Sunday, May 18, 2008

Ethanol Tax Credit

The Ethanol Tax Credit is finally being reduced by 6 cents per gallon. The problem is that it should be zero. Ethanol needs to stand on its own. Below is the old legislation.

For all ethanol blends:
51 Cent per Gallon Ethanol Tax Credit Is Important Tool

The Volumetric Ethanol Excise Tax Credit, also known as VEETC, is a Federal tax credit that went into effect on January 1, 2005. This is a credit of $.51 for every gallon of pure ethanol blended into gasoline. For example, an E10 blend will have a credit available of $.051/gallon, and E85 will have a credit available of $.4335/gallon. This credit is identical for both E10 and E85, as are the forms to file for it.

A registered blender is the only individual in the supply chain that is eligible for this credit, and it can only be taken once. Understanding where this credit is taken and who is eligible is imperative to keep the pricing of ethanol-blended fuels below regular gasoline and in-line with where they should be. This credit is now refundable quarterly, and all funds are paid out of the General Fund of the federal budget. In years past, these funds were allocated from the Highway Fund.

It is recommended that you consult with your accountant to see how this credit will affect your business.

VEETC Details

· Credit of 51 cents for every gallon of pure ethanol blended into gasoline

· E10 would have a credit of 5.1 cents per gallon.

· VEETC is sometimes referred to as the “blenders credit”. A registered blender is the only individual eligible for the credit.

· The credit is refundable quarterly from the General Fund

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