our team

IRS Guidance on Filing 2015 Biodiesel, Renewable Diesel and Alternative Fuel Mixture Credits

The IRS has issued guidance to taxpayers on how to claim the biodiesel, renewable diesel and alternative fuel mixture excise tax credits for the 2015 calendar year. 

Notice 2016-05 (attached) requires taxpayers to file all claims for biodiesel and renewable diesel mixture credits on IRS Form 8849, Schedule 3.  All claims for calendar year 2015 should be filed on a single Form 8849.  Under this guidance claimants of biodiesel and renewable diesel mixture credits cannot use Form 720 for claims for the fourth quarter of 2015 and any claims filed on that form should be refiled in accordance with Notice 2016-05.   The period in which taxpayers may file claims for 2015 begins on February 8, 2016 and runs through August 8, 2016.   The IRS will accept claims filed in accordance with the notice between January 15, 2016 and February 8, 2016 (such claims will be treated as filed on February 9, 2016).  The IRS will issue a payment of the credit to the taxpayer within 60 days of receipt of the claim.

Please note that the current Schedule 3 to Form 8849 specifically states that it should not be used for claims for calendar year 2015.  In prior years the IRS has requested that certain taxpayers refile their claims that were originally filed on prior year forms.  We recommend that taxpayers wait for the new Schedule 3 to be issued before filing 2015 claims.  We have reached out to the IRS to find out the timeline but anticipate the forms will be issued prior to official start of the filing period on February 8, 2016.  With respect to claims for 2016, the current Schedule 3 does not specifically prohibit those claims being made; we are however, confirming with the IRS on the correct procedure.

In a change from last year, the IRS mentions the income tax treatment of the credits that would have been claimed on Form 720 as an excise tax offset had the credit been extended at the end of 2014 rather than retroactively reinstated at the end of 2015.  Referencing IRS Notice 2015-56, the IRS states that “a claimant reduces its § 4081 excise tax liability by the amount of excise tax credit allowable under § 6426(c) and its § 4041 excise tax liability by the amount of excise tax credit allowable under § 6426(d) in determining its deduction for those excise taxes or its cost of goods sold deduction attributable to those excise taxes.”

The guidance requires claimants of the alternative fuel mixture credit to file all claims – including the fourth quarter – on IRS Form 720X (Amended Quarterly Excise Tax Return).  Claims for the alternative fuel mixture credit must not exceed the claimant’s excise tax liability incurred during the quarter to which the claim relates.  The period in which taxpayers may file claims for the alternative fuel mixture credit begins on February 8, 2016.  Claimants must file within three years from the tax return was filed or two years from when the excise tax was paid, whichever is later.

Finally, the IRS guidance notes that taxpayers claiming the biodiesel and renewable diesel credits as income tax credits are require to follow the usual rules of attaching their claim to their 2015 income tax return.