Congress Passes Tax Extenders

Dec 20, 2019

Congress has passed a package of spending bills which include several energy and fuel related tax extenders. The President is expected to sign the bill.  The extenders were passed without amendment. The full text of the bill can be found at https://www.congress.gov/116/bills/hr1865/BILLS-116hr1865enr.pdf  The extenders include:

  • A retroactive extension of the biodiesel and renewable diesel tax credits. The credits would be reinstated as of January 1, 2018 and be extended through December 31, 2022. The legislation includes language directing the IRS to issue a special rule for a one-time claim for 2018 and 2019 tax credits;
  • A retroactive extension of the second generation biofuel producer credit. The credit would be reinstated as of January 1, 2018 and be extended through January 1, 2021;
  • A retroactive extension and clarification of the alternative fuel and alternative fuel mixture credits through December 31, 2020. The clarification is language that states that an alternative fuel mixture credit is not available to mixtures of that contain liquefied petroleum gas, compressed or liquefied natural gas and compressed or liquefied gas derived from biomass. The clarifying language applies on a forward basis and, in a change to prior versions of the bill, will include the retroactive period to the extent that claims were filed after January 1, 2018 and have not yet been paid;
  • Extension of the oil spill tax through 2020. The tax would be reinstated on the 1st day of the calendar month following enactment of the legislation. If the legislation passes this week the tax will be reinstated effective January 1, 2020.

With respect to the credits that are being reinstated retroactively, taxpayers should wait until the IRS has issued its guidance on how to file before filing. Although we would anticipate that nothing will change from prior years where there has been a retroactive reinstatement the IRS has advised that claims filed prior to the issuance of the guidance will be rejected.

On the matter of the alternative fuel mixture credit being eliminated with respect to LPGs with respect to claims not filed by or paid/allowed before January 8, 2018, a separate alert will be sent with more analysis and explanation on that.