Get Your 2018 – 2020 CNG Tax Credit
CNG Tax Credit aka 50-Cent Fuel Credit aka Alternative Fuel Excise Tax Credit aka Excise Tax Credit now available for all sales 2018-2020.
We have been getting some calls from people asking to assist with the proper way to file for the CNG tax credit. We thought sharing this insight would help to bring some clarity and help many to understand the process.
ACT NOW, as this important development will add a significant amount to your CNG Station bottom-line performance for the last 2 years.
FAQ For CNG Tax Credit
Private individuals, natural gas or propane retailers or suppliers, private companies, non-profit agencies and state and local government entities.
Does natural gas used in a bi-fuel vehicle qualify?
Yes. Natural gas or propane used in an on-road, bi-fuel motor vehicle is eligible for the credit.
How is a gallon measured?
For natural gas ( CNG) sold after December 31, 2018, the tax credit is based on the gasoline gallon equivalent (GGE) or diesel gallon equivalent (DGE). For taxation purposes, one GGE is equal to 5.66 lbs. of compressed natural gas. One DGE is equal to 6.06 lbs. of liquefied natural gas.
Who files for the CNG tax credit?
The Alternative Fueler claims the credit. – Station owner and or operator
Example A. The natural gas retailer refuels a privately owned or government vehicle at his/her retail outlet. The retailer is the Alternative Fueler.
Example B. A natural gas retailer sells bulk fuel to a motor-fuel customer. The customer refuels its own vehicles. The customer is the Alternative Fueler.
Example C. A natural gas or propane retailer sells bulk fuel to a motor fuel customer. The customer gives the retailer a written statement saying that all the fuel purchased will be used for a taxable use. The CNG retailer is the Alternative Fueler. With no written statement, the customer is the Alternative Fueler.
What IRS forms are needed to claim the CNG tax credit?
Each entity wishing to claim the credit must register by filing IRS Form 637. Once approved, the IRS will issue a 637 number with “AL” at the end, indicating IRS authorization to file as an alternative fueler.
Private entities claim the tax refund on their income tax return using IRS Form 4136, “Credit for Federal Tax Paid on Fuels” or Schedule 3 (Form 8849).
State and local government entities submit Form 8849 “Claim for Refund of Excise Taxes”.
Fuel suppliers: the alternative fuel credit must first be taken on Form 720 as a credit against your alternative fuel or compressed natural gas (CNG) tax liability. If you have these tax liabilities and you did not make the claim on Schedule C (Form 720) as a credit against those liabilities, you must first file Form 720X, Amended Quarterly Federal Excise Tax Return, before Form 8849, Schedule 3, can be used for the refund.
Where do I obtain the forms?
You can download the forms and instructions at www.irs.gov.
What happens if my CNG tax credit is higher than my income tax owed?
If your business doesn’t have enough tax liability, the remainder of the credit is issued as a refund. If your entity is a nonprofit or governmental unit, the entire amount is issued as a refund.
Is there a limit to the amount I can claim?
No. You must have on file proper documentation of the natural gas or propane purchased and used in the vehicle during the period of the claim. The claim must be for an alternative fuel sold or used during a period that is at least 1 week. The amount of the claim must be at least $200 unless the claim is filed electronically. To meet the minimum, amounts from lines 2 and 3 may be combined.
What records do I need?
If you are an ultimate purchaser, you must keep the following records:
The number of gallons purchased and used during the period covered by your claim.
The dates of the purchases.
The names and addresses of suppliers and amounts purchased from each in the period covered by your claim.
Maintain records at least 4 years after you filed claim.