Form 8896: Low Sulfur Diesel Fuel Production Credit
Form 8896, officially titled "Low Sulfur Diesel Fuel Production Credit," is an Internal Revenue Service (IRS) document used by qualified small business refiners to claim a tax credit for producing low sulfur diesel fuel.
Who Can File Form 8896?
Only qualified small business refiners can claim the credit using Form 8896. Here's what qualifies a refiner:
A. Business Structure: Must be a small business, partnership, S corporation, or cooperative.
B. Production Capacity: The refinery's average daily crude oil refining capacity cannot exceed 150,000 barrels.
C. Fuel Production: Must produce low sulfur diesel fuel that meets the Environmental Protection Agency (EPA) standards.
What is the Credit Amount?
The credit is generally 5 cents per gallon of low sulfur diesel fuel produced during the tax year. However, there's a qualified costs limitation and a limit based on total credits allowed in prior tax years. You can find details and calculations in the Form 8896 instructions.
How to File Form 8896?
Step 1: Download the Form: You can download the latest version of Form 8896 and its instructions attached below.
Step 2: Complete the Form: Carefully follow the instructions provided with the form. Ensure you have all the necessary documentation to support your claim.
Step 3: Filing Deadline: Form 8896 is typically due on the same date as your income tax return (including extensions).
What is considered "low sulfur diesel fuel" for the purposes of this credit?
The IRS defines low sulfur diesel fuel as fuel that meets the ultra-low sulfur content requirements of 15 parts per million (ppm) by weight.
Is there a deadline to file Form 8896?
Form 8896 must be filed with your timely filed income tax return for the tax year in which the fuel was produced.
What happens if I claim more credit than I'm eligible for?
If the IRS determines you claimed an excessive credit amount, you may be subject to penalties and interest.
What happens if I sell my low sulfur diesel fuel to another refiner?
You can still claim the credit as long as you meet the eligibility requirements.