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State Tax Notes: Iowa, Oregon, and Washington Rulemakings Underway

Iowa, Oregon, and Washington state departments of revenues have recently announced rulemakings concerning the taxation of natural gas as a transportation fuel. The Iowa rules implement changes called for in legislation (SB 2338) enacted earlier this year. The change includes using the GGE and DGE units for taxing CNG and LNG, respectively. The rulemaking is really only a technicality as the statutory language set an effective date of July 1, 2014. With this change the new tax rates in Iowa for CNG and LNG are 21 cents and 22.5 cents, respectively. Companies doing business in the state should review the full notice and consider the implications of the tax change. Comments may be submitted until November 4th.

Oregon’s Department of Revenue has released a proposal to implement new permit requirements for NGV owners. The proposal implements changes enacted in HB 4131, a bill that allows NGVs to apply for a permit in lieu of having to pay the motor fuel excise tax. Under the proposal, emblems will be issued annually and be valid from January 1st through December 31st, with fees prorated for partial year registrations. The fees below do not apply to commercial motor vehicles subject to the weight-mile fee in Oregon. Based on the current fuels tax rate ($ .30 per gallon), the annual fees are:

Vehicle Weight Base Formula Annual Fee
0 – 10,000 pounds $60.00 (60 x $ 0.30) ÷ $ .12 $150.00
10,001 – 26,000 pounds $300.00 (300 x $ 0.30) ÷ $ .12 $750.00
26,001 pounds and above $400.00 (400 x $ 0.30) ÷ $ .12 $1,000.00

Persons interested in filing comments on this issue may do so by October 21st.

In Washington, the Department of Revenue issued a notice to implement changes required by SB 6440. The change in law exempts natural gas that is purchased and then compressed or liquefied for sale as a transportation fuel from state and local utility taxes. CNG and LNG would be subject to gross receipt taxes as well as motor fuel taxes.