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RETAILERS: WANT TO ADD E-85 or Blender Pumps?
State, Federal Incentives Can Help
State and federal
can help offset the cost of adding an E85 pump or ethanol blender
pump to your station.
Kansas Alternative
Fueling Infrastructure Tax Credit
Tax Credits:
• Expenditures for qualified alternative-fuel fueling stations shall
be allowed a credit against the income tax imposed against the owner
of such facility.
• For any qualified
alternative-fuel fueling station placed in service on or after
January 1, 2009, an amount equal to 40 percent of the total amount
expended but not to exceed $100,000 for each fueling station.
• This fund is administered by the Kansas Department of Revenue.
• Reference Kansas Statute 79-32,201
Contact: Kathleen Smith, (785) 296-3070,
kathleen_smith@kdor.state.ks.us
The form can
be downloaded at:
www.ksrevenue.org/taxcredits-altfuel.htm
The
Federal Tax Credit
From http://www.byoethanol.org/incentives/federal-tax-credit.html
The American Recovery and
Reinvestment Act of 2009 (H.R.1) expanded the value of the
Alternative Fuel Vehicle Refueling Property Tax Credit and extended
the credit through January 1, 2011.
As a result, fueling
stations are now eligible to claim a 50% federal income tax credit
for the cost of establishing alternative fueling infrastructure,
including E85 and ethanol blender pumps. Other fuels eligible
include natural gas, compressed natural gas, liquefied natural gas,
liquefied petroleum gas, hydrogen, or biodiesel blends of at least
B20.
The maximum tax credit
is $50,000 for the cost of installing alternative fuel vehicle
refueling property to be used in a trade or business of the taxpayer
or installed at the principal residence of the taxpayer. The 50%
credit is effective for property placed in service after December
31, 2008 and before January 1, 2011.
To claim the
infrastructure tax credit, consult Internal Revenue Service (IRS)
Form 8911. Owners who install qualified refueling property on
multiple sites may utilize the credit for each property; see IRS
Form 8911 instructions for definitions of qualifying property and
the value of the credit.
.See IRS Form
8911.
The form can
be downloaded at:
http://www.irs.gov/pub/irs-pdf/f8911.pdf
Kansas State Tax Credit to FFV Owners Who Use E85 Fuel
People who buy FFVs and use E85 can claim a state tax credit. An
individual who purchases a new FFV has from the date of purchase
through that calendar year and the next calendar year to purchase
500 gallons of E85. They can then submit those receipts with their
taxes and receive a $750 tax credit.
Download the form for the tax credit from the Kansas Department of Revenue
here
For all ethanol
blends:
51 Cent per Gallon Ethanol Tax Credit Is Important Tool
The Volumetric Ethanol Excise Tax Credit, also known
as VEETC, is a Federal tax credit that went into effect on January 1, 2005.
This is a credit of $.51 for every gallon of pure ethanol blended into
gasoline. For example, an E10 blend will have a credit available of
$.051/gallon, and E85 will have a credit available of $.4335/gallon. This
credit is identical for both E10 and E85, as are the forms to file for it.
A registered blender is the only
individual in the supply chain that is eligible for this credit, and it can
only be taken once. Understanding where this credit is taken and who is
eligible is imperative to keep the pricing of ethanol-blended fuels below
regular gasoline and in-line with where they should be. This credit is now
refundable quarterly, and all funds are paid out of the General Fund of the
federal budget. In years past, these funds were allocated from the Highway
Fund.
It is recommended that you
consult with your accountant to see how this credit will affect your
business.
VEETC Details
· Credit
of 51 cents for every gallon of pure ethanol blended into gasoline
· E10
would have a credit of 5.1 cents per gallon.
· VEETC
is sometimes referred to as the “blenders credit”. A registered blender is
the only individual eligible for the credit.
· The
credit is refundable quarterly from the General Fund
E85 Federal Tax Forms
Fuel
IRS Form 8849
Form 8849 is an excise tax refund form. It is
used to claim a refund for the lower excise tax on E85 (13 cents per gallon)
in situations where the higher excise tax (18.4 cents per gallon) has been
paid. This form is filed separately from a company's income tax return, with
a separate IRS office that handles excise taxes.
http://www.e85fuel.com/pdf/irsf8849.pdf
Schedule 3, (Form 8849):
Alcohol Fuel Mixtures and Biodiesel Mixtures http://www.e85fuel.com/pdf/irsf8849.pdf
IRS Form 6478
Form 6478 to claim the fuel tax credit is filed
with the income tax return. So it is very possible that a company would file
both Form 8849 and Form 6478 to claim the excise tax refund and the fuel tax
credit.
http://www.e85fuel.com/pdf/irs_form_6478.pdf
IRS Form 637:
Application for Registration (For Certain Excise
Tax Activities) http://www.e85fuel.com/pdf/irsf637.pdf
IRS Publication 378:
Fuel Tax Credits and Refunds. You may be able
to claim federal fuel tax credits on your income tax return.
http://www.e85fuel.com/pdf/IRS%20378.pdf
IRS Form 720
Part I, of Form 720, "Fuel Taxes", has been
revised to eliminate the reduced rates of excise tax provided under prior
law for three blending levels of gasohol.
http://www.e85fuel.com/pdf/irsf720_2005.pdf
Part I, Item 62, pertaining to fuel taxes on gasoline, has a new tax rate
imposed on the sale of an ethanol gasoline blend.
Equipment
IRS
Publication 535 - Section 179A: Income Tax Deduction for Clean Fuel
Refueling Property:
This provision allows for the immediate write-off of certain
clean fuel vehicle refueling property. This is property that otherwise would
have to be capitalized and depreciated over time (usually 5 or 7 years).
Thus, it allows for acceleration of the deduction. Qualified property would
be property, other than a building or its components, used to store or
dispense clean-burning fuel into the fuel tank of a vehicle that will burn
the fuel. Generally, this includes tanks, dispensers and associated
equipment at the station. "Clean fuel" for this purpose includes fuel that
is 85% alcohol (i.e. E85/E70). It must be new property (not used). The
deduction is limited to $100,000 cumulatively per location. In other words,
you could take $100,000 all in one year, or $20,000/year for five years.
There are recapture rules if the property ceases to qualify. An example: If
the station goes back to pumping normal unleaded. This may be a worthwhile
benefit for the E85 retailers.
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