The Internal Revenue Service (IRS) delivered a win to the biofuels industry with a proposal reflecting expansion of the 45Z tax credit. The 45Z tax credit encourages any transportation fuel produced with low-emission techniques, a technology-neutral approach that makes it more complex to create rules that don’t accidentally disadvantage certain industries, Bracewell’s Tim Urban told Bloomberg Tax.
Prior IRS guidance limited qualified sales to fuel users – as opposed to wholesalers, dealers, or other middlemen – which upended the industry’s typical practices.
“It’s such a big deal that in some cases, we had outside lawyers that work for fuel companies and accounting firms that were threatening to not count those sales to middlemen for clients,” Urban said.
