Reed Smith Client Alerts

On December 29, 2017, the First District of the Illinois Appellate Court reversed an Illinois Independent Tax Tribunal (“Tribunal”) decision, which had held that compressed natural gas (“CNG”) is subject to Illinois motor fuel tax for periods prior to July 1, 2017.1 This decision creates a potential refund opportunity for motor fuel tax paid on CNG used in the operation of vehicles in Illinois prior to July 1, 2017, and may not foreclose refunds for tax periods after that date.2

Authors: David P. Dorner Jeremy P. Gove

Facts

The taxpayer, Waste Management of Illinois, Inc. (“Waste Management”), operates trucks using CNG as fuel in its waste collection business. Waste Management originally paid Illinois motor fuel tax on the CNG that its trucks consumed in Illinois, but subsequently filed refund claims after the Illinois Department of Revenue (the “Department”) amended its motor fuel tax regulations in 2014 to address gallon-equivalency rates for gaseous substances, including CNG.3 The Department denied Waste Management’s refund claims, and the matter was appealed to the Tribunal.