On June 18, 2024, the U.S. Treasury and the IRS released final rules regarding Prevailing Wage and Apprenticeship Requirements for tax credits enacted in the Inflation Reduction Act, including the §45Z Clean Fuel Production Credit. The final rule includes substantial changes from the proposed rule, issued August 30, 2023.
Per the final regulations, taxpayers claiming the higher value for the §45Z credit must satisfy the Prevailing Wage and Apprenticeship (PWA) Requirements for taxable years beginning after December 31, 2024. Clean Fuels Alliance America, the trade association representing the biodiesel, renewable diesel, and sustainable aviation fuel industry, provided additional information during its June Member Meeting in DC. Clean Fuels also promised to provide additional information and guidance as more analysis becomes available.
The Internal Revenue Service created several fact sheets, including:
- Publication 5855 – Overview and Recordkeeping Requirements
- Publication 5983 – Fact Sheet on Compliance and Enforcement
- An online FAQ
- Information on prevailing wage rates is available via SAM.gov.
Clean Fuel Production Credit
On May 31, the U.S. Treasury and IRS released initial guidance on the §45Z Clean Fuel Production Credit that becomes available for transportation fuels in 2025. The notice outlines requirements for domestic fuel producers to register (or update registration) under IRC §4101.
IRS is encouraging producers to register (or re-register) under §4101 using the existing form 637 as soon as possible to allow the agency sufficient time to process applications. A valid registration letter is necessary to claim the credit. The agency cannot guarantee that taxpayers registering after July 15, 2024, will receive the required letter prior to January 1, 2025.
Until an updated form is released, on-road transportation fuel producers may use the current form 637 by writing in Activity Letter “CN” and providing additional information about production capacity, the ASTM standard for the fuel produced, and feedstocks including country of origin. Appendix A to the guidance provides a list of feedstocks.
Originally shared by Clean Fuels Alliance America, June 18, 2024.