SUBJECT: ISSUE: DATE: PMAA CONTACT:

IRS Biodiesel Blending Credit Special Procedures for 2010 Biodiesel Refund Claims January 17, 2011 Mark S. Morgan, Regulatory Counsel mmorgan@pmaa.org

EXECUTIVE SUMMARY: The Internal Revenue Service this week issued special procedures that blenders must follow to make a refund claim for the federal biodiesel tax credit on blends created during the 2010 calendar year. The special procedures are the result of recent legislation reinstating the $1.00 per gallon biodiesel tax credit through December 31, 2011 and making the credit retroactive to the date it expired on January 1, 2010. As a result, blenders are allowed for a limited time to make a onetime refund claim for biodiesel blends created during calendar year 2010. IRS ISSUES SPECIAL REFUND PROCEDURES FOR BIODIESEL TAX CREDIT CLAIMS ON 2010 BLENDS: The federal biodiesel blenders credit expired on 12/31/09. Last December, Congress reinstated the biodiesel blenders credit as part of the Jobs Creation Act of 2010 (Pub. L. 111-312). The legislation reinstated the $1.00 per gallon blenders credit through 12/31/11 and made it retroactive from 01/01/10. As a result, blenders may now file refund claims for the $1.00 per gallon credit on any biodiesel blends created during calendar year 2010, the period for which the credit was expired. This week the IRS issued special refund claim procedures for biodiesel blends created during the 2010 calendar year. The special procedures require blenders to file a single, onetime refund claim for all blends created during 2010. The IRS will accept and process 2010 biodiesel credit refund claims from January 14, 2011 to through August 1, 2011. The IRS will not accept any 2010 biodiesel credit refund claims filed after August 1, 2011. The special procedures allow blenders to file refund claims only for biodiesel blends created in 2010. Therefore, blenders may not use 2010 biodiesel credits to reduce existing 4081 excise tax liability as is normally required for biodiesel claims. In other words, do not use IRS Form 720 for 2010 biodiesel claims. The special procedures do not apply to claims for biodiesel blends created during calendar year 2011. Instead, follow IRS claim procedures in place before the biodiesel blender credit expired on 01/01/10. These claim procedures require that the amount of biodiesel blenders credit be taken as a credit against existing federal excise tax liability on IRS Form 720. A refund is then allowed for any excess amount that may remain on IRS Forms 8849 and 8849 Schedule C. HOW TO FILE A CLAIM FOR REFUND ON 2010 BIODIESEL BLENDS: The following special claim procedures apply to biodiesel blends created during calendar year 2010. 1. Use IRS Form 8849 Claim for Refund of Excise Taxes and Form 8849 Schedule 3 Certain Fuel Mixtures and the Alternative Fuel Credit. These forms are available at www.irs.gov. 2. Fill out and sign IRS Form 8849.

3. Fill out Form 8849 Schedule 3 as required. Under Period of Claim enter 01/01/2010 through 12/31/2010. Enter amounts for all biodiesel gallons used in blends during the 2010 calendar year (January 1, 2010 through December 31, 2010) on line 2(b). Multiply the amount of biodiesel gallons reported on line 2(b) by $1.00 to determine the amount of the claim and enter on line (2)(c) 4. Attach Form 8849 Schedule 3 to Form 8849. 5. Send (before August 1, 2011) the completed IRS Forms 8849 and 8849 Schedule 3 along with supporting information normally required for biodiesel claims (producers certificates etc,) to: Internal Revenue Service P.O. Box 312 Covington, KY 41012-0312 6. On the envelope write FUEL MIXTURE CLAIM Or Alternatively, 2010 biodiesel claims may be filed electronically through any electronic return originator, transmitter, or intermediate service provider participating in the IRS e-file program for excise taxes. 7. The filing period for 2010 biodiesel refund claims is January 14, 2011 through August 1, 2011. The IRS will not accept any 2010 biodiesel claims received after August 1, 2011. 8. The IRS will pay interest on any claim not paid within 60 days of receipt. Interest is calculated from the claim filing date. IMPORTANT! Biodiesel claims for 2010 are for straight refunds only. Do not use Form 720.The IRS will not pay 2010 biodiesel claims submitted of Form 720. Biodiesel claims for 2010 may still taken as a nonrefundable income tax credit on IRS Form 8864 or a refundable income tax credit on IRS Form 4136. IMPORTANT! The IRS will not process any protective or anticipatory claims for 2010 biodiesel blends that may have been filed before the start of the special filing period beginning on January 14, 2011. These claims must be refilled. IMPORTANT! File only one claim for all of calendar year 2010. The IRS will not process more than one 2010 claim from the same claimant. All 2010 claims must be combined in a single onetime claim. IMPORTANT! Use it or lose it. File the 2010 biodiesel refund claim by August 1, 2011. The IRS will not accept or 2010 after this date. IMPORTANT! The special procedures in this Regulatory Report apply to 2010 biodiesel claims only. New biodiesel claims filed for blends created in 2011 must follow established procedures in place before the biodiesel credit expired on December 31, 2009. This includes filing an IRS Form 720 to reduce the amount of the biodiesel credit against existing federal excise tax liability before a refund is allowed. IMPORTANT! These special procedures do not apply to 2010 claims for the alcohol blends. These claims must follow established IRS claim procedures.