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Tax Credit for Propane Motor Fuel

By Trucktruth.com, June 1st, 2009

Under IRS rules, the entity that buys the propane fuel and loads the propane cylinders onto lift trucks can claim a 50-cent-per-gallon tax credit as an “alternative fueler.”

Tax Credit for Propane Motor Fuel

Many retailers of propane motor fuel can claim a 50-cent-per-gallon tax credit. The credit is part of the federal highway bill, SAFETEA. The tax credit began October 1, 2006 and is effective through September 30, 2009. For many customers, this credit can be worth thousands of dollars per lift truck per year!

Under IRS rules, the entity that buys the propane fuel and loads the propane cylinders onto lift trucks is considered the alternative fueler and is eligible to file for the credit. Please note the propane fueled forklift must be associated with a trade or business, no personal activity can be claimed.

How do I claim the tax credit?

You must register with the IRS and be classified as an “Alternative Fueler.???

This is accomplished by completing and mailing IRS Form 637 entitled “Application for Registration for Certain Excise Tax Activities.???Obtain the form by downloading at WWW.IRS.GOV

If you already have either a Certificate of Registry or a Letter of Registration, you may be grandfathered in and would not have to register immediately

However, we recommend that you file Form 637 regardless of previous status as everyone must be registered as an “Alternative Fueler???by July 1, 2007 in order to take the credit.

File IRS Form 4136 at the end of the taxable year

Form 4136 allows you to claim a credit against your income tax liability

If your income tax liability is less than the credit, the IRS will send you a check for the difference

In other words, this is a refundable credit and is due to you even if you have no further federal tax liability

We encourage you to consult with your tax advisor for any questions you may have

You can find more details from the IRS (Internal Revenue Service) by visiting them at WWW.IRS.GOV .

You can also find additional information at the AFRED (Alternative Fuels Research & Education Division) website at http://www.propane.tx.gov/taxcredit/taxcredit.html