How to Pay Biodiesel Taxes
Biodiesel, like normal diesel and other fuel, is subject to excise and other taxes at both the state and federal levels. Although personal biodiesel usage is tax exempt at the federal level up to so many gallons, recording and acknowledging with your state and the federal government the creation, usage and/or sale of biodiesel (and paying any taxes as required) is necessary. Here are the easiest methods to pay your biodiesel taxes.
- Difficulty:
- Easy
Instructions
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Contact your state's Department of Revenue (DOR) for biodiesel creation and usage tax registration.
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2
Call your local IRS office, by following the link provided in the Resources section and clicking on your state on the interactive map, for biodiesel creation and usage tax registration at the federal level. If your local IRS office is unable to help you, use IRS Telephone Assistance or call a certified public accountant for additional information.
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3
Keep records of your biodiesel creation, usage or sale on a spreadsheet as well as in your car. Also, keep records of whether or not you have "blended" biodiesel with any other fuels, as some fuels are taxable while others are not and each state is different in regards to how taxes on blended products break down. If you also use biodiesel off-road, keep a record of the amount of fuel used in vehicles off the highway (lawn mower, farm equipment, et cetera) as many states do not tax biodiesel used in off-road situations.
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4
Apply for a motor vehicle fuel tax license or a business tax registration certificate as required by your state. In many states, you must apply for either or both of these documents before you can legally create and/or distribute biodiesel.
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5
Record your biodiesel-related creation, usage and/or sale at the state and federal levels either via Internet or through the mail on the appointed deadlines. Keep in mind that some states will penalize you if you do not record your usage or sale of biodiesels even if the recorded number is zero.
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Pay all owed biodiesel taxes before or at the appointed deadlines. Also, take advantage of the many tax exemption possibilities and biodiesel credits pointed out to you by your accountant, your state's DOR and/or the IRS. In small personal use cases, the credits often outweigh or balance out the amount of taxes owed.
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