Illinois Administrative Code › Title 86 - REVENUE › Part 500 - MOTOR FUEL TAX › Subpart B - MOTOR FUEL TAX › Section 500.298 - Civil Penalties for Dyed Diesel Fuel Violations

Current through Register Vol. 48, No. 28, July 12, 2024
a) Definitions. For purposes of this Section,
				the following definitions apply:
"Inspection" means the periodic examination by duly
				  authorized agents of the Department of places at which motor fuel is or may be
				  produced or stored. Such places may include, but are not limited to, any
				  terminal, any fuel storage facility that is not a terminal, any retail fuel
				  facility, and any State highway inspection station, weigh station, agricultural
				  inspection station, mobile station, or other location designated by the
				  Department to be used as a fuel inspection site. Inspection of multiple
				  locations may be conducted as part of one inspection. When one inspection spans
				  multiple sites, the inspection may occur over a period of up to 15 days.
"Occurrence" means each event that results in a violation. As
				  noted in subsections (c) and (d), an occurrence may encompass a series of
				  similar violations occurring during an inspection (e.g., multiple violations of
				  notice requirements). However, a separate occurrence results each time a
				  violation of subsection (b) is found. For purposes of the penalty imposed under
				  subsection (e), a first occurrence results for any amount of sales or attempted
				  sales made to a specific customer during the course of a single day. A second
				  and subsequent occurrence results for each day subsequent to the first
				  occurrence in which any amount of sales or attempted sales are made to that
				  same customer.
"Operator" means the person who has physical control over a
				  motor vehicle. For purposes of this Section, the driver of a vehicle is
				  considered the operator of that vehicle irrespective of any ownership or lease
				  agreements. When a motor vehicle is not under the control of a driver, the
				  operator will be the person that has physical control over that vehicle. For
				  instance, if a truck parked on company property is found to have dyed diesel
				  fuel in its tanks, a penalty will be issued to the company. If, however, the
				  company has leased that truck to a lessee and the lease remains in effect at
				  the time an inspection occurs on the company property, the lessee will be the
				  operator to whom a penalty is issued. In the latter case, the lessee is the
				  party having physical control over the leased vehicle, until such time as the
				  lease has terminated.
b)
				From January 1, 2000 through June 30, 2001, if a licensed motor vehicle is
				found to have dyed diesel fuel within the ordinary fuel tanks attached to the
				motor vehicle, the operator shall pay a penalty of $2500 for the first
				occurrence and $5000 for the second occurrence and each occurrence thereafter.
				On and after July 1, 2001, when a motor vehicle required to be registered for
				highway purposes is found to have dyed diesel fuel within the ordinary fuel
				tanks attached to the motor vehicle, the operator shall pay a penalty of $2500
				for the first occurrence and $5000 for the second occurrence and each
				occurrence thereafter. On and after August 2, 2001, if a recreational-type
				watercraft is found to have dyed diesel fuel within the ordinary fuel tanks
				attached to the watercraft, the operator shall pay a penalty of $2500 for the
				first occurrence and $5000 for the second occurrence and each occurrence
				thereafter. (Section 15 of the Law). The first occurrence penalty imposed by
				this subsection (b) on and after July 29, 2010 shall be $1,000. Each licensed
				motor vehicle or recreational-type watercraft found to have dyed diesel fuel in
				its tanks constitutes a separate occurrence.
EXAMPLE 1: A truck is inspected at a designated inspection
				  site and dyed diesel fuel is found in the ordinary fuel tank of the truck
				  (owned by the ABC Company). The truck driver tells Department agents that his
				  or her boss, Mr. ABC, tells employees to fill ABC Company trucks with dyed
				  diesel fuel. The truck driver tells the agents that there are other trucks
				  located at the ABC Company with dyed diesel fuel in the ordinary fuel tanks
				  attached to the trucks. Department agents then go to the ABC Company and
				  conduct an inspection. Agents find 2 vehicles registered to the ABC Company
				  with dyed diesel fuel in the ordinary fuel tanks of the vehicles.
