Summary of NC Tax Credits for Biofuels

The following is a list of NC legislation that is currently in effect.  There are others pending, of course, but these are what have been passed.

Alt Fuel Infrastructure Tax Credit

A tax credit is available for facilities that dispense biodiesel and ethanol/gasoline mixtures consisting of at least 70% ethanol.  The credit is equal to 15% the taxpayer’s cost to construct and install the dispensing facility, including pumps, storage tanks, and related equipment, that is directly and exclusively used for dispensing or storing the fuel. Equipment for storing and dispensing must clearly be identified as being associated with renewable fuel.  The credit must be taken in three equal annual installments beginning with the taxable year in which the facility is placed in service.  Facilities must be placed in service before January 1, 2011.
Public Law:  NC Gen. Statute 105-129.16D

Renewable Energy Property Tax Credit

Taxpayers who construct, purchase, or lease renewable energy property are eligible for a tax credit equal to 35% of the cost of the property. Renewable energy property includes: equipment that uses renewable biomass resources to produce ethanol, methanol, biodiesel, or methane produced via anaerobic biogas utilizing agricultural and animal waste or garbage; and related devices for converting, conditioning, and storing the liquid fuels and gas produced with biomass equipment.
A ceiling of $2.5 MM per installation applies to renewable energy property placed in service for any purpose other than residential and must be taken in five equal installments beginning with the taxable year in which the property is placed in service. Property must be placed in service before January 1, 2011.

Public Law:  NC Gen. Statute 105-129.16A

Biodiesel Production Facilities Tax Credit

A taxpayer that constructs and places in service a commercial facility for processing renewable fuel is allowed a credit equal to twenty-five percent (25%) of the cost to the taxpayer of constructing and equipping the facility.  Biodiesel is included in the definition of renewable fuel.  The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service.  A taxpayer that constructs and places in service in North Carolina three or more commercial facilities for processing renewable fuel and invests a total amount of at least $400,000,000 in the facilities is allowed a credit equal to 35% of the cost to the taxpayer of constructing and equipping the facilities. Facilities must be placed in service before January 1, 2011.

Public Law:  NC Gen. Statute 105-129.16D

 

Alt Fuel Tax Exemption from Sales & Use Tax

 

The retail sale, use, storage or consumption of alternative fuels is exempt from the state’s sales and use tax. Sales and use tax is applied to conventional off road fuel sales and is 7% of the sales price. For example if the price of B100 is $3.00 per gallon, the sales tax exemption would be a savings of .042 cents per gallon on a B20 blend. This incentive includes biodiesel blended with fuel oil for heating applications.  Biofuels distributors must first register with the NC Department of Revenue as an Alcohol Fuel and Biodiesel Provider (Form GAS 1264) and post a minimum of a $2,000 bond. The amount of the bond is in proportion to on road fuel sales. Fuel sales are reported on Form E500.  Biodiesel may be splashed blended up to a B20 blend with mechanically dyed off road diesel (as per IRS Transitional Rules).   To register as a fuel provider, call the North Carolina Motor Fuels and Tax Office for more information: 877- 308- 9092 or 919-733-3409.

NC Gen. Statute 105-164.13 (11)

 Biodiesel Provider Credit

This law provides for a biodiesel provider credit equal to the per gallon excise tax the producer paid on the biodiesel. Only a biodiesel provider that produces at least 100,000 gallons of biodiesel during the taxable year is allowed a credit. The credit does not apply to tax paid on diesel fuel included in a biodiesel blend. The credit may not exceed five hundred thousand dollars ($500,000).   To obtain the credit the biodiesel would have to be sold to a user with a NC destination which would carry the tax. The undyed biodiesel would be taxed at 29.9 + .25 = 30.15 (road and inspection taxes). The dyed biodiesel would be taxed at .25 (inspection tax). Any fuel sold to exempt entities would be taxed at .25 (inspection tax). The biodiesel provider must be registered with the Department and file a return displaying all receipts and disbursements. Off road diesel does not have the road tax imposed so it would not be eligible for the credit.

Biodiesel is defined as a liquid fuel derived in whole from agricultural products, animal fats, or wastes from agricultural products or animal fats. “Biodiesel provider” is defined as a person who either:

  • Produces an average of no more than 500,000 gallons of biodiesel per month during a calendar year. A person who produces more than this amount is a refiner; or,
  • Imports biodiesel outside the terminal transfer system by means of a marine vessel, a transport truck, a railroad tank car, or a tank wagon.

This law is effective for taxable years beginning on or after January 1, 2008 and is repealed for taxable years beginning on or after January 1, 2010. Now Public Law 2006-66. Amends Article 3B of Chapter 105 of the General Statutes, § 105‑129.16F.
 

Posted in Biodiesel.