmental agencies under this part.

(i) In lieu of the provisions set out in subsection (d)(2), petroleum products may be delivered to a governmental agency through a customer-controlled pump. A licensed wholesaler may locate such pump(s) at a location other than the wholesaler's primary storage location. A customer-controlled pump shall not be located on any retail station island. Such pump(s) must be connected to a storage tank whose inventory is owned by the licensed wholesaler. Any licensed wholesaler found violating any statute or any rule promulgated by the commissioner relating to a customer-controlled pump shall lose the right to sell from a customer-controlled pump for a period of not less than two (2) years, and shall be subject to all other penalties set forth in the law. A person associated with a retail station shall neither take part in the dispensing or sale of petroleum products from such pumps, nor shall such person possess any key that will activate any meter that may be used for dispensing such products. A customer-controlled pump shall have the ability to identify each customer separately and only that customer shall be allowed to purchase petroleum products through that identity at the pump. One (1) invoice exclusively for sales from a customer-controlled pump shall be issued on the last day of any month in which a tax refund on sales to governmental agencies is claimed. Such invoice shall clearly identify itself as an invoice solely for sales through a customer-controlled pump. Sales through a customer-controlled pump are not subject to the minimum purchase requirements of this part.

(j) Notwithstanding any other provision of this part to the contrary, a governmental agency may purchase petroleum products from retail stations free of the taxes imposed in 67-3-201, 67-3-202 and 67-3-203, and free of the fee imposed in 67-3-204. Such purchases may only be made through a fleet credit card or an oil company credit card which has been issued by the oil company to a governmental agency which holds an exemption permit issued by the commissioner pursuant to this part.

(1) shall be liable for the state petroleum products taxes and fees imposed in part 2. In the event of such liability, the taxes and fees shall be collected in the manner otherwise provided by law; and further,

(i) all bulk exports of petroleum products, and

(ii) sold by a supplier to a person, who is licensed in this state, for immediate export to a state for which the destination state motor fuel tax has been paid to the supplier.

T.C.A. 67-3-408. Kerosene exemption. There shall be exempt from the tax imposed in 67-3-202 all kerosene sold or used in the state for purposes other than in any motor vehicle or equipment operated on the public highways of this state. This includes K-1 kerosene sold at retail through dispensers which have been designed and constructed to prevent delivery directly from the dispenser into a vehicle fuel supply tank, and K-1 kerosene sold at retail through non-barricaded dispensers in quantities of not more than twenty-one (21) gallons for use other than for highway purposes, under such rules as the department shall reasonably require. Quantities sold at retail stations, other than stated above, are subject to the diesel tax imposed in 67-3-202.

T.C.A. 67-3-409. Aviation fuel exemption. There shall be exempt from the taxes imposed in 67-3-201 and 67-3-202 taxable motor fuel sold for use in aircraft, provided that the buyer must be registered to purchase jet fuel subject to federal taxes applicable to jet fuel, and the vendor must obtain certification of such fact satisfactory to the department prior to making the sale.

T.C.A. 67-3-410. Refineries. (a) None of the laws relating to the inspection of petroleum products as set forth in 60-3-103 through 60-3-114 or the taxes and fees imposed by this chapter upon petroleum products, shall be applicable or collectible in the following cases:

(1) Upon any of the products while being transported from, inside or outside the state to a petroleum refinery inside the state, for the purpose of there being refined, further refined or processed;

(2) Upon any of the products while being refined, further refined, processed or stored at a petroleum refinery inside this state. Refinery exemptions are applicable to all petroleum activities, exchanges and transactions that are customarily performed by or engaged in by a refinery, but specifically excluded are exemptions applicable to the storage of petroleum or petroleum products for others, whether by lease or otherwise;

(3) Upon any of the products while being transported from a refinery inside this state to another petroleum refinery inside this state; and

(4) Upon any of the products while being transported from a petroleum refinery inside this state to a place outside this state, excluding commercial marine vessels even though delivery is made in midstream of waterways constituting geographical boundaries of this state. For any product transported from refinery storage via marine vessel as an export but in fact coming to rest at a nonexempt destination in this state, for which the taxes and fees are not reported and paid by a bonded importer, the refinery shall bear responsibility to this state for the payment of taxes, fees, and applicable interest and penalty.

