Alternative Fuel Credits(p23)

The registered alternative fueler (unmixed fuel) is the person eligible to make the claim. An alternative fueler (unmixed fuel) is that person that is liable for tax on alternative fuel under the rules for taxable events for Other Fuels (discussed in chapter 1) or would be liable but for an exemption for nontaxable uses. For example, you are an alternative fueler (unmixed fuel) if you buy liquefied petroleum gas in general purpose portable containers and use it as a fuel in a forklift truck. An alternative fueler also includes a person who sells for use or uses an alternative fuel in aviation.

In the case of nonliquid fuel, the credit is based on the gasoline gallon equivalent of the fuel as shown on the claim form.

If you used an alternative fuel to produce an alternative fuel mixture for sale or use in your trade or business, you may be eligible for a credit or refund. An alternative fuel mixture is a mixture of alternative fuel and taxable fuel (gasoline, diesel fuel, or kerosene). You must sell the mixture to any person for use as a fuel or use the mixture as a fuel.

For purposes of the alternative fuel credit or alternative fuel mixture credit, alternative fuel means:

• Liquefied petroleum gas,
• Compressed natural gas,
• Liquefied natural gas,
• Liquefied hydrogen,
• Liquid fuel derived from coal (including peat) through the Fischer-Tropsch process (see Carbon capture requirement, later),
• Liquid fuel derived from biomass (as defined in Internal Revenue Code section 45K(c)(3)),
• P Series Fuels (as defined under section 13211(2) of title 42 (United States Code),
• Liquefied gas derived from biomass (as defined in Internal Revenue Code section 45K(c)(3)), and
• Compressed gas derived from biomass (as defined in Internal Revenue Code section 45K(c)(3)).

Alternative fuel does not include ethanol, methanol, biodiesel, or renewable diesel.

You must be registered by the IRS in order to take the alternative fuel credit or alternative fuel mixture credit. See Registration Requirements in chapter 1.

A credit for liquid fuel derived from coal (including peat) through the Fischer-Tropsch process can be claimed only if the fuel is derived from coal produced at a gasification facility which separates and sequesters the following percentage of the facility's total carbon dioxide emissions.

• 50% for fuel produced after September 30, 2009, and before December 31, 2009.
• 75% for fuel produced after December 30, 2009.

The alternative fuel credits may not be claimed for alternative fuel that is produced outside the United States for use as a fuel outside the United States. The United States includes any possession of the United States.

Credits for alternative fuels and alternative fuel mixtures for any fuel derived from the production of paper or pulp are not available for fuel sold or used on or after December 31, 2009.

Any alternative fuel credit must first be taken on Schedule C to reduce your liability for alternative fuel and CNG reported on Form 720. Any alternative fuel 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 alternative fuel credit and alternative fuel mixture credit can be claimed on Schedule C (Form 720), Schedule 3 (Form 8849), or Form 4136.