CNG Tax Benefits in New Law

Email received from Steve Anthony, Senior NGV Account Executive at Southern California Gas Co.

From: Anthony, Steven C.
Sent: Monday, December 20, 2010 2:42 PM
Subject: CNG Tax Benefits in New Law


CNG Customers,

See the attached notice [below] from NGV America, the natural gas industry trade association, regarding the 50 cents per GGE rebate being retroactive for 2010 and extended out through the end of 2011. Congress has directed the IRS to develop guidance for submitting the rebate request for all of 2010, so you may wish to wait until this guidance is available. The legislation allows a 6 month window to submit the request for 2010.

In addition, a few tax-paying customers are eligible for very favorable tax treatment for new trucks and CNG stations.

If you have never applied for the 50 cents per GGE rebate registration number, I urge you to do so immediately on IRS Form 637. You must obtain a registration number prior to applying for the 50 cents per GGE rebate.


Steve Anthony
Southern California Gas Co.
Sr. NGV Account Executive

The notice from NGV America:

Tax Credits Extended

Friday, December 16, 2010, the President signed into law H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. Earlier in the week, the Senate passed the bill by a vote of 81 to 19 and the House of Representatives passed the bill 277-148. This tax bill was the result of negotiations between President Obama and Republicans, and will extend the 2001 and 2003 income tax cuts for all families for two years and unemployment benefits for one year. Among these and other major provisions, the bill includes some major provisions that are very beneficial to the NGV industry:

The fuel credit was extended. The bill extends until December 31, 2011 the $0.50 fuel credit for CNG and LNG when used as a transportation fuel. As expected, the extension is made retroactive back to January 1, 2010. The $0.50 tax credit for CNG and LNG had expired at the end of 2009. The tax bill includes special instructions directing the Treasury Department to develop procedures allowing for a one-time claim for any fuel used or sold in 2010.

The fueling station (infrastructure) credit was extended. The bill extends for one year the tax credit for natural gas fueling infrastructure. The extension is for 30 percent of the cost of qualified equipment up to a maximum of $30,000 and $1,000 for non-business property (i.e., home refueling). The tax credit is 30 percent and not 50 percent because Congress extended the tax credit as originally enacted in 2005 -- not according to the increased level enacted as part of the 2009 TARP legislation. The bill also allows for 100 percent expensing of the infrastructure costs, and it is our understanding that the tax credit may be taken along with a 100 percent expensing. This means that a taxpayer could claim up to a $30,000 tax credit for new natural gas fueling infrastructure and then expense the remaining cost (cost of station less tax credit amount of $30,000) all in the first year. The 100 percent expensing provision is good for equipment placed in service after September 8, 2010.

The vehicle credit was NOT extended. Despite repeated and substantial efforts by many of you with Congress, the income tax credit for the purchase of NGVs was not extended. However, there is some good news relating to tax treatment of new NGVs. The bill allows taxpayers to expense 100 percent of the cost of new capital expenditures. This means that businesses purchasing NGVs will be able to write-off the full cost of buying such vehicles in the first year instead of depreciating them over five or more years. The expensing provision does not help tax-exempt entities or private consumers who purchase NGVs (unless they can depreciate them). The 100 percent depreciation provision also applies to equipment placed in service after September 8, 2010.