(b) All refinery exemptions granted to petroleum refineries shall apply to refiners or manufacturers of fuel alcohol who have a refinery or a manufacturing facility in Tennessee.

(b) No refund under this section shall be authorized unless:

(1) A claim is submitted containing a declaration that it is made under the penalty of perjury and also containing all of the information which the commissioner may require, and filed with the commissioner either semiannually or annually, on or before April 15 and October 15 following the end of each semiannual period ending on the immediately preceding December 31 and June 30 respectively, or on April 15 of the following year if filed annually;

(2) Each purchase made is of fifty (50) gallons or more; and

(3) The amount of the refund payable is twenty-five dollars ($25.00) or more for any one (1) claim period.

(b) For diesel fuel that is exported to points outside the state, in vehicle fuel supply tanks of diesel locomotives or marine tows, where such is consumed in such locomotives or marine tows outside the state, the user may apply for refund of the special privilege tax imposed by section 67-3-203, less the export tax imposed by section 67-3-205, and may apply for refund of the environmental assurance fee, imposed by section 67-3-204, by submitting a claim for refund within ninety (90) days of the last day of the month in which the export was made. If a credit is being claimed for such products exported for consumption, it shall be claimed on a report filed within the same ninety (90) day period.

T.C.A. 67-3-413. Refunds - governmental - refund claim filing by vendor.

(b) (1) An application for refund or credit shall be filed with the commissioner, on forms prescribed by the commissioner, on or before the last day of the second month following the month in which the exempt sales were made. All sales in any month on which a refund is due shall be included in one (1) application for refund.

(2) After January 1 and no later than March 31 of any year, a licensed wholesaler, importer or supplier may apply for refund under subsection (a) above for any exempt sales made during the previous calendar year on which a claim for refund has not previously been made. Only one (1) such omnibus claim shall be permitted. Such omnibus claim is designed to allow claimants to secure refunds on items previously omitted on claims filed under subsection (b)(1). No extension of time to file this omnibus claim shall be allowed.

(d) (1) Any application for refund submitted to the department which does not comply with any of the provisions set out above shall not be approved and a refund shall not be granted.

(2) Licensed wholesalers, importers or suppliers shall not be entitled to a refund on sales made to any person who does not hold a valid governmental agency exemption permit at the time of such sale.

(e) Applications for refund made pursuant to this section shall not be subject to the provisions of § 67-1-707.

(b) Any person using fuel for the generation of power to operate a mobile self-propelled rock drill; a motor vehicle and an auxiliary unit used for concrete mixing; for boom, pneumatic, or pump unloading; on which the gasoline tax or diesel tax has been paid, or on which the tax is payable by a limited user, shall be entitled to a refund, or a reduction of taxes imposed according to the following formula:

(1) For concrete mixers and concrete pumpers, forty percent (40%) of the tax;

(2) For pneumatic unloaders, ten percent (10%) of the tax;

(3) For boom unloaders, ten percent (10%) of the tax;

(4) For pump unloaders, the tax on two and one-half (2.5) gallons for each unloading where the pump is actually used; and

(b) The commissioner shall have authority to require the claimant to provide adequate documentation to support the claim. The department may make any investigations it considers necessary before refunding the taxes or fees to a person and in any case may investigate a refund after the refund has been issued and within the time frame for making adjustments to tax under this title.

PART 5 PAYMENT OF TAX

(b) This notice of election shall be made on forms provided by the department.

(c) The department shall release a list of electing suppliers under subsection (b) upon request by any person. Disclosure of this information by the department shall not constitute a violation of any confidentiality requirement imposed by 67-1-1701 et seq.

(d) The absence of an election by a supplier under this section shall not relieve the supplier of responsibility for remitting the taxes and fees imposed by this chapter. However, the responsibility of the supplier shall be limited to the supplier's own imports into this state.

(e) Any supplier who makes the election provided by this section shall pre-collect the taxes and fees imposed by this chapter on all removals from a qualified out-of-state terminal on its account without regard to:

(1) the license status of the person acquiring the petroleum product from such supplier,

(2) the point or terms of sale, or

(b) The supplier who has out-of-state terminals and has entered into a blanket pre-collection election under 67-3-503 shall also remit gasoline tax imposed by 67-3-201 on products originating at out-of-state terminals destined for Tennessee.

