The Internal Revenue Service Office of Chief Counsel recently issued a chief counsel advice (CCA) memorandum, updating a previous memo on biodiesel blender excise credits.
CCA 201406001 clarifies the office’s opinion that taxpayers “must treat the excise tax credits allowed under § 6426(a) as a reduction in its federal excise tax liability under §§ 4081 and 4041. Accordingly, the claimant’s allowable federal income tax deduction for federal excise taxes is reduced by the amount of the credits.” This is a dramatic change from what most practitioners understood CCA 201342010 to represent in regard to excluding blender credits from taxable income.
To support the memo’s position, the office offers a brief argument, relying on prior IRS rulings for how to handle similar issues involving state income tax credits.
At an event in January, Scott Dinwiddie, special counsel to the IRS’s Office of Associate Chief Counsel (Income Tax & Accounting), said taxpayers were reading the rationale in CCA 201342010 more broadly than the office had intended and new clarification would be forthcoming.
The origins and evolution of the § 6426 credits, the weight of authority these two memos represent, and the strength of argument presented in CCA 201406001 are equally invaluable to those pursuing refund claims for § 6426 credits.
For more information on this topic, or to learn how Baker Tilly tax specialists can help, contact our team.
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