California Raises CNG/LNG Tax Rates

The California State Board of Equalization is readying the implementation of revisions to Assembly Bill 1907, which includes new use fuel tax rates for compressed natural gas (CNG) and liquefied natural gas (LNG) that is used as a fuel in motor vehicles.

Beginning January 1, 2015, the new requirement adjusts the tax rate for CNG to 8.87 cents ($0.0887) for each 126.67 cubic feet or 5.66 pounds of CNG used, measured at the standard pressure and temperature (14.73 pounds PSI at 60° fahrenheit). The new requirement also adjusts the tax rate for LNG to 10.17 cents ($0.1017) for each 6.06 pounds of LNG used.

The board notes that in addition to the requirement for collecting the adjusted tax, CNG retailers in California must place a label on the CNG dispenser that indicates "gasoline gallon equivalent." Retailers of LNG must place a similar label that reads "diesel gallon equivalent." For more information on the labeling requirements, contact the California Department of Food and Agriculture, Division of Measurement Standards, at www.cdfa.ca.gov/dms.

Natural gas vehicle operators and fleets that have paid the annual flat-rate tax are not subject to the use fuel tax, so long as the NGVs have a current flat-rate decal affixed to them. However, if you are an annual flat rate permit holder, a current year’s flat rate decal must be affixed to each vehicle for which you have pre-paid the fuel taxes. In addition, you must provide the vendor with a written representation that you have prepaid the annual flat rate fuel tax and that the fuel seller is not liable for collecting and paying those taxes. Providing the vendor with a photocopy of the letter that was sent to you with your decal(s) will satisfy this requirement.

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