Special Fuels Tax Rate and Liquefied Petroleum Gas and Natural Gas Inspection Fee Changes – New Legislation

Effective January 1, 2014, changes to special fuel tax rates and the to liquefied petroleum gas and natural gas inspection fee program will be implemented. During the 2013 legislative session, the Colorado legislature passed HB13-1110 which changed the tax rates of Liquefied Petroleum Gas (LPG), Liquefied Natural Gas (LNG), and Compressed Natural Gas (CNG). The legislation added natural gas fuels to the liquefied petroleum gas inspection fee.

Currently, the tax rate for LPG, LNG and CNG is the same as other special fuels, $0.205 per gallon. Starting January 2014, the tax rates for these three gaseous fuel types will change to $0.03 per gallon for LPG and LNG and $0.03 per gallon equivalent for CNG. A gallon equivalent is measured using the volumetric reporting requirement currently included in the federal excise return, Form 720, which is 126.67 cubic feet per gallon equivalent. The tax rates for these fuels will change annually through 2019.

Sales of LNG and CNG will be now be subject, along with LPG, to the Liquefied Petroleum Gas and Natural Gas Inspection Fee. Calculation of the fee will be based on a $10 per tank truckload rate. A tank truckload is defined as 8,000 gallons or gallon equivalents. Instead of a flat rate, the fee will now be calculated on a per-gallon or gallon equivalent basis.

The LPG/NG Decal program will also be discontinued as a result of this legislation. The 2013 LPG/NG decals currently in use are valid until December 31, 2013. After that time there will be no requirement to pre-pay special fuel taxes for LPG, LNG, and CNG fueled vehicles. The taxes and fees for these gaseous fuels will be collected at the time of purchase, at the rates stated above.