Notice Regarding Excise Tax on Fuel Grade Ethanol or Biodiesel Fuel

August 11, 2017

During the 2017 legislative session, N.C.G.S. 105-449.81(3b) was amended in part 
through Session Law 2017-39 to add marine vessels as a mode of transportation for 
which fuel grade ethanol or biodiesel are taxable upon importation into this state. This 
subsection was amended further through Session Law 2017-204 to clarify that the Excise 
tax imposed on fuel grade ethanol or biodiesel imported by marine vessel only applies 
when the fuel grade ethanol or biodiesel is delivered to a non-registered IRS terminal. 

Fuel grade ethanol or biodiesel fuel remains taxable when (a) it is produced in this state 
and is removed from the storage facility at the production location or (b) it is imported to 
this state by means of a transport truck, a railroad tank car, or a tank wagon – modes of 
transportation outside the terminal transfer system.

Effective August 11, 2017, in addition to importation by transport truck, railroad tank car, 
or tank wagon, fuel grade ethanol or biodiesel is taxable when it is imported into this state 
by a marine vessel where fuel grade ethanol or biodiesel from the vessel is not delivered 
to a terminal that has been assigned a terminal control number by the Internal Revenue 
Service. Fuel grade ethanol or biodiesel remain not taxable upon importation into this 
state when the product is delivered by marine vessel to a registered IRS terminal.

Questions regarding this notice may be directed to the Excise Tax Division at telephone 
number (919) 707-7500 or toll free (877) 308-9092. 

If a written response would require the Department to interpret the law in a manner not 
specifically addressed in a statute, regulation, or Departmental or IRS publication, the 
person requesting the written response must follow the procedure (and pay the required 
fee) for requesting a private letter ruling.