n-16-05.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Biodiesel and Alternative Fuels; Claims for 2015; Excise Tax

Notice 2016-05

Section 1. PURPOSE
This notice provides rules claimants must follow to make a one-time claim for
payment of the credits and payments allowable under §§ 6426(c), 6426(d), and 6427(e)
of the Internal Revenue Code (Code) for biodiesel (including renewable diesel) mixtures
and alternative fuels sold or used during calendar year 2015 (collectively, 2015
biodiesel and alternative fuel incentives). These rules are prescribed under
§§ 185(b)(4) and 192(c) of the Protecting Americans from Tax Hikes Act of 2015 (PATH
Act), Pub. L. 114-113 Div. Q (2015) (the Act). This notice also provides instructions for
how a claimant may offset its § 4081 liability with the § 6426(e) alternative fuel mixture
credit for 2015, and provides instructions for how a claimant may make certain income
tax claims for biodiesel, second generation biofuel, and alternative fuel.

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Section 2. BACKGROUND
Sections 6426(a) and (c) allow a blender of a biodiesel (including renewable
diesel) mixture to claim a $1.00-per-gallon credit against its tax liability under § 4081
(relating to the tax imposed on taxable fuel). Similarly, §§ 6426(a) and (e) allow a
blender of an alternative fuel mixture to claim a credit against its tax liability under
§ 4081, except that the credit amount is $0.50 per gallon. Sections 6426(a) and (d)
allow a person that sells or uses alternative fuel as a fuel in a motor vehicle or
motorboat and in aviation to claim a $0.50-per-gallon credit against the claimant’s tax
liability under § 4041 (relating to the tax imposed on diesel fuel and alternative fuel).
Blenders of biodiesel (including renewable diesel) mixtures and persons that sell
or use alternative fuel as a fuel in a motor vehicle or motorboat and in aviation may
claim any excess credit under §§ 6426(c) or (d) as a payment under § 6427(e) or as a
refundable income tax credit under § 34. As an alternative to the payments and credits
allowed under §§ 6426, 6427, and 34, a blender of a biodiesel (including renewable
diesel) mixture may claim a nonrefundable income tax credit under § 40A (see Section
8 of this notice for additional information). For federal income tax purposes, a claimant
reduces its § 4081 excise tax liability by the amount of excise tax credit allowable under
§ 6426(c) and its § 4041 excise tax liability by the amount of excise tax credit allowable
under § 6426(d) in determining its deduction for those excise taxes or its cost of goods
sold deduction attributable to those excise taxes. See Notice 2015-56, 2015-35 I.R.B.
235.

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The Code provisions that authorize these credits and payments expired for sales
and uses after December 31, 2014, but were reinstated by the Act for sales and uses
through 2016. Sections 185(b)(4) and 192(c) of the Act direct the Secretary of the
Treasury (Secretary) to issue guidance providing for a one-time submission of claims
under §§ 6426(c), 6426(d), and 6427(e) for 2015. The Act requires the guidance to
provide for a 180-day period for the submission of claims (in such manner as prescribed
by the Secretary) to begin no later than 30 days after the guidance is issued.
Sections 184 and 185(a) of the Act also reinstated Code provisions authorizing
credits for second generation biofuel producers (§ 40(b)(6)) and biodiesel and
renewable diesel used as fuel (§ 40A), respectively. The second generation biofuel
producer credit expired for production after December 31, 2014, and was reinstated by
the Act for production through 2016. The credit for biodiesel and renewable diesel used
as fuel expired for sales and uses after December 31, 2014, and was reinstated by the
Act for sales and uses through 2016.
Section 3. SCOPE
This notice provides the procedure for claiming 2015 biodiesel and alternative
fuel incentives. Claimants that filed “protective” or anticipatory claims during 2015 for
biodiesel and alternative fuel incentives covered by this notice should refile their claims
pursuant to the procedures provided in this notice. The IRS will not treat as perfected
any such protective or anticipatory claims previously filed with the IRS that are not
timely supplemented in accordance with these procedures.

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Except as provided by this notice, the rules in Notice 2005-4, 2005-1 C.B. 289
(providing guidance on alcohol and biodiesel fuel tax credits and payments), as
modified by Notice 2005-62, 2005-2 C.B. 443 (providing guidance for certain biodiesel
issues not addressed in Notice 2005-4), and Notice 2006-92, 2006-2 C.B. 774
(providing guidance on alternative fuel and alternative fuel mixture taxes, credits, and
payments), apply to claims for 2015 biodiesel and alternative fuel incentives.
This notice prescribes a method for submitting claims for the alternative fuel
mixture credit relating to alternative fuel mixtures sold or used during 2015.
This notice does not affect the income tax claims described in Section 8 of this
notice.
Section 4. HOW TO MAKE A ONE-TIME CLAIM FOR CREDITS AND PAYMENTS
ALLOWABLE UNDER §§ 6426(c), 6426(d), AND 6427(e)
Claimants must follow the procedures listed below to make a one-time claim
under this notice for payment of credits and payments allowable under §§ 6426(c),
6426(d), and 6427(e) relating to 2015 biodiesel and alternative fuel incentives.
• Claimants must submit claims for 2015 biodiesel and alternative fuel incentives
on Form 8849, Claim for Refund of Excise Taxes.
• Claimants must include Schedule 3 (Form 8849), Certain Fuel Mixtures and the
Alternative Fuel Credit, with their submission and enter amounts for 2015
biodiesel and alternative fuel incentives on Line 2 and Line 3 of Schedule 3, as
appropriate.

