Code Section 40
| Code Section | Effective Date | Name of Act | Name of Provision | 10yr Revenue Estimate ($millions) |
|---|---|---|---|---|
| 40 | **1/2/2013 | The American Taxpayer Relief Act of 2012 | Extension and modification of cellulosic biofuel producer credit | -59 |
| 40, 6426, 6427(e) | *12/31/2010 | The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 | Extension of provisions related to alcohol used as fuel | -4,859 |
| 40 | 1/1/2010 | Health Care and Education Reconciliation Act of 2010 | Elimination of Unintended Application of Cellulosic Biofuel Producer Credit | 23,600 |
| 40 | 1/1/2010 | The Small Business Jobs Act of 2010 | Make crude tall oil ineligible for the cellulosic biofuel producer credit | 1,849 |
* Note on Effective Date
The extension of the income tax credit is effective for periods after December 31, 2010. The extension of excise tax credit for alcohol fuel mixtures applies to periods after December 31, 2010. The extension of the payment provisions for alcohol fuel mixtures applies to sales and uses after December 31, 2010. The extension of additional duties on ethanol takes effect on January 1, 2011.
** Note on Effective Date
The provision generally is effective on the date of enactment. The technical drafting correction is effective as if included in section 15321(b) of the Heartland, Habitat, Harvest, and Horticulture Act of 2008.
Extension and modification of cellulosic biofuel producer credit
Explanation of Provision
The provision extends the income tax credit for cellulosic biofuel for one additional year (through December 31, 2013). The provision makes a technical drafting correction by separately restating, apart from the general section 40 termination provisions, the rule that the cellulosic biofuel producer credit may only be carried forward three years after any termination of the cellulosic biofuel producer credit.
The provision expands qualified cellulosic biofuel production to include algae-based fuel. Producers of fuel derived from cultivated algae, cyanobacteria, or lemna will qualify for the cellulosic biofuel producer credit, a $1.01 income tax credit for each gallon of qualified cellulosic biofuel production. In addition, for algae-based fuel, the proposal expands qualified cellulosic biofuel production to include fuel derived from algae that is sold by the taxpayer to another person for refining by such other person into a fuel that meets the registration requirements for fuels and fuel additives under section 211 of the Clean Air Act. Thus, algae-based fuel sold for further refining, not just as end use as a fuel, would qualify for the credit.
Extension of provisions related to alcohol used as fuel
Explanation of Provision
Extension of income tax credit
The provision extends the present-law income tax credit for alcohol fuels (other than the cellulosic biofuel producer credit) an additional year, through December 31, 2011.
Extension of excise tax credit and outlay payment provisions for alcohol used as a fuel
The provision extends the present-law excise tax credit and outlay payments for alcohol fuel mixtures for an additional year, through December 31, 2011.
Extension of additional duties on ethanol
The provision extends the present-law duties on ethanol and ethyl tertiary butyl ether for an additional year, through December 31, 2011.
Elimination of Unintended Application of Cellulosic Biofuel Producer Credit
Explanation of Provision
The provision modifies the cellulosic biofuel producer credit to exclude fuels with significant water, sediment, or ash content, such as black liquor. Consequently, credits will cease to be available for these fuels. Specifically, the provision excludes from the definition of cellulosic biofuel any fuels that (1) are more than four percent (determined by weight) water and sediment in any combination, or (2) have an ash content of more than one percent (determined by weight). Water content (including both free water and water in solution with dissolved solids) is determined by distillation, using for example ASTM method D95 or a similar method suitable to the specific fuel being tested. Sediment consists of solid particles that are dispersed in the liquid fuel and is determined by centrifuge or extraction using, for example, ASTM method D1796 or D473 or similar method that reports sediment content in weight percent. Ash is the residue remaining after combustion of the sample using a specified method, such as ASTM D3174 or a similar method suitable for the fuel being tested.
Make crude tall oil ineligible for the cellulosic biofuel producer credit
Explanation of Provision
The provision modifies the cellulosic biofuel producer credit to exclude from the definition of cellulosic biofuel fuels with an acid number of greater than 25. The acid number is the amount of base required to neutralize the acid in the sample. The acid number is reported as weight of the base (typically potassium hydroxide) per weight of sample, or milligram (‘‘mg’’) potassium hydroxide per gram. The normal acid number for crude tall oil is between 100 and 175. As a comparison, ASTM D6751 for biodiesel specifies that the acid number be less than 0.5 mg potassium hydroxide. ASTM D4806 for ethanol does not have acid value but instead limits ‘‘acidity’’ to 0.007 mg of acetic acid per liter, which is significantly below an acid number of 25.
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