Article
Federal tax credit extended for use and sale of alternative fuels
March 17, 2020 · Authored by Eric Farmer, Adam Hite
On Dec. 17, 2019, President Trump signed the Further Consolidated Appropriations Act into law — retroactively restoring the refundable federal tax credit for sale or use of alternative fuels, including propane.
The credit, which originally expired on Dec. 31, 2017, is now extended for fuel sold or used through Dec. 31, 2020.
Claim the credit
For companies looking to access quick capital during the COVID-19 pandemic, this refundable credit is equal to 50 cents per gallon — or gasoline-gallon equivalent — used or sold by a taxpayer, which could add up to substantial savings for businesses. Unlike refunds for taxes paid on fuel, receipt of this aren’t included in taxable income.
Qualifying activities
The federal legislation provides this tax incentive for using the following:
- Propane
- Biodiesel and biodiesel mixtures
- Qualified fuel cell vehicles
- Alternative fuel vehicle refueling property
- Energy-efficient commercial buildings
- Certain producers and blenders of alternative fuels
Each incentive has specific documentation, registration, and reporting requirements, so taxpayers should visit the IRS website, or consult a tax advisor before getting started.
Retroactive application
In response to the Appropriations Act, the IRS issued Notice 2020-8, which allows taxpayers to make a one-time claim of the credits for fuels sold or used during 2018 and 2019, without having to file an amended return.
Per the notice, taxpayers who missed out on receiving the tax credit for those tax years simply need to file a claim for refund via Form 8849 by the prescribed due date of Aug. 11, 2020.
If the IRS doesn’t issue the payment within 60 days after the claim has been filed, it will be required to pay interest in addition to the refund.
Additional considerations
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.