IRS Guidance on Filing 2018 & 2019 Biodiesel, Renewable Diesel and Alternative Fuel Excise Tax Credits

Jan 15, 2020

The IRS has issued guidance to taxpayers on how to claim the biodiesel, renewable diesel and alternative fuel excise tax credits for the 2018 and 2019 calendar years.

Claiming Biodiesel and Renewable Diesel Mixture and Alternative Fuel Excise Tax Credits

Notice 2020-08 (attached) requires taxpayers to file all claims for biodiesel and renewable diesel mixture and alternative fuel tax credits on IRS Form 8849, Schedule 3.  All claims for calendar years 2018 and 2019 should be filed on a single Form 8849.  Under this guidance claimants of biodiesel and renewable diesel mixture and alternative fuel credits cannot use Form 720 for claims for the fourth quarter of 2019 and any claims filed on that form should be refiled in accordance with Notice 2020-08. The period in which taxpayers may file claims for 2018 and 2019 begins on February 14, 2020 and runs through August 11, 2020. The IRS will accept claims filed in accordance with the notice prior to February 14, 2020 (such claims will be treated as filed on February 14, 2020 and will not be processed before that date). The IRS will issue a payment of the credit to the taxpayer within 60 days of receipt of the claim (the date of the claim being deemed February 14, 2020 for anything filed before that). Claims may be filed by mail or electronically.

The IRS guidance notes that taxpayers claiming the biodiesel, renewable diesel and alternative fuel credits as income tax credits are require to follow the usual rules of attaching their claim to their income tax return. Taxpayers who claim the second generation biofuel income tax credit should also do so on their  income tax return.

Claiming Alternative Fuel Mixture Excise Tax Credits

The guidance requires claimants of the alternative fuel mixture credit to file all claims – including the fourth quarter 2019 – on IRS Form 720X (Amended Quarterly Excise Tax Return).  A separate Form 720X must be filed for 2018 and 2019. 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 14, 2020.  Claimants must file within three years from when the tax return was filed or two years from when the excise tax was paid, whichever is later.

As a reminder, the statute that reinstated the alternative fuel mixture credit bars all claims for the $0.50 per gallon alternative fuel mixture credit for mixtures containing contain liquefied petroleum gas (including butane and propane), compressed or liquefied natural gas and compressed or liquefied gas derived from biomass, unless the claim was filed prior to January 8, 2018 and has not been denied.