Section 4. ALTERNATIVE FUEL

MIXTURES

(a) Overview . This section provides rules under which a credit or payment may be obtained under § 6426 (the alternative fuel mixture excise tax credit), §§ 34 and 6427 (the alternative fuel mixture income tax credit), or § 6427 (the alternative fuel mixture payment) for an alternative fuel mixture that is sold for use or used as a fuel by the person producing the mixture. The amount of the credit or payment allowed with respect to an alternative fuel mixture is based on the amount of alternative fuel used to produce the mixture.

(b) Conditions to allowance —(1) Ex- cise tax credit . A claim for the alternative fuel mixture excise tax credit with respect to an alternative fuel mixture is allowed under § 6426 only if the claimant—

(i) Produced the alternative fuel mixture for sale or use in the trade or business of the claimant;

(ii)(A) Sold the alternative fuel mixture for use as a fuel; or

(B) Used the alternative fuel mixture as a fuel;

(iii)(A) Is registered under § 4101 as an alternative fueler; or

(B) In the case of claims made before July 1, 2007, is registered under § 4101 for any purpose;

(iv) Has made no other claim with respect to the amount of alternative fuel in the mixture or, if a payment with respect to the amount of alternative fuel was erroneously claimed under § 6427 and received, claimant has repaid the government with interest;

(v) Has filed a timely claim on Form 720 and the claim contains all the information required by the claim form described in paragraph (c) of this section; and

(vi) Has § 4081 liability for the period of the claim and the total amount of the alternative fuel mixture excise tax credit claimed under § 6426 for the period of the claim does not exceed such liability.

(2) Payment or income tax credit . A claim for an alternative fuel mixture payment under § 6427 or an alternative fuel mixture income tax credit under §§ 34 and 6427 is allowed only if— (i) The conditions of paragraphs (b)(1)(i), (ii), and (iii) of this section are met;

alternative fuel that is sold for use or used as a fuel in a motor vehicle or motorboat. The amount of the credit or payment allowed with respect to alternative fuel is based on the amount of alternative fuel sold or used.

(b) Conditions to allowance —(1) Ex- cise tax credit . A claim for the alternative fuel excise tax credit with respect to alternative fuel sold for use or used as a fuel in a motor vehicle or motorboat is allowed under § 6426 only if the claimant—

(i) Is the alternative fueler (unmixed fuel) with respect to the fuel;

(ii)(A) Is registered under § 4101 as an alternative fueler; or

(B) In the case of a claim made before July 1, 2007, is registered under § 4101 for any purpose;

(iii) Has made no other claim with respect to the alternative fuel;

(iv) Has filed a timely claim on Form 720, Quarterly Federal Excise Tax Return, and the claim contains all the information required by the claim form described in paragraph (c) of this section; and

(v) Has § 4041 liability for the period of the claim and the total amount of the alternative fuel excise tax credit claimed under § 6426 for the period of the claim does not exceed such liability.

(2) Refundable income tax credit —(i) In general . A claim for the alternative fuel income tax credit with respect to alternative fuel sold for use or used as a fuel in a motor vehicle or motorboat is allowed under §§ 34 and 6427(e)(2) only if—

(A) The conditions of paragraphs (b)(1)(i) and (ii) of this section are met;

(B) The sale or use of the alternative fuel is in the claimant’s trade or business;

(C) The claimant has filed a timely claim for credit on Form 4136, Credit for Federal Tax Paid on Fuels, and the claim contains all the information required by the claim form described in paragraph (c) of this section; and

(D) The amount claimed under §§ 34 and 6427(e)(2) as an alternative fuel income tax credit is the amount that exceeds the claimant’s § 4041 liability for the period of the claim.

(ii) Estimated tax reduction . For purposes of determining the amount of required estimated tax payments, the alternative fuel income tax credit claimed on Form 4136 is subtracted from total tax and reduces estimated tax payments. Thus, a

taxpayer may benefit from the credit before filing an income tax return. See, for example, Form 1120–W, Estimated Tax for Corporations .

(3) Payments . A claim for the alternative fuel payment with respect to alternative fuel sold for use or used as a fuel in a motor vehicle or motorboat is allowed under § 6427(e)(2) only if—

(i) The claimant is— (A) The United States; (B) A State (as defined in § 48.4081–1(b)); or

(C) A § 501(a) exempt organization (other than an organization required to file a Form 990–T, Exempt Organization Business Income Tax Return );

(ii) The conditions of paragraphs (b)(1)(i) and (ii) of this section are met;

(iii) The sale or use of the alternative fuel is in the claimant’s trade or business;

(iv) The claimant has filed a timely claim for payment on Form 8849, Claim for Refund of Excise Taxes, and the claim contains all of the information required by the claim form described in paragraph (c) of this section; and

(v) The amount claimed under § 6427(e)(2) as an alternative fuel payment is the amount that exceeds the claimant’s § 4041 liability for the period of the claim.

(c) Content of claim . The claim form will provide that each claim for an alternative fuel credit or payment must contain the following information with respect to the alternative fuel covered by the claim:

(1) The amount of alternative fuel sold or used.

(2) A statement that the conditions to allowance described in paragraph (b) of this section have been met.

(3) A statement that the claimant either—

(i) Produced the alternative fuel it sold or used; or

(ii) Has in its possession the name, address, and employer identification number of the person(s) that sold the alternative fuel to the claimant, the date of purchase, and an invoice or other documentation identifying the alternative fuel.

(d) Amount of the credit . The amount of credit for any alternative fuel other than compressed natural gas is the product of $0.50 and the number of gallons of alternative fuel. The amount of the credit for compressed natural gas is $0.50 per 121 cubic feet.

October 23, 2006 775 2006–43 I.R.B.