In this example, there are 3 separate occurrences. The truck
				  driver is assessed a first occurrence penalty for dyed diesel fuel found in the
				  ordinary fuel tank attached to the truck. The driver is the operator who had
				  physical control over the truck when dyed diesel fuel was found in the tanks.
				  The ABC Company is assessed a first occurrence penalty for the first licensed
				  motor vehicle inspected at the business found with dyed diesel fuel in the
				  ordinary fuel tank attached to the motor vehicle. The company is also assessed
				  a $5000 second occurrence penalty for the second licensed motor vehicle
				  inspected at the business found with dyed diesel fuel in the ordinary tank
				  attached to the motor vehicle. The ABC Company is the person who has physical
				  control over the trucks at the time of inspection.
EXAMPLE 2: Truck driver #1 was previously issued a first
				  occurrence penalty when he or she was found operating an ABC Company truck with
				  dyed diesel in its tanks. Truck driver #1 returns this truck to the ABC
				  Company. Several months later, agents inspect the ABC Company. The same truck
				  previously driven by truck driver #1 is found to have dyed diesel fuel in its
				  tanks. At a later inspection, truck driver #2 is found to be operating the same
				  truck with dyed diesel in its tanks. In addition, truck driver #1 was found to
				  be operating a truck with dyed diesel in its tanks. Six months after its first
				  inspection, ABC Company acquires 5 new trucks. During the course of an
				  inspection, all 5 of the new trucks are found to have dyed diesel in their
				  tanks.
The ABC Company is issued a first occurrence penalty for the
				  truck discovered during the agent's first inspection at ABC Company. The ABC
				  Company is the person who has physical control over the truck at the time of
				  inspection. . Truck driver #2 is issued a first occurrence penalty. Truck
				  driver #2 is the person who has physical control over the truck at the time of
				  inspection. Truck driver #1 is issued a $5000 second occurrence penalty because
				  he or she has physical control over the truck at the time of inspection and it
				  is the second time he or she has committed a violation of subsection (b) of
				  this Section. Company ABC is issued a separate $5000 second occurrence penalty
				  for each of the 5 new trucks because the company has physical control over each
				  of these trucks, and each truck represents a second and subsequent violation of
				  subsection (b) of this Section.
EXAMPLE 3: The owner of XYZ Company is driving a truck that
				  is inspected and found to have dyed diesel fuel in the ordinary fuel tank
				  attached to the truck. Several hours later, a second truck owned by XYZ Company
				  and driven by an employee is inspected. It, too, is found to have dyed diesel
				  fuel in the ordinary tank attached to the truck.
In this example, there are 2 separate occurrences. The owner
				  of Company XYZ driving the truck is assessed a first occurrence penalty for
				  dyed diesel fuel found in the ordinary fuel tank attached to the truck, and the
				  employee of Company XYZ driving the second truck is assessed a first occurrence
				  penalty for dyed diesel fuel found in the ordinary fuel tank attached to the
				  truck. The owner and employee are each persons who have physical control over
				  the trucks, and as such, are operators subject to first occurrence
				  penalties.
EXAMPLE 4: Robert Andrew takes his family water skiing on Fox
				  Lake. The boat is stopped for a routine inspection and dyed diesel fuel is
				  found in the boat's fuel tanks.
Mr. Andrew is assessed a first occurrence penalty for dyed
				  diesel fuel found in the ordinary fuel tank attached to the watercraft. Mr.
				  Andrew's ski boat is a recreational-type watercraft required to use clear
				  diesel fuel. Dyed diesel fuel may be placed in the tanks of commercial
				  watercraft, however, without penalty. For example, tugboats or commercial
				  fishing boats found to have dyed diesel fuel in their tanks will not be subject
				  to the penalty imposed in this subsection (b).
c) Any person who owns, operates, or controls
				any container, storage tank, or facility used to store or distribute dyed
				diesel fuel without the notice required by Section 4f of the Motor Fuel Tax Law
				shall pay a penalty of $500 for the first occurrence and $1000 for the second
				occurrence and each occurrence thereafter. [35 ILCS
				505/15 ] Section 4f requires that a legible and
				conspicuous notice stating "Dyed Diesel Fuel, Non-taxable Use Only" appear on
				all containers, storage tanks, or facilities used to store or distribute dyed
				diesel fuel. For purposes of this penalty, a series of similar violations
				occurring during the course of one inspection constitutes a single occurrence.
