Propane and Compressed Natural Gas Tax Credits Reinstated – Refund Claims Can Be Filed Beginning on February 14, 2020

The IRS has provided helpful guidance on requesting refunds for the 2018 and 2019 years for the Alternative Fuel Credit (more commonly known as Propane Tax Credit and Compressed Natural Gas Tax Credit). This credit expired after December 31, 2017 but has been retroactively reinstated by the Taxpayer Certainty and Disaster Tax Relief Act of 2019, signed by the President on December 20, 2019.  The credit enables taxpayers that use propane or liquefied petroleum gas (LPG) for off-highway business use in equipment like forklifts or compressed natural gas (CNG) in vehicles to receive a 50-cent per-gallon credit. 

Notice 2020-8 provides taxpayers the option to use a streamlined method for filing refund claims. For 2018 and 2019 only, taxpayers can file one form 8849, along with the Schedule 3 to claim refunds for both years. The IRS will accept one-time claims for the 2018 and 2019 alternative fuel tax credits during the 180-day period between February 14, 2020 and August 11, 2020.

If the taxpayer follows these procedures, the IRS should issue the refund within 60 days after the claim is received or it will pay interest from the claim filing date. The IRS will not process any claims filed on Form 8849 after August 11, 2020.

Alternatively, taxpayers can use the more cumbersome method of amending their 2018 tax return to include the Form 4136 to request the credit. Taxpayers would also need to file the Form 4136 with their 2019 income tax returns. This method would clearly cause the IRS to provide the refunds later than the method provided in Notice 2020-8.

Another important requirement is that claimants must be registered with the IRS as an alternative fueler to file for the alternative fuel credit. If not already registered, the taxpayer may apply by filing Form 637 – Application for Registration (For Certain Excise Tax Activities).

Our advice to taxpayers is to begin to gather the necessary information now, so the Form 8849 can be filed shortly after February 14, 2020. Please contact your Schneider Downs tax advisor with any questions or if you need further assistance.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2022 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Automobile, Tax BY Steven Barber
The FTC Safeguards Rules Are Extended to June 9, 2023
401(k) Plans, Tax BY Luke Dovell
Want More Money? Start Investing Early
IRS Gave the Gift of Higher Estate and Gift Tax Limits for 2023
Automobile, Tax BY Michael Conroy
Electric Vehicle Tax Credit
Industry Keeps Eye on Rising Costs in Driver Recruitment and Retention
State Tax Considerations in a Remote Environment
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.