IRS delays biodiesel 'cold soak' deadline for tax credit eligibility

By Ron Kotrba | May 11, 2009
The Internal Revenue Service made an unexpected move that surprised the industry in early April, pushing back six months the deadline requiring biodiesel to meet the latest version of ASTM D 6751 to legitimately claim the dollar-per-gallon tax credit. The latest version of D 6751 includes a Cold Soak Filtration Test. As a result of IRS's extension, biodiesel meeting the previous version of D 6751 the version without a CSFT is still eligible until IRS's new enforcement date, Oct. 1. The news came just days after April 1, the original enforcement date. Immediately afterwards, several sources closely involved in the ASTM process told Biodiesel Magazine they were shocked by IRS's move, and they were not sure exactly how or why this happened.

The deadline extension could cause some interesting discussion in the industry. For producers having trouble passing the test, it is good news as they can continue to collect the credit while modifying their process. However, buyers are interested in purchasing B100 that meets the latest version of D 6751, which means purchasing biodiesel that passes the CSFT. BQ-9000 certified producers and marketers, however, are expected to meet the latest version of D 6751 to remain eligible for their BQ-9000 status. Also, the invisible allowance of B5 in the diesel fuel specification, ASTM D 975, is predicated upon B100 meeting the latest version of D 6751.

The version of the existing cold soak method which many people in the industry say is flawed (see the feature article "'Cold Soak' or Wet Blanket?" in May 2009 Biodiesel Magazine), will be replaced later this year by a new, more feedstock-equal test method. The latest CSFT method recently got out of a committee of standards review process at ASTM, and it received an official number ASTM D 7501.

The CFST was originally developed after the Minnesota B2 mandate went into effect in 2005, when diesel fuel filters across the state began clogging. As a result, the intention of a precautionary test was to help minimize the introduction of fuel into the marketplace that has a propensity to precipitate out of solution at temperatures above the cloud point, and contribute to faster fuel filter pluggings in diesel vehicles.

To view the IRS document, visit http://www.irs.gov/pub/irs-drop/n-09-34.pdf.
 
 
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