Agri-biodiesel is a special type of biodiesel derived solely from certain agricultural products including virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, and mustard seeds, and from animal fats.
Certification
In order to claim the credit for biodiesel mixtures, you will need a certificate from the producer or importer, if you are claiming a credit for the use of biodiesel in your trade or business. If you are producing the mixture yourself, and claiming the credit, you still need a certificate. A standard format for this certificate can be found in the Appendix to Internal Revenue Service (IRS) Publication 378, Fuel Tax Credits and Refunds. When completing the certificate, in addition to other information, you will be required to indicate a percentage breakdown of the fuel mixture between agri-biodiesel and other biodiesel.
How To Claim the Credit
If you produce or import an alcohol fuel mixture or biodiesel fuel mixture, the credit is first applied against any excise tax liability you report on Form 720, Quarterly Federal Excise Tax Return. If the credit exceeds your liability, you can claim the excess as a credit on Schedule C of Form 720. You can also claim a refund on Form 8849, Claim for Refund of Excise Taxes. You can claim a credit on Form 4136, Credit for Federal Tax Paid on Fuels, or on Form 6478, Credit for Alcohol Used As Fuel.
If you blend alcohol with gasoline, diesel fuel, or kerosene outside the bulk transfer terminal system, you have to pay the gasoline tax on the volume of alcohol that goes into the mixture. Likewise, if you blend biodiesel with undyed diesel fuel, you have to pay the diesel fuel tax on the volume of biodiesel that goes into the mixture. These taxes are reported and paid on Form 720. If you are a blender of fuels, you also need to be registered with the Internal Revenue Service. You register by completing and filing Form 637, Application for Registration (For Certain Excise Tax Activities). Blenders of alcohol fuel mixtures and biodiesel fuel mixtures fall under Activity Letter M on that registration form.