taxes

Motor Fuels Tax Audit Procedures Manual - Ch. 153

Chapter 4 - Liquefied Gas Law

Introduction

"Liquefied Gas" means all combustible gases that exist in the gaseous state at 60 degrees Fahrenheit and at a pressure of 14.7 pounds per square inch absolute, but does not include gasoline or diesel fuel. (Section 153.001(16)

A tax is imposed on the use of liquefied gas for the propulsion of motor vehicles on the public highways of this state at the rate of 15 cents per gallon.

Exemptions

Except for the use of liquefied gas used in motor vehicles on the highways in the state, all other sales or uses of liquefied gas are exempt. The following entities are not required to pay the tax or purchase decals:

  • Texas public school districts
  • Texas counties
  • Federal government
  • Texas non-profit electric and telephone cooperatives

The tax does not apply to a commercial transportation company that uses the fuel exclusively to provide transportation services to Texas public school districts, and has been issued a vehicle specific exception letter by the Comptroller.

Collection of Tax

Liquefied Gas Dealers are required to pay tax directly to the state on annual reports per Rule 3.196.

Interstate truckers licensed under IFTA are not required to prepay the tax on vehicles operated for commercial purposes and traveling out of state. However, the vehicles must display current multi-state fuel tax agreement decals. An interstate trucker must pay fuels taxes to a permitted dealer, or if fuel is delivered from the interstate trucker's tax-free storage, the tax must be reported and remitted on the liquefied gas dealer report.

Permit Types

The following must obtain a Fuels Tax Permit by filing an application with the Comptroller:

  • Liquefied Gas Dealer obtains a "Dealer's Permit"
  • User obtains a "Liquefied Gas Tax Decal"
  • Motor vehicle dealer obtains a "Motor Vehicle Dealer's Liquefied Gas Tax Decal"
  • Trip Permit

The dealer's permit is permanent. The liquefied gas tax decal and Motor Vehicle Dealer's Liquefied Gas Tax Decal must be applied for annually during the month of expiration.

Permit Lists

The statute does not require permit lists to be prepared. All bulk sales are tax free.

Specific Permits

Liquefied Gas Dealer
Authorizes a dealer to collect and remit taxes on liquefied gas deliveries into the fuel supply tanks of motor vehicles displaying an IFTA or multi-state fuel tax agreement decal, an out-of-state license plate or a motor vehicle displaying a motor vehicle dealer's liquefied gas tax decal.

No delivery may be made in Texas into the fuel supply tanks of motor vehicles not bearing a current liquefied gas tax decal without first obtaining the required dealer's permit to make taxable sales.

Liquefied Gas Tax Decal
Each user of liquefied gas in a motor vehicle operated on the public highway of Texas and licensed in Texas shall pre-pay and obtain a decal based on gross weight and mileage driven the previous year.

Exceptions

  • The liquefied gas tax does not apply to sales to Texas public school districts and counties in this state.
  • A Texas public school district or a county in this state operating a motor vehicle powered by liquefied gas is not required to prepay the liquefied gas tax and obtain a decal for the motor vehicle.
  • A commercial transportation company operating a motor vehicle powered by liquefied and gas and is used exclusively to provide transportation services to a Texas public school district is not required to have a liquefied gas tax decal or special use liquefied gas tax decal. (Must have vehicle specific exemption letter issued by the Comptroller.)
  • Texas non-profit telephone and electric cooperatives are not required to display liquefied gas tax decals on motor vehicles.

Interstate Trucker - Liquefied Gas
A liquefied gas interstate trucker based in Texas and licensed under IFTA is no longer required to prepay the tax on vehicles operated for commercial purposes and traveling out of state. However, the vehicles must display current multi-state fuel tax agreement decals.

An LG interstate trucker must pay fuels taxes to a permitted dealer, or if fuel is delivered from the interstate trucker's tax-free storage (including the truck's cargo tanks), the tax must be reported and remitted on the liquefied gas dealer report.

Interstate truckers registered under IFTA who deliver liquefied gas into the fuel supply tanks of motor vehicles displaying out of state license plates or motor vehicle displaying a motor vehicle dealer's liquefied gas tax decal from their own bulk storage (including the truck's cargo tanks) must have liquefied gas dealer permits.

Liquefied Gas Tax Decal Permit
Authorizes any user of liquefied gas for propulsion of a motor vehicle on the public highways of Texas to pay in advance annually on each motor vehicle owned, operated and licensed by him in Texas, a tax based on the registered gross weight and miles traveled in the previous year.

Motor Vehicle Dealer's Liquefied Gas Tax Decal Permit
Authorizes any motor vehicle dealer holding a valid registration under TEX.REV.CIV.STAT.ANN. art. 6686 to obtain a decal for each liquefied gas-powered motor vehicle held for sale or resale and pay the tax per gallon to a permitted liquefied gas dealer on each delivery of liquefied gas into the fuel supply tank of the motor vehicle. This permit is sub-titled in the statute as a class of decal rather than a separate permit.

Trip Permit
Allows a trucker, who makes infrequent trips into Texas, to bring a qualified commercial motor vehicle into Texas for one trip. This license is in lieu of an interstate trucker's permit or an IFTA license. Only five such trips are allowed in a calendar year.

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(Revised 02/2004)