well there seems to be some disinformation concerning production of the fuel. There are specific tax laws covering this.
IRS Publication 510 covers some of the tax related issues concerning Blended Fuel and Excise Taxes.
IRS Form 720 is used to file Excise Taxes.
This is a summary of the information we have on the topic of taxes and Biodiesel production:
There IS a tax on diesel fuel and blended diesel fuel. This tax also applies to Biodiesel fuel.
This tax is paid by submitting Form 720 Quarterly Federal Excise Tax Return.
The person that produces the blended diesel fuel, outside the bulk transfer / terminal system (blender), is liable for the tax which is imposed under IRC section 4081(b) upon sale or removal.
The number of gallons of blended diesel fuel subject to the tax is the difference between the total number of gallons of blended diesel fuel removed or sold, and the number of gallons of previously taxed fuel used to produce the blended diesel fuel.
An exclusion from tax on the "blended taxable fuel" mixture is provided in Treasury Regulations section 48. 4081-1(c)(1)(ii) for minor blending if: during any calendar quarter the removal or sale of the mixture in aggregate by the blender is less than 400 gallons.
For more information and to view these documents go directly to
www.irs.gov and click on Publications/Forms. Look for Publication 510 and Form 720
from
http://freedomfuelamerica.com/products/faq.asp
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