E85 TAX AND INCENTIVE GUIDE

 

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:
45 Cent per Gallon Ethanol Tax Credit Is Important Tool

The Volumetric Ethanol Excise Tax Credit, also known as VEETC is a credit of $.45 for every gallon of pure ethanol blended into gasoline. 

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 45 cents for every gallon of pure ethanol blended into gasoline

· E10 would have a credit of 4.5 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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