Full View ethanol incentives-fed

Calvin,

Below are the two federal tax incentives that I know about. I copied information on each program from two different sources. Also I added info on the tax forms at the end. John Crockett will be supplying you with info on the one state incentive that is available. Hope this is helpful.

Beth

Alternative Fuel Infrastructure Tax Credit

1. Federal Incentive Offers 30%
A new Federal tax credit included in the Energy Bill took effect Jan. 1, 2006. A fuel retailer can claim a 30 percent tax credit, up to $30,000 for the cost of installing clean fuel refueling facilities, including E85 fuel. The credit applies to property placed in service between Dec. 31, 2005 and Dec. 31, 2009.

In May 2006, the Internal Revenue Service (IRS) published Form 8911, which provides a mechanism to claim the infrastructure tax credit. Owners who install qualified refueling property on multiple sites can utilize the credit for each property. The instructions define what is considered qualified 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

2. Alternative Fuel Infrastructure Tax Credit

A tax credit is available for the cost of installing alternative fueling equipment placed into service after December 31, 2005. Qualified alternative fuels are natural gas, liquefied petroleum gas, hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel. The credit amount is up to 30% of the cost, not to exceed $30,000, for equipment placed into service before January 1, 2009. The credit amount is up to 50% not to exceed $50,000, for equipment placed into service on or after January 1, 2009. Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location. Consumers who purchase residential fueling equipment may receive a tax credit of up to $1,000, which increases to $2,000 for equipment placed into service after December 31, 2008. The maximum credit amount for hydrogen fueling equipment placed into service after December 31, 2008, and before January 1, 2015, is $200,000. The credit expires December 31, 2010, for all other eligible fuel types. Form 8911 (PDF 247 KB) provides additional information and must be used in order to claim the tax credit. Download Adobe Reader (Reference Public Law 111-5, Section 1123, and 26 U.S. Code 30C)

Point of Contact

U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/

VEETC

1.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

2. Volumetric Ethanol Excise Tax Credit (VEETC)

An ethanol blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of $0.45 per gallon of pure ethanol (minimum 190 proof) blended with gasoline. Only entitles that have produced and sold or used the qualified mixture as a fuel in their trade or business are eligible for the tax credit. The incentive must first be taken as a credit against the blender's fuel tax liability; any excess over this tax liability may be claimed as a direct payment from the IRS. Under current law, this incentive expires December 31, 2010. For more information, see IRS Publication 510 and IRS Forms 637, 720, 4136, 6478, and 8849, which are available via the IRS Web site. (Reference Public Law 110-234, and 26 U.S. Code 6426)

Point of Contact

Excise Tax Branch
U.S. Internal Revenue Service Office of Chief Counsel
Phone (202) 622-3130
http://www.irs.gov/

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.

What’s good about biofuels

ü Domestically grown

Ø reducing imported oils - Security

Ø economic development

ü Significantly lower emissions

ü Renewable & carbon neutral

ü No engine modifications need

ü Safer, Biodegradable & Simply a Better Product

Important Federal Alternative Fuel Mandates

• Energy Policy Act of 1992 Required Acquisition of Alternative Fuel Vehicles for Federal & State Fleets

• Executive Order 13149 (2000) Directs a 20% Reduction in Federal Fleet Petroleum Consumption

• Energy Policy Act of 2005 Mandates 7.5 Billion Gallons of Renewable Fuel by 2012

• EPA, 40 CFR Part 80, Requires Ultra-Low Sulfur Diesel

Federal Biofuels Incentives

Small Agri-Biodiesel/Ethanol Producer Credit

The Credit passed in 1990 (SEPTC) was not effective but has been improved

• Offsets Alternative Minimum Tax

• Cooperatives Can Allocate Credit to Members

• Unused Credits Carried Back 1 Year – Forward 3 Years

• Becomes Income tax Deduction after Expires

Limitations

• Limited to Tax Generated by Passive Activities

• Subject to Taxable income Add Back Provision

Biofuels Infrastructure Tax Credit

A fuel retailer can claim a 30 percent tax credit, up to $30,000 for the cost of installing clean fuel refueling facilities. The credit took effect on Jan. 1, 2006 and applies to property placed in service between Dec. 31, 2005 and Dec. 31, 2009.