T.C.A. 67-3-505. Terminal operator liability. (a) The terminal operator of a terminal in this state is jointly and severally liable for the taxes and fees imposed under 67-3-202, 67-3-203 and 67-3-204, and shall remit payment to the department upon discovery of either of the following conditions:

(1) The supplier and/or bonded importer with respect to the taxable petroleum products is a person other than the terminal operator and is not licensed; provided that the terminal operator shall be relieved of liability if he establishes all of the following:

(A) the terminal operator has a valid terminal operator's license issued for the facility from which the petroleum product is withdrawn,

(B) the terminal operator has an unexpired notification certificate from the supplier as required by the department or the Internal Revenue Service, and

T.C.A. 67-3-506. Supplier to collect tax-deferred payment.

(a) Each licensed supplier and bonded importer who sells taxable petroleum products shall collect from the purchaser the taxes and fees imposed in part 2.

T.C.A. 67-3-507. Bad debt allowance. (a) A licensed supplier or bonded importer is entitled to a credit, against taxes payable under this part, for any tax or fee not paid to the supplier or importer by a licensed wholesaler, who has made a valid election under 67-3-506(b) and whose election, at the time of the delivery of product giving rise to the unpaid tax or fee, had not been terminated by the supplier or importer, by operation of subsection (c) of this section, or by the commissioner under subsection (d) of this section. The credit must be claimed on the return within sixty (60) days following the failure of the wholesaler to make the required payment to the supplier or importer.

(b) Not later than fifteen (15) days after the earliest date on which the wholesaler who has made the election provided for in 67-3-506(b) was required to make the payment, the supplier or importer shall notify the department in writing of the default. The notice shall include the name of the defaulting wholesaler, the amount of the default, whether the supplier or importer has terminated the wholesaler's election, and the date of any termination.

(b) The allowance shall be an amount equivalent to 1.5415% of the amount of tax imposed by sections 67-3-201 and 67-3-202 shown to be due on the monthly report filed with the commissioner. The allowance may be taken as a credit on the monthly report.

(c) There shall be submitted with the report, in support of the deduction, the certificate of the supplier or bonded importer that, with respect to the gallonage sold or distributed within this state, during the period covered by the report, there was paid or credited to each wholesaler to whom any part of the gallonage was sold or distributed, an amount equivalent to 1.5415% of the taxes applicable to the gallonage; and to each retailer to whom any part of the gallonage was sold or distributed, an amount equivalent to one-half of one percent (0.5%) of the taxes applicable to the gallonage. If a supplier has made a blanket election to pre-collect the tax under section 67-3-503 and remits the tax on behalf of a bonded importer, then the allowance shall be credited to the bonded importer. If it is determined that a supplier or bonded importer has not credited the proper allowance to another supplier or bonded importer or to the wholesaler or retailer, the tare allowance received by the supplier or importer will be disallowed.

(d) Any wholesaler who receives the allowance from a supplier or importer shall credit to the retailer an amount equivalent to one-half of one percent (0.5%) of the taxes applicable to the gallonage. If it is determined that a wholesaler has not credited to the retailer the proper allowance, the allowance received by the wholesaler will be disallowed.

(1) Any diesel fuel that contains a dye;

(2) Any taxable petroleum products on which a claim for refund has been made; or

T.C.A. 67-3-511. Payment of floorstock tax. (a) The floorstock tax report required by 67-3-304(d)(4) shall be accompanied by payment of the floorstock tax calculated in accordance with 67-3-304(d) and (e) and payment made on or before the due date of that report. The floorstock tax imposed on inventory held outside of the bulk transfer/terminal system on the effective date of this Act reportable under 67-3-304 shall be payable in two (2) equal annual installments. The first installment shall be due on or before the twenty-fifth (25th) day of the month following the month in which this Act becomes effective, and the second installment is due on the same date of the following year.

(b) For any floorstock tax due following an increase in the tax rate on petroleum products, the floorstock tax imposed on inventory shall be payable within twenty-five (25) days of the end of the month in which the increase becomes effective.

