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Washington State: Compressed Natural Gas Exemptions


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The Washington State Department of Revenue has issued a special notice regarding compressed natural gas and liquefied natural gas used as transportation fuel.

Beginning July 1, 2015, consumers are exempt from the Washington State brokered natural gas use tax imposed on sales of natural gas, CNG and LNG purchased for use as transportation fuel. The state defines transportation fuel as a fuel “for the generation of power to propel a motor vehicle, a vessel, or a locomotive or railroad car.”

Also effective July 1, 2015, the exemption provided under RCW 82.08.02565 is amended: for the period July 1, 2017 through June 30, 2028, a quarterly retail sales tax refund is available to qualifying gas distribution businesses. Businesses interested in obtaining the refund must apply for it and present records substantiating the exemption (such as invoices, proof of tax paid). Gas distribution businesses must pay sales tax on qualifying purchases at the point of sale, and they will no longer be able to apply for a refund effective July 1, 2028.

However, gas producers may purchase without sales tax qualifying machinery and equipment, so long as a properly completed Manufacturer’s Sales and Use Tax Exemption Certificate is presented at purchase.

For additional information, including a definition of “gas distribution business” and reporting requirements, please see the departmental special notice.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.