Federal Ethanol Incentives

The Volumetric Ethanol Excise Tax Credit (VEETC)

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. The VEETC went into effect on January 1, 2005 and sunsets at the end of 2010.

Federal Biodiesel Incentives

Biodiesel Excise Tax Credit

The tax credit is $.50 per gallon of waste-grease biodiesel and $1.00 for agribiodiesel. If the fuel is used in a mixture, the credit is 1 cent per percentage point of agri-biodiesel used or 1/2 cent per percentage point of waste-grease biodiesel. This credit is for biodiesel producers & was established in the American Jobs Creation Act of 2004 (Public Law 108-357) runs through the end of 2008.

INCOME TAX CREDIT - Adds to existing law to provide for an income tax credit for capital investment in biofuel infrastructure, with a limitation.

RELATING TO INCOME TAX CREDITS; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 63-3029M, IDAHO CODE, TO PROVIDE FOR AN INCOME TAX CREDIT FOR CAPITAL INVESTMENT IN BIOFUEL INFRASTRUCTURE, TO DEFINE TERMS, TO PROVIDE A LIMIT, TO PROVIDE THE MAXIMUM AMOUNT OF THE CREDIT, TO PROVIDE FOR CARRY FORWARD AUTHORITY, TO PROVIDE FOR RECAPTURE, TO PROVIDE FOR ADMINISTRATIVE PROVISIONS AND TO PROVIDE FOR RULES; PROVIDING AN EFFECTIVE DATE AND PROVIDING A SUNSET DATE.

SECTION 1. That Chapter 30, Title 63, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 63-3029M, Idaho Code, and to read as follows:

(1) The definitions contained in the Idaho income tax act shall apply to this section unless the context clearly requires another definition.

(a) "Biofuel" means any fuel offered for sale as a transportation fuel that is agriculturally derived and meets applicable ASTM standards as required in section 37-2506, Idaho Code, including, but not limited to, ethanol, ethanol-blended fuel, biodiesel and biodiesel blends.

(b) "Fuel distributor" or "distributor" means any business with a situs in Idaho that distributes motor vehicle fuel including, but not limited to, wholesalers, jobbers, distributors or terminal operators.

(c) "Fueling infrastructure" means necessary tanks, piping, pumps, pump stands, hoses, monitors, blending equipment, meters, rack injection systems or any other equipment including installation of equipment necessary for a fuel distributor to offer biofuel to its customers, or for a retail fuel outlet to offer biofuel for sale.

(d) "Placed into service" means that biofuel is offered for sale and continues to be offered for sale through the fueling infrastructure made available by the qualified investment.

(e) "Qualified investment" means installation of new fueling infrastructure dedicated to the purpose of selling or offering for sale biofuel; or upgrading existing fueling infrastructure demonstrated to be incompatible with the biofuel to be offered, including cleaning of existing fuel storage tanks, trucks or other equipment for the purpose of providing biofuels.

(f) "Recapture period" means a period of five (5) years from the date the qualified investment was placed into service. During this period, biofuel must be offered for sale on a continuous basis.

(g) "Retail fuel dealer" or "dealer" means any business with a situs in Idaho that sells or offers for sale at the retail level motor vehicle fuel.

(3) For taxable years beginning on or after January 1, 2007, and before December 31, 2011, and subject to the limitations of this section, a taxpayer who has placed into service a qualified investment after July 1, 2007, shall, in lieu of the investment tax credit provided in section 63-3029B, Idaho Code, be allowed a nonrefundable credit against taxes imposed by sections 63-3024, 63-3025 and 63-3025A, Idaho Code, in the amount of six percent (6%) of the amount of qualified investment as defined in subsection (2) of this section, and made during a taxable year, wherever located within this state.

(4) The credit allowed by this section shall not exceed fifty percent (50%) of the income tax liability of the taxpayer.

(5) In the case of a group of corporations filing a combined report under subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member of the group but not used by that member may be used by another member of the group, subject to the provisions of subsection of this section, instead of carried over. For a combined group of corporations, credit carried forward may be claimed by any member of the group unless the member who earned the credit is no longer included in the combined group.

(6) If the credit allowed by subsection (3) of this section exceeds the limitation under subsection (4) of this section, the excess amount may be carried forward for a period that does not exceed the next five (5) taxable years.

