Why are incentives important? Fast Facts:
9 Imported petroleum has accounted for over 50% of petroleum consumed by the U.S. each year since 1998 and in 2004 was nearly 60%. Increasing petroleum demand, along with declining U.S. production of oil are main causes for this reliance on imported oil.
9 Transportation (cars, trucks and buses) consumes two thirds of all oil used in the U.S.
9 All other energy sectors have diversified while transportation is still 95-98% reliant on petroleum products- gasoline and diesel.
What incentives are available?
Biodiesel Blenders Tax Credit (available 2005-2008):
• A $1.00/ gallon tax credit for “agri-biodiesel” (1st use vegetable oils and animal fats- including palm and fish oil) and a $.50/gallon tax credit for biodiesel produced from recycled oils and animal fats is available for biodiesel blended with petroleum diesel. The benefit of the credit is calculated based on the percent of biodiesel blended with
petroleum diesel, so that a 20% of “agri-biodiesel” is worth .20 per gallon. Biodiesel blended fuel is defined as any blend equal or greater than 1 gallon of diesel fuel with 999 gallons of biodiesel.
• Blenders must register with the IRS to claim the tax credit by completing Form 637-M.
Contact local IRS field office for further information about the registration process and timing. Registration can take a considerable amount of time. Contact: IRS Southeast field office manager: Willie Clayton (407) 660-5822 Ext. 210.
• Registered blenders claim the tax credit on Form 720. A direct link to IRS forms is:
http://www.irs.gov/formspubs/lists/0,,id=97817,00.html. A blender does not have to have a tax liability to receive the credit.
• On-road and off-road diesel fuel are eligible for the blenders credit.
For more information contact: http://www.biodiesel.org/
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Volumetric Ethanol Excise Tax Credit (VEETC) (available 2005-2010):
• Allows for a tax refund of 51 cents per gallon on each gallon of ethanol blended with gasoline to be paid within 20-28 days of blending gasoline with ethanol. For E85 (85%
ethanol, 15% gasoline) the credit is equal to .43 cents per gallon. For E10, the credit is worth .05 cents per gallon.
• VEETC eliminates the need of the alcohol fuels income tax credit which was
cumbersome and subject to alternative minimum tax requirements. VEETC provides credit for every gallon of ethanol used in the marketplace without regard to the income of the taxpayer or whether the ethanol is used in a taxed fuel or tax exempt fuel.
• Blenders must register with the IRS to claim the tax credit by completing Form 637-M.
Contact local IRS field office for further information about the registration process and timing. Registered blenders may claim the credit weekly for refunds greater than $200 with Form 8849, quarterly with Form 720 or annually with Form 4136. The same refund forms are used for both biodiesel and ethanol blending.
For more information visit: http://www.ethanolrfa.org/policy/regulations/
Refueling Infrastructure Tax Credit:
• The 2005 Energy Bill provides a 30% tax credit (up to $30,000) for refueling equipment for E85 ethanol, compressed natural gas, liquefied petroleum gas, hydrogen, and
biodiesel blends containing at least 20 percent biodiesel.
• The 2005 Transportation bill increases credit for infrastructure up to $50,000.
Administrative procedures for claiming the infrastructure credits are currently being developed by the IRS.
NC Tax Credit for Alternative Fuel Refueling infrastructure (2004 House Bill 1636):
• A tax credit is available for facilities that dispense biodiesel and ethanol/gasoline mixtures consisting of at least 70% ethanol.
• The credit is equal to 15% the taxpayer’s cost to construct and install the dispensing facility, including pumps, storage tanks, and related equipment, that is directly and exclusively used for dispensing or storing the fuel. Equipment for storing and dispensing must clearly be identified as being associated with renewable fuel.
• The credit must be taken in three equal annual installments beginning with the taxable year in which the facility is placed in service.
• Facilities must be placed in service before January 1, 2008. Reference North Carolina General Statutes 105 129.16D
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NC Alternative Fuel Tax Exemption:
• The retail sale, use, storage or consumption of alternative fuels is exempt from the state’s sales and use tax. Sales and use tax is applied to conventional off road fuel sales and is 7% of the sales price. For example if the price of B100 is $3.00 per gallon, the sales tax exemption would be a savings of .042 cents per gallon on a B20 blend. This incentive may be especially attractive for biodiesel blended with fuel oil for heating applications and biodiesel sold to landscaping and construction companies.
• Biofuels distributors must first register with the NC Department of Revenue as an Alcohol Fuel and Biodiesel Provider (Form GAS 1264) and post a minimum of a $2,000 bond. The amount of the bond is in proportion to on road fuel sales.Fuel sales are
reported on Form E500.
• Biodiesel may be splashed blended up to a B20 blend with mechanically dyed off road diesel ( as per IRS Transitional Rules).
• To register as a fuel provider, call the North Carolina Motor Fuels and Tax Office in Raleigh for more information: 877- 308- 9092 or 919-733-3409.
For more information about the tax exemption:
http://www.eere.energy.gov/afdc/progs/view_ind.cgi?afdc/5664/0
North Carolina Soybean Producers Association Biodiesel Distributor Rebate Program:
• New dealers and distributors are eligible for a rebate on the first 250 of 500 gallons of soy biodiesel (B100) purchased
• A Biodiesel Equipment Enhancement Rebate for new dealers and distributors will help cover the cost of any equipment changes that may be needed to begin selling soy biodiesel. Rebate is 1/2 of the cost of equipment with a maximum of $2,500 per dealer.
• Rebates are available as long as funding lasts. Contact Lynn Burgdorf or Jim Wilder at 919-839-5700 for more information.
For more information contact:
Anne Tazewell Alternative Fuels Program Manager/NCSC Phone: 919-513-7831 Email: anne_tazewell@ ncsu.edu
Tax Incentives: Alternative Fuel Distributors
Centralina Economic Development Commission