New York – Reporting Requirements for Natural Gas Exemption

SALT Report 2506 – The New York Department of Taxation issued a technical memo that explains the sales and use tax exemption for purchases of natural gas that will be converted to compressed natural gas and used or consumed in the engine of a motor vehicle.

To claim the exemption, the purchaser must provide the vendor with Form ST-121, Exempt Use Certificate, using Part 3, Box U. If a portion of the natural gas will be used for non-exempt purposes, the amount paid for the portion that was used in a non-exempt manner must be reported as a taxable purchase on the purchaser’s sales and use tax return. Or, if applicable, it can be reported on Schedule B, Taxes on Utilities and Heating Fuels.

If the purchaser does not provide the vendor with Form ST-121 or another exemption certificate, the vendor should collect the state and local sales tax from the purchaser. However, if the purchaser subsequently converts all or a portion of the natural gas into CNG for the exclusive use in the engine of a motor vehicle, the purchaser can file a claim for a refund or credit using Form AU-11, Application for Credit or Refund of Sales or Use Tax. The refund claim or credit can only be taken for the sales tax that was paid on the natural gas used in an exempt manner.

The natural gas exemption is effective June 1, 2013 and expires on August 31, 2014.

For Further Information

New York Department of Taxation – TSB-M-13(3)S