Section 2. BACKGROUND

(a) Excise tax credits —(1) In general . Sections 6426(a) and (c) of the Internal Revenue Code allow a person producing a biodiesel (including renewable diesel) mixture to claim a $1.00-per-gallon credit against its tax liability under section 4081 (relating to the tax imposed on taxable fuel). Similar rules under section 6426(d) apply to a person that sells or uses alternative fuel as a fuel in a motor vehicle or a motorboat and in aviation, except that the credit amount is $0.50 per gallon, and the credit for alternative fuel is taken against the claimant’s tax liability under section 4041 (relating to the tax imposed on diesel fuel and alternative fuel).

(2) Form and timing . The taxes imposed by sections 4041 and 4081 are reported on Form 720, Quarterly Federal Excise Tax Return, and the section 6426 claims are made on Schedule C (Form 720), Claims . Claims allowed by section 6426 that were not made by a claimant on the claimant’s Form 720 for a particular quarter may be claimed on Form 720X,

Amended Quarterly Federal Excise Tax Return . Generally, these claims must be made within three years from the time the return was filed or two years from the time the tax was paid, whichever is later.

(b) Claims for payment —(1) In gen- eral . A person allowed the biodiesel mixture credit or alternative fuel credit whose claims exceed its tax liability may claim this excess as a payment under section 6427(e). (2) Form and timing . A claimant must first apply the biodiesel mixture credit and alternative fuel credit against its tax liability by making the claim on Form 720 or Form 720X. To the extent the claim exceeds its tax liability, the claimant may file a claim for payment of that excess amount on Form 8849, Claim for Refund of Excise Taxes, and attach Schedule 3 (Form 8849), Certain Fuel Mixtures and the Alterna- tive Fuel Credit . Section 6427(i)(3)(C) requires claims for payment under section 6427(e) to be filed on or before the last day of the first quarter following the earliest quarter of the claimant’s income tax year included in the claim. For example, a calendar-year claimant’s claim for a biodiesel mixture sold or used during June and July must be filed by September 30 of the same calendar year.

(c) Refundable income tax claims —(1) In general . If a claimant does not timely file an allowable claim for a payment under section 6427(e), then section 34 allows the claimant to file the claim as a refundable income tax credit.

(2) Form and timing . Claims under section 34 must be filed on Form 4136, Credit for Federal Tax Paid on Fuels, as an attachment to the claimant’s income tax return. Generally, these claims must be made within three years from the time the claimant’s income tax return was filed or two years from the time the income tax was paid, whichever is later.