Tax Credits Extended for Propane Forklift Users

As a result of the "fiscal cliff" legislation that was passed in January, the Alternative Fuel Tax Credit of 50 cents per gallon has been extended through December, 2013. The credit, which had previously expired at the end of 2011, has also been been retroactive through 2012.

Does Propane Used in Forklifts Qualify?

Yes. The credit is available for each gallon of propane used to power a motor vehicle or motor boat. The Internal Revenue Service defines a motor vehicle as "any type of vehicle propelled by motor designed for carrying or towing loads from one place to another, regardless of the type of load or material carried." Propane forklifts are qualified vehicles and are eligible for the tax credit.

How Do I Convert My Propane Usage into Gallons?

Most customers will use 33- or 43- pound cylinders for their forklifts. The IRS uses a conversion factor of 4.25 pounds for each gallon of propane. Multiply your total number of cylinders by their weight, and then divide the answer by 4.25 to determine your gallons used. (Example: 100 cylinders X 33 pounds each = 3300 pounds. 3300 divided by 4.25 would equal 776 gallons.

How Can I Receive the Credit?

You must be registered with the IRS as an Alternative Fueler. You can register by completing IRS Form 637: Application for Registration (For Certain Excise Tax Activities)

Can I Still Claim the Credit for a Government or Tax-Exempy Entity?

Yes. If you use propane to power motor vehicles (forklifts), you can claim the credit by completing IRS Form 8849: Claim for Refund of Excise Taxes (inlcuding Fuel Tax Credits and Refunds)

Where Can I Get More Information?

Visit the IRS website for additional Forms, Instructions and Publications

Forms of interest may be as follows:
Form 637: Application for Registration (For Certain Excise Tax Activities)

Form 720: Quarterly Federal Excise Tax Return

Form 4136: Credit for Federal Tax Paid on Fuels

Form 8849: Claim for Refund of Excise Taxes

Publication 510: Excise Taxes (Including Fuel Tax Credits and Refunds)

IRS Notice 2006-92


Contact the IRS Excise Tax Branch Directly at 202-622-3130