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...Continued from page 17                           mental entities can claim the “excess credit” as
                                                                a cash payment, others are limited to claiming
            liquified propane) for such a purpose in the United   the “excess credit” as a refundable income tax
            States                                              credit
                   The rate of tax varies depending on the
            liquid; in the case of propane the tax rate is 18 3   Qualifying vehicles
            cents per energy equivalent of a gallon of gas-            The IRS regulations provide guidance on
            oline, or approximately 13 5 cents per gallon       what constitutes a “motor vehicle” for purposes of
            Significantly, the tax on use does not apply in sit-  the Alternative Fuel Tax Credit   Under these rules,
            uations where the alternative fuel was previously   the term includes “all types of vehicles propelled
            subject to tax on sale: if propane is sold to a user   by motor that are designed for carrying or towing
            in a sale subject to the Section 4041 fuel excise   loads from one place to another, regardless of
            tax, the seller (and not the user) is the person that   the type of load or material carried or towed and
            can claim the Alternative Fuel Tax Credit   Thus,   whether or not the vehicle is registered or required
            where the Section 4041 fuel excise tax applies,     to be registered for highway use ”  The regulation
            qualifying individuals and entities are generally   explicitly includes “forklift trucks” as an example,
            able to use the Alternative Fuel Tax Credit to fully   and excludes “farm tractors, trench diggers, pow-
            offset their liability                              er shovels, bulldozers, road graders or rollers, and
                   In some cases, a person eligible for the Al-  similar equipment which does not carry or tow a
            ternative Fuel Tax Credit may claim the credit as   load ”
            either a direct cash payment from the U S  Trea-
            sury Department or as a refundable income tax       Registration requirement
            credit to the extent its allowable Alternative Fuel        Under IRS guidance, an individual or entity
            Tax Credit exceeds its Section 4041 fuel excise tax   must be registered as an “alternative fueler” in
            liability in a given quarter   Under the relevant stat-  order to claim the Alternative Fuel Tax Credit
            utes and IRS guidance, the following requirements   Claimants can register using IRS Form 637, Appli-
            apply:                                              cation for Registration (For Certain Excise Tax Ac-
                   • A person can only claim the Alternative    tivities) (registration code “AL”)   Persons who are
            Fuel Tax Credit as a cash payment or a refund-      registered under another category should consult
            able income tax credit if the qualifying sale or use   their tax advisor with respect to their registration
            occurred as part of the person’s trade or business.    requirements to ensure that they receive the
            Individuals with qualifying nonbusiness uses of their   credit
            propane are limited to using the credit to offset
            their Section 4041(a) fuel excise tax liability     Taxpayer-specific situations
                   • A person can only claim the Alternative    Businesses
            Fuel Tax Credit as a cash payment or a refund-             Where a taxable business produces and
            able income tax credit to the extent the credit ex-  sells propane for use as fuel in a motor vehicle
            ceeds its Section 4041 fuel excise tax liability for a   or motorboat, that sale will generally both be
            given quarter   Any Alternative Fuel Tax Credit to   subject to the Section 4041 fuel excise tax and eli-
            which a person is entitled that does not exceed     gible for the Alternative Fuel Tax Credit   To the ex-
            a person’s quarterly Section 4041 fuel excise tax   tent the amount of the Alternative Fuel Tax Credit
            liability must first be used as a credit against that   exceeds the applicable tax in a given quarter,
            tax                                                 the business will be eligible to claim a refundable
                   • Only tax-exempt entities and govern-       income tax credit   The business generally will not



    18                                          Alabama Propane Gas Association  |  March / April  2020
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