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Tax Incentives
Tax IncentivesB11 Illinois Tax Incentive
Illinois provides a sales tax exemption (6.25%) for blends of biodiesel above B10 - correspondingly, most retail outlets in Illinois sell a B11 blend of biodiesel to take advantage of the incentive. This results in B11 selling for approximately 10-15 cents less than petroleum diesel. Illinois also has a partial sales tax exemption (20 percent off 6.25 percent) for biodiesel blends of one to 10 percent.
Federal Tax Credit Facts
- B100 is taxed once it is blended with undyed diesel fuel.
- The blender is liable for the tax that is reported quarterly on Form 720.
- No credit is allowed unless the blender obtains a certification from the producer of B100 (certificate must specify virgin or recycled feedstock).
- All biodiesel producers must have registered with the IRS on Form 637 by July 1, 2005 ($10,000 penalty, plus $1.00/day thereafter).
Example
- 5,000 gallons of diesel sold as a B20 blend
- 1,000 gallons of B100 x 24.4 cents = $244 in federal excise tax due
- 1,000 gallons x $1/gallon credit (virgin soy oil) = $1,000
- $1,000 - $244 = $756 refund
ExSTARS (Excise Summary Terminal Activity Reporting System)
- All fuel moves through a terminal.
- The fuel comes in bulk (pipeline or vessel), and leaves in transport loads (rail or truck).
- New requirements and reporting in fuels for fraud prevention.
- All must have a mechanical dye injection system for off-road fuels.
- The IRS then sends a report to each state Department of Revenue.
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