A producer of a biodiesel mixture can make a claim for the biodiesel (defined earlier) used to produce a biodiesel mixture. Special rules determine the order in which the claim can be made. A mixture for this purpose is a mixture of biodiesel with diesel fuel without regard to kerosene that is at least 0.1% (by volume) of diesel fuel.
You can make a claim only for a mixture you produce and sell or use. You must sell the mixture to any person for use as a fuel, or use it as a fuel in your trade or business. The credit is allowed for each gallon of biodiesel you used to produce a mixture only if the sale or use is in your trade or business. The biodiesel used to produce the biodiesel mixture must meet ASTM D6751 and meet the registration requirements for fuels and fuel additives established by the EPA under section 211 of the Clean Air Act. Biodiesel produced, sold, or used after April 1, 2009, must meet the revised requirements of ASTM D6751. See Notice 2008-110 for details.taxmap/pubs/p510-023.htm#en_us_publink1000117032
You must obtain and keep as part of your records a certification to you from the producer of the biodiesel. The certificate is required for any biodiesel fuel credit claimed. The certificate must identify the product produced and the percentage of biodiesel and agri-biodiesel in the product. If the producer of the biodiesel is also the taxpayer claiming the biodiesel credit, the certificate is required but lines 2–7 are not needed. See Model Certificate O in the Appendix.
The Certificate for Biodiesel and, if applicable, Statement of Biodiesel Reseller must be attached to the first claim filed supported by the certificate or statement. See Model Certificate O
and Model Statement S
in the Appendix
. If the certificate and statement are not attached to Form 720 because they are attached to a previously filed claim on Schedule 3 (Form 8849) for the biodiesel, attach a separate sheet with the following information:
- Certificate identification number.
- Total gallons of biodiesel on certificate.
- Total gallons claimed on Schedule 3 (Form 8849).
- Total gallons claimed on Schedule C (Form 720).
Persons who blend biodiesel with undyed diesel fuel to produce a blended taxable fuel outside the bulk transfer/terminal system must pay the tax on the volume of taxmap/pubs/p510-023.htm#en_us_publink1000118009
biodiesel in the mixture when the mixture is sold or removed. Persons who blend biodiesel with dyed diesel fuel must meet the applicable dye requirements or pay the tax. See Form 720 to report this tax. You must be registered by the IRS as a blender. See Form 637.
The biodiesel mixture credit may not be claimed for biodiesel produced outside the United States for use as a fuel outside the United States. The United States includes any possession of the United States.taxmap/pubs/p510-023.htm#en_us_publink1000117034
Any biodiesel mixture credit must first be taken on Schedule C to reduce your taxable fuel liability for gasoline, diesel fuel, and kerosene reported on Form 720. Any excess credit may be taken on Schedule C (Form 720), Schedule 3 (Form 8849), Form 4136, or Form 8864. See Notices 2005-4 and 2005-62 for more information.taxmap/pubs/p510-023.htm#en_us_publink1000117035
If the credit is applied to biodiesel used in the production of a mixture and you later separate the biodiesel from the mixture or do not use the mixture as fuel, you must pay a tax equal to the credit. Report this tax on Form 720.