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Propane Forklift Tax Credit

In 2005, Congress enacted the Safe, Accountable, Flexible and Efficient Transportation Equity Act of 2005, otherwise known as the Highway Bill (P.L. 109-59). Among other things, the legislation modestly increased excise taxes on alternative fuels while at the same time creating a 50 cent per gallon credit for alternative fuels, including propane, used in motor vehicles.

These provisions went into effect on October 1, 2006, with the ultimate goal of encouraging the use of alternative fuels. Congress did increase the federal excise tax on most fuels, including propane, although propane received the smallest increase; the tax on propane went from 13.6 cents per gallon to 18.3 cents per gallon. Moreover, it should be emphasized that sales of propane for use in forklifts remain exempt from the federal excise tax on motor fuels by way of a credit available to the ultimate purchaser.

In providing further guidance re-garding the legislation, the Internal Revenue Service (IRS) made clear that forklifts fit the definition of an off-highway business motor vehicle and hence fuel used in a forklift is eligible for the 50 cent per gallon credit. Moreover, the IRS indicated that in this instance it is the end-user, namely the forklift operator, who is entitled to apply for the credit, not the propane marketer. Therefore, forklift operators should be aware that the fuel they use for forklift operation will be eligible for a 50 cent per gallon credit assuming they take appropriate steps to properly register with the IRS.

As a first step, forklift operators should file Form 637 with the IRS in order to be registered as an “Alternative Fueler.” The IRS will then issue a registration number identifying the forklift operator as an Alternative Fueler. After receiving a registration number, the forklift operator can file a claim for the credit at the end of the year by filing Form 4136. If the alternative fuel excise tax credit exceeds the excise tax liability, the forklift operator may be able to claim an alternative fuel income tax credit (or refund) under certain circumstances.

For more information about this tax credit, please consult your tax attorney. Relevant IRS forms may be viewed and downloaded by going to www.irs.gov/formspubs/index.html.

Simon Walker Forklift Emissions Calculator When the California Air Resources Board (CARB) laid out its emissions mandates, the team at Raymond Handling Solutions (Santa Fe Springs, CA) sprung into action to determine the impact the rules would have on the marketplace. President Rich Mattern gave a presentation to the company about the implications those regulations may have on the end-users, which was the impetus Simon Walker, regional sales manager, needed. “According to the regulations, the end-user is responsible for his or her own emissions,” Walker explains. “End-users really need to be aware of the emissions their fleets are producing.” To help achieve that, Walker took some of the information available on CARB's Web site and, using Microsoft Excel, created an emissions calculator. “The regulations are easy to understand for people who do this every day, but difficult for people who don't have it clearly explained to them,” Walker says. The calculator took about a month to develop and is available for anyone to use. Walker added it to the company Web site at http://www.raymond-forklifts.com/Emissions_calculator.html, alongside his other calculator creations, including a Pareto calculator to tell how deep to store pallets and a hydrogen emissions calculator for a battery charging area. “We took the information that was available on CARB's Web site, and Simon found a way to creatively use it for our own purposes and that of our customers,” Mattern says. “A lot of customers don't pay attention to it, so now we have a way to easily help them comply.”