Sales and Purchases of Liquefied Petroleum Gas (LPG) - AB 426 and New Sales Tax Exemptions

1. Does the exemption from sales or use tax for qualified purchases of LPG also apply to sales and purchases of propane?
2. I live in an area where natural gas was not available and it was necessary to purchase propane for my central heating system. Natural gas mains were recently installed and propane is no longer my only option. However, I still have propane delivered into my 75-gallon tank for use as a secondary-heating source. Do my purchases of propane qualify for the exemption from sales and use tax on purchases of liquefied petroleum gas?
3. . I purchased a time-share in an ocean condominium. The condominium is not serviced by gas mains; however, the property does house a 175-gallon propane tank owned by the time-share owners. Do purchases of LPG for the time-share qualify for the LPG exemption?
4. I know my purchases of LPG qualify for the new sales and use tax exemption. However, I just received a bill from my propane dealer for my annual tank rental. They added sales tax to the rental fee. Does my annual tank rental fee qualify for exemption from tax?
5. I am a propane vendor and make sales of LPG to residents for household use. I currently have a customer who rents two 50-gallon tanks from me. Due to the nature of the customer's property and their tank space availability, I make deliveries into both tanks when I deliver propane. Does this affect the LPG exemption? Would your answer be different if one of the tanks was less than 30 gallons?
6. For the LPG exemption, what constitutes a "person that assists a qualified person?"
7. I understand what type of general information must be included in an exemption certificate. What type of specific information is required for the LPG exemption?

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1. Does the exemption from sales or use tax for qualified purchases of LPG also apply to sales and purchases of propane?

Yes. Liquefied petroleum gas is a mixture of light hydrocarbons, which are gaseous at atmospheric temperature and pressure. Liquefied petroleum gas occurs naturally in crude oil and natural gas production fields and is also produced in the oil refining process. Its main components are Propane (C₃H₈) at a boiling point of -2.07°C and Butane (C₄H₁₀) at a boiling point of 0°C.

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2. I live in an area where natural gas was not available and it was necessary to purchase propane for my central heating system. Natural gas mains were recently installed and propane is no longer my only option. However, I still have propane delivered into my 75-gallon tank for use as a secondary-heating source. Do my purchases of propane qualify for the exemption from sales and use tax on purchases of liquefied petroleum gas?

No. RTC section 6353(b) and Regulation 1533 both define a qualified residence, as a primary residence not serviced by gas mains and pipes. Since natural gas is now available in your area and your residence is serviced by a gas main, this LPG exemption will not apply to your purchases even though the LPG is delivered by the seller into your 75-gallon tank.

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3. I purchased a time-share in an ocean condominium. The condominium is not serviced by gas mains; however, the property does house a 175-gallon propane tank owned by the time-share owners. Do purchases of LPG for the time-share qualify for the LPG exemption?

To the extent the condominium is not your primary residence but is a vacation home, your purchases of LPG will not qualify for the LPG exemption.

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4. I know my purchases of LPG qualify for the new sales and use tax exemption. However, I just received a bill from my propane dealer for my annual tank rental. They added sales tax to the rental fee. Does my annual tank rental fee qualify for exemption from tax?

No. The provisions of RTC section 6353(b) do not apply to the vendor's annual rental charge for the rental of the tank.

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5. I am a propane vendor and make sales of LPG to residents for household use. I currently have a customer who rents two 50-gallon tanks from me. Due to the nature of the customer's property and their tank space availability, I make deliveries into both tanks when I deliver propane. Does this affect the LPG exemption? Would your answer be different if one of the tanks was less than 30 gallons?

The fact that you deliver LPG into two 50-gallon tanks will not invalidate the exemption authorized under RTC section 6353(b) as long as the other requirements of the section are met. However, when delivering LPG to one 25-gallon tank and one 50-gallon tank, the exemption provided under RTC section 6353(b) will not apply to the delivery of LPG into a tank with a storage capacity less than 30 gallons even though your delivery into both tanks aggregates to purchases of LPG in excess of 30 gallons. When your customer fills out the proper exemption certificate, he or she should note that only those deliveries of LPG into a tank with a storage capacity equal to or greater than 30 gallons qualify for the exemption. Tax will still apply to the customer's purchase of LPG delivered into the 25-gallon tank.

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6. For the LPG exemption, what constitutes a "person that assists a qualified person?"

As defined in Regulation 1533 , a person that assists a qualified person generally means a person engaged on a contract or fee basis or employed by a qualified person in an activity described in Major Group 07 (Codes 0711 to 0783) of the SIC Manual which includes soil preparation services, crop services, animal services, landscape and horticultural services, and farm labor and management services. For more details, see Regulations 1533.

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7. I understand what type of general information must be included in an exemption certificate. What type of specific information is required for the LPG exemption?

The exemption certificate should contain the information set forth in the sample LPG exemption certificate or available through our Information Center at 800-400-7115.

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