Print this Article
Wednesday, July 26, 2006 04:00 pm

Taxman cometh

Biofuels hobbyists shouldn't have to jump through hoops

Since being profiled by Illinois Times this spring, Dayton Keyes, who spends less than $1 per day on fuel by producing biodiesel from used cooking oil, says he’s lost count of the media interviews he’s done.

So it was bound to happen: Officials from the Illinois Department of Revenue contacted Keyes last week and politely informed the police investigator for the secretary of state’s office that he was violating state law.

“It was a surprise to find out about it, because I’d been told there was no tax on it,” Keyes says.

Although Keyes was correct that there’s no sales tax on homemade biodiesel, the state does charge all Illinois drivers a motor-fuel tax for “the privilege of operating motor vehicles on public highways and recreational watercraft,” according to IDOR’s Web site.

“If someone figured out how to burn water in a motor,” Keyes quips, “it would be taxed.”

In addition, Keyes learned, he must be bonded for at least $1,000 and licensed as a fuel distributor. Then, every month, he must file a special tax return.

Keyes characterizes the conversation with the revenue folks as more of a courtesy call than a shakedown — he just happens to be among the higher-profile biodiesel revolutionaries in the state. The tax bill he’ll receive in the next several days will only come out to about $30.

“In no way were they trying to squeeze me. I’m a state police officer, so the last thing I want to break the law,” he says.

True, render unto Caesar and all that — but Caesar should cut people such as Keyes a break.

His biodiesel, which he converts from spent french-fry grease — and can be used in lieu of kerosene in tiki torches — burns cleaner than petroleum diesel and gasoline and cuts down on greenhouse gases, yet the licensing, bonding, and tax-reporting procedure is the same for Keyes as it is for ExxonMobil’s Joliet oil refinery, for example. Failure to comply is a felony, he was told.

Although he’s knowledgeable and passionate about the potential of renewable energy to wean America off foreign oil, it should be noted that Keyes and other biodiesel makers are hobbyists first and foremost.

However, the state needs to make a distinction between large corporations and microproducers such as Keyes, who built his biodiesel lab as a practical matter when he began commuting daily to Springfield from Maroa, which is near Decatur.

He’d like to see the Legislature make changes so that biodiesel hobbyists aren’t penalized and, in the meantime, make other biodiesel revolutionaries aware of state regulations for motor fuels (

“It’s only fair that everybody pay the motor-fuel tax, but we shouldn’t have to get licensed like Exxon,” Keyes says.

To read our profile of Keyes, see “The revolution will be motorized,”