(c) A supplier, bonded importer, importer, or wholesaler shall, for increases in the gasoline tax, remit tax, pursuant to subsections (a) or (b) above, based upon all inventory as provided in 67-3-304(d) held in storage at the start of business on the effective date of the increase. All inventory held at retail stations and by end users shall be exempt from this requirement.

(d) A supplier, bonded importer, importer or wholesaler shall, for increases in the diesel tax, the special privilege tax or the environmental assurance fee, remit taxes and/or fees, pursuant to subsections (a) or (b) above, based upon all inventory as provided in 67-3-304(d) held outside the bulk transport/terminal system at the start of business on the effective date of such increase. All inventory held at retail stations and by end users shall be exempt from this requirement.

T.C.A. 67-3-512. Payment of taxes and fees by fuel blenders. Each person blending untaxed materials, including blendstocks and additives, with taxable petroleum products as to which taxes and fees have already been paid or accrued, shall remit the taxes and fees imposed by this chapter on the previously untaxed volumes. Should the blending process alter the specifications of the blended product according to ASTM specifications, then applicable taxes and fees shall apply to the altered product.

(b) In the event that an exporter removes from a bulk plant in this state taxable petroleum products as to which the taxes and fees imposed by this chapter have previously been paid or accrued, such exporter may apply for and the state shall issue a refund of such taxes and fees, except the export tax, upon a showing of proof of export satisfactory to the department in conformity with 67-3-802, net of the allowances provided by 67-3-509.

(c) All licensed importers shall otherwise report and pay the taxes and fees, in the manner provided by 67-3-502, on diversions into this state of imported product; provided that no 67-3-509 allowances shall be deducted with respect to diverted shipments.

(d) In the event of a legal diversion from a destination in this state to another state, 67-3-804 shall apply, and an unlicensed exporter diverting the product shall first pay taxes and fees on the fuel before exporting such fuel, and may apply for a refund from this state for the taxes and fees paid, less the 67-3-509 allowance.

(e) In the event that a state involved in a cross-border shipment has entered into a multi-state compact with this state, the diverter shall pay or seek refund only upon the difference in state taxes with notice to both states upon proof shown of payment to the actual destination state. The department shall establish procedures for making this adjustment and prepare a list of those states which meet these criteria.

T.C.A. 67-3-515. Payment by electronic funds transfer. (a) The commissioner may require the taxpayer to make payments as provided in this part 5 by means of electronic funds transfer.

(b) Provided, however, anything to the contrary notwithstanding, if the taxpayer reports by electronic data interchange pursuant to 67-3-706, payment shall be made by means of electronic funds transfer in accordance with 67-1-703, regardless of the amount of tax owed. Payment shall be by Automated Clearing House Debit (ACH debit) or Automated Clearing House Credit (ACH credit) or by any other means established by the commissioner.

PART 6 BONDING AND LICENSES

T.C.A. 67-3-605. Transporter's license. Any person who is not licensed as a supplier, exporter or importer shall obtain a transporter's license before transporting petroleum products by whatever manner from a point outside this state to a point inside this state, from a point inside this state to a point outside this state, or from a refinery in this state, if the person is engaged for hire.

(b) Applicants for a restricted importer's license must meet the following conditions:

(1) The taxable petroleum products imported must all be the subject of a tax pre-collection agreement with a supplier as provided in 67-3-501 or a tax pre-collection election as provided in 67-3-503.

(c) The department shall determine that a particular state has adopted terminal reporting requirements which are adequate to facilitate information exchange on cross-border movements of petroleum products prior to granting restricted importer's licenses to applicants for importation of taxable petroleum products from that state.

(d) A person desiring to import taxable petroleum products from another state, and who has not obtained a restricted importer's license and has not entered into an agreement to prepay this state's petroleum products taxes and fees to the supplier or permissive supplier with respect to such imports shall:

(1) obtain a valid bonded importer's license subject to the bonding requirements of this chapter, and

T.C.A. 67-3-608. License application - form - investigation. (a) Each application for a license under this part shall be made upon a form prepared and furnished by the department. It shall be subscribed to by the applicant and shall contain such information as the department may reasonably require for the administration of this chapter, including the applicant' s federal employer identification number and, with respect to the applicant for an exporter's license, a copy of the applicant's license to purchase or handle taxable motor fuel in the specified destination state or states for which the export license is to be issued.

