If you produced qualified second generation biofuel, you may be able to claim the Biofuel Producer Credit on Form 6478. This credit is available under Internal Revenue Code Section 40 for fuel sold or used before 2025.
For tax years beginning after 2024, this credit no longer applies to new production. However, eligible taxpayers may still be able to claim the credit on an original or amended return if they are within the allowed filing period.
What Is the Biofuel Producer Credit?
Form 6478 is used to calculate the Section 40 Biofuel Producer Credit. The credit consists of the second generation biofuel producer credit for qualifying fuel sold or used during eligible tax years.
What Qualifies as Second Generation Biofuel?
To qualify, the fuel must be:
- Derived from qualified feedstocks.
- Registered with the Environmental Protection Agency (EPA) under Section 211 of the Clean Air Act as a fuel or fuel additive.
- A liquid fuel.
- Not alcohol with a proof level below 150.
In addition, during the tax year the fuel must be:
- Sold by the producer to another person for use in that person's trade or business to produce a qualified second generation biofuel mixture.
- Sold by the producer to another person for use as a fuel in that person's trade or business.
- Sold to a person who then resells the fuel and places it into the buyer's fuel tank.
- Used by the producer for one of the qualifying purposes listed above.
When Can You Claim the Credit?
You generally claim the credit for the tax year in which the qualifying sale or use occurred.
If you did not originally claim the credit, you may choose to claim it, or elect not to claim it, within three years of the original due date of the return (determined without extensions). This can be done on either:
- An original return, or
- An amended return.
Who Must File Form 6478?
The following entities must file Form 6478 to claim the credit:
- Partnerships
- S corporations
- Cooperatives
- Estates
- Trusts
Most other taxpayers do not need to complete Form 6478 if their only Biofuel Producer Credit comes from a pass-through entity, such as a partnership, estate, trust, or similar organization.
How to Enter the Biofuel Producer Credit in Our Software
Follow these steps:
- Go to Federal.
- Select Deductions (Select my forms).
- Choose Credits.
- Select Less Common Credits.
- Choose Biofuel Producer Credit.
If you're claiming this credit, keep records showing the production, sale, or use of the qualified second generation biofuel, along with any supporting EPA registration documentation. Proper records can help support your claim if the IRS requests additional information.
For more information, please review Instructions for Form 6478.