Texas Dyed Diesel Permit: End User Number or Bonded User License

To buy dyed diesel in Texas without paying the state’s $0.20-per-gallon fuel tax, you need to register with the Texas Comptroller of Public Accounts. Most off-highway users apply for an end user number using Form AP-197 and then provide a signed statement to their fuel supplier with each purchase. Higher-volume operations apply instead for a dyed diesel fuel bonded user license using Form AP-133. There is no separate “Texas dyed diesel permit” beyond these two registrations; which one you need depends on how many gallons you burn each month.

Who Can Register

The exemption under Texas Tax Code Section 162.206 is open to any person or business in Texas that uses dyed diesel exclusively for off-highway purposes.¹ Farm tractors, irrigation pumps, construction generators, earth-moving equipment, and oil and gas production machinery all qualify, along with similar equipment that never touches a public road.

Sole owners, partnerships, corporations, and other organizations can all register.² Two conditions have to hold: you consume the fuel yourself rather than resell it, and none of it goes into the tank of a motor vehicle operated on Texas highways.¹

End User Number or Bonded User License

Your monthly volume decides which registration you need.

An end user number lets you buy dyed diesel tax-free under the signed statement system, capped at 10,000 gallons per calendar month.¹ Two categories of buyer get a higher 25,000-gallon monthly cap:

Oil and gas producers using all the fuel for original production or to increase production, provided they also obtain a separate letter of exception from the Comptroller.²
Agricultural users consuming all the fuel in off-highway agricultural equipment, with no separate letter required.¹

Any gallons over your monthly cap are taxable, and if you routinely exceed the limit the Comptroller will require you to hold a dyed diesel fuel bonded user license instead.¹

The bonded user license is the option for operations whose consumption runs above what the signed statement system allows. It carries heavier reporting duties: bonded users file periodic returns showing tax-free gallons received and consumed, even in quarters with no taxable activity.³ Most small and mid-sized operations stay within the signed statement limits when they can.

Applying for the End User Number (Form AP-197)

Form AP-197, the Texas Dyed Diesel Fuel End User Signed Statement Number Registration, is not a tax license application. It is a shorter registration that produces the end user number your supplier will verify before selling you tax-free fuel.²

The form asks for:

Your business structure: sole owner, partnership, corporation, or other organization.
Your Federal Employer Identification Number or Social Security Number.
Your Texas taxpayer number, if you already have one.
The physical location of your business. The Comptroller wants a street address or meaningful directions like “3 miles south of FM 1960 on Jones Road,” not a P.O. Box.²

You can submit the completed form by mail to the Texas Comptroller of Public Accounts, 111 E. 17th St., Austin, TX 78774-0100; by fax to (512) 936-0012; or by email to FuelsTax@cpa.texas.gov. Applications are processed in the order received. Once approved, your end user number goes into the Comptroller’s system, where suppliers can verify it online before completing a sale.²

Applying for the Bonded User License (Form AP-133)

If your consumption exceeds the signed statement thresholds, use Form AP-133, the Texas Application for Fuels Tax License. It asks for the same identification details as AP-197 along with information about your partners or corporate officers, and corporations must provide their Secretary of State file number.⁴ Mail the completed form to the same Austin address used for AP-197.

Bonded users must post a surety bond. Under Texas Administrative Code Section 3.447, a dyed diesel fuel bonded user reporting annually must post security equal to twice its annual tax liability on taxable diesel fuel uses, with a $10,000 minimum. The Comptroller can waive the bond if it determines the security isn’t necessary to protect the state’s interest.³ The Comptroller sets the bond amount based on your anticipated taxable fuel usage.

The Signed Statement You Give Your Supplier

Registration alone does not exempt any single purchase. You also have to give the licensed supplier or distributor a signed statement that includes your end user number.¹ Without it, the supplier cannot legally sell you dyed diesel without collecting the $0.20-per-gallon state tax.

p>The statement must confirm two things: that you will consume all the dyed diesel yourself and won’t resell it, and that none of it will be put into the fuel tank of a vehicle driven on public highways. It must bear the signature of the purchaser or an authorized representative. A supplier can verify your end user number on the Comptroller’s website, which means you can begin purchasing before you physically hand over a completed signed statement, as long as your number is active in the system.¹

Suppliers pay attention to this because a valid signed statement with an end user number shifts the burden of proof to the buyer. If you later misuse the fuel, the liability falls on you, not the supplier who sold in good faith.

Records You Have to Keep

Every purchase should be documented with records showing the date, the seller’s name, the number of gallons, and which equipment consumed the fuel. Records must clearly separate fuel used in off-highway equipment from any fuel that went to taxable purposes. Texas law makes it a criminal offense to fail to keep the records required under Chapter 162 or to make false entries in them.

Comptroller auditors compare the volume you bought against what your equipment could reasonably consume off-highway. Buy 8,000 gallons in a month while operating two small generators and you should expect questions. Equipment run-hour logs kept alongside fuel purchase invoices make audits far less painful.

Bonded user license holders also file periodic returns with the Comptroller detailing tax-free gallons received and consumed, even during periods with no taxable transactions. Falling behind is one of the fastest ways to trigger an audit or lose the license.³

What Misuse Costs

Putting dyed diesel in a highway vehicle is easy for regulators to catch and expensive to explain. Federal law under 26 U.S.C. Section 6715 imposes a penalty on each violation equal to the greater of $1,000 or $10 per gallon of dyed fuel involved. On a 100-gallon tank, that is $1,000 for a single fill-up.⁵

The floor multiplies for repeat offenders: $2,000 on a second violation, $3,000 on a third, and so on, while the per-gallon calculation stays at $10.⁵

Texas adds its own enforcement. Under Tax Code Section 162.403, making false entries in required fuel records, destroying required records, or using a signed statement fraudulently are criminal offenses. The Comptroller can also revoke your end user number or bonded user license, cutting off your access to tax-free dyed diesel entirely.

1
Justia Law. Texas Tax Code Chapter 162 – Motor Fuel Taxes
2
Texas Comptroller of Public Accounts. Texas Dyed Diesel Fuel End User Signed Statement Number Registration
3
Legal Information Institute. 34 Texas Administrative Code 3447 – Reports, Due Dates, Bonding
4
Texas Comptroller of Public Accounts. Texas Application for Fuels Tax License
5
Office of the Law Revision Counsel. 26 USC 6715 – Dyed Fuel Sold for Use or Used in Taxable Use, Etc