Dyed Diesel General Information and Requirements

History

With the signing of Public Act 91-173, the Dyed Diesel program in Illinois became effective January 1, 2000. Aligning Illinois' program with the Federal dyed diesel/low sulfur program, Illinois law now requires that all special fuel used for non-taxable, non-highway use must have red dye added. The dye provides the identifier which serves as an enforcement tool during field audits and inspections.

The importance of this program is recognized and supported by the motor fuel industry as it serves to "level the playing field" and enhance compliance in an industry vulnerable to tax-evading schemes. Funding secured from the Illinois Department of Transportation, the Illinois State Police, and the Illinois Commerce Commission to purchase vehicles and testing, sampling, and safety equipment, has allowed IDOR to enforce this program.

• The fuel must be dyed prior to the removal at the terminal rack.
• The dyed diesel must be properly labeled.

• Storage tanks, containers, or facilities must be labeled with a legible & conspicuous notice stating "Dyed Diesel Fuel, Non-Taxable Use Only".
• Bills of lading and invoices accompanying any sale of dyed diesel must contain a legible & conspicuous notice stating "Dyed Diesel Fuel, Non-Taxable Use Only, Penalty For Taxable Use".

These transactions must be reported in order to track the tax-free sales and use of the dyed diesel fuel. Additionally, UST and EIF reporting applies to dye diesel.

You report the transactions by separating out your dyed diesel activities from your other special fuel transactions.

• Knowingly selling or attempting to sell dyed diesel fuel for highway use:
  • First Offense: $1,000 fine Class A misdemeanor.
  • Second or Subsequent Offense: $5,000 fine Class 4 felony.
• Knowingly sell, store, or transport dyed diesel fuel without the required notices:
  • First Offense: $500 fine
  • Second or Subsequent Offense: $1,000 fine
• Having dyed diesel in the fuel tanks attached to a motor vehicle required to be registered for highway purposes:
  • First Offense: $1,000 fine, Class A misdemeanor
  • Second or Subsequent Offense: $5,000 Class 4 felony
• Knowingly selling or attempting to sell dyed diesel fuel for highway use or for use in a recreational-type watercraft:
  • First Offense: $1,000 fine Class 4 felony.
  • Second or Subsequent Offense: $5,000 fine Class 2 felony.
• Knowingly possessing dyed diesel for use in recreational-type watercraft:
  • First Offense: $1,000 fine Class A misdemeanor
  • Second or Subsequent Offense: $5,000 Class 2 felony
    
    

• Referrals from the public or other agencies
• Account reviews
• Audits
• Site inspections

Detailed information is available on the webpage PIO-71, Dyed Diesel Fuel Enforcement Program.