Natural gas use tax
What is natural gas use tax?
This tax applies when you (a consumer) use natural or manufactured gas, and the person who sold you the gas has not paid public utility tax on the sale. The law imposes this tax only for natural gas delivered to a consumer through a pipeline. The rate is the same as the state and city public utility taxes. The gas value is the consumer’s purchase price of the gas, and must include all or part of the transportation charges.
Do I pay natural gas use tax on transportation charges?
No. You can exclude transportation charges when paying this tax if any of the transportation charges for the delivery of the natural gas is separately subject to the state’s and cities’ public utility taxes. You need to include transportation charges that are not subject to public utility taxes.
How do I pay the tax?
You need to pay the tax monthly or quarterly to the Department of Revenue. If filing monthly or quarterly you must file and pay electronically. If you’re exempt from filing electronically, you may submit a Natural Gas Use Tax Addendum with your Combined Excise Tax Return
What rate do I pay?
The natural or manufactured gas rate is the same as the public utility tax rate. The state rate is currently .03852. The city rates vary depending on the location, and we list those rates on the Natural Gas Use Tax Addendum.
Tax return filing information
State natural gas use tax
Volume (in therms): Enter a whole number for the total volume (in therms) of gas delivered for the return period. If your company received natural gas in more than one location, enter the total volume for all locations. We will cross-match this information with the quarterly reports we get from the local gas distribution companies. (1 MMBTU = 10 therms OR 1 therm = 100,000 BTU's)
Purchase price: Enter the purchase price of the gas. Do not include transportation charges.
Transportation charges: Enter the amount of separately stated interstate and intrastate transportation charges that are not subject to public utility tax.
Total Value: purchase price plus the transportation charges (if applicable).
Total state tax due: total value multiplied by the rate.
Local city natural gas use tax
Location city code: Enter the four-digit code(s) for cities where you used the gas. You can find the codes on the Natural Gas Use Tax Addendum. (Note: If you used the natural gas at a county address, you only need to complete the state portion of this tax.)
Total city value: Enter the total city value for each location where you used your natural gas.
Local rate: Enter the applicable rate for each city. You can find rates on the Natural Gas Use Tax Addendum.
City tax due: Total city value multiplied by the rate.
State and city credits
State credit for public utility tax paid: We allow a credit against use tax imposed by the state for any gross receipts tax similar to Washington’s Gas Distribution public utility tax. Another state must impose the tax on the seller of Washington consumed gas.
City credit for public utility tax paid: Cities allow a credit against the use tax imposed by the cities for any gross receipts tax similar to the city’s tax on natural gas. Another state or political subdivision of the state must impose the tax on the seller of the Washington consumed gas.
Credit for use tax paid: We allow a credit against natural gas use tax for any use tax the consumer paid to another state. The tax must be similar to Washington’s natural gas use tax. The credit is only applicable to the gas subject to Washington’s natural gas use tax. Credit is prorated between the state and city portion of the tax based on the relative rates of the two taxes.
Example: A company purchased natural gas in another state for $13,000. This company paid $500 worth of use tax for this purchase. The company used their natural gas in Seattle. The company will owe state and local use tax on this natural gas purchase. The state and local use tax rate is equal to .03852 and .06.
Step 1Add the state and local use tax rates together.
.03852 + .06 = .09852
Step 2Take your use tax rates and divide by your total from Step 1.
.03852/.09852 = .39099 and
.06/.09852 = .60901
Step 3Take the amount of use tax you paid to another state, and multiply it by the totals from Step 2.
$500 x .39099 = $195.50 and
$500 x .60901 = $304.50
Step 4Input the credit amounts in the credit section as follows:
State Credit(s) - Consumer Paid Use Tax $195.50 and
Local City Credit(s) - Consumer Paid Use Tax $304.50
How are the funds distributed?
We distribute the state portion of the tax to the general fund. We send the city portion to the state treasurer’s office, which then distributes to the cities.