Fuel Taxes

tax_form-application_graphicYour E85 distributor can pass on the blender’s credit, or you can become the “blender of record” and apply for the credit directly through a 637M license from the IRS.

In the two underground tanks used with blender pumps, some marketers have questioned whether to use E85 or denatured fuel ethanol in the ethanol-containing tank. In most cases, the reason to consider starting with denatured ethanol is to obtain the ethanol blender’s credit directly. While most marketers have been able to get an E85 distributor to pass on the credit, using denatured ethanol and obtaining the credit directly is indeed an option. Keep in mind that regular reporting and increased bookkeeping responsibilities are required for those who are considered “blenders” of ethanol and gasoline.

In order to apply directly for the credit for blending ethanol, a marketer must obtain a 637M license from the IRS. The “M” designation is commonly referred to as the “blender’s license.” When filing IRS form 637, many applicants are confused by the designations AL (alternative fuels) and AM (alternative fuels mixtures). Those are not the designations needed to be considered a blender by the IRS. According to IRS instructions, “alternative fuel does not include ethanol, methanol, biodiesel, or renewable diesel.” 637M is the required tax license for blenders of ethanol.

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