Motor Fuels Tax Minute, Episode 67: Blenders Tax Credit

In this week’s episode of Motor Fuels Tax Minute, our hosts talk about the upcoming expiring blenders credit and how that will affect those in the industry.

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Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 67

00:00:00
Kelly: Welcome to this week’s Motor Fuels Tax Minute, the vlog where we talk all things motor fuel. Today, Leanne is going to talk to us about the upcoming expiring blenders credit and how that will affect those in the industry.

00:00:12
Leanne: That’s right. There’s still a lot up in the air about the blenders tax credit. It is set to expire at the end of this year, and it’s not currently set to be extended. In fact, as we’ve talked about in the past, it’s set to be replaced by the clean fuel production credit, which is a whole new regime on which we’re still awaiting guidance. There is some talk about bringing the blenders tax credit back, whether for the whole year or even just for a little bit of time while they work out exactly how these new credits are going to work.

But if we work on the operating assumption that the credit is going away on December 31st, what kinds of things do taxpayers need to think about? The biggest one is don’t change your business model. The IRS has indicated that it is going to be paying attention. So, if you always clear down all of your inventory and sell it in December, that’s great. Continue to do that. But if you don’t do that, don’t do it this year because this is a more likely year that the credit will not come back.

I know it’s hard. It’s hard to make business plans. It’s hard to have inventory sitting there unsold and potentially not eligible for any credit. But the biggest thing is just don’t change the business model or don’t change it substantially.

Try to plan ahead as much as possible. If contracts are coming in, be able to support them. If people are looking for product because it would have a credit on it this year and it is a change from the business model, be able to support that. Have the backup that these were true arm’s length transactions, that people needed this product and they needed it at a competitive price. All the usual types of elements that we talk about in supporting the business purpose of the transaction.

So, take away from all of that gobbledygook: try not to change your business model too much, if at all. And if you do need to make some changes, particularly if you’re actually getting requests to ship a lot of products at the end of the year, just have all of the support out there that these are true arm’s length commercial transactions and not just done for the purposes of the credit.

00:02:20
Kelly: That’s a lot of great information as always, Leanne. And so yeah, not changing. That can sometimes be the hardest thing not to do. So hopefully take Leanne’s advice, do your due diligence and we’ll see what comes. Other than that, I think the excise tax landscape, is going to be pretty quiet come year-end. No new superfund taxes. No new anything, right?

00:02:42
Leanne: Nothing changes, but when it does, it’s kind of big.

00:02:46
Kelly: That’s true, that’s true. And of course, we’ll be updating everyone with those tax rate changes on LinkedIn, so keep an eye out for those.

Well, that was this week’s Motor Fuels Tax Minute. Thank you for joining us.

00:02:56
Leanne: Thank you.