(7) In the event that the qualified investment upon which the credit allowed by this section has been used ceases to qualify for the credit during the recapture period, the recapture of credit under this section shall be in the same proportion and subject to the same provisions as the amount of credit required to be recaptured under section 63-3029B, Idaho Code.

(8) In addition to other needed rules, the state tax commission may promulgate rules prescribing, in the case of S corporations, partnerships, limited liability companies, trusts or estates, a method of attributing the credit under this section to the shareholders, partners or beneficiaries in proportion to their share of the income from the S corporation, partnership, trust or estate.

SECTION 2. This act shall be in full force and effect on and after July 1, 2007, and shall be null, void and of no force and effect on and after January 1, 2012.

The purpose of this legislation is to provide an additional 3% investment tax credit to any Idaho retail fuel dealer or fuel distributor who chooses to invest in infrastructure dedicated to providing biofuels to their customers. The bill sunsets at the end of 2011.

The impact on the General Fund from this legislation is estimated to be $30,000 in FY08. The maximum estimated impact of the bill is $300,000 over five years.

The United States has a heavy reliance on petroleum and imports over 60 percent of the petroleum we consume. The last time the U.S. was able to meet its consumption needs was 1951. Domestic oil peak production occurred just after the 1973 Arab oil embargo and has moved steadily in a downward trend since that time.

Idaho does not have any petroleum production wells and is one of about a dozen states that does not have a refinery. All petroleum used in Idaho is imported in by truck, rail or pipeline. Most Idaho markets receive petroleum from refineries in Montana and Utah via two pipelines owned by ConocoPhillips (Yellowstone Pipeline) and Chevron corporations respectively (Figure 1).

The Chevron Pipeline accounts for about 70 percent of motor fuel transported into Idaho from Utah’s five refineries at or near Salt Lake City. Beginning in Salt Lake City, the pipeline follows the U.S. Interstate I-84 route into Southeastern Idaho and traverses southern Idaho before continuing on to Pasco and Spokane, Washington. At the junction of I-84 and I-86, near Declo, Idaho, a spur line runs to a storage facility in Pocatello. Chevron has other storage locations in Burley and Boise.

The Yellowstone Pipeline, owned and operated by ConocoPhillips, accounts for approximately 30 percent of motor fuel transported into Idaho. Beginning in Billings, Montana, the 10” pipeline crosses into Idaho following Interstate 90 and terminates in Spokane. Portions of the pipeline are above ground, piggy-backing the Interstate 90 bridges as they span waterways along the route.

It is unlawful to act as a fuel distributor in Idaho without a fuel distributor license issued by the Idaho State Tax Commission. There are approximately 180 licensed fuel distributors, many of which are not from within the state. Idaho has approximately 900 gasoline retail stores and the approximate distribution of brands of fueling stations is shown in Figure 2. Idaho is one of a few states that does not require, or have cities that require, specific blends of gasoline or diesel fuel. Several Idaho fuel suppliers also serve stations in neighboring states where specific fuel blends are required.

Idaho transportation fuel usage for 2006 through 2008 is shown in Table 1. Idaho gasoline, diesel and biodiesel usage actually dropped in 2008 while there was a significant increase in ethanol usage. Historically ethanol usage in Idaho has been consistent and small. Since the 1980’s about 3 million gallons of ethanol were sold in the state each year. In 2006, there was a boost in ethanol sales, jumping to about 3.4 million gallons. These sales were from less than 60 stations.

In the Energy Independence and Security Act (EISA) of 2007, the Federal Government mandated large increases in the use of renewable fuels. Corn-based ethanol will increase from current levels of 9 billion gallons/year to 13.8 billion gallons in 2012 and to 15 billion gallons by 2015. It also makes a commitment to development of advanced biofuels, like cellulosic ethanol, by requiring production of 21 billion gallons by 2022. Biomass-based diesel fuels such as biodiesel will increase from current levels of 0.5 billion gallons/year to 1 billion gallons/year by 2012. To meet these requirements, petroleum refiners must use 10.21% renewable fuels in 2009 and this will approach 20% by 2015.

Idaho residents are largely unaware of this dramatic change in fuel supplies because most of the state’s fuel suppliers have been able to take advantage of a small refiner exemption that delays implementation until the end of 2010. However, starting January 1, 2011, all fuel sold in the state will contain between 10 and 15% renewable fuel.

1) A Fuel Distributors License is needed to purchase bulk fuels, blend and resell to the public.

