IRS Issues Guidance on Fuel tax Credits

The federal Internal Revenue Service has issued guidance on how taxpayers that retroactively claimed the 50-cent-a-gallon fuel tax credit for using alternative fuels (including propane used in forklifts) in 2014 should adjust their income tax returns to take account of the increased credits.  Late last year, Congress retroactively extended through 2014 a number of tax provisions that had expired after 2013.  Among these were fuel tax credits for biodiesel blenders and certain sellers and users of alternative fuels.  We are aware that a number of motor carriers take advantage of the latter credit for their use of propane in their forklifts.  The extension of the credits through 2014 allowed these taxpayers to offset the fuel tax they may have owed when they filed their quarterly excise tax returns during calendar 2014.  IRS issued guidance on that process earlier this year.  Through those offsets, however, the credits served to lower the deductions those same taxpayers took on their income taxes, and so raised those taxes, which also now require adjusting.  In its most recent guidance, IRS says that for purposes of the income tax adjustments, a taxpayer should be careful to match the fuel used, the credits taken for that use, and the adjustments to income tax, quarter by quarter.  IRS Notice 2015-56, available here:  http://www.irs.gov/pub/irs-drop/n-15-56.pdf  Congress only extended the credits we’re talking about here through the end of last year.  It’s anticipated that Congress will probably extend them yet again late this year or early next, but that’s not certain.

Provided by Bob Pitcher, American Trucking Associations