(1) The application is not filed in good faith.

(2) The applicant is not the real party in interest.

(3) Any prior license of the real party in interest has been revoked for cause.

(4) Information on the application has been falsified, is fraudulent, is incomplete or the applicant has in any material way misrepresented the true facts.

(5) With respect to an exporter's license, the applicant is not licensed in the intended specific state(s) of destination.

(6) The applicant, or any of the applicant's agents, officers or employees, has a prior conviction for motor fuel tax evasion in any state, federal or foreign jurisdiction.

(b) The penal amount of the bond shall be not less than the greater of one thousand dollars ($1,000) or three (3) times the amount of the tax required to be paid monthly by the person. The monthly amount shall be determined by averaging the tax over a period of six (6) months immediately preceding the execution of the bond. If a person has not been in business for a period of six (6) months, the penal amount of the bond shall be determined on the average monthly tax during the actual time the person has been engaged in business or on the estimated average monthly tax; however, the bond shall not be less than fifty thousand dollars ($50,000). The commissioner may, at any time, require an increase in the penal amount of the bond if the commissioner deems such increase necessary to safeguard the revenues of the state, but in no event shall the bond exceed the sum of one million dollars ($1,000,000).

(c) A person required to execute more than one (1) bond, whether required in order to become a licensee or to be eligible for an exemption or refund under part 4, may combine the total amount of each of the bonds into a single bond which shall be conditioned upon payment of all petroleum products taxes, fees, penalties and interest that may accrue against the person. The penal amount of any combination bond shall be determined in the manner provided in subsection (b), but shall in no case be less than three thousand dollars ($3,000) nor more than two million dollars ($2,000,000).

(d) Licensees who seek exemption or refunds under part 4 and who do not accrue liability as suppliers and/or importers, instead of the provisions set out in subsection (b), shall post a minimum bond of one thousand dollars ($1,000). The commissioner may, at any time, require additional bond if the commissioner deems such bond necessary to safeguard the revenues of the state. In no event shall the bond exceed the sum of one million dollars ($1,000,000).

(e) If the required maximum penal amount of the bond in subsection (b) exceeds one hundred thousand dollars ($100,000) or if the required maximum penal amount of the bond in subsection (c) exceeds two hundred thousand dollars ($200,000), the commissioner may agree to reduce the penal amount of a bond if the commissioner determines that any potential tax liability is otherwise adequately secured or protected, or if the commissioner determines that the past good filing and payment record of the taxpayer indicates that lowering the penal amount of the bond would not result in a substantially increased risk of loss to the state. The required maximum penal amount of the bond in subsection (b) may not, however, be reduced to an amount less than one hundred thousand dollars ($100,000), and the required maximum penal amount of the bond in subsection (c) may not be reduced to an amount less than two hundred thousand dollars ($200,000).

(f) The bond may be a corporate surety bond or a personal surety bond; and, in either event, it shall be signed by the applicant as principal. If a corporate surety bond is executed, it shall be signed as surety by an authorized surety company licensed to do business in this state.

(g) Instead of a personal or corporate surety on such bond required in subsection (a), the commissioner may allow the applicant to secure such bond by depositing collateral in the form of a certificate of deposit, or equivalent thereto, as accepted and authorized by the banking laws of Tennessee, which has a face value equal to the amount of the bond. Such collateral may be deposited with any authorized state depository designated by the commissioner.

(h) An applicant may execute a bond with personal surety approved by the commissioner. The personal surety or sureties shall own real estate within the state, free and unencumbered, and with the assessed value equal to three (3) times the amount of the average monthly tax payment. The bond shall be registered in the register's office of the county in which the property is located, and the taxpayer shall be liable for all registration fees. The state shall have a lien against the property superior to all other liens attaching after the registration, which may be enforced by levy on the property of the taxpayer and the taxpayer's surety, and by sale of the property as now provided by law. A personal surety bond shall be executed on forms furnished by the commissioner and shall contain a sworn certificate of the county trustee showing the assessed valuation of the real estate and that all ad valorem taxes on it are paid. In the event the property is located within an incorporated town or city, the foregoing information shall also be furnished by sworn certificate of the proper municipal official. The bond shall also contain an abstract of title of the real estate described in the instrument, showing the exact status of title to the property for the preceding ten (10) years, and the abstract of title shall be signed and sworn to by the county register.