2) Bond = 2 times the monthly estimated sales in gallons (example: a 100,000 per month consumption X .25 = 25,000 X 2 = a 50,000 bond @ 10% = a 1,500 annual premium) The .25 cent per gallon tax is paid at the time of purchase. The reimbursement only comes when the consumers use is a non-taxeable use.

3) Monthly reporting requires a Form 1450 state form and can be electronically filed.

4) All pumps require the office of weights and measures to certify them and approve public signage or communication when referring to fuel types and uses.

5) The federal part can all be done through the IRS. (Federal tax = 18.4 cents per gallon) The .51 cents blending tax credit is also done through the IRS.

Jim Henderson – state tax commission, will help with questions and paperwork. 208-334-7701

I've put about 8000 miles on my 2006 Buick Rendezvous since my Fuel-Flex

http://www.fullflexint.com/images/New_Folder/buickR.jpg

conversion in July 2008. It had 37,000 miles on it when I converted it, and now has 45,000.

I'm using almost 100% E-85, and have noticed the fuel mileage is a little less than I was getting before. Combined city/hwy mileage is now 18 mpg when I was previously getting 20. That's not a problem though because the E-85 costs 70 cents less per gallon less than the E-10 I was using before.

The real surprise has come on two road trips, one 1000 miles and one 600 miles, when I couldn't buy E-85 on these two trips I used 87 octane unleaded, or 89 octane E-10; and I averaged 24 Mpg ! On my pre-conversion road trips I would average 21 Mpg; and the best I ever got on a pre-conversion road trip ( with a tail wind ) was one tank full at 23 Mpg.

In short, my vehicle is running great, and I'm very pleased with my Fuel-Flex conversion.

When the garage that did my conversion had a question, they were very pleased with the help they received in a phone conversation with you.

They were especially impressed that you called the garage back the following day to see if everything went okay !

From:	BETH BAIRD <BBAIRD@cityofboise.org> Add to Contacts
To:	calvin_Leman2001@yahoo.com
Cc:	John Crockett <John.Crockett@oer.idaho.gov>

From:	"Crockett, John" <John.Crockett@oer.idaho.gov> View Contact
To:	calvin_leman2001@yahoo.com
Cc:	Beth Baird <BBAIRD@cityofboise.org>

	3 Files Download All Biofuel Incentives.doc (28KB); HB 177 -Biofuel Tax Credit.doc (25KB); Transportation Fuels Status 9 09.doc (727KB)

Table 1 – Idaho Transportation Fuel Usage in Gallons
County	2006	2007	2008*
Gasoline	647,518,256	655,351.134	620,000,000
Ethanol	3,283,528	4,408,566	20,800,000
Diesel	464,093,713	544,096,519	520,000,000
Biodiesel	64,259	230,063	205,000
Table does not include aviation fuel. Gasoline and diesel amounts include ethanol and biodiesel. * Estimate Source: Idaho Tax Commission.

Table 1 – Idaho Transportation Fuel Usage in Gallons
County	2006	2007	2008*
Gasoline	647,518,256	655,351.134	620,000,000
Ethanol	3,283,528	4,408,566	20,800,000
Diesel	464,093,713	544,096,519	520,000,000
Biodiesel	64,259	230,063	205,000
Table does not include aviation fuel. Gasoline and diesel amounts include ethanol and biodiesel. * Estimate Source: Idaho Tax Commission.

2. Alternative Fuel Infrastructure Tax Credit

Point of Contact

2. Volumetric Ethanol Excise Tax Credit (VEETC)

Point of Contact

Excise Tax Branch
U.S. Internal Revenue Service Office of Chief Counsel
Phone (202) 622-3130
http://www.irs.gov/

Idaho Transportation Fuels & Biofuels Status

Idaho Transportation Fuels & Biofuels Status

2. Alternative Fuel Infrastructure Tax Credit

Point of Contact

2. Volumetric Ethanol Excise Tax Credit (VEETC)

Point of Contact

Excise Tax Branch U.S. Internal Revenue Service Office of Chief Counsel Phone (202) 622-3130 http://www.irs.gov/

Idaho Transportation Fuels & Biofuels Status

Idaho Transportation Fuels & Biofuels Status

Excise Tax Branch
U.S. Internal Revenue Service Office of Chief Counsel
Phone (202) 622-3130
http://www.irs.gov/