Ethanol Retailer and Distributor Tax Credit (ERD) (Section 135.772)

Purpose

The Ethanol Retailer and Distributor Tax Credit offers an income tax credit against Missouri state income tax liability to any retail dealer that sells higher-ethanol fuel at its own retail service station, or a distributor that sells higher-ethanol fuel directly to the end user located in Missouri (Section 135.772).

Administering Agency

Missouri Department of Revenue

Credit Effective Date

This credit applies to all tax years beginning on or after January 1, 2023. If a taxpayer’s fiscal year begins before January 1, 2023, but ends during the 2023 calendar year, the taxpayer may claim the credit for the amount of higher ethanol blend sold between January 1, 2023, and the end of the tax year.

Example: A retailer with a fiscal year beginning October 1, 2022, and ending September 30, 2023, may claim the credit for the amount of higher ethanol blend sold from January 1, 2023, through September 30, 2023.

Eligible Applicants

Retail dealer - A person, firm, or corporation doing business in Missouri that owns or operates a retail service station in Missouri that sells higher ethanol blend at such retail dealer's retail service station.

Distributor – A person, firm, or corporation doing business in Missouri that produces, refines, blends, compounds, or manufactures motor fuel; imports motor fuel into the state; or is engaged in distribution of motor fuel that sells higher ethanol blend directly to the final user located in this state.

Qualifying Ethanol

Higher ethanol blend – A fuel capable of being dispensed directly into motor vehicle fuel tanks for consumption that is comprised of at least fifteen percent but not more than eighty-five percent ethanol.

How the Program Works

A retail dealer that sells higher ethanol blends at its retail service station, or a distributor that sells higher ethanol blends directly to the final user in this state, is eligible for a tax credit against its Missouri state income tax liability. The credit amount is five cents per gallon of higher ethanol blend sold by the retail dealer through metered pumps at its retail service station or sold by a distributor directly to the final user in this state, during the tax year in which the credit is claimed. Eligible retailers and distributors must complete Form 5885 to calculate the credit amount.

Eligible Use of the Tax Credit

The Ethanol Retailer and Distributor Tax Credit may be applied to income tax liability imposed under Chapter 143, RSMo, excluding withholding tax imposed by Sections 143.191 to 143.265. The credit is applied after all other allowable credits.

The tax credit is not refundable.

If the credit exceeds the tax liability, the unused portion can be carried forward five subsequent tax years.

The credit cannot be transferred, sold, or assigned.

For pass-through entities, the credit must be claimed at the entity level. It may not be assigned or passed through to partners, shareholders, or members.

Funding Limits and Apportionment

The total amount of Ethanol Retailer and Distributor Tax Credits redeemed by all taxpayers in any fiscal year may not exceed $5,000,000.

If claims exceed the limit, credits will be apportioned on an equal ratio among all eligible claimants.

Returns claiming the Ethanol Retailer and Distributor Tax Credit must file a return between July 1 through April 15 of each fiscal year. If April 15 falls on a Saturday, Sunday, or a legal holiday, claims filed on the next business day will be considered timely.

Section 135.772, RSMo, does not provide provisions to waive interest, penalties, or additions resulting from apportionment.

If your return would result in a balance due without applying this credit, you may wish to pay the amount due by the return’s due date to avoid interest and applicable additions or penalties. After apportionment, any overpayment exceeding $1 and not owed to the Department may be refunded.

If your return would result in a refund before applying the credit, the Department will issue a partial refund for the amount that exceeds the claimed credit. After apportionment, any remaining refundable amount will be issued separately.

If the credit amount is reduced due to apportionment, you may file an amended return with Form 5885 and Form MO-TC on or after July 1 to be considered for the following fiscal year. Amended returns may be filed until the credit has been fully redeemed or the statute of limitations for refunds expires (generally three years from the original due date).

How to Claim the Credit

To claim the Ethanol Retailer and Distributor Tax Credit:

  • Complete and sign Form 5885.
  • Submit Form 5885 and Form MO-TC with your Missouri income tax return (Form MO-1040, Form MO-1120, or Form MO-PTE).
  • Mail the forms to: Missouri Department of Revenue, P.O. Box 27, Jefferson City, MO 65105 or email to: taxcredit@dor.mo.gov.

Authorization

The credit sunsets December 31, 2028, and fully terminations September 1, 2029.

Forms Required

Contact Information

  • Email: taxcredit@dor.mo.gov
  • Phone: 573-751-3220
  • Mail: Missouri Department of Revenue, Taxation Division, P.O. Box 27, Jefferson City, MO 65101

Definitions

Distributor, a person, firm, or corporation doing business in this state that:

 (a)  Produces, refines, blends, compounds, or manufactures motor fuel;
 (b)  Imports motor fuel into the state; or
 (c)  Is engaged in distribution of motor fuel;

Higher ethanol blend, a fuel capable of being dispensed directly into motor vehicle fuel tanks for consumption that is comprised of at least fifteen percent but not more than eighty-five percent ethanol;

Retail dealer, a person, firm, or corporation doing business in this state that owns or operates a retail service station in this state;

Retail service station, a location in this state from which higher ethanol blend is sold to the general public and is dispensed directly into motor vehicle fuel tanks for consumption.