How to register for the clean fuel production credit by Jan. 1, 2025

On May 31, 2024, the U.S. Department of the Treasury and Internal Revenue Service (IRS) released Notice 2024-49 [1] on the clean fuel production credit established by the Inflation Reduction Act (IRA). The Notice provides guidance on the registration requirements for claiming the clean fuel production credit under section 45Z of the Internal Revenue Code. To qualify for this credit for the production starting Jan. 1, 2025, taxpayers must obtain a signed registration letter from the IRS dated on or before Jan. 1, 2025. This registration is a critical step, and taxpayers are encouraged to apply as soon as possible to ensure timely processing.

Registration process and deadlines

Producers of clean fuel must ensure compliance with all outlined requirements to avoid delays. To streamline the registration process, the IRS has set a deadline of July 15, 2024, for applications to be processed in time for the Jan. 1, 2025, start date. Applications received after July 15, 2024, will be processed as quickly as possible, but there is no guarantee to receive the registration by Jan. 1, 2025.

The Notice also outlines the necessary procedures for registration. The registration can be made on Form 637, Application for Registration. The form has been revised to include the specification of Activity Letters “CN” for non-sustainable aviation fuel (SAF) transportation fuel and “CA” for SAF. If an applicant needs to file the registration before the form is updated, the activity letter can be manually inputted.

The following information is required to be included on Form 637.

For non-SAF transportation fuel,

• Type of non-SAF fuel and the annual volume of each type;
• The feedstock(s) and country of origin of each feedstock used to produce each type of non-SAF;
• The location(s) and a description of the applicant’s production facilities;
• Each production facility’s annual fuel production capacity, and whether the applicant’s production facilities are operational and currently producing volumes of non-SAF transportation fuel;
• The names and addresses of any person(s) acting for the applicant as an agent or broker in buying, selling, or transporting any non-SAF transportation fuel;
• The business entities to which the applicant sells non-SAF transportation fuel;
• The business entities from or with which the applicant buys, trades, transfers, or exchanges any non-SAF transportation fuel;
• The annual volume of non-SAF transportation fuel the applicant buys, sells, trades, transfers, or exchanges; and
• A statement indicating under which ASTM standard(s), SAE standard(s), or both, the applicant produces non-SAF transportation fuel.

For SAF transportation fuel,

• A statement indicating whether the applicant produces SAF under an ASTM D7566 Annex or ASTM D1655 Annex A1, and if applicable, the specific ASTM D7566 Annex under which the SAF synthetic blending component is produced;
• The feedstock(s) and country of origin of each feedstock used to produce the SAF the applicant produces;
• The annual volume of SAF the applicant produces;
• The location(s) and a description of the applicant’s production facilities;
• Each production facility’s annual fuel production capacity, and whether the applicant’s production facilities are operational and currently producing volumes of SAF;
• The names and addresses of any person(s) acting for the applicant as an agent or broker in buying, selling or transporting any SAF;
• The business entities to which the applicant sells SAF;
• The business entities from or with which the applicant buys, trades, transfers or exchanges any SAF; and
• The annual volume of SAF the applicant buys, sells, trades, transfers or exchanges.

Notice 2024-49 also identifies primary feedstocks used to make transportation fuels that may be eligible for the section 45Z credit for purposes of applications for registration.

Where to go from here?

For more details surrounding the specific changes and updates, review the IRS website. And to discuss how Baker Tilly can assist your organization with understanding section 45Z tax credits and maximizing the available benefits of the IRA, contact us today.

Resource

1. Section 45Z Clean Fuel Production Credit, IRS, 2024