United States (Federal) Alternative Fuel Dealer
Alternative Fuel Excise Tax Credit
A tax incentive is available for alternative fuel that is sold for use or used as a fuel to operate a motor vehicle. A tax credit in the amount of $0.50 per gallon is available for the following alternative fuels: compressed natural gas (based on 121 cubic feet), liquefied natural gas, liquefied petroleum gas, liquefied hydrogen, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or liquefied gas derived from biomass. For an entity to be eligible to claim the credit they must be liable for reporting and paying the federal excise tax on the sale or use of the fuel in a motor vehicle. Tax exempt entities such as state and local governments that dispense qualified fuel from an on-site fueling station for use in vehicles qualify for the incentive. Eligible entities must be registered with the Internal Revenue Service (IRS). The incentive must first be taken as a credit against the entity's alternative fuel tax liability; any excess over this fuel tax liability may be claimed as a direct payment from the IRS. The tax credit is not allowed if an incentive for the same alternative fuel is also determined under the rules for the ethanol or biodiesel tax credits. Under current law, this incentive expires December 31, 2009, except in the case of the credit for liquefied hydrogen, which expires September 30, 2014. For more information, see IRS Publication 510 and IRS Forms 637, 720, 4136, and 8849, which are available via the IRS Web site. (Reference Public Law 110-343, Section 204, and 26 U.S. Code 6427)
Point of Contact
Excise Tax Branch
U.S. Internal Revenue Service Office of Chief Counsel
Phone (202) 622-3130
http://www.irs.gov/
Energy Independence and Security Act of 2007 Signed Into Law
President Bush signed the Energy Independence and Security Act (EISA) of 2007 (House Resolution 6), designed to improve vehicle fuel economy and help reduce U.S. dependence on oil. EISA aims to increase the supply of alternative fuel sources by setting a mandatory Renewable Fuel Standard (RFS) requiring transportation fuel sold in the U.S. to contain a minimum of 36 billion gallons of renewable fuels by 2022, including advanced and cellulosic biofuels and biomass-based diesel. In addition, the law requires the Corporate Average Fuel Economy (CAFE) standard to reach 35 miles per gallon by the year 2020. The EISA is projected to reduce energy consumption by 7% and greenhouse gas emissions by 9% by 2030. For a summary of the major provisions set forth by the legislation, visit the Energy Independence and Security Act of 2007 page of the Federal Incentives & Laws Web site. The complete legislation can be viewed on the Library of Congress Web site.
Import Duty for Fuel Ethanol
The U.S. Customs and Border Protection imposes a 2.5% ad valorem tariff on the import of ethanol for use in fuel which is based on the percent volume of the fuel at the time of transaction. The 2009 Normal Trade Relations duty rate (formerly known as the Most Favored Nation duty) of $0.54 per gallon of ethanol also applies to imports from most countries to offset the Volumetric Ethanol Excise Tax Credit (VEETC) available from the U.S. Internal Revenue Service (IRS). Ethanol imports from countries that are part of the North Atlantic Free Trade Agreement, Caribbean Basin Initiative, and Andean Trade Preference Act may not be subject to the secondary duty provided the ethanol is produced with feedstocks from those nations (specific feedstock percentage requirements apply). Importers of ethanol must follow the same regulations as domestic producers, including registering with the IRS. (Reference Harmonized Tariff Schedule Number 99010050, and Public Laws 96-499, 99-514, 109-423, and 110-234)
Point of Contact
U.S. Customs and Border Protection
Phone (703) 526-4200 or (877) 227-5511
http://www.cbp.gov/
Biodiesel Income Tax Credit
A taxpayer that delivers pure, unblended biodiesel (B100) into the tank of a vehicle or uses B100 as an on-road fuel in their trade or business may be eligible for an incentive in the amount of $1.00 per gallon of biodiesel, agri-biodiesel, or renewable diesel. If the biodiesel was sold at retail, only the person that sold the fuel and placed it into the tank of the vehicle is eligible for the tax credit. The incentive is allowed as a credit against the taxpayer's income tax liability. Claims must include a copy of the certificate from the registered biodiesel producer or importer that: identifies the product; specifies the product's biodiesel, agri-biodiesel, and/or renewable diesel content; confirms that the product is properly registered as a fuel with the U.S. Environmental Protection Agency (EPA); and confirms that the product meets the requirements of ASTM specification D6751. Renewable diesel is defined as liquid fuel derived from biomass that meets EPA's fuel registration requirements and ASTM specifications D975 or D396; the definition of renewable diesel does not include any fuel derived from co-processing biomass with a feedstock that is not biomass. Under current law, this incentive expires December 31, 2009. For more information, see IRS Publication 510 and IRS Forms 637 and 8864, which are available via the IRS Web site. (Reference Public Law 110-343, Section 202, and 26 U.S. Code 40A)
Point of Contact
Excise Tax Branch
U.S. Internal Revenue Service Office of Chief Counsel
