HB617 Alabama 2015 Session

Summary

Primary Sponsor

Pebblin W. WarrenRepresentative

Democrat

Session

Regular Session 2015

Title

Taxation, natural gas, system to collect tax on natural gas and liquefied natural gas, penalties, Sec. 40-17-168, 40-17-169, 40-17-170, 40-17-170.1 to 40-17-170.19, inclusive, added; Secs. 40-17-160, 40-17-161, 40-17-165, 40-17-167 am'd

Summary

HB617 sets up a uniform state system to tax and regulate natural gas used as motor fuel (CNG/LNG), replacing decals with licenses, fees, and penalties while extending temporary suspensions and defining gallon-based measurement rules.

What This Bill Does

It creates a new Section 3B and related provisions to establish a uniform motor fuel tax collection and enforcement system for CNG and LNG, including licensed public sellers and fleet producers, bond requirements, reporting, and penalties. It replaces the old decal system with a flat annual vehicle-class fee and requires licenses for sellers and fleet producers, plus monthly tax returns and a trust-based tax remittance to the state. It suspends decals and motor-fuel taxes temporarily, uses gallon-equivalents for taxation if no comprehensive framework is in place by specified dates, and specifies tax rates (13 cents per gallon-equivalent plus a 6-cent increment) distributed per existing law; it also allows deductions for exempt entities and imposes civil and criminal penalties for noncompliance.

Who It Affects

• Vehicle owners and operators who use compressed natural gas (CNG) or liquefied natural gas (LNG) as fuel (they would face new annual license fees by vehicle class and potential tax collection when framework is active).
• Public sellers of CNG/LNG and fleet producers (they must obtain licenses, post bonds, collect and remit taxes, file monthly returns, and maintain records).
• Personal producers of CNG (they must obtain licenses and pay annual/renewal fees; bonds are not required for individuals).
• Exempt entities (such as certain government bodies or school systems) (they may have deductions for gallons sold to them but cannot claim refunds; they must provide exempt license numbers).
• Out-of-state vehicle fuel purchasers in Alabama (they would pay Alabama motor fuel tax in lieu of other fees when purchasing fuel in-state).
• Department of Revenue and LP-Gas Board (they administer licensing, bonding, reporting, and tax distribution and receive initial and ongoing funding).

Key Provisions

• New uniform motor fuel tax system for CNG/LNG (Article 3B, 40-17-168 to 40-17-170.19) with taxes aligned to current motor fuel tax rates and gallon-equivalent measurements.
• Annual flat license fees by vehicle class using CNG/LNG: Class 1 $75, Class 2 $85, Class 3 $150, Class 4 $175; decals replaced by licenses and fees.
• Licenses and bonds: Public sellers and fleet producers must obtain licenses and post surety bonds (minimum $25,000 or twice the average monthly tax liability, whichever is greater); personal producers generally not required to bond; bonds reviewed every five years.
• Licensing and penalties: Department can refuse licenses for disqualifications; failure to license, file, or pay taxes can lead to civil penalties (up to $10,000 for first violation, escalating for subsequent violations) and criminal penalties (including felony penalties for evasion).
• Tax collection and distribution: Public sellers and fleet producers collect taxes per GGE (CNG) or DGE (LNG) and remit to the Department; proceeds distributed under existing 40-17-361 and 40-17-362 rules with separate $0.13 per GGE/DGE and an additional $0.06 per GGE/DGE allocated to specific uses.
• Exempt entity deductions: Licensed exempt entities can have gallons deducted from monthly tax returns; exempt entities must have valid exemption licenses and provide exempt license numbers.
• Monthly reporting: Licensees file monthly returns by the 20th of each month; returns must include totals of disbursements, exemptions, and other required details; electronic filing may be required.
• Recordkeeping and trust: Taxes collected are held in trust for the state; licensees have fiduciary duty to remit the correct amounts and maintain records for at least three years.
• Temporary decals/tax suspension and gallon-equivalent approach: Decals and motor fuel taxes were suspended temporarily by prior act; if no comprehensive framework is in place by Oct 1, 2017, CNG must be taxed by gallon-equivalents and conversions based on defined weights (5.66 lbs CNG = 1 gallon gasoline; 6.06 lbs LNG = 1 gallon diesel) until a framework is established.
• Cost offset and administration: The state appropriates funds to offset DMV/Revenue costs of implementing the article initially, then annually from revenues collected under the bill.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation