The Internal Revenue Service (IRS) has issued guidance for companies seeking to file claims for biodiesel and Bioheat® fuel blends during the 2018 and 2019 tax years.
Congress reinstated the biodiesel tax credit for five years, or retroactively through 2022, as part of a year-end tax and spending deal. President Trump signed the bill into law on December 20, 2019. The deal provides a $1-per-gallon tax credit for qualified blends of biodiesel and renewable diesel made during the 2018 and 2019 tax years and extends the incentive at $1-per-gallon through December 31, 2022. It is the most significant reinstatement of the tax credit since its creation in 2007 and the result of a long and hard-fought victory for NEFI and its allies.
As it had done for previous retroactive extensions, Congress created a special rule for one-time claims for qualified blends created during the 2018 and 2019 tax years. Claims must be submitted within 180 days, beginning on February 14,2020 and ending August 11, 2020. In other words, claims must be submitted on or before August 11, 2020.
The IRS guidance document also provides instructions for submitting special one-time claims for the IRS Section 6426(e) alternative fuel mixture tax credit. Congress renewed this credit retroactively for 2018 and 2019. Unlike the biodiesel tax credit, however, it was only extended for one additional year, or through December 31, 2020. It offers 50 cents for every 1.353 gallons of propane used as a transportation fuel (often referred to as propane autogas), or approximately 37 cents per gallon. It is also available for propane used in a forklift in association with a trade or business
The IRS is directing companies to submit both 2018 and 2019 claims on a single Form 8849 along with a completed Schedule 3: Certain Fuel Mixtures and the Alternative Fuel Credit. Claims may be submitted by postal mail to:
Internal Revenue Service
P.O. Box 312
Covington, KY 41012-0312
Any claims submitted before February 14, 2020 will have been deemed as filed on February 14, 2020. The IRS said it will pay claims within 60 days. Late payments by the IRS will include interest using the method under IRS Section 6621.
Complete IRS Guidance (Notice 2020-8)
Form 8849: Claim for Refund of Excise Taxes
Schedule 3: Certain Fuel Mixtures and the Alternative Fuel Credit
NEFI recommends members consult with a qualified tax professional for assistance in filing claims. Questions may also be directed to the IRS at (202) 317-4718.