A while back I posted out to the Biodieselnow forum on all the
taxation stuff.

The post collected a ton of great information (EPA sites, Tax Sites,
all of that kind of stuff).

So, for research purposes here ya go....
http://forums.biodieselnow.com/topic.asp?TOPIC_ID=4325

Last time I checked (almost a year ago), the following was in place:

To Sell Biodiesel:
==================
1- You have to register your fuel with the EPA
2- It has to pass the Tier I & Tier II Health & Human Testing
---Ain't cheap. Like $500K to $1Mil for the testing alone
3- You need to register your business w/ your state
4- The state & local municipality has the right to come & "inspect"
your premises. (you know, check to see that you're running a safe
business & all & not gonna blow your block up, this also includes
OSHA--oooo...a shiver just ran down my spine)
5- If you pump it in any way, shape, or form, your equipment has to
be certified by your state's "Weights & Measures" certifying program
--The certification ain't cheap
--Equipment that's actually certifiable ain't cheap either
--Like $2,000 just for a stupid pump alone
--A cheap $350.00 fill-rite pump ain't gonna cut it It's not
deemed "Legal For Trade"


Now the "How To Get Around Some Of This Crap" shpeal:
=====================================================
1- Just get an NBB membership for a small producer
--Costs $2500 / year
--This get's you out of registering your fuel w/ the EPA and the EPA
testing because you just submit the NBB's data to the EPA
2- Forming a business isn't bad either, I'd recommend seeking the
advice of an attorney and a CPA before you incorporate or get set up
though, you wanna be fully protected (read: you don't wanna get your
socks sued off you)
3- The permit's to have fuel on hand ain't all that bad either, just
jump through their hoops, pay the $$$ and be ready to educate the
inspector on the "finer points of why Biodiesel is so great (and not
as flammable as diesel fuel)". Taking the Fire Marshall out to lunch
and getting to know him/her WELL BEFORE you bring em out to your
place is PROBABLY a good idea. While going to lunch, take him in a
diesel vehicle running Biodiesel. Tell him all about biodiesel (most
Fire Marshall's I know are diesel users--I ain't seen many newer fire
trucks runnin' on Gas these days
4- Collecting "TAX" on fuel you sale for "On-Road Use" isn't too hard
either, really & truly you don't even have to collect it, but when
you go to do the business taxes, the tax-man's gonna pull it out of
your profits when you do your taxes--this is why most places collect
it, they're passing the tax on to Joe Public.
5- Used pumps aren't too terrible to find, you just have to make sure
they're "certifiable". Find a used petroleum equipment place near you
& buy an old diesel pump. You may have to replace the rubber seals in
it, but they can usually be had fairly inexpensively. Once you've got
it installed, have the Standard Weights & Measure's guy's come out &
certify it. If you DO choose to use a cheap fill-rite and it's not
certified, remember, someone could come back & sue you. ie--"You sold
me 400 gallons of fuel, but when I had it measured it was only 390" A
certified pump is a good thing.

OK, now a bit on quality:
=========================
If you DO decide to
A) make & sell your biodiesel or
B) buy it wholesale & sell it retail
Make dang sure you're qualities up to snuff.

Although there really isn't an enforcable standard in the US for
Biodiesel yet (sure, the EPA CLAIMS it should meet ASTM D-6751 and
the NBB SAY'S a producer should produce ASTM D-6751 spec fuel, but
there's no "quality cops" that I'm aware of yet except Joe User).

The EPA classifies "Biodiesel" as a blend feedstock meeting ASTM D-
6751. But they don't lay out punitive measures for not using spec
fuel. If you were to get caught selling "out of spec fuel",
essentially to the government, if it's out of spec, it's
not "Biodiesel as they classify it".

The NBB does sort of a "wink-and-a-nod" to all their members, sort of
a "Hey, make good fuel" but they won't come & audit you (unless, of
course you PAY them to...at which point I'm sure they'd come & do
it..they'll do ANYTHING for a price ya know). There's been several
well documented cases of producer's making & selling crappy, out of
spec fuel that trashed peoples engines & fuel systems (a bunch of
glycerine in the bottom of a fuel tank ain't a pretty sight).

Why make quality stuff?
=======================
Because if ya don't, it's gonna bite ya in the rear. Some Joe Public
user is gonna put it in their diesel. If it's poor quality and it
damages something in the engine, guess who's held liable? The FUEL
PRODUCER. Lawsuit's aren't fun things....make good stuff & you stand
a lot better chance of not being sued for bad fuel.

Tax Laws & stuff:
=================
If you USE your own biodiesel that you make, it's true, you can use
up to 400 gallons of the stuff in 1 year and not have to pay FEDERAL
excise tax on it...but the law say's nothing about STATE excise tax.

By the way, this 400 Gallon tax thing ONLY applies to a private
individual. Girl Mark found that it doesn't apply to business fleets
(sorry guys).

Biodiesel, when taxed, for the most part, is taxed at the same excise
tax rates as diesel fuel (typically diesel get's a .22 cent Fed tax
and in most states a .24 cent State Excise tax). That means you may
still be held liable for the State excise taxes and Federal excise
taxes after your first 400 gallons. That also only applies if you
use the fuel for "On-Road Use" (means yer gonna drive your biodiesel
running vehicle on highways maintained by tax dollars).

Notice I said "for the most part". There's still lot's of discussions
going on between lawyers, the IRS, and small producer's defining how
the tax should or should not be applied. Caveat Emptor in regards to
the IRS.

Also, as someone said earlier, there's some tax credits in place for
those that use biodiesel. Most of them apply to Biodiesel Retailers
(those selling Biodiesel) and for the most part, they only apply
to "blends" of 1% to 99% (the IRS and the Lawyers are still fleshing
this one out).

The credit came from the American Jobs Creation Act.
Essentially, a blender selling biodiesel is entitled to a 1 cent per
percentage point of biodiesel per gallon. ie. B20 would be entitled
to 20 cents tax credit per gallon. The credit is taken when a seller
does their taxes (usually quarterly w/ big businesses).

There's also another credit out there that say's if you buy biodiesel
and you pay the federal excise tax on it, you can get a certain
amount of it refunded to you, but I've heard (not verified though)
that this one may only apply to big fleet's and business users. I've
still yet to find the exact tax code & language on this tax credit.

Bartering:
==========
Works for me! Although, yeah, that stupid tax man probably has a way
to tax my "bartering" too, but I'm not gonna go out of my way to find
out what it is.

The little group I'm a part of uses this sort of barter system
instead of exchanging $$$$ for biodiesel. Ie. one of us buy's a
barrel of methanol & gives it to the guy making biodiesel in trade
for a portion of biodiesel.

You can see how we portion our's out here:
(you may have to cut & paste the url--Yahoo may cut this one off)
http://www.riverstonesbiodiesel.com/bd/group/value.php?
id=1&url=http://riodiesel.com/&gname=The%20Biodiesel%20Barons

Anyway, hope the links from the forum post at the top are of worth to
some of you.

Just remember, there's only 2 things certain in life:
Death and taxes.

Keep the biodiesel flowing!!

-Graydon
Utah Biodiesel Supply
www.utahbiodieselsupply.com