Phone (202) 622-3130
http://www.irs.gov/
Alternative Fuel Definition - Internal Revenue Code
The Internal Revenue Service (IRS) defines alternative fuels as liquefied petroleum gas, compressed natural gas, liquefied natural gas, liquefied hydrogen, liquid fuel derived from coal through the Fischer-Tropsch process, liquid hydrocarbons derived from biomass, and P-Series fuels. Biodiesel, ethanol, and renewable diesel are not considered alternative fuels by the IRS. While the term "hydrocarbons" includes liquids that contain oxygen, hydrogen, and carbon and as such "liquid hydrocarbons derived from biomass" includes ethanol, biodiesel, and renewable diesel, the IRS specifically excluded these fuels from the definition. (Reference 26 U.S. Code 6426)
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
Volumetric Ethanol Excise Tax Credit (VEETC)
An ethanol blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of $0.45 per gallon of pure ethanol (minimum 190 proof) blended with gasoline. Only entitles that have produced and sold or used the qualified mixture as a fuel in their trade or business are eligible for the tax credit. The incentive must first be taken as a credit against the blender's fuel tax liability; any excess over this tax liability may be claimed as a direct payment from the IRS. Under current law, this incentive expires December 31, 2010. For more information, see IRS Publication 510 and IRS Forms 637, 720, 4136, 6478, and 8849, which are available via the IRS Web site. (Reference Public Law 110-234, and 26 U.S. Code 6426)
Point of Contact
Excise Tax Branch
U.S. Internal Revenue Service Office of Chief Counsel
Phone (202) 622-3130
http://www.irs.gov/
Emergency Economic Stabilization Act/Energy Improvement and Extension Act of 2008
The Emergency Economic Stabilization Act (House Resolution 1424) was signed by President Bush, enacting the Energy Improvement and Extension Act of 2008. The bill amends and extends existing biodiesel blending and production tax credits, extends existing alternative fuel excise tax credit, and extends the alternative fueling infrastructure tax credit. The bill also creates a new tax incentive toward the purchase of qualified plug-in hybrid electric vehicles, based on vehicle weight and battery capacity. Additionally, qualified idle reduction devices are exempt for heavy-duty truck retail excise taxes.
Alternative Fuel Mixture Excise Tax Credit
An alternative fuel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive on the sale or use of the alternative fuel blend (mixture) for use as a fuel in the blender's trade or business. The credit is in the amount of $0.50 per gallon of alternative fuel used to produce a mixture containing at least 0.1% gasoline, diesel, or kerosene. Qualified alternative fuels are: compressed natural gas (based on 121 cubic feet), liquefied natural gas, liquefied petroleum gas, liquefied hydrogen, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or liquefied gas derived from biomass. The incentive must first be taken as a credit against the blender's alternative fuel tax liability; any excess over this fuel tax liability may be claimed as a direct payment from the IRS. The tax credit is not allowed if an incentive for the same alternative fuel is also determined under the rules for the ethanol or biodiesel tax credits. Under current law, this incentive expires December 31, 2009, except in the case of the credit for liquefied hydrogen, which expires September 30, 2014. For more information, see IRS Publication 510 and IRS Forms 637, 720, 4136, and 8849, which are available via the IRS Web site. (Reference Public Law 110-343, Section 204, and 26 U.S. Code 6427)
Point of Contact
Excise Tax Branch
U.S. Internal Revenue Service Office of Chief Counsel
Phone (202) 622-3130
http://www.irs.gov/
Biodiesel Mixture Excise Tax Credit
A biodiesel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of $1.00 per gallon of pure biodiesel, agri-biodiesel, or renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel. Only blenders that have produced and sold or used the qualified biodiesel mixture as a fuel in their trade or business are eligible for the tax credit. The incentive must first be taken as a credit against the blender's fuel tax liability; any excess over this tax liability may be claimed as a direct payment from the IRS. Claims must include a copy of the certificate from the registered biodiesel producer or importer that: identifies the product; specifies the product's biodiesel, agri-biodiesel, and/or renewable diesel content; confirms that the product is properly registered as a fuel with the U.S. Environmental Protection Agency; and confirms that the product meets the requirements of ASTM specification D6751. Renewable diesel is defined as liquid fuel derived from biomass that meets EPA's fuel registration requirements and ASTM specifications D975 or D396; the definition of renewable diesel does not include any fuel derived from co-processing biomass with a feedstock that is not biomass. Under current law, this incentive expires December 31, 2009. For more information, see IRS Publication 510 and IRS Forms 637, 720, 4136, 8849, and 8864, which are available via the IRS Web site. (Reference Public Law 110-343, Section 202, and 26 U.S. Code 6426)
Point of Contact
Excise Tax Branch
U.S. Internal Revenue Service Office of Chief Counsel
Phone (202) 622-3130
http://www.irs.gov/
