Witnesses back shortening diesel refund window as committee reviews DMV bill

At a legislative committee session, Matt Coda of the firm Meadow Hill testified on behalf of the Vermont Fuel Dealers Association and the Vermont Retail Grocers Association Motor Fuel Division in support of a proposed change in the DMV miscellaneous bill that would shorten the time allowed to apply for diesel tax refunds from three years to one.

The change under discussion — described in the hearing as section 25 of S.123 — would require tax‑exempt entities or fuel dealers that seek refunds on diesel excise taxes to file within 12 months instead of the current 36 months. "I understand why the DMV wants to shorten it," Coda said, and added that dealers and municipalities generally prefer to get rebates promptly.

Coda spent much of his testimony explaining the practical differences between clear (on‑road) diesel and dyed (off‑road) diesel and the tax treatment of each. "This is nontaxable. This is taxable," he said while holding two samples to illustrate the point. He described the tax breakdown he attributed to the products: clear on‑road diesel carries a roughly 28¢ excise tax plus a 3¢ motor fuel transportation infrastructure fee and 1¢ for the petroleum cleanup fund; dyed off‑road diesel carries a smaller set of levies including a 2¢ charge for a weatherization fund and 1¢ to the petroleum cleanup fund. Coda said the two products are physically the same fuel with a solvent added to indicate nonroad use and tax status.

Coda and committee members discussed how refunds are claimed. He said either the fuel seller or the tax‑exempt purchaser — for example a school district, municipality or farm — can apply for the rebate, and that dealers sometimes apply on behalf of customers. He described common operational reasons for discrepancies, such as suppliers who only have clear diesel available for delivery and therefore supply clear diesel to a tax‑exempt user who later applies for a refund.

Representatives on the panel sought clarification. Representative White asked Coda to repeat the tax amounts; Coda responded with the gallon figures he cited for Vermont consumption and the tax breakdown above. Representative Burke pressed on which vehicles and operators may use dyed diesel; Coda said the simplest rule is that clear diesel is typically used in vehicles with regular (green) registrations and dyed diesel is associated with equipment on red plates or off‑road use, but there are exceptions — for example, for‑profit bus companies that contract with school districts must document and segregate gallons used for school service versus private use.

Committee members also raised operational questions about documentation and audits. Coda recounted past instances in which municipalities were asked by dealers to provide tax‑exempt certificates after the sale; he said the paperwork can be required to substantiate a refund claim and that the Department of Motor Vehicles audits those claims.

Other portions of the DMV miscellaneous bill were mentioned briefly in the same session. Committee members discussed provisions related to valuation and transfer of used vehicles (intended to address private sales and independent assessments of vehicle value) and a change to codify a fee for bulk electronic records requests to the DMV. Witnesses at the hearing characterized the used‑vehicle valuation changes as affecting private sales rather than dealerships, and described the bulk electronic records fee as bringing an existing practice into statute.

No formal vote on the bill or any specific section was recorded during the hearing. The committee adjourned to await legislative counsel and to continue consideration of other sections.

Ending: The committee carried the provision under discussion forward as part of ongoing consideration of the DMV miscellaneous bill; staff and counsel are expected to provide further drafting and clarification before any formal vote is taken.