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Dyed Fuel Laws

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Most diesel fuel sold in Nevada is intended for use in motor vehicles on public highways. This fuel appears clear (it is not dyed) and is subject to fuel taxes.

Diesel fuel which is dyed red is meant for use in off-road equipment and farm vehicles that are not operated on public highways. This fuel is not taxed.

It is illegal to use dyed fuel, or other form of untaxed product, such as used motor oil, biodiesel produced or sold from a source other than a retail location, or other waste oil used for a taxable purpose. The DMV will investigate all claims of illegal sale or use of untaxed fuel and take action in accordance with the following statute:

NRS 366.735 Misuse or alteration of exempt special fuel: Administrative fine.

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1. The Department may take disciplinary action in accordance with subsection 2 against any person who:
   1. Sells or stores any dyed special fuel for a use which the person selling or storing such fuel knows, or has reason to know, is a taxable use of the fuel;
   2. Willfully alters or attempts to alter the strength of composition of any dye in any special fuel intended to be used for a taxable purpose; or
   3. Uses dyed special fuel for a taxable purpose.
2. For any violation described in subsection 1, the Department may:
   1. If the violation is a first offense, impose an administrative fine of not more than $2,500 and suspend any license issued to that person pursuant to this chapter for not more than 30 days;
   2. If the violation is a second offense within a period of 4 years, impose an administrative fine of not more than $5,000 and suspend any license issued to that person pursuant to this chapter for not more than 60 days; and
   3. If the violation is a third or subsequent offense within a period of 4 years, impose an administrative fine of not more than $10,000 and revoke any license issued to that person pursuant to this chapter.

Fuel suppliers, dealers and producers should visit Motor Carrier for information and tax returns. Biodiesel and other types of alternative fuels such as vegetable oil are subject to taxation and monthly reporting. Contact the Fuel Industry Team at (775) 684-4711 ext. 2.