Alabama natural gas public sellers and fleet producers will need to follow new regulations following the passage of House Bill 333. The bill was passed at the end of April and takes effect on October 1, 2018. HB 133 introduces a license and surety bond requirement for sellers and producers and creates a taxation system for natural gas.
Natural gas public sellers and fleet producers are involved in providing natural gas to the public. Fleet producers are entities or individuals that produce compressed or liquefied natural gas (CNG or LNG) that is used in vehicles commercially. Public sellers operate service stations that sell CNG or LNG to the public for use in vehicles, like in public buses and natural gas-powered cars.
Natural gas public sellers and fleet producers will be required to apply for a license under HB 133, submitted along with a $50 application fee. The license is valid for all selling and production locations, but the seller or producer applicant must include an additional $25 fee per location. As part of licensing, sellers and producers will also need to file a surety bond with the Alabama Department of Revenue. The bond must be the greater of $25,000 or about twice the applicant’s average monthly tax liability.
Beginning in January 2023, the Department will review each seller and producer’s surety bond to ensure it is in the proper amount. Personal producers of natural gas are also required to apply and become licensed, but are not required to purchase a surety bond. If an application is denied for any reason—including if the applicant has been convicted of fraud or had a previous license cancelled—the applicant can file an appeal with the Alabama Tax Tribunal.
HB 133 also levies an excise tax of $.08 on each gallon or gasoline gallon equivalent of CNG and LNG. The tax will increase to $.13 per gallon on October 1, 2023, and again on October 1, 2028 to $.15 per gallon of CNG and $.19 per gallon of LNG. One reason for the surety bond requirement is to ensure that natural gas public sellers and fleet producers pay all required taxes.
Sellers and producers must pay taxes on or before the 2oth of every month, which must be submitted with a report containing the following information:
- Total of all monthly disbursements of CNG and LNG for use in motor vehicles
- Total of all monthly disbursements of CNG and LNG to licensed exempt entities
- The name and exempt entity license number of any exempt entity licensed under the Code of Alabama 1975, Section 40-17-332(j)
Exempt entities (entities that do not have to pay excise taxes on CNG and LNG) include the following:
- U.S. or state government entities
- Alabama city and county boards of education
- Alabama Institute for Deaf and Blind, the Department of Youth Services school district, and private and church school systems
If you have questions about becoming a licensed natural gas public seller or fleet producer, contact the Department of Revenue. The experts at SuretyBonds.com are ready to help you get bonded in Alabama.
