Alternative Fuel Tax Credit for Propane
From Wikicpa
The Transportation and Energy Act of 2005 increased the excise tax on propane to 18.3 cents per gallon, effective October 1, 2006. This Act also provided for a 50 cent per gallon credit for each gallon of alternative fuel sold or used by a taxpayer as a fuel in a motor vehicle or motorboat.
In this case, alternative fuel is defined as compressed or liquefied natural gas, liquefied petroleum gas or propane, fuels derived from coal, and liquefied hydrogen or hydrocarbons derived from biomass. Not included are ethanol, methanol or bio-diesel.
The Internal Revenue Service notice 2006-92 provides a definition of when propane is used in a motor vehicle. Regulation 48.4041-8(c) defines a motor vehicle as all types of vehicles propelled by a motor and designed for carrying or towing loads, regardless if used on or off roads. The regulation state that this includes forklifts trucks used at plants and warehouses.
Filing for the credit
To be eligible for the credit, the taxpaper must first register with the IRS using Form 637.
The credit itself is claimed on Form 4136
Effective date October 1, 2006
An amended 2006 tax return can be filed to claim a credit for fuels used from October 1, 2006 to December 31, 2007 for calendar year taxpayers.
