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Natural Gas

Taxing Natural Gas Fuel Transactions


Methane is the primary component of natural gas, a fossil fuel produced from the deterioration of plant and animal mass. Many companies and municipalities have adopted the use of natural gas as an alternative fuel mainly as a way to power fleets of trucks or buses. As the use of natural gas increases, so do its tax complexities. The two primary forms of natural gas, Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG), are each taxed differently.

Taxation Challenges

  • Units of measure and conversions
  • Inventory management issues when transporting
  • Tracking state and local tax requirements
  • Changing rates, rules and forms
  • State incentives and rebates

Examples

  • At the federal level, CNG is converted to GGE (gasoline gallon equivalent) based on 126.67 SCF (standard cubic foot) = 1 GGE, but LNG is converted based on 143.97 SCF = 1 GGE.
  • Indiana uses therms to measure CNG and gallons to measure LNG.
  • 33% of fuel industry tax professionals were unaware that they may have a state excise tax liability if they sell or use natural as a motor fuel (*based on a 2014 Avalara survey).
  • In 2015, Arkansas announced the Gaseous Fuels Rebate Program that will offer $1.315 M in rebates for new CNG and LNG refueling stations.

The Avalara Solution

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AvaTax Excise

Identify and calculate fuel transactions

Avalara AvaTax Excise identifies and calculates indirect taxes for fuel transactions with built-in support for all major jurisdictions in the U.S., Canada, and Europe.

Don’t guess about the correct taxes for your fuel transactions. Try AvaTax Excise for free at ExciseRates!

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Returns Excise Enterprise

Fuel tax compliance automation

Avalara Returns Excise Enterprise generates signature-ready fuel tax returns and reports from fuel transaction data, enabling distributors, terminal operators, suppliers, fleets, and retailers to fully automate the filing process and ensure tax compliance.

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Returns Excise Pro

Easy fuel tax filing

Avalara Returns Excise Pro simplifies fuel tax filing through automation, enabling small and medium sized suppliers, distributors and terminal operators to reduce filing time and costs. An ideal solution for -

  • Smaller businesses facing electronic filing mandates
  • Businesses operating in less than 5 states
  • Businesses with less than 500 transactions per month
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CertCapture

Manage your fuel licenses and exemption documents

Avalara CertCapture creates, validates and stores fuel license and exemption documents, ensuring tax calculation and compliance accuracy, limiting audit exposure.

AvaTax Excise and Returns Excise Enterprise integrate directly with CertCapture to provide a fuel license and exemption document management solution. Learn more about integration.

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Browse Our Resources On Natural Gas

View our free resources on natural gas. A one-time registration is required.

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