Exemption for Liquefied Petroleum Gas
A full exemption from sales and tax use became available under section 6353(b) for certain sales, storage, use, or other consumption of LPG when delivered into a tank of 30 gallons or more. The exemption applies to LPG purchased for use in:
- Household activities in a qualified residence.
- Household activities mean those activities normally undertaken, such as cooking, heating and lighting.
- Qualified residence means a primary residence not serviced by gas mains or pipes.
LPG delivered for use at a residence or other structure not qualifying as a primary residence, such as a vacation home or office, does not qualify for the exemption and is subject to tax.
Purchasers of LPG for use in household activity who may provide an exemption certificate to obtain the exemption include:
- Renters or tenants
- Landlords or management companies purchasing LPG for the primary residences of renters or tenants.
- Qualified farmers or ranchers (see below) purchasing LPG for the primary residences of their tenants or employees who assist in producing and harvesting agricultural products.
- Producing and harvesting agricultural products by qualified persons.
Qualified person means:
- Someone engaged in a line of business described in Codes 0111 to 0291 of the Standard Industrial Classification (SIC) Manual (1987 edition). Codes 0111 to 0291 include agricultural or horticultural businesses producing items such as cash crops, field crops, vegetables and melons, fruit and nut production, horticultural specialties, livestock, dairy, poultry and eggs, and other animal specialties.
- A person or employee who assists a person engaged in those codes by performing the activities in SIC Codes 0711 to 0783. Codes 0711 to 0783 include agricultural services such as soil preparation, crop planting, cultivating, protecting or harvesting, cotton ginning, veterinary and other animal services, landscape and horticultural services, and farm labor and management services.
- A retailer will be relieved from the liability for the sales and use tax on its sales of LPG to qualified persons if they take an exemption certificate timely and in good faith, from purchasers stating the property will be used in a qualifying manner as provided under section 6353(b). The exemption certificate should be retained for a period of not less than four (4) years.
- A purchaser who provides an exemption certificate to a retailer and who makes any use of the LPG, not qualifying under section 6353(b) will be liable for the tax, plus interest and applicable penalties. Purchasers must maintain records supporting the use of any LPG under an exemption certificate.