North Carolina Biodiesel Taxes

According to North Carolina law, biodiesel is taxed similarly to diesel fuel. Caveat: individual non-commercial homebrewers as well as those burning SVO or WVO are exempt from these requirements if their activities are non-business in nature and their tax liability is less than $2,000 annually. Whoever sells the biodiesel is liable for the tax. If you’re a producer retailing fuel you are liable for the tax. If you just produce and sell to you a licensed, bonded distributor they can be liable for the tax.

The license is free of charge, and is perpetual (i.e., does not need to be renewed). The minimum $2,000 bond is required in the event you fail to pay your taxes. Monthly tax returns must be filed in order to pay the NC excise tax, and the NC inspection fee, according to your own fuel consumption. Rates are published on the NC Department of Revenue website.

In short, the seller must:

  1. apply for a license (no charge, perpetual)
  2. post the bond
  3. pay the taxes monthly

We have collected links to the forms you’ll need. All of these forms are available from the North Carolina Department of Revenue, Motor Fuels Taxes Division. In case they re-organize their site, here is the URL you might use to re-locate the proper forms: http://www.dor.state.nc.us/downloads/motor.html

This is the license form:

  • Form Gas 1262 – Application for Refiner / Supplier / Terminal Operator / Licensed Distributor / Blender / Alternative Fuels Provider / Kerosene Distributor / Importer / Exporter Licenses
    NOTE: When filing for this license, individuals should write-in “biodiesel provider” as the License Type.

    This is the form required to post the bond:

  • Form Gas 1212 – Motor Fuels Tax Liability Bond Form

    This is the form used to file monthly payments (“returns”):

  • Form Gas 1264 – Motor Fuels Fuel Alcohol Provider Return
    NOTE: Apparently the monthly return form can be complicated, as there are three subordinate forms and one set of instructions:

  • Gas-1264RS – Fuel Alcohol Provider Schedule of Receipts
  • Gas-1264DS – Fuel Alcohol Provider Schedule of Disbursements
  • Gas-1264DC – Fuel Alcohol Provider Schedule of State Diversion Corrections

    Please note that this information does not address the Federal Excise Tax that also applies to biodiesel. Visit the National Biodiesel Board website for information on the Federal tax credit.

    Individuals needing further assistance in completing their forms, filing for a license, posting a bond, or submitting their monthly returns may contact

    Patti Thompson
    Motor Fuels Licensing and Bonds Assistant
    NC Dept of Revenue, Motor Fuels Tax Division
    Phone: 919-715-3753 or 919-733-3409
    Shared fax: 919-733-8654
    Email: patti.thompson@dor.nc.com