The IRS issued Notice 2015-3, outlining procedures for claiming the various alternative fuel and biodiesel tax credits that were reinstated retroactively for 2014. Taxpayers who claim those credits on an income tax return will use the normal procedures, while taxpayers who claim the credits on a quarterly return will generally be able to file for their entire 2014 credit amount on a single quarterly return.
The alternative fuel, alternative fuel mixture, biodiesel and biodiesel mixture credits all originally expired at the end of 2013, but were extended retroactively for 2014 in December when the Tax Increase Prevention Act of 2014 was enacted.
Generally, taxpayers who pay fuel tax must first use these credits to offset tax by claiming them on Form 720, “Quarterly Federal Excise Tax Return,” but the credits for biodiesel, biodiesel mixtures and alternative fuel are refundable. Any refundable amount can be claimed either quarterly as a payment by filing Form 8849, “Claim for Refund of Excise Taxes,” or as a tax credit on the annual income tax return by filing Form 8864, “Biodiesel and Renewable Diesel Fuels Credit” or Form 4136, “Credit for Federal Tax Paid on Fuels” (for alternative fuel and biodiesel mixtures).
Notice 2015-3 provides that taxpayers can claim their quarterly payments for these fuels by filing a single Form 8849 for all four quarters of 2014 by Aug. 8, 2015. Taxpayers who wish to file for refunds on their income tax return using Form 4136 or Form 8864 will use the normal procedures when they file their annual return.
The alternative fuel mixture credit is not refundable, so taxpayers must amend their Forms 720 with a Form 720X to use the credits to offset fuel tax liability. Form 720X allows taxpayers to amend multiple quarters on a single form.
The IRS will not process any protective or anticipatory claims for any of the credits, so taxpayers who have already filed must refile using the procedures under the notice.