IRS Delays Biodiesel 'Cold Soak' Deadline for Tax Credit Eligibility

By Ron Kotrba | March 09, 2009
The Internal Revenue Service pushed back its deadline six months 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 original enforcement date was April 1, just over a week ago.

The CFST was developed as a precautionary test 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.

The IRS tax credit deadline extension could cause some interesting discussion in the industry.

For producers having trouble passing the test, it is good news for them that 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, must 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 cold soak method in existence today, which many people in the industry say is flawed, 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.

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