Trump's diesel tax deferral sparks confusion and warnings

President Trump signed an executive order at a campaign rally in Nebraska earlier this month designed to appeal to rural voters by making diesel cheaper. However, the order has sparked confusion and warnings from states, with farmers and truckers expressing concerns about potential tax liabilities.

At a farm co-op in Salem, South Dakota, Gerald Otte is topping off his big, white 18-wheeler full of soybeans. He can choose between two kinds of diesel. One dyed red is 24.4 cents a gallon cheaper because it's exempt from federal highway taxes. However, Otte says his company told him to keep using regular non-dyed diesel, fearing they may owe taxes later.

Molly Nixon, a senior fellow in executive power at the Cato Institute, noted that Trump's order only defers payment of federal taxes and does not have the legal authority to prevent the IRS from collecting the tax. Nixon suggested that getting rid of the tax might require legislation.

South Dakota's governor is also telling people not to fill up their highway vehicles on dyed diesel, and the state's Trucking Association sent out a flyer advising not to change fuel practices due to the uncertainty about potential tax liability.