IRS issues Notice Regarding Tax Incentives/Credits for Biodiesel and Cellulosic Ethanol
Biodiesel Tax Incentive
The Internal Revenue Service Nov. 26 issued Notice 2008-110 to provide guidance on modifications to the biodiesel tax incentives that resulted from a revision to the requirements of the American Society of Testing and Materials standard D6751. The notice will appear in the Internal Revenue Bulletin 2008-51, dated December 22, 2008.
The tax incentives arise under the Internal Revenue Code Sections 40A, 6426, and 6427. ASTM revised the requirements of ASTM D6751 to add a cold soak filtration test for biodiesel, effective October 13, 2008.
The notice described a transitional rule in which a certification that the biodiesel—covered by a claim related to the production, use, or sale of biodiesel or a mixture of it—meets the requirements of the standard is valid if the biodiesel meets the standard's requirements as in effect either before or after the October revision.
The production, use, or sale of biodiesel or a mixture of biodiesel must occur before April 1, 2009, for the rule to apply.
If such a claim relates to the production, use, or sale of biodiesel or a mixture of it after April 1, 2009, such a certification is only valid if the biodiesel meets the requirements of the standard as revised in October to include the cold soak filtration test.
Cellulosic Biofuel Producer Credit
IRS said Notice 2008-110 also provides guidance regarding the cellulosic biofuel producer credit under Section 40 of the Internal Revenue Code. Taxpayers who produce cellulosic biofuel after Dec. 31, 2008, and before Jan. 1, 2013, and sell it for use or use it for a purpose described under Section 40 are allowed the credit.
Taxpayers who are not registered with the treasury secretary as producers of cellulosic biofuel under Section 4101 may not obtain the credit.
Taxpayers interested in registering as producers of cellulosic biofuel must apply on Form 637, Application for Registration (For Certain Excise Tax Activities.