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• Claimants must follow the instructions to Form 8849 and Schedule 3 when
preparing their submission to the extent that those instructions do not conflict
with this notice.
• Each claimant must claim all 2015 biodiesel and alternative fuel incentives for
which the claimant is eligible on a single Form 8849.
• Each claimant must mail its submission to the address listed for Schedule 3 in
the instructions to Form 8849 under Where to File. Alternatively, claimants may
electronically file Form 8849 and Schedule 3 through any electronic return
originator, transmitter, or intermediate service provider participating in the IRS e-
file program for excise taxes.
• Claimants are reminded that they must be registered by the IRS in order to make
alternative fuel claims under §§ 6426(d) and 6427(e) and to make alternative fuel
mixture claims under § 6426(e) (described in Section 6 of this notice). Claimants
that are not already registered by the IRS may apply to the IRS for registration by
filing Form 637, Application for Registration (For Certain Excise Tax Activities), in
accordance with the instructions to Form 637.
• Claimants may not combine 2015 and 2016 claims for biodiesel and alternative
fuel incentives. Claims for 2015 biodiesel and alternative fuel incentives must be
made in accordance with the rules for one-time claims prescribed in this notice.
Claims for 2016 biodiesel and alternative fuel incentives must be made in
accordance with the normal rules for filing such claims.

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Section 5. CLAIM PERIOD AND DUE DATE FOR BIODIESEL AND ALTERNATIVE
FUEL INCENTIVES
Although a claimant may submit its claim under this notice as early as January
15, 2016, the 180-day claim period for 2015 biodiesel and alternative fuel incentives
begins on February 8, 2016. Consequently, all claims for 2015 biodiesel and alternative
fuel incentives must be filed on or before August 8, 2016. The IRS will not process
claims filed after that date. The IRS will deem any claim that is submitted by the
method prescribed in this notice before February 8, 2016, as filed on February 8, 2016.
If the IRS does not pay a 2015 biodiesel and alternative fuel incentives claim that
conforms to this notice within 60 days after the claim is received, the IRS will pay the
claim with interest from the claim filing date (February 8, 2016, in the case of claims
submitted before that date) using the overpayment rate and method provided by § 6621
of the Code.
Section 6. HOW TO MAKE AN ALTERNATIVE FUEL MIXTURE CLAIM UNDER
§ 6426(e)
For 2015, all alternative fuel mixture credit claims allowed by § 6426(e), including
claims for the fourth quarter, must be made on Form 720X, Amended Quarterly Federal
Excise Tax Return. The IRS is unable to process 2015 claims on the fourth quarter
Form 720 due to the timing of enactment of the Act. Failure to file a Form 720,
Quarterly Federal Excise Tax Return, and remit the § 4081 tax due for any quarter in
2015 before submitting a claim allowed by § 6426(e) on Form 720X will result in
delayed processing of the claim and delayed payment of refunds resulting from the

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credit. Similarly, failure to follow the claim procedure in this section will result in delayed
processing and payment of 2015 § 6426(e) claims. Claimants are reminded that the
claim for a § 6426(e) credit for any quarter may not exceed the § 4081 liability incurred
in the quarter for which the credit is being claimed. Form 720X allows claimants to
adjust multiple quarters on a single Form 720X.
Section 7. CLAIM PERIOD AND DUE DATE FOR ALTERNATIVE FUEL MIXTURE
CREDITS
The claim period for the 2015 alternative fuel mixture credit begins on February
8, 2016. The IRS will deem any claim that is submitted by the method prescribed in
section 6 of this notice before February 8, 2016, as filed on February 8, 2016.
Generally, claims for the § 6426(e) alternative fuel mixture credit must be made within
three years from the time the return was filed or two years from the time the tax was
paid, whichever is later.
Section 8. CLAIMS NOT AFFECTED BY THIS NOTICE
This notice does not affect 2015 claims for the nonrefundable income tax credit
under § 40(b)(6) for second generation biofuel producers. Taxpayers should continue
to submit these claims separately on, and in accordance with, Form 6478, Biofuel
Producer Credit. This notice also does not affect 2015 claims for the nonrefundable
income tax credits under § 40A(b)(1) for biodiesel mixtures, § 40A(b)(2) for biodiesel
(including renewable diesel), or under § 40A(b)(4) for the small agri-biodiesel producer
credit. Taxpayers should continue to submit these claims separately on, and in
accordance with, Form 8864, Biodiesel and Renewable Diesel Fuels Credit. A taxpayer

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must submit Form 8864 with its income tax return in accordance with the instructions to
its income tax return form. Taxpayers are reminded that under § 40A(c), credits
allowable under § 40A must be reduced to the extent that any benefit is claimed under
§§ 6426 and 6427 with respect to the same biodiesel (including renewable diesel).
Similarly, this notice does not affect 2015 claims for the refundable income tax
credit under § 34 for biodiesel mixtures or alternative fuel. Taxpayers should continue
to submit these claims separately on, and in accordance with, Form 4136, Credit for
Federal Tax Paid on Fuels. A taxpayer must submit Form 4136 with its income tax
return in accordance with the instructions to its income tax return form. Taxpayers are
reminded that under § 34(b), credits are not allowed under § 34 for any amount properly
payable under § 6427 and claimed in a timely filed claim. For this purpose, the IRS will
treat as timely filed any claim submitted for amounts payable under § 6427 that
conforms to the rules provided in this notice.
Section 9. DRAFTING INFORMATION
The principal author of this notice is Amanda F. Dunlap of the Office of Associate
Chief Counsel (Passthroughs & Special Industries). For further information regarding
this notice contact Amanda F. Dunlap at (202) 317-6855 (not a toll-free call). For further
information regarding the income tax treatment of the 2015 biodiesel and alternative fuel
incentives or Notice 2015-56, please contact Shareen Pflanz at (202) 317-7006.