FS-2024-25, July 2024 This fact sheet provides answers to frequently asked questions (FAQs) related to § 45Z of the Internal Revenue Code. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Accordingly, these FAQs may not address any particular taxpayer’s specific facts and circumstances, and they may be updated or modified upon further review. Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case. Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer’s case, the law will control the taxpayer’s