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The CRUSH Files: Solving the Complex Issues Associated with Alternative Fuel Taxation

  • Mar 20, 2017 | Bubba Lange

The ever-changing rules and regulations behind taxing alternative fuels are complex. For CRUSH AUSTIN 2017, Avalara’s national tax compliance conference May 2–3 in Austin, Texas, we sat down with one of the conference speakers, Bubba Lange, senior vice president of solution engineering at Avalara. Bubba told us what attendees can expect from his CRUSH session on alternative fuel taxation and what he is most looking forward to at this year’s conference.

Accounting professionals and business owners are attending CRUSH 2017; why would they need to know more about alternative fuel taxation to better serve their clients or get their job done?

They need to know more about alternative fuel taxation because the rules and regulations constantly change. Keeping up with changes, and ensuring they are introduced in the correct time sequence, is an industry challenge. In addition, tax credits change every year, and the automated calculation and reporting systems have to deal with these constantly changing regulations.

The title for your session at CRUSH AUSTIN is “Alternative Fuel Taxation.” What are the key concepts you hope attendees take home?

I want attendees to know more about the complex tax rates and rules surrounding alternative fuels, and their impact on state and federal levels. For example, biodiesel and diesel, as well as ethanol and gasoline, are not treated the same from state to state and at the federal level. Also, the blending of ethanol and biodiesel involves tax credits, as well as new rates and rules.

Attendees should also realize that Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG) have to deal with unit of measure conversions that vary at the state and federal levels. It’s also important to know that the supply chain for alternative fuels will cause issues that the established refined fuels have solidified over the years.

For example, gasoline and diesel fuel are transported from refineries in pipelines and vessels to supply terminals throughout the United States. This movement of goods, considered to take place in the primary distribution chain, is often referred to as “bulk” movement. Products are stored in the terminals until being loaded onto trucks and moved to retail and commercial sites. This movement is called “breaking bulk.” However, CNG and LNG, as well as ethanol and biodiesel, don’t follow this process because they are moved from manufacturing facilities, often located past the terminals. Because laws and taxes are different in the normal distribution chain and vary by state, it is often difficult to determine which laws to apply to an alternative fuel movement. In states where alternative fuels are exempt from excise taxes, they automatically become subject to sales and use taxes.

Why do you feel businesses ignore, or are unaware of, alternative fuel taxation, and what potential ramifications do the businesses face?

Alternative fuel is an emerging market, and each state has its own set of nuisances. Businesses that find themselves quickly expanding into new states often focus on the primary refined fuels, and get caught in a time crunch.

What’s one thing most people don’t know about your topic?

Alternative fuel taxes are double-edged swords. While alternative fuels have issues when it comes to calculating the correct taxes on invoices to customers and from suppliers, they have separate issues when it comes to compliance reporting for each state.

How do you feel technology helps speed sales tax compliance and reporting?

Technology alone has its limits when it comes to speeding up compliance and reporting. However, when it’s coupled with accurate and updated content, technology will speed tax compliance and reporting, and it will also reduce the rework associated with catching the changes after the customer was invoiced and returns were filed.

What are you looking forward to most at CRUSH AUSTIN?

I am looking forward to hearing customers’ feedback on our product lines.

Join Bubba Lange for his session, “Alternative Fuel Taxation,” on May 3. For more information on CRUSH AUSTIN 2017, visit our website that includes all conference sessions, speaker bios, location information, after-hours activities, and more!

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Bubba Lange
Avalara Author Bubba Lange
Robert "Bubba" Lange is the Senior Vice President, Solution Engineering at Avalara. He has more than 35 years of ERP implementation, sales and distribution, business development, finance, and transportation experience. As senior vice president of solution engineering, he has direct responsibility for pre-sales solution definition across all excise tax automation product lines.