Form 6478: Biofuel Producer Credit

Form 6478 is an official Internal Revenue Service (IRS) document used by qualified producers to claim the Biofuel Producer Credit. This credit offers tax relief to businesses that produce a specific type of biofuel known as second-generation biofuel.

What is a Second-Generation Biofuel?

Second-generation biofuels are liquid fuels derived from renewable resources that meet specific criteria set by the Environmental Protection Agency (EPA). These resources can include:

  • Lignocellulosic or hemicellulosic matter (think woody plants or grasses)
  • Cultivated algae
  • Cyanobacteria
  • Lemna (a small, aquatic plant)

Who Can Use Form 6478?

This form is not for everyone. It's specifically designed for:

  • Businesses registered with the IRS as second-generation biofuel producers.
  • Partnerships
  • S corporations
  • Cooperatives
  • Estates
  • Trusts

What is the Purpose of Form 6478?

The primary purpose of Form 6478 is to calculate and claim the Biofuel Producer Credit. This credit reduces a producer's income tax liability based on the amount of qualifying second-generation biofuel they produce and sell or use in their business.

What is the Credit Amount?

The credit amount depends on the type and use of the biofuel produced:

Up to $1.01 per gallon: Applies to second-generation biofuel that is:

  1. Sold and used by the purchaser to produce a second-generation biofuel mixture.
  2. Sold and used by the purchaser as a fuel in a trade or business.
  3. Sold at retail for use as a motor vehicle fuel.
  4. Used by the producer to produce a second-generation biofuel mixture.
  5. Used by the producer as a fuel in a trade or business.

Reduced Credit: If the biofuel also qualifies for alcohol fuel tax credits, the credit amount is lowered to:

  1. $0.46 per gallon for ethanol-based biofuel.
  2. $0.41 per gallon for non-ethanol biofuel.

Who can file Form 6478?

Only qualified second-generation biofuel producers and entities like partnerships, S corporations, cooperatives, estates, and trusts involved in such production can file Form 6478.

What information is required on Form 6478?

The form requires details about the type and quantity of biofuel produced, its sale or use, and any applicable credit reductions. You'll also need to provide your tax identification information.

How Much is the Biofuel Producer Credit Worth?

The credit amount depends on the type of biofuel and its use:

  • Up to $1.01 per gallon for qualifying fuel not classified as alcohol fuel.
  • $0.46 per gallon for qualifying ethanol fuel.
  • The credit may be reduced if the biofuel also qualifies for other tax incentives like alcohol fuel tax credits.

When Can I Claim the Biofuel Producer Credit?

You can claim the credit for the tax year in which the sale or use of the biofuel occurs. There's also flexibility: you have up to three years from the original due date of your tax return (excluding extensions) to claim or elect not to claim the credit. This allows you to file an amended return if needed.