EXAMPLE 1: A licensed motor fuel distributor has 5 bulk
				  storage tanks of dyed diesel fuel. During an inspection, agents find that none
				  of the 5 tanks are marked with the required dyed diesel fuel notice.
In this example, the distributor is assessed a first
				  occurrence penalty of $500 for all 5 storage tanks found without the required
				  notice. This series of similar violations results in one first occurrence
				  penalty.
EXAMPLE 2: In the course of an inspection of a licensed motor
				  fuel distributor with multiple locations, a motor fuel distributor is found to
				  have 5 unmarked tanks at the first location, 3 unmarked tanks at the second
				  location, and one unmarked tank at the third location. For purposes of this
				  penalty, the violations found at the first, second and third location are
				  considered a single occurrence spanning multiple locations during one
				  inspection. However, if a subsequent inspection revealed that his or her
				  storage tanks did not contain the required notice, the distributor would be
				  assessed a second occurrence penalty of $1000. These violations would be
				  considered to have occurred during a separate inspection.
d) Any person who sells or transports dyed
				diesel fuel without the notice required by Section 4e shall pay a penalty of
				$500 for the first occurrence and $1000 for the second occurrence and each
				occurrence thereafter. (Section 15 of the Law) A legible and conspicuous notice
				stating "Dyed Diesel Fuel, Non-taxable Use Only, Penalty for Taxable Use" must
				appear on all bills of lading and invoices accompanying any sale of dyed diesel
				fuel. (Section 4e of the Law)
EXAMPLE 1: A licensed motor fuel distributor is inspected at
				  one of its 3 locations. Three dyed diesel fuel sales invoices are found without
				  the required dyed diesel fuel notice. During the course of a week-long
				  inspection, agents examine invoices at the other 2 bulk plants of this
				  distributor. At the second location, no violations are found, and at the third
				  location, none of the diesel fuel sales invoices contain the required dyed
				  diesel fuel notice.
In this example, the licensed motor fuel distributor is
				  assessed a first occurrence penalty of $500 for all invoices found at the first
				  and third locations without the required notice. The unmarked invoices found at
				  these locations constitute a single occurrence spanning multiple locations
				  during one inspection. However, if a subsequent inspection revealed that his or
				  her invoices did not contain the required notice, the licensed motor fuel
				  distributor would be assessed a second occurrence penalty of $1000.
e) Any licensed motor fuel
				distributor or licensed supplier who sells or attempts to sell dyed diesel fuel
				for highway use shall pay a penalty of $5000 for the first occurrence and a
				$10,000 penalty for the second occurrence and each occurrence thereafter. In
				addition, on and after August 2, 2001, any licensed motor fuel distributor or
				licensed supplier who sells or attempts to sell dyed diesel fuel for use by
				recreational-type watercraft on the waters of this State shall pay a penalty of
				$5000 for the first occurrence and a $10,000 penalty for the second occurrence
				and each occurrence thereafter. The penalties imposed under this subsection (e)
				on and after July 29, 2010 shall be $1000 for the first occurrence and $5000
				for the second occurrence and each occurrence thereafter. (Section 15 of the
				Law)
f) Any person subject to the
				penalties described in this Section may protest the penalty by making a written
				request for a hearing within 60 days after notice of the penalty from the
				Department. If the hearing is not requested in writing within 60 days, the
				penalty assessment becomes final. (Section 15 of the Law)
g) The penalties imposed by subsections (b)
				and (e) of this Section will be imposed only when the special fuel contains the
				dye Solvent Red 164 in quantities greater than .1 part per million.