Guidance on Claiming Biodiesel and Alternative Fuel Credits for 2017

March 15, 2018

The Bipartisan Budget Act of 2018 retroactively extended through 2017 the biodiesel, renewable diesel, and alternative fuel tax credits. The credits have not yet been extended for 2018. The law renewed the following credits for 2017:

  • $1 per gallon biodiesel mixture credit
  • $1 per gallon biodiesel credit
  • $0.10 per gallon small agri-biodiesel producer credit
  • $1.01 per gallon second-generation biofuel producer credit
  • $0.50 per gallon alternative fuels and mixtures excise tax credits

Taxpayers claiming one of the fuel excise tax credits as an offset to their excise tax liability ordinarily would claim the credit on their quarterly Form 720, “Quarterly Federal Excise Tax Return.” However, because the credit was not in place during 2017, the IRS provided instructions in Notice 2018-21 on how taxpayers may make a one-time claim for payment of the excise tax credits. The notice also clarified that no change was made in how to claim the income tax credits.

Taxpayers can claim refunds for the credits as follows:

  • Claims for a refund of the biodiesel and alternative fuel excise tax credits must be submitted on Form 8849, “Claim for Refund of Excise Taxes,” by Sept. 29, 2018.
  • Claims for a refund of the alternative fuel mixture excise tax credit must be made by filing Form 720X, “Amended Quarterly Federal Excise Tax Return,” for each relevant quarter of 2017. The amended returns must be filed by the later of three years after the original Form 720 was filed or two years after payment of the excise tax liability.
  • Second-generation biofuel producers should claim refunds by submitting a completed Form 6478, “Biofuel Producer Credit,” with their income tax return.
  • Taxpayers claiming the biofuel income tax credits should claim refunds by submitting a completed Form 8864, “Biodiesel and Renewable Diesel Fuels Credit,” with their income tax return.
  • Taxpayers claiming the refundable income tax credits for the biodiesel mixture or the alternative fuels credit should claim refunds by submitting a completed Form 4136, “Credit for Federal Tax Paid on Fuels,” with their income tax return.

Keep in mind the following when claiming one of these credits:

  • Taxpayers that filed protective refund claims for one of these credits must refile that claim using the procedures described in the notice.
  • For pass-through entities, some of the credits are refundable to the entity directly, but some are refundable to the partners or shareholders. Refer to the form instructions for additional information.
  • Taxpayers must be registered with the IRS to claim these credits. They should register by filing Form 637, “Application for Registration (for Certain Excise Tax Activities),” with the IRS.