Taxes
IRS Urges Clean Fuel Producers to Apply Now for Tax Credit
Fuel producers eligible to claim the Clean Fuel Production Credit starting Jan. 1 should apply for registration ASAP, the IRS said.
Jun. 05, 2024
Fuel producers that are eligible to claim the Clean Fuel Production Credit starting next year should apply for registration as soon as possible, the IRS said on May 31.
“A taxpayer must have a signed registration letter from the Internal Revenue Service dated on or before January 1, 2025, for the taxpayer to be eligible to claim the § 45Z credit for production starting January 1, 2025,” the IRS said in Notice 2024-49, which was released last Friday. “Thus, taxpayers should apply for registration as soon as possible to give the IRS sufficient time to process registration applications.”
The Section 45Z tax credit under the Inflation Reduction Act is available for clean fuel produced by a taxpayer at a qualified facility from 2025 through 2027.
For purposes of the Clean Fuel Production Credit, transportation fuel is divided into two broad categories of fuel: sustainable aviation fuel (SAF) and non-SAF transportation fuel.
The credit is equal to the product of the applicable amount per gallon (or gallon equivalent) for any transportation fuel that is produced by the taxpayer at a qualified facility during the taxable year and the emissions factor for such fuel as determined under the tax code, according to the IRS.
Notice 2024-49 provides guidance for registering for both SAF and non-SAF production, as well as background on the Section 45Z tax credit.