Effective for tax years beginning on or after January 1,
2006, a retail dealer of biodiesel blended fuel may claim a biodiesel blended
fuel tax credit. "Biodiesel blended fuel" means a blend of biodiesel with
petroleum-based diesel fuel that meets the standards provided in Iowa Code
section 214A.2. In determining the
minimum percentage by volume of biodiesel, the department will take into
account reasonable variances due to testing and other limitations. For purposes
of this rule, tank wagon sales are considered retail sales. The credit is
calculated on Form IA 8864.
(1)
Calculating the credit.
a.
Gallonage requirement.
(1)
Tax years beginning on or after January 1, 2006, but prior to January 1, 2009.
In order for a retail dealer to qualify for the biodiesel blended fuel tax
credit for tax years beginning on or after January 1, 2006, but prior to
January 1, 2009, of the total gallons of diesel fuel that the retail dealer
sells and dispenses during the tax year, 50 percent or more of those gallons
must be biodiesel blended fuel formulated with a minimum percentage of 2
percent by volume of biodiesel. The gallonage amounts for all motor fuel sites
of a retail dealer are combined when calculating this gallonage
requirement.
(2) Tax years
beginning on or after January 1, 2009, but prior to January 1, 2012. For tax
years beginning on or after January 1, 2009, but prior to January 1, 2012, the
biodiesel blended fuel tax credit is calculated separately for each retail
motor fuel site for which 50 percent or more of the total gallons of diesel
fuel sold at the motor fuel site was biodiesel blended fuel formulated with a
minimum percentage of 2 percent by volume of biodiesel.
(3) Tax years beginning on or after January
1, 2012. For tax years beginning on or after January 1, 2012, the requirement
that 50 percent of all diesel fuel gallons sold be biodiesel gallons to be
eligible for the tax credit is eliminated. A retail dealer may qualify for the
biodiesel blended fuel tax credit even if the number of gallons of biodiesel
blended fuel sold is less than 50 percent of the total gallons of diesel fuel
sold.
b.
Amount
of credit.
(1) Fuel sold on or after
January 1, 2006, but prior to January 1, 2012. For biodiesel blended fuel sold
on or after January 1, 2006, but prior to January 1, 2012, the tax credit
equals three cents multiplied by the qualifying number of biodiesel blended
fuel gallons sold by the taxpayer during the tax year. Qualifying biodiesel
blended fuel must be formulated with a minimum percentage of 2 percent by
volume of biodiesel.
(2) Fuel sold
on or after January 1, 2012, but prior to January 1, 2013. For biodiesel
blended fuel sold on or after January 1, 2012, but prior to January 1, 2013,
the tax credit equals the sum of two cents multiplied by the qualifying number
of biodiesel blended fuel gallons sold by the taxpayer during the tax year that
have a minimum percentage of 2 percent by volume of biodiesel but less than 5
percent by volume of biodiesel plus four and one-half cents multiplied by the
qualifying number of biodiesel blended fuel gallons sold by the taxpayer during
the tax year that have a minimum percentage of 5 percent by volume of
biodiesel. In addition, the gallonage requirements described in paragraph
304.34(1)"a" do not apply to fuel sold on or after January 1,
2012.
(3) Fuel sold on or after
January 1, 2013, but prior to January 1, 2018. For biodiesel blended fuel sold
on or after January 1, 2013, but prior to January 1, 2018, the tax credit
equals four and one-half cents multiplied by the qualifying number of biodiesel
blended fuel gallons sold by the taxpayer during the tax year that have a
minimum percentage of 5 percent by volume of biodiesel. Diesel fuel sold that
contains less than 5 percent by volume of biodiesel does not qualify for the
biodiesel blended fuel tax credit.
(4) Fuel sold on or after January 1, 2018,
but prior to January 1, 2025.
1. Amount of
credit. For biodiesel blended fuel sold on or after January 1, 2018, but prior
to January 1, 2025, the tax credit equals the sum of three and one-half cents
multiplied by the qualifying number of biodiesel blended fuel gallons sold by
the taxpayer during the tax year that have a minimum percentage of 5 percent by
volume of biodiesel but less than 11 percent by volume of biodiesel plus five
and one-half cents multiplied by the qualifying number of biodiesel blended
fuel gallons sold by the taxpayer during the tax year that have a minimum
percentage of 11 percent by volume of biodiesel. Diesel fuel sold that contains
less than 5 percent by volume of biodiesel does not qualify for the biodiesel
blended fuel tax credit.
2.
Blending errors. Where a blending error occurs and an insufficient amount of
biodiesel has inadvertently been blended with petroleum-based diesel fuel so
that the mixture fails to contain 11 percent by volume of biodiesel, a 1
percent tolerance applies in determining the credit amount for the blended
product as described in 304.34(1)
"b"(4)"2":
* If the amount of the biodiesel erroneously blended with
petroleum-based diesel is at least 10 percent of the total blended product by
volume, the entire blended product qualifies for the credit amount available
for biodiesel blended fuel that has a minimum percentage of 11 percent by
volume of biodiesel.
* If the amount of biodiesel blended with petroleum-based
diesel is at least 5 percent but less than 10 percent of the total blended
product by volume, the entire blended product qualifies for the credit amount
available for biodiesel blended fuel that has a minimum percentage of 5 percent
by volume of biodiesel but less than 11 percent by volume of biodiesel.
* Numbered paragraph 304.34(1)"b"(4)"2"
applies only if a retail dealer intends to sell and dispense biodiesel blended
fuel that has a minimum percentage of 11 percent by volume of biodiesel. If a
retail dealer does not intend to sell and dispense biodiesel blended fuel that
has a minimum percentage of 11 percent by volume of biodiesel and the product
sold and dispensed contains less than 11 percent biodiesel by volume, no error
has occurred and the product does not qualify for the credit amount available
for biodiesel blended fuel that has a minimum percentage of 11 percent by
volume of biodiesel.
c.
Refundability. Any credit
in excess of the taxpayer's tax liability is refundable. In lieu of claiming
the refund, the taxpayer may elect to have the overpayment credited to the tax
liability for the following tax year.
d.
Transferability. The
credit may not be transferred to any other person.
e.
Examples.
EXAMPLE 1: A taxpayer operated four retail motor fuel sites
during 2008 and sold a combined total at all four sites of 100,000 gallons of
diesel fuel, of which 55,000 gallons was biodiesel blended fuel containing a
minimum percentage of 2 percent by volume of biodiesel. Because 50 percent or
more of the diesel fuel sold was biodiesel blended fuel, the taxpayer may claim
the biodiesel blended fuel tax credit totaling $1,650, which is 55,000 gallons
multiplied by three cents.
EXAMPLE 2: A taxpayer operated two retail motor fuel sites
during 2008, and each site sold 40,000 gallons of diesel fuel. One site sold
25,000 gallons of biodiesel blended fuel containing a minimum percentage of 2
percent by volume of biodiesel, and the other site sold 10,000 gallons of
biodiesel blended fuel containing a minimum percentage of 2 percent by volume
of biodiesel. The taxpayer would not be eligible for the biodiesel blended fuel
tax credit because only 35,000 gallons of the total 80,000 gallons, or 43.75
percent of the total diesel fuel gallons sold, was biodiesel blended fuel. The
50 percent requirement is based on the aggregate number of diesel fuel gallons
sold by the taxpayer, and the fact that one retail motor fuel site met the 50
percent requirement does not allow the taxpayer to claim the biodiesel blended
fuel tax credit for the 2008 tax year.
EXAMPLE 3: Same facts as in example 2, except the fuel sales
occurred in 2009. The taxpayer can claim a biodiesel blended fuel tax credit
totaling $750, which is 25,000 gallons multiplied by three cents, since one of
the retail motor fuel sites met the 50 percent biodiesel blended fuel
requirement.
EXAMPLE 4: Same facts as in example 2, except the fuel sales
occurred in 2016, and all biodiesel blended fuel sold contains a minimum
percentage of 5 percent by volume of biodiesel. The taxpayer can claim a
biodiesel blended fuel tax credit totaling $1,575, which is 35,000 gallons
multiplied by four and one-half cents, since the 50 percent biodiesel blended
fuel requirement has been eliminated.
(2)
Fiscal year filers.
Taxpayers whose tax year is not on a calendar-year basis and whose tax year
ends before December 31, 2006, may compute the tax credit on the gallons of
biodiesel blended fuel sold during the period from January 1, 2006, through the
end of the tax year, provided that 50 percent of all diesel fuel sold during
that period was biodiesel blended fuel. Because the tax credit is repealed on
January 1, 2025, a taxpayer whose tax year ends prior to December 31, 2024, may
continue to claim the tax credit in the following tax year for any biodiesel
blended fuel sold through December 31, 2024.
See 701-subrule 501.31(2) for examples illustrating how this
subrule is applied.
