File Your Compressed Natural Gas Excise Tax Return Easily with Our IRS-Authorized Online Portal
- No Software Installation Required
- 24/7 Access to Tax Filing Support
- No Annual Fees or Long-Term Contracts
What Is the Compressed Natural Gas Tax (IRS No. 120)?
Compressed Natural Gas CNG is classified as an alternative fuel under federal excise tax rules. The tax applies when CNG is delivered into the fuel tank of a motor vehicle or motorboat, or sold in certain bulk transactions. This tax is reported on Form 720 under IRS No. 120 in the Fuel Taxes category.
Under Section 4081, alternative fuels such as CNG are taxable when used for highway transportation purposes. Unlike traditional gasoline or diesel, CNG is taxed based on energy content rather than liquid volume.
Form 720 Tax Rate: Compressed Natural Gas (CNG) is subject to federal excise tax at $0.183 per gasoline gallon equivalent (GGE) and must be reported on IRS Form 720 for the applicable quarter.
- The tax applies when CNG is dispensed into a vehicle fuel tank or sold in qualifying bulk sales
- Tax liability arises at the time of delivery or sale
- The tax rate is based on gasoline gallon equivalent standards
- Sellers and users must maintain proper transaction and usage records
Any business or individual that sells, dispenses, or uses CNG as a motor fuel is responsible for reporting and paying this tax quarterly using IRS Form 720.
Compressed Natural Gas Excise Tax Filing Requirements
| Category | Details |
|---|---|
| IRS Number | 120 (Compressed natural gas (CNG)) |
| Reporting Section | Part 1 (Fuel Taxes) |
| Filing Frequency | Quarterly |
| Tax Rate | $0.183 per gallon |
| Tax Calculation Formula | Number of gallons × $0.183 |
| Details Required for Calculating the Tax Amount | Number of gallons |
Compressed Natural Gas Excise Tax Due Dates and Penalties
| Quarter | Tax Period Covered | Form 720 Due Date |
|---|---|---|
| Q1 | January 1 – March 31 | April 30 |
| Q2 | April 1 – June 30 | July 31 |
| Q3 | July 1 – September 30 | October 31 |
| Q4 | October 1 – December 31 | January 31 (following year) |
If you fail to file Form 720 for your excise tax on Compressed Natural Gas
(CNG) by the applicable due date, the IRS may impose
penalties and interest.
Common penalties include:
Generally 5% of the unpaid tax for each month or part of a month the return is late, up to 25%.
Generally 0.5% of the unpaid tax for each month or part of a month, up to 25%.
If taxes have not been paid, interest can accumulate from the date payment was due until the tax liability has been satisfied.
Further penalties may arise where federal tax deposits have been untimely, understated, or improperly deposited.
How to file Compressed
Natural Gas Tax online with Simple720?
(easy 4 Steps)
details
the Tax category
Tax details
your payment
Why Choose Simple720 for Filing Your Compressed Natural Gas Tax?
Simple720 vs Other Providers vs Manual Filing
| Filing Features | Simple720 | Other Providers | Paper Filing |
|---|---|---|---|
| Software Download | Not required | May be required | Not applicable |
| License | No license | May require license | Not applicable |
| Contract | No contract | May require contract | Not applicable |
| Cost | Affordable pricing | Often higher cost | Moderate |
| Filing Speed | Fast online filing | Varies by provider | Slower filing |
| Ease of Use | Simple guided process | Platform dependent | Complicated manual process |
| Efficiency | Highly efficient | Varies by provider | Less efficient |
| Tax Calculation | Automatic calculation | Provider dependent | Manual calculation |
| Support | Dedicated support | Limited support | No support |
| Overall Experience | Fast and simple | Varies by provider | More manual effort |
Smooth and Quick Filing Experience
We were able to submit our CNG
fuel taxes without delays or confusion. The system was very easy to follow.
Accurate Calculations Every Time
Earlier we struggled with manual
errors. Simple720 made sure our CNG tax was calculated correctly for IRS No.
120.
Reliable for Ongoing Compliance
Our quarterly filings are now
organized and accessible anytime. This has simplified our compliance process
completely.
Frequently Asked Questions
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