BS! Last year after Hurricane Katrina hit there was a big fuel shortage here
in Louisiana so the groverment for a short time allowed station to sell red
diesel (aka. offroad diesel). Never had any problems with it. The reason
your dealer thinks you should not use it because it has more sulfur than
onroad diesel and it may interfere with sensors.

The crime is TAX evasion, and the federal government takes it very
seriously.  It is very common for them to dip-check pickup trucks at
auctions in the mid-west.

Couldn't have said this better myself, so I am copying it from another
source:

The people you have to worry about when running dyed fuel on the highway is
the IRS. They're the ones who typically decide where to set up a checkpoint,
and the state and local law enforcement people just assist them with the
operation.

They don't look in your tank. They pull a sample and check for the presence
of dye. The test they use is sensitive enough that you may have run several
hundred gallons of undyed fuel thru the system since you last used dyed, but
it will still pick up traces of the dye and they've gotcha.

Right now a person is better off to buy highway diesel than dyed fuel even
for off road use. Why? The typical oil distributor learns from his supplier
and gouges on prices for dyed fuel. You buy the highway fuel, currently
about 10 cents more than dyed, BUT, you file for a refund of the state road
tax since you're using it off road. We did that for years with our cranes
because NC says they're off road equipment even though they were tagged and
run on the highway. You run the highway fuel because the Feds say anything
on a road must run taxed fuel, but the state rebates their part of the tax
back to you when you file for the refund. We switched to highway fuel after
we got caught with dyed fuel at a checkpoint run by the IRS. They were
prepared to fine us in the neighborhood of $30K, but we had a letter from
the state saying it was permissible to run dyed fuel in off road equipment
that travels on the highway from one site to another, such as mobile cranes.
The guy from the IRS was decent about it, and explained that the Federal
regulations required taxed fuel in ANYTHING traveling on the highway. He did
not levy the fine although he could have. In our conversation with him, he
told us something that was sorta interesting. He works all over NC doing the
fuel checks, and he said here in the mountains you'd catch a lot of pickups
running dyed fuel, but few larger trucks. OTOH, in the eastern part of the
state he said you hardly ever caught anyone running it in a pickup but
plenty of larger trucks tried it.

If it was really worthwhile to run dyed fuel, the simplest thing would be to
let the vehicle tank (on a pickup for instance) be filled with highway fuel,
but pipe the engine supply from one of the off-road tanks you often see in
the bed of pickups. They don't check to see where the fuel lines are hooked
up, so you could get away with that. Right now though, dyed #2 is about
$2.90 + 7% sales tax here, and highway fuel is about $3.09, so there's no
savings to be had anyway. Depending on price swings, highway fuel is cheaper
than dyed at times, even though its price includes close to 30 cents in NC
road tax that's not on the dyed fuel.

http://www.practicalmachinist.com/cgi-bin/ubbcgi/ultimatebb.cgi?ubb=get_topic;f=
1;t=023430;p=0

More information about cheating the tax man.

Any use of dyed diesel fuel or dyed kerosene. In fact, you may be subject to
a substantial penalty if you use dyed fuel as a fuel in a registered
diesel-powered highway vehicle
http://www.irs.gov/businesses/small/industries/article/0,,id=99855,00.html

Motor vehicle.   For the purpose of applying the tax on the delivery of
special motor fuels, motor vehicles include all types of vehicles, whether
or not registered (or required to be registered) for highway use, that have
both the following characteristics.
 a.. They are propelled by a motor.

 b.. They are designed for carrying or towing loads from one place to
another, regardless of the type of material or load carried or towed.

Motor vehicles do not include any vehicle that moves exclusively on rails,
or any of the following items: farm tractors, trench diggers, power shovels,
bulldozers, road graders, road rollers, and similar equipment that does not
carry or tow a load.
http://www.irs.gov/publications/p510/ch01.html#d0e1795

Dyed Diesel Fuel Penalty Waived in Florida Due to Hurricane Wilma
http://www.irs.gov/newsroom/article/0,,id=150042,00.html

Don't get caught in the red Agencies checking for dyed diesel fuel (July
1995)

Don't get caught with the wrong colored diesel fuel. Red dye is added to tax
exempt fuel at the refinery or terminal to make it traceable. Fuel taxed for
use on roads is clear or has a yellowish tint. If an inspection of the fuel
tanks on a vehicle used on the roads of this state reveals a different
color, samples of the suspect fuel are sent to a laboratory for analysis.
Truckers with colored diesel fuel are subject to fines.

Department of Transportation and Development (DOTD) and Internal Revenue
Service officials have recently set up operations to test the fuel in the
tanks of trucks traveling Louisiana highways. The Department of Revenue and
Taxation is cooperating

with the IRS and DOTD in cracking down on fuel tax evaders. Those drivers
caught using exempt fuel on the road will be required to pay the taxes due,
and will be subject to fines of $1000, or $10 per gallon of improperly used
fuel, whichever amount is greater. Repeat violations bring higher fines.

Since it is illegal both to use the taxexempt fuel on the road, or to hold
it or sell it for on-the-road use, the owner of a tank containing fuel to be
used illegally is also subject to penalties.

The dyed-fuel inspection program is one of many joint Federal-State
compliance projects currently in progress.

http://www.rev.state.la.us/forms/publications/tt(07_95).pdf

The average fine for using Red-dye fuel on the road is over $10,000.00. It
is a Federal IRS violation. Get caught twice--Over $50K! It Will NOT flush
out of the system. I used to catch these guys all the time!

It is supposed to be higher sulphur, but with supply and demand, according
to the guys that make it and the guys that haul or load it, most is low
sulphur with dye added. I think most diesel gurus say your truck will run
better with the higher sulphur. Maybe it has a higher cetane number, I know
biodiesel does. I never noticed any mileage decrease but, if there was it
was way more than offset by the cost. There is a steep fine if you get
caught. Rumors say farm tags are good to have if you are running it, because
it is an off-road fuel. Farmers and ranchers, drilling rigs and other
oilfield related machinery may use it because they are not highway driven
vehicles. If you use your vehicle on the road you must pay road tax on your
fuel and that is the difference between red and clear and there used to be a
blue or something that was low tax for certain things.

http://www.johndee.com/discuss/messages/9/8620.html?1152918113

WOW

this answered my question

I did not intend this to stir a big TAX discussion,

I was wondering how many people actually did it
and if there was any problems

I have run a few tanks through and so far the truck runs better on the
red, then the clear.

Another reason why I was asking is, diesel is 3.09 a gallon here
and the "red stuff" is 2.29 a gallon

a considerable savings.

I have a large tank in my yard and the local fuel depot delivers for
free.

Thanks