One-Year Extension of the Alternative Fuel Excise Tax Credit for 2017

Tax|Tax Reform|Transportation & Logistics

By Jim Gilboy

This article was in collaboration with Keith Donnelly. 

The Alternative Fuel Credit is a refund of federal excise taxes that many companies in the transportation and manufacturing industries utilized in the past.  To qualify, the taxpayer sold or used the fuels listed below to operate a motor vehicle, motor boat or aviation equipment. The taxpayer was also required to be registered with the IRS as an Alternative Fueler. Specifically, the credit provided for a $0.50 per gallon credit for the following fuels:

  1. Liquefied petroleum gas
  2. “P-Series” fuel
  3. Compressed natural gas
  4. Liquefied hydrogen
  5. Fischer-Tropsch process liquid fuel from coal
  6. Liquid fuel derived from biomass
  7. Liquefied natural gas
  8. Liquefied gas derived from biomass
  9. Compressed gas derived from biomass

The credit expired on December 31, 2016; and the Tax Cuts and Jobs Act failed to provide an extension of the credit.  However, on February 9, 2018, Congress passed the federal spending bill (The Bipartisan Budget Act of 2018), which contained many provisions generally referred to as “Extenders” including several energy related tax incentives.  The bill extends a few items impacting the transportation industry, including both the Alternative Fuel Credit and tax credits related to biodiesel and renewable diesel fuels, until December 31, 2017. We will continue to monitor the status of all of these credits and the potential of them being extended for the 2018 tax year. 

The IRS will have to act quickly on this matter and update related forms, procedures, etc…  For example, the IRS issued the 2017 Form 4136 without the lines required to claim these credits based on the current law at the time of their publishing.  

Please contact any member of Schneider Downs Tax Department for additional information regarding these specific tax law extenders and any other changes that were included in the earlier Tax Cuts and Jobs Act.

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