Propane gas used in forklifts qualify for refundable federal fuels tax credits

March 21, 2014

Propane gas used in forklifts qualify for refundable federal fuels tax credits

Barry D. Groebel, CPA

Do you use propane powered forklifts in your business – maybe in a warehouse, plant floor, or shipping yard? If so, you may be entitled to refundable federal fuels tax credits for the propane you purchased in 2012 and 2013. It is possible your propane gas vendor has already advised you of this special tax credit. The credit is $0.50 per gallon of propane gas used in a forklift, and it is refundable which means the IRS will pay you the credit even if you do not owe any income tax! Here is how to get the credits:

Need to be registered
Per IRS rules and information regarding the credit in order to be eligible the business must first register as an “alternative fueler”. It is possible that your business is already registered. This special fuels tax credit law was in effect in 2011 and prior years. If you recall claiming a fuels tax credit for your propane gas used in forklifts in 2011 or earlier years you are probably already registered. If you are registered you should have a “registration number” that ends in “AL”.

It is not a problem if you are not already registered. All you have to do to register is to file Form 637, Application for Registration (For Certain Excise Tax Activities), We can help you fill out this simple form. After you file Form 637 you should receive your registration number in about 6 to 8 weeks.

Applying for the credit
The credit for the propane fuel use in forklifts expired at the end of 2011 and was re-enacted in January 2013 and extended for 2012 and 2013. So, once you are registered and get your registration number ending in “AL” you can apply for the refundable credits for both 2012 and 2013.

If you have not yet filed your 2012 or 2013 business income tax returns to claim the credit on the return you need to include Form 4136, Credit for Federal Tax Paid on Fuels in the return.

You can still apply for the credit even if you already filed your 2012 or 2013 tax returns. Form 4136 can be filed with an amended return. So, all you need to do is amend the 2012 or 2013 that was previously file by including Form 4136.

We can assist with preparation of the Form 4136 and amending the 2012 or 2013 if necessary. All we need is your alternative fueler registration number ending in “AL” and the number of gallons purchased for the applicable year.

Other considerations
Federal tax law requires that the amount of the credit be included in federal taxable income in the year received. However, since the tax on the credit is only a percentage of the total credit - the net amount will still be worth it.

Also, this is only a federal credit. There is no similar credit for Pennsylvania tax purposes.

The bottom line – if you used propane fuel in your forklifts during 2012 or 2013 you are due a refund from the IRS. Contact us to help you get your money.

For additional information or questions about this article contact Barry Groebel at

Barry Groebel HeadshotBarry D. Groebel, CPA