T.C.A. 67-3-611. New bond. (a) The commissioner may require a licensee to file a new bond with a satisfactory surety in the same form and amount if:

(1) liability upon the previous bond is discharged or reduced for any reason; or

(2) the commissioner determines that any surety on the previous bond becomes unsatisfactory.

(b) If the new bond is unsatisfactory, the commissioner shall cancel the license. If the new bond is satisfactorily furnished, the commissioner shall release in writing the surety on the previous bond from any liability accruing after the effective date of the new bond.

T.C.A. 67-3-613. Bond replacement. (a) If at any time after the execution of any surety bond, the surety or sureties thereon become insolvent, the commissioner may require the execution of a new bond with good and solvent surety in the same manner and with the same penalty as the bond being replaced. The bond shall be subject to the approval of the commissioner.

(b) Any person executing a bond under the provisions of this part may, at any time prior to default under any existing bond, apply to the commissioner for leave to cancel the existing bond and file a new bond with a new surety.

T.C.A. 67-3-614. Bond release. (a) Sixty (60) days after making a written request for release to the commissioner, the surety of a bond furnished by a licensee is released from any liability to the state accruing on the bond after the sixty (60) day period. The release does not affect any liability accruing before the expiration of the sixty (60) day period.

(b) The commissioner shall promptly notify the licensee furnishing the bond that a release has been requested. Unless the licensee obtains a new bond that meets the requirements of this chapter and files with the commissioner the new bond within the sixty (60) day period, the commissioner shall cancel the license.

(c) Either the principal or surety may request the commissioner to cause an audit to be made of the books and records of the principal, and the audit shall be commenced within ninety (90) days from the date of the request. Upon completion of the audit, and if no additional taxes, fees, interest or penalty are shown to be due, or the additional sum is paid to the commissioner, then and thereafter, all liability of the surety on the bond shall cease and the surety shall be released. Any collateral deposited as security with the commissioner shall be released and returned to the person entitled to it. Any real estate which has been pledged as security for the bond shall be released by the commissioner by the execution of a release for that purpose, which may be recorded in the same manner as other releases are recorded. The commissioner may require the principal on the bond to furnish the form for a release.

T.C.A. 67-3-616. License display. Each license shall be preserved and conspicuously displayed at the place of business for which it is issued. The department is authorized to waive this requirement for any class of licensee.

T.C.A. 67-3-617. License termination - notice - surrender. Whenever any person licensed to do business under this chapter relocates, discontinues, sells, or transfers the business, the license shall be void, and the licensee shall immediately notify the department in writing of the relocation, discontinuance, sale, or transfer. The notice shall give the date of the event, and if a sale or transfer of the business, the name and address of the purchaser or transferee. The licensee shall be liable for all taxes, fees, interest, and penalties that accrue or may be owing, and any criminal liability for misuse of the license, that occurs prior to issuance of the notice.

(b) The commissioner may suspend or revoke a license for failure to comply with the provisions of this chapter after at least ten (10) days notice to the licensee and after a hearing, if requested by the licensee, pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.

PART 7 REPORTS

(b) The reports required by this section shall be filed on or before the twentieth (20th) day of the month following the month of activity.

(c) The distributor report required by this section shall include the following information with respect to billed gallons of taxable petroleum products; with the amounts stated and indicated as net gallons, or stated and indicated as gross gallons if unable to provide net gallons:

(1) Removal of gallons of petroleum products by the reporting supplier or importer from the bulk transfer/terminal system in this state as to which the taxes and fees imposed by this chapter have been collected or accrued.

(2) Removal of gallons of diesel fuel or heating oil from terminals in this state by the reporting supplier, tax exempt, as to which dye has been added in accordance with this chapter.

(3) Removal of gallons of petroleum products from terminals in this state by the reporting supplier or importer, tax exempt, for export from this state by that person where the proper petroleum products tax for the destination state has been collected or accrued at the time of removal from the terminal, sorted by state of destination.

(4) Removal of gallons of petroleum products from terminals in this state by the reporting supplier or importer, tax exempt or for which credit can be taken on the return, for export, where the proper petroleum products tax for the respective destination state has been collected or accrued at the time of removal from the terminal, sorted by state of destination.

(5) Total removals in this state.

(6) Removal of gallons of petroleum products from a terminal in a state other than Tennessee by the reporting supplier or importer, for shipment into Tennessee.

(b) The monthly terminal report required by this section shall be filed on or before the last day of the month following the month of activity and shall include the following information for each terminal location in this state:

(1) Terminal code assigned by the Internal Revenue Service.

(J) Gross gallons.

(1) The amount of monthly gains or losses, in net gallons;

(2) The total net gallons removed from the terminal in bulk during the calendar year;

(4) The amount of tax due calculated pursuant to 67-3-302(b) and 67-3-303(c); and

(1) Each and every shipment of taxable petroleum products acquired free of all states' petroleum products taxes, except the export tax imposed by section 67-3-205, at a terminal in this state for direct delivery outside of this state by the exporter.

(2) Each and every shipment of taxable petroleum products acquired free of this state's tax and fee at a terminal in this state for direct delivery outside of this state but as to which the destination state's petroleum products tax was paid or accrued to the vendor at the time of removal from the terminal.

(3) The gallons delivered to taxing jurisdictions outside this state from bulk plant storage, and the means of transport.

(4) The name and federal employer identification number of the person receiving the exported taxable petroleum products from the exporter.

(5) The date of each shipment.

(6) The carrier name (or alpha code) and carrier federal employer identification number.

(6) Any other information that may be required by the commissioner for the proper administration of this chapter.

(2) In the case of delivery by tank wagon, or other motor vehicle, there shall be furnished, in addition to the foregoing information in subsection (a), the vehicle's license number.

(3) In case of delivery by tank car, there shall be furnished, in addition to the foregoing information in subsection (a), the car number and initials, and the capacity of the car.

(c) A carrier delivering petroleum products or substitutes therefor to any person required to have a license under part 6 who is known by the carrier not to have such license, shall immediately notify the department by facsimile of the delivery, if facsimile service is reasonably available; but if not, by the next quickest means available. The department shall furnish to the carriers a list of all persons holding licenses and shall supplement and amend the list periodically as licenses are issued or revoked.

(d) If a transporter fails to make the reports required by this section, the commissioner may assess a civil penalty of one thousand dollars ($1,000) for each violation.

(b) In addition to any other penalty provided by law, there is hereby imposed on any person required to file reports by means of electronic data interchange, the commissioner may assess a penalty of five hundred dollars ($500) for each instance of reporting by any other means.

PART 8 ENFORCEMENT PROVISIONS

T.C.A. 67-3-801. Destination state shipping paper to be issued. (a) A person operating a refinery, terminal or bulk plant facility in this state shall prepare an automated, machine-generated, shipping paper, and provide it to the driver of every transport truck receiving petroleum products into the vehicle storage tank; provided however, where a bulk plant is not equipped to provide a machine-generated paper, it shall manually prepare the shipping paper required by this section. The department may by regulation require shipping papers to meet tamper-resistant standards, and every manually prepared shipping paper shall contain a stamp indicating that the paper was prepared at the facility at which it was issued.

(b) Every shipping paper shall set out on its face:

(1) Identification by address of the terminal or bulk plant from which the petroleum products were removed,

(2) The date the petroleum products were removed,

(3) The type and amount of petroleum products removed, actual gallons and net gallons,

(4) The state of destination as represented to the terminal operator by the transporter, the shipper or the shipper's agent,

(i) with respect to diesel fuel acquired under claim of exempt use, indicating the fuel is "DYED DIESEL FUEL, NON-TAXABLE USE ONLY, PENALTY FOR TAXABLE USE" for the load or the appropriate portion of the load, or

(c) No terminal or refinery operator shall imprint any statement on a shipping paper relating to petroleum products to be delivered to this state, indicating:

(1) Any supplier's liability for payment of the taxes and fees imposed by this chapter; or

(2) The tax-paid or tax-collected status of any petroleum products;

(e) A person operating a refinery, terminal or bulk plant may load petroleum products, a portion of which is destined for sale or use in this state and a portion of which is destined for sale or use in another state or states. However, such split loads shall be documented by the operator by issuing shipping papers designating the state of destination for each portion of the product.

(f) A person operating a refinery, terminal or bulk plant shall post a conspicuous notice located near the point of receipt of shipping papers by transport truck operators, which notice shall describe in clear and concise terms the duties of the transport operator and retail dealer under 67-3-802 through 67-3-805; provided that the department may by rule or notice establish the language, type, style and format of the notice.

T.C.A. 67-3-802. Shipping paper to be carried on board. (a) Each person transporting petroleum products in a transport truck upon the public highways of this state shall:

(1) Carry on board the shipping paper issued by the refinery operator, the terminal operator or the bulk plant operator of the facility where the petroleum product was obtained, whether within or without this state.

(2) Show and permit duplication of the shipping paper by any law enforcement officer or representative of the department, upon request, when transporting, holding or off-loading the product(s) described in the shipping paper.

(A) removal from the state in which the shipment originated, or

(ii) Receives from the commissioner a verification number authorizing the diversion.

(5) Meet such other conditions or take such other actions as the department may reasonably require by regulation for the enforcement of this chapter.

(b) The department may in its discretion provide an advance notification procedure for documentation supporting the import of petroleum products where the importer is unable to obtain terminal-issued shipping papers which comply with this section.

T.C.A. 67-3-803. Refusal of delivery. No retail vendor, bulk plant operator, wholesaler or bulk end user shall accept delivery of petroleum products into bulk storage facilities in this state if that delivery is not accompanied by a shipping paper prepared in accordance with this part. The commissioner may assess a civil penalty in an amount equal to the taxes and fees on the product (without regard to any exemption or dye) or one thousand dollars ($1000), whichever is greater, for each violation, against a person who fails to comply with this section.

(b) The commissioner may assess a civil penalty in an amount equal to the taxes and fees on the product (without regard to any exemption or dye) or one thousand dollars ($1000), whichever is greater, for each violation, against any person who diverts a shipment or alters a shipping paper other than as provided for in subsection (a). No civil penalty will be assessed in those cases where the prior notification required in (a) above was not accomplished due to error, other than negligence, if within three (3) working days the shipper, the transporter, or the agent of either, notifies the department of the diversion and error.

T.C.A. 67-3-805. Right to rely. The supplier and the terminal operator shall be entitled to rely for all purposes of this chapter on the representation by the transporter, the shipper or the shipper's agent, as to the shipper's intended state of destination and tax exempt use. The shipper, the importer, the transporter, the shipper's agent and any purchaser, but not the supplier or terminal operator, shall be jointly and severally liable for any taxes and fees otherwise due to the state as a result of an unlawful diversion of the petroleum products from the represented destination state. A terminal operator shall be entitled to rely on the representation of a licensed supplier or bonded importer with respect to the supplier's obligation to collect taxes and fees and the related shipping paper representation as shown on the shipping paper as provided by § 67-3-801.

T.C.A. 67-3-806. Petroleum products and vehicles declared contraband - confiscation - procedure for hearing. (a) Any petroleum product which is owned or possessed by any person in avoidance, evasion or violation of any provision contained in this part; and any vehicle which is used for storage or transportation of the product; are contraband and may be seized by the commissioner. All products and vehicles seized as contraband shall be delivered promptly to the custody of the department and disposed of under § 67-1-1435. Proceeds of the sale shall be paid to the state treasury for the benefit of the general fund.

(b) Any person, claiming any property or any interest in property seized under the provisions of subsection (a), may file with the commissioner at Nashville a claim in writing, requesting a hearing and stating the person's interest in the product or vehicle seized. The hearing shall be held under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. The request shall be made within ten (10) days following the confiscation.

(c) If no claim is interposed, the petroleum products or other property shall be forfeited without further proceedings and shall be sold as herein provided.

(c) An end user who ex