Grassley, Wyden introduce tax extenders bill

On Feb. 28, Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and Ranking Member Ron Wyden, D-Ore., introduced legislation to extend 29 tax credits, including those that benefit producers of renewable diesel, second generation biofuels and bioenergy.

According to information released by the Senate Committee on Finance, the bipartisan legislation aims to extend several tax credits at their current level for 2018 and 2019. The bill currently addresses 26 provisions that expired at the end of 2017, and three others that expire at the end of 2018. The bill would also provide disaster tax relief benefits to individuals and businesses affected by major disasters that occurred last year.

“Congress needs to get out of this bad habit of regular retroactive extensions of these tax provisions. The whole point of these federal tax incentives is to encourage certain behaviors, especially investments in alternative energies, energy efficiency and transportation. The best way to do that is ahead of time, not retroactively,” Grassley said. “But it’s also the case that many of these industries made business decisions last year based on that reasonable expectation that they would be extended since it’s what Congress has consistently done in the past. I hope the House of Representatives acts soon since taxpayers affected by these expired provisions have to file their tax returns in the coming weeks. Thousands of jobs across the country depend on it.”

“It’s past time to kick the addiction to short-term tax policies, but until Congress is able to break this cycle for good, taxpayers deserve certainty about what they’ll owe,” Wyden said. “It’s important this is a two-year bill covering 2019, and it includes key renewable energy incentives I’m proud to fight for. Filing season for 2018 is already underway, so the Congress should act on this quickly.”

The tax extenders bill includes several credits that benefit the biofuel and biomass power industries.

The bill extends the $1.01-per-gallon second generation biofuel producer credit through 2019. The provision, formerly known as the “cellulosic biofuel producer credit” is a nonrefundable income tax credit for second generation biofuel sold at retail into the fuel tank of a buyer’s vehicle, or second generation biofuel mixed with gasoline or a special fuel and sold or used as a fuel.

The legislation also extends the $1-per-gallon tax credit for biodiesel and biodiesel mixtures and the small agri-biodiesel producer credit of 10 cents per gallon through 2019. The provision treats renewable diesel the same as biodiesel, except there is no small producer credit. The credit may be taken as an income tax credit, and the mixture credit may be taken as an excise tax payment or credit.

Another provision of the bill extends through 2019 is the credit for alternative fuel vehicle refueling property, which can be claimed for the installation of alternative fuel vehicle refueling property placed in service before 2020. The credit is available for property that dispenses alternative fuels, including ethanol, biodiesel, natural gas, hydrogen and electricity. The credit is capped at $30,000 per location for business property and $1,000 for property installed at a principal residence.

In addition, the tax extenders package includes a provision extending certain Sec. 45 and Sec. 48 production tax credits (PTC) for renewable energy through 2019. Eligible renewable sources include closed-loop biomass, open-loop biomass, geothermal, landfill gas, trash, qualified hydropower, and marine and hydrokinetic renewable energy. The credit rate is adjusted for inflation, and for 2017 was 2.41 cents per kilowatt hour for power produced at closed-loop biomass and geothermal facilities, and 1.2 cents per kilowatt hour for power produced at open-loop biomass, small irrigation power, municipal solid waste, marine/hydrokinetic and certain hydropower facilities. The PTC remains in place for 10 years following establishment of the facility. Alternatively, taxpayers may elect to claim a 30 percent investment tax credit instead of the production tax credit with respect to property placed in service at a qualified facility.

The special allowance for second generation biofuel plant property would also be extended. The provision provides through 2019 an additional first-year 50 percent bonus depreciation for cellulosic biofuel facilities.

Additional information, including a summary of the bill, titled the “Tax Extender and Disaster Relief Act of 2019, is available on the Senate Finance Committee website.