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Clean Fuel Production Credit: A Guide

Let's break down the latest IRS Fact Sheet FS-2024-25, providing clarity on the Clean Fuel Production Credit under § 45Z of the Internal Revenue Code. This credit, is designed to incentivize the production of clean transportation fuel and offers significant benefits for eligible taxpayers starting January 1, 2025.

Clean Fuel Cars

What is the Clean Fuel Production Credit?


The Clean Fuel Production Credit is a tax credit introduced by the Inflation Reduction Act of 2022. It aims to promote the production of clean transportation fuels, including sustainable aviation fuel (SAF) and non-SAF transportation fuel.


Key Points from FS-2024-25 FAQs:


1. Who needs to apply for registration?

According to the FAQs, each business unit that produces clean fuel and has a separate employer identification number (EIN) must apply for registration using Form 637. This includes both SAF and non-SAF transportation fuel producers.


2. What about disregarded entities?

If a disregarded entity (such as a single-member LLC for tax purposes) produces clean fuel, it must also apply for registration separately using Form 637. The fact that it's disregarded for income tax purposes does not exempt it from registration requirements.


3. Can an owner of a disregarded entity claim the credit?

Yes, even if the owner itself is not registered, it can still claim the Clean Fuel Production Credit using the registration number of the disregarded entity. This provision ensures that beneficial owners can still benefit from the credit.


Why This Matters to You:


  • Compliance Clarity: Clear guidelines on registration ensure that producers of clean fuel can easily comply with IRS requirements.

  • Avoid Penalties: Taxpayers who rely in good faith on these FAQs are protected from certain penalties if there is an underpayment due to their reliance.

  • Accessibility: The IRS is committed to updating and maintaining the accuracy of these FAQs, ensuring that taxpayers have access to the latest information they need.


Stay informed about the latest developments in tax credits like the Clean Fuel Production Credit by regularly checking IRS resources and announcements. If you’re involved in clean fuel production, ensure compliance with registration requirements to take full advantage of potential tax benefits.


For more detailed information, refer directly to IRS Fact Sheet FS-2024-25 and related IRS announcements. As always, consult with a tax professional for personalized advice tailored to your specific circumstances.


Keep checking back for more updates and insights that simplify the tax landscape for you. Happy tax planning!



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