Notice 2015-56: Income tax treatment, biodiesel incentive credit for 2014

Income tax treatment, biodiesel incentive credit

The IRS today released an advance version of Notice 2015-56 that explains the federal income tax treatment of amounts paid in cash to claimants under the one-time claim submission process for biodiesel (including renewable diesel) mixtures and alternative fuels sold or used during calendar year 2014.

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Under section 6426, taxpayers may be eligible for certain excise tax credits. Any excess credit under the biodiesel mixture credit or alternative fuel credit may be claimed as a cash payment under 6427 or as a refundable income tax credit under section 34.

Notice 2015-56 [PDF 40 KB] explains that a claimant must reduce:

  • Its income tax deduction for—or cost of goods sold deduction attributable to—section 4081 excise taxes for each calendar quarter during 2014 by the amount of the section 6426(c) credit for a biodiesel mixture sold or used during that calendar quarter
  • Its income tax deduction for—or cost of goods sold deduction attributable to—section 4041 excise taxes for each calendar quarter during 2014 by amount of the section 6426(d) credit for alternative fuel sold or used during that calendar quarter

Background

The biodiesel and alternative fuel incentives were retroactively extended by the Tax Increase Prevention Act of 2014, enacted in December 2014. Because Congress restored the 2014 incentives retroactively, the biodiesel mixture credit and the alternative fuel credit were treated as if they never expired.

Claimants determined their 2014 calendar year biodiesel mixture credit and alternative fuel credit by reference to the number of gallons of biodiesel used to produce certain biodiesel mixtures during 2014 and certain sales or uses of alternative fuel during 2014.

In January 2015, IRS issued Notice 2015-3 [PDF 29 KB] as instructions for those claiming the alternative fuel mixture credit, relating to the number of gallons of alternative fuel used to produce certain alternative fuel mixtures during calendar year 2014. Notice 2015-3 provided the only methods for claiming 2014 biodiesel mixture and alternative fuel incentives.

 

For more information, contact a tax professional with KPMG’s Excise Tax Practice group:

Taylor Cortright | +1 (202) 533 6188 | tcortright@kpmg.com

Deborah Karet Gordon | +1 (202) 533 5965 | dkgordon@kpmg.com

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