I.R.C. § 40A(a) General Rule —
For purposes of section 38, the biodiesel fuels credit determined under this section for the taxable year
is an amount equal to the sum of—
I.R.C. § 40A(a)(1) —
the biodiesel mixture credit, plus
I.R.C. § 40A(a)(2) —
the biodiesel credit, plus
I.R.C. § 40A(a)(3) —
in the case of an eligible small agri-biodiesel producer, the small agri-biodiesel
producer credit.
I.R.C. § 40A(b) Definition Of Biodiesel Mixture Credit, Biodiesel Credit, And Small Agri-Biodiesel
Producer Credit —
For purposes of this section—
I.R.C. § 40A(b)(1) Biodiesel Mixture Credit
I.R.C. § 40A(b)(1)(A) In General —
The biodiesel mixture credit of any taxpayer for any taxable year is $1.00 for each
gallon of biodiesel used by the taxpayer in the production of a qualified biodiesel
mixture.
I.R.C. § 40A(b)(1)(B) Qualified Biodiesel Mixture- —
The term “qualified biodiesel mixture”
means a mixture of biodiesel and diesel fuel (as defined in section 4083(a)(3)), determined without regard to any use of kerosene, which—
I.R.C. § 40A(b)(1)(B)(i) —
is sold by the taxpayer producing such mixture to any person for use as a fuel,
or
I.R.C. § 40A(b)(1)(B)(ii) —
is used as a fuel by the taxpayer producing such mixture.
I.R.C. § 40A(b)(1)(C) Sale Or Use Must Be In Trade Or Business, Etc. —
Biodiesel used in the production of a qualified biodiesel mixture shall be taken
into account—
I.R.C. § 40A(b)(1)(C)(i) —
only if the sale or use described in subparagraph (B) is in a trade or business of the taxpayer, and
I.R.C. § 40A(b)(1)(C)(ii) —
for the taxable year in which such sale or use occurs.
I.R.C. § 40A(b)(1)(D) Casual Off-Farm Production Not Eligible —
No credit shall be allowed under this section with respect to any casual off-farm
production of a qualified biodiesel
mixture.
I.R.C. § 40A(b)(2) Biodiesel Credit
I.R.C. § 40A(b)(2)(A) In General —
The biodiesel credit of any taxpayer for any taxable year is $1.00 for each gallon
of biodiesel which is not in a mixture with diesel fuel and which during the taxable
year—
I.R.C. § 40A(b)(2)(A)(i) —
is used by the taxpayer as a fuel in a trade or business, or
I.R.C. § 40A(b)(2)(A)(ii) —
is sold by the taxpayer at retail to a person and placed in the fuel tank of such
person's vehicle.
I.R.C. § 40A(b)(2)(B) User Credit Not To Apply To Biodiesel Sold At Retail —
No credit shall be allowed under subparagraph (A)(i) with respect to any biodiesel which was sold in a retail sale described in subparagraph
(A)(ii).
I.R.C. § 40A(b)(3) Certification For Biodiesel —
No credit shall be allowed under paragraph (1) or (2) of subsection (a) unless the taxpayer obtains a certification (in such form and manner as prescribed
by the Secretary)
from the producer or importer of the biodiesel which identifies the product produced
and the percentage of biodiesel and agri-biodiesel in the product.
I.R.C. § 40A(b)(4) Small Agri-Biodiesel Producer Credit
I.R.C. § 40A(b)(4)(A) In General —
The small agri-biodiesel producer credit of any eligible
small agri-biodiesel producer for any taxable year is 10 cents for each gallon of
qualified agri-biodiesel production of such producer.
I.R.C. § 40A(b)(4)(B) Qualified Agri-Biodiesel Production —
For purposes of this paragraph, the term “qualified agri-biodiesel production”
means any agri-biodiesel which is produced by an eligible small agri-biodiesel producer,
and which during the taxable year—
I.R.C. § 40A(b)(4)(B)(i) —
is sold by such producer to another person—
I.R.C. § 40A(b)(4)(B)(i)(I) —
for use by such other person in the production of a qualified biodiesel mixture
in such other person's trade or business (other than casual off-farm production),
I.R.C. § 40A(b)(4)(B)(i)(II) —
for use by such other person as a fuel in a trade or business, or
I.R.C. § 40A(b)(4)(B)(i)(III) —
who sells such agri-biodiesel at retail to another person and places such agri-biodiesel
in the fuel tank of such other person, or
I.R.C. § 40A(b)(4)(B)(ii) —
is used or sold by such producer for any purpose described in clause (i).
I.R.C. § 40A(b)(4)(C) Limitation —
The qualified agri-biodiesel production of any producer for any taxable year shall
not exceed 15,000,000 gallons.
I.R.C. § 40A(c) Coordination With Credit Against Excise Tax —
The amount of the credit determined under this section with respect to any biodiesel
shall be properly reduced to take into account any benefit provided with respect
to such biodiesel solely by reason of the application of section 6426 or 6427(e).
I.R.C. § 40A(d) Definitions And Special Rules —
For purposes of this section—
I.R.C. § 40A(d)(1) Biodiesel —
The term “biodiesel” means the monoalkyl esters of long chain fatty acids derived
from plant or animal matter which meet—
I.R.C. § 40A(d)(1)(A) —
the registration requirements for fuels and fuel additives established by the Environmental
Protection Agency under section 211 of the Clean Air Act (42 U.S.C. 7545), and
I.R.C. § 40A(d)(1)(B) —
the requirements of the American Society of Testing and Materials D6751.
Such term shall not include any liquid with respect to which a credit may be determined
under section 40.
I.R.C. § 40A(d)(2) Agri-Biodiesel —
The term “agri-biodiesel”
means biodiesel derived solely from virgin oils, including esters derived from virgin
vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe,
rapeseeds, safflowers, flaxseeds, rice bran, mustard seeds, and camelina, and from
animal fats.
I.R.C. § 40A(d)(3) Mixture Or Biodiesel Not Used As A Fuel, Etc.
I.R.C. § 40A(d)(3)(A) Mixtures —
If—
I.R.C. § 40A(d)(3)(A)(i) —
any credit was determined under this section with respect to biodiesel used in the
production of any qualified biodiesel mixture, and
I.R.C. § 40A(d)(3)(A)(ii) —
any person—
I.R.C. § 40A(d)(3)(A)(ii)(I) —
separates the biodiesel from the mixture, or
I.R.C. § 40A(d)(3)(A)(ii)(II) —
without separation, uses the mixture other than as a fuel,
then there is hereby imposed on such person a tax equal to the product of the rate
applicable under subsection (b)(1)(A) and the number of gallons of such biodiesel in such mixture.
I.R.C. § 40A(d)(3)(B) Biodiesel —
If—
I.R.C. § 40A(d)(3)(B)(i) —
any credit was determined under this section with respect to the retail sale of
any biodiesel, and
I.R.C. § 40A(d)(3)(B)(ii) —
any person mixes such biodiesel or uses such biodiesel other than as a fuel,
then there is hereby imposed on such person a tax equal to the product of the rate
applicable under subsection (b)(2)(A) and the number of gallons of such biodiesel.
I.R.C. § 40A(d)(3)(C) Producer Credit —
If—
I.R.C. § 40A(d)(3)(C)(i) —
any credit was determined under subsection (a)(3), and
I.R.C. § 40A(d)(3)(C)(ii) —
any person does not use such fuel for a purpose described in subsection (b)(4)(B),
then there is hereby imposed on such person a tax equal to 10 cents a gallon for
each gallon of such agri-biodiesel.
I.R.C. § 40A(d)(3)(D) Applicable Laws —
All provisions of law, including penalties, shall, insofar as applicable and not
inconsistent with this section, apply in respect of any tax imposed under subparagraph
(A) or (B) as if such tax were imposed by section 4081
and not by this chapter.
I.R.C. § 40A(d)(4) Pass-Thru In The Case Of Estates And Trusts —
Under regulations prescribed by the Secretary, rules similar to the rules of subsection
(d) of section 52 shall apply.
I.R.C. § 40A(d)(5) Limitation To Biodiesel With Connection To The United States —
No credit shall be determined under this section with respect to any biodiesel which
is produced outside the United States for use as a fuel outside the United States.
For purposes of this paragraph, the term “United States” includes any possession of
the United States.
I.R.C. § 40A(e) Definitions And Special Rules For Small Agri-Biodiesel Producer Credit —
For purposes of this section—
I.R.C. § 40A(e)(1) Eligible Small Agri-Biodiesel Producer —
The term “eligible small agri-biodiesel producer”
means a person who, at all times during the taxable year, has a productive capacity
for agri-biodiesel not in excess of 60,000,000
gallons.
I.R.C. § 40A(e)(2) Aggregation Rule —
For purposes of the 15,000,000 gallon limitation under subsection (b)(4)(C) and the 60,000,000 gallon limitation under paragraph (1), all members of the same controlled group of corporations (within the meaning of
section 267(f))
and all persons under common control (within the meaning of section
52(b) but determined by treating an interest of more than 50 percent as a controlling
interest) shall be treated as 1 person.
I.R.C. § 40A(e)(3) Partnership, S Corporation, And Other Pass-Thru Entities —
In the case of a partnership,
trust, S corporation, or other pass-thru entity, the limitations contained in subsection
(b)(4)(C) and paragraph (1) shall be applied at the entity level and at the partner or similar level.
I.R.C. § 40A(e)(4) Allocation —
For purposes of this subsection, in the case of a facility in which more than 1
person has an interest, productive capacity shall be allocated among such persons
in such manner as the Secretary may prescribe.
I.R.C. § 40A(e)(5) Regulations —
The Secretary may prescribe such regulations as may be necessary—
I.R.C. § 40A(e)(5)(A) —
to prevent the credit provided for in subsection (a)(3) from directly or indirectly benefiting any person with a direct or indirect productive
capacity of more than 60,000,000 gallons of agri-biodiesel during the taxable year,
or
I.R.C. § 40A(e)(5)(B) —
to prevent any person from directly or indirectly benefiting with respect to more
than 15,000,000 gallons during the taxable year.
I.R.C. § 40A(e)(6) Allocation Of Small Agri-Biodiesel Credit To Patrons Of Cooperative
I.R.C. § 40A(e)(6)(A) Election To Allocate
I.R.C. § 40A(e)(6)(A)(i) In General —
In the case of a cooperative organization described in section 1381(a),
any portion of the credit determined under subsection (a)(3) for the taxable year may, at the election of the organization, be apportioned pro
rata among patrons of the organization on the basis of the quantity or
value of business done with or for such patrons for the taxable year.
I.R.C. § 40A(e)(6)(A)(ii) Form And Effect Of Election —
An election under clause (i) for any taxable year shall be made on a timely filed return for such year. Such
election, once made, shall be irrevocable for such taxable year. Such election shall
not take effect unless the organization designates the apportionment as such in
a written notice mailed to its patrons during the payment period described in section
1382(d).
I.R.C. § 40A(e)(6)(B) Treatment Of Organizations And Patrons
I.R.C. § 40A(e)(6)(B)(i) Organizations —
The amount of the credit not apportioned to patrons
pursuant to subparagraph (A) shall be included in the amount determined under subsection (a)(3) for the taxable year of the organization.
I.R.C. § 40A(e)(6)(B)(ii) Patrons —
The amount of the credit apportioned to patrons pursuant to subparagraph (A) shall be included in the amount determined under such subsection for the first
taxable year of each patron ending on or after the last day of the payment period
(as defined in section 1382(d)) for the taxable year
of the organization or, if earlier, for the taxable year of each patron ending on
or after the date on which the patron receives notice from the cooperative of the
apportionment.
I.R.C. § 40A(e)(6)(B)(iii) Special Rules For Decrease In Credits For Taxable Year —
If the amount of the credit of the organization determined under such subsection
for a taxable year is less than the amount of such credit shown on the return of
the organization for such year, an amount equal to the excess of—
I.R.C. § 40A(e)(6)(B)(iii)(I) —
such reduction, over
I.R.C. § 40A(e)(6)(B)(iii)(II) —
the amount not apportioned to such patrons under subparagraph (A) for the taxable year,
shall be treated as an increase in tax imposed by this chapter on the organization.
Such increase shall not be treated as tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter or for purposes of section
55.
I.R.C. § 40A(f) Renewable Diesel —
For purposes of this title—
I.R.C. § 40A(f)(1) Treatment In The Same Manner As Biodiesel —
Except as provided in paragraph (2), renewable diesel shall be treated in the same manner as biodiesel.
I.R.C. § 40A(f)(3) Renewable Diesel Defined —
The term “renewable diesel”
means liquid fuel derived from biomass which meets—
I.R.C. § 40A(f)(3)(A) —
the registration requirements for fuels and fuel additives established by the Environmental
Protection Agency under section 211 of the Clean Air Act (42 U.S.C. 7545), and
I.R.C. § 40A(f)(3)(B) —
the requirements of the American Society of Testing and Materials D975 or D396,
or other equivalent standard approved by the Secretary.
Such term shall not include any liquid with respect to which a credit may be determined
under section 40. Such term does not include any fuel derived from coprocessing biomass with a feedstock
which is not biomass. For purposes of this paragraph, the term “biomass”
has the meaning given such term by section 45K(c)(3).
I.R.C. § 40A(f)(4) Certain Aviation Fuel
I.R.C. § 40A(f)(4)(A) In General —
Except as provided in the last 3 sentences of paragraph (3), the term “renewable diesel” shall include fuel derived from biomass which meets
the requirements of a Department of Defense specification for military jet fuel or
an American Society of Testing and Materials specification for aviation turbine fuel.
I.R.C. § 40A(f)(4)(B) Application Of Mixture Credits —
In the case of fuel which is treated as renewable diesel solely by reason of subparagraph
(A), subsection (b)(1) and section 6426(c) shall be applied with respect to such fuel by treating kerosene as though it were
diesel fuel.
I.R.C. § 40A(g) Termination —
This section shall not apply to any sale or use after December 31, 2022.
(Added by Pub. L. 108-357, title III, Sec. 302(a), Oct. 22, 2004, 118 Stat. 1418; amended by Pub. L. 109-58, title XIII, Sec.
1344(a), 1345, 1346(a), Aug. 8, 2005, 119 Stat. 594; Pub. L. 109-135, title IV, Sec. 412(h), Dec. 21, 2005, 119 Stat. 2577; Pub. L. 110-246, title XV, Sec. 15321(f), June 18, 2008, 122 Stat. 1651; Pub. L. 110-343, div. B, title II, Sec. 202, 203, Oct. 3, 2008, 122 Stat. 3765; Pub. L. 111-312, Sec. 701(a), Dec. 17, 2010; Pub. L. 112-240, title IV, Sec. 405, Jan. 2, 2013, 126 Stat. 2313; Pub. L. 113-295, Div. A, title I, Sec. 153(a), Dec. 19, 2014, 128 Stat. 4010;Pub. L. 114-113, Div. Q, title I, Sec. 185(a), Dec. 18, 2015, 129 Stat. 2252; Pub. L. 115-123, Div. D, title I, Sec. 40407(a), Feb. 9, 2018, 132 Stat. 64; Pub. L. 116-94, Div. Q, title I, Sec. 121(a), Dec. 20, 2019.)
BACKGROUND NOTES
AMENDMENTS
2019 -
Subsec. (g). Pub. L. 116-94, Div. Q, Sec. 121(a), amended subsec. (g) by substituting “December 31, 2022” for
“December 31, 2017”.
2018 -
Subsec. (g). Pub. L. 115-123, Sec. 40407(a), amended subsec. (g) by substituting “December 31, 2017” for “December
31, 2016”.
2015 - Subsec. (g). Pub. L. 114-113, Div. Q, Sec. 185(a), amended subsec. (g) by substituting “December 31, 2016” for
“December 31, 2014”.
2014 - Subsec. (g). Pub. L. 113-295, Div. A, Sec. 153(a), amended subsec.
(g) by substituting “December 31, 2014” for “December 31, 2013”.
2013 - Subsec. (g). Pub. L. 112-240, Sec. 405(a), amended subsec. (g) by substituting “December 31, 2013”
for “December 31, 2011”.
2010 - Subsec. (g). Pub. L. 111-312, Sec. 701(a), amended subsec. (g) by substituting “December 31, 2011”
for “December 31, 2009”.
2008 - Subsec. (b)(1)(A). Pub. L. 110-343, Div. B, Sec. 202(b)(1), amended subpar. (A) by substituting “$1.00” for “50 cents”.
Subsec. (b)(2)(A). Pub. L. 110-343, Div. B, Sec. 202(b)(1), amended subpar.
(A) by substituting “$1.00” for “50 cents”.
Subsec. (b)(3)-(5). Pub. L. 110-343, Div. B, Sec. 202(b)(3)(A), amended subsec.
(b) by striking par. (3) and by redesignating par. (4)-(5) as par.
(3)-(4). Before being struck, par. (3) read as follows:
“(3) Credit For Agri-Biodiesel- In the case of any biodiesel which is agri-biodiesel,
paragraphs (1)(A) and (2)(A)
shall be applied by substituting ‘$1.00’ for ‘50 cents’.”
Subsec. (d)(2). Pub. L. 110-343, Div. B, Sec. 202(f), amended par. (2)
by substituting “mustard seeds, and camelina” for “and mustard seeds”.
Subsec. (d)(3)(C)(ii). Pub. L. 110-343, Div. B, Sec. 202(b)(3)(D), amended clause (ii) by substituting “subsection (b)(4)(B)”
for “subsection (b)(5)(B)”.
Subsec. (d)(5). Pub. L. 110-343, Div. B, Sec. 203(b), amended subsec.
(d) by adding par. (5).
Subsec. (e)(2). Pub. L. 110-343, Div. B, Sec. 202(b)(3)(C), amended par.
(2) by substituting “subsection (b)(4)(C)” for “subsection
(b)(5)(C)”.
Subsec. (e)(3). Pub. L. 110-343, Div. B, Sec. 202(b)(3)(C), amended par.
(3) by substituting “subsection (b)(4)(C)” for “subsection
(b)(5)(C)”.
Subsec. (f)(2). Pub. L. 110-343, Div. B, Sec. 202(b)(3)(B), amended par.
(2). Before amendment, it read as follows:
“(2) Exceptions-
“(A) Rate Of Credit- Subsections (b)(1)(A)
and (b)(2)(A) shall be applied with respect to renewable diesel by substituting “$1.00”
for “50 cents”.
“(B) Nonapplication Of Certain Credits- Subsections
(b)(3) and (b)(5) shall not apply with respect to renewable diesel.”
Subsec. (f)(3). Pub. L. 110-343, Div. B, Sec. 202(c), amended par. (3)
by substituting “liquid fuel” for “diesel fuel”, by striking “using a thermal depolymerization
process”, and by inserting “, or other equivalent standard approved by the Secretary”
after D396”.
Subsec. (f)(3). Pub. L. 110-343, Div. B, Sec. 202(d)(1), amended par.
(3) by adding the last two sentences to the end.
Subsec. (f)(3). Pub. L. 110-343, Div. B, Sec. 202(d)(2), amended par.
(3) by striking “(as defined in section 45K(c)(3))”.
Subsec. (f)(4). Pub. L. 110-343, Div. B, Sec. 202(e), amended subsec.
(f) by adding par. (4).
Subsec. (g). Pub. L. 110-343, Div. B, Sec. 202(a), amended subsec.
(g) by substituting “December 31, 2009” for “December 31, 2008”.
Subsec. (d)(1). Pub. L. 110-246, Sec. 15321(f)(1), amended par. (1) by adding the flush sentence at the end.
Subsec. (f)(3). Pub. L. 110-246, Sec. 15321(f)(2), amended par. (3) by adding the flush sentence at the end.
2005 - Subsec. (b)(5)(B). Pub. L. 109-135, Sec. 412(h), amended subpar. (B) by striking “(determined without regard to the last sentence
of subsection (d)(2))” after “means agri-biodiedel”.
Sec. 40A. Pub. L. 109-58, Sec. 1346(b)(1), amended the heading for Sec. 40A by inserting “and Renewable Diesel” after “Bio-diesel”.
Subsec. (a). Pub. L. 109-58, Sec. 1345(a), amended subsec. (a). Before amendment, it read as follows:
“(a) GENERAL RULE-
“For purposes of section 38, the biodiesel fuels credit determined under this section
for the taxable year is an amount equal to the sum of--
“(1) the biodiesel mixture credit, plus
“(2) the biodiesel credit.”
Subsec. (b). Pub. L. 109-58, Sec. 1345(d)(2), amended the heading for subsec. (b) by substituting “, Biodiesel Credit, and Small
Agri-biodiesel Producer Credit” for “and Biodiesel Credit”.
Subsec. (b)(4). Pub. L. 109-58, Sec. 1345(d)(1), amended par. (4) by substituting “paragraph (1) or (2) of subsection
(a)” for “this section”.
Subsec. (b)(5). Pub. L. 109-58, Sec. 1345(b), added par. (5).
Subsec. (d)(3)(C). Pub. L. 109-58, Sec. 1345(d)(3), amended par. (3) by redesignating subpar. (C) as subpar. (D) and added a subpar.
(C).
Subsec. (e). Pub. L. 109-58, Sec. 1344(a), amended subsec. (e) by substituting
“2008” for “2006”.
Subsec. (e). Pub. L. 109-58, Sec. 1345(c), redesignated subsec. (e)
as subsec. (f) and added a subsec. (e).
Subsec. (f). Pub. L. 109-58, Sec. 1346(a), redesignated subsec. (f)
as subsec. (g) and added a subsec. (f).
EFFECTIVE DATE OF 2019 AMENDMENTS
Amendment by Pub. L. 116-94, Div. Q, Sec. 121(a), applicable to fuel sold or used after December 31, 2017.
EFFECTIVE DATE OF 2018 AMENDMENT
Amendment by Pub. L. 115-123, Sec. 40407(a), effective for fuel sold or used after December 31, 2016.
EFFECTIVE DATE OF 2015 AMENDMENT
Amendment by Pub. L. 114-113, Div. Q, Sec. 185(a), effective for fuel sold or used after December 31, 2014.
EFFECTIVE DATE OF 2014 AMENDMENT
Amendment by Pub. L. 113-295, Div. A, Sec. 153(a), effective for fuel sold or used after December 31, 2013.
EFFECTIVE DATE OF 2013 AMENDMENT
Amendment by Sec. 701(a) of Pub. L. 111-312 effective for fuel sold or used after December 31, 2011.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Sec. 701(a) of Pub. L. 111-312 effective for fuel sold or used after December 31, 2009.
EFFECTIVE DATE OF 2008 AMENDMENTS
Amendments by Div. B, Sec. 202(a)-(c), (e), (f), of Pub. L. 110-343 effective for fuel produced, and sold or used after December 31, 2008.
Amendments by Div. B, Sec. 202(d) of Pub. L. 110-343 effective for fuel produced, and sold or used after the date of the enactment of
this Act [Enacted: Oct. 3, 2008].
Amendment by Div. B, Sec. 203(b) of Pub. L. 110-343 effective for claims for credit or payment made on or after May 15, 2008.
Amendment by Sec. 15321(f) of Pub. L. 110-246 effective for fuel produced after December 31, 2008.
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendment by Sec. 412(h) of Pub. L. 109-135 effective on the date of the enactment of this Act [Enacted: Dec. 21, 2005].
Amendment by Sec. 1344 of Pub. L. 109-58 effective on the date of the enactment of this Act [Enacted: Aug. 8, 2005].
Amendments by Sec. 1345 of Pub. L. 109-58 effective for taxable years ending after the date of the enactment of this Act [Enacted:
Aug. 8, 2005].
Amendments by Sec. 1346 of Pub. L. 109-58 effective with respect to fuel sold or used after December 31, 2005.
EFFECTIVE DATE
Effective for fuel produced, and sold or used, after December 31, 2004, in taxable
years ending after such date.
