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Corn+Soybean Digest

Harkin Pushes To Close Biodiesel Tax Loophole And Boost Domestic Energy Security

Senator Tom Harkin (D-IA) announced legislation that would ensure the biodiesel tax credit is carried out as Congress intended. The biodiesel tax credit was passed to spur U.S. biofuels production and stimulate the rural economy and Congress listed a number of vegetable oils as eligible for the tax break. The IRS is giving the biodiesel tax credit for production from palm oil, a feedstock not listed under statute and often imported from foreign countries. Harkin’s bill would close this loophole and clarify that only feedstocks listed by Congress are eligible to receive the biodiesel tax credit.

“Giving tax breaks for biodiesel made from palm oil is not what Congress had in mind with the biodiesel tax credit,” says Harkin. “This legislation will provide a simple, cost-effective and WTO compliant way to boost America’s domestic energy production and help our rural economy through farm-based renewable energy.”

Harkin’s bill would do two things. First, it ensures that the biodiesel tax credit is available only for biodiesel made from the feedstocks listed in statute. The proposal does not discriminate against foreign-sourced biodiesel, but it would provide clarification for the IRS that biodiesel made from oilseeds other than those listed in statute are ineligible for the biodiesel tax credit. Second, it establishes a performance standard to ensure that all biodiesel receiving the tax credit works effectively in truck and car engines.

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