Note: This information and related laws apply to both registered and unregistered farm vehicles.
Dyed Versus Undyed Diesel Fuel
Undyed diesel fuel is taxable. It can be used in registered or non-registered vehicles or equipment. If the vehicle and/or equipment is not registered or required to be registered and fuel tax has been paid for fuel used for off-road purposes, the customer can apply for a tax refund. (Va. Code § 58.1-2259 (A)(14)(15)(18)(20) and (B)).
Dyed diesel fuel is untaxed fuel. It can be used in vehicles that are not registered or required to be registered in Virginia, when conducting business as provided for in Va. Code §§ 46.2-662 through 46.2-684. Va. Code § 58.1-2265.
Can dyed diesel fuel be used in vehicles registered for farming purposes (F-tags)?
No. Since federal or state tax has not been paid on dyed diesel fuel, it cannot be used in vehicles that are designed for highway use and are required to be registered in Virginia. (Va. Code § 58.1-2265)
Dyed Diesel Fuel Use in Farm Vehicles
Use is acceptable in vehicles not registered or required to be registered in the state and operated in accordance with the provisions of Va. Code §§ 46.2-662 through 46.2-684.
Penalties for Unlawful Use
The civil penalty is a minimum of $1,000 or $10 per gallon of fuel, based on the maximum storage capacity of the tank(s). Penalties are charged on the propulsion tanks of the vehicle as well as on any storage tanks on the vehicles. Penalties can also be charged on the storage tank at the farm if that was the source of the dyed fuel found in the vehicle. (Va. Code § 58.1-2265(B))
Any person who refuses to allow an inspection or collection of a fuel sample is subject to a $5,000 penalty for each refusal. If the refusal is for a vehicle fuel sample collection, the penalty is assessed to the registered owner of the vehicle. If the refusal is for a sample to be taken from any other storage tank or container, the penalty will be payable by the owner of the storage tank or container. (Va. Code § 58.1-2267)
A person may be charged with a Class 6 felony if he or she uses dyed diesel fuel for a use that he or she knows or has reason to know is a taxable use of the fuel. Penalties can be charged if a person sells dyed diesel fuel to someone who the seller knows or has reason to know will use the fuel for a taxable purpose. If the amount of fuel is less than 20 gallons, the person may be charged with a Class 1 misdemeanor. (Va. Code § 58.1-2273(7))
A person who attempts to alter the strength or composition of any dye or dye marker in any dyed diesel fuel may be charged with a Class 6 felony. (Va. Code § 58.1-2273(8))