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.
- 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
- 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
Identify and calculate fuel transactions
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.Learn more
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
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.Learn more
Browse Our Resources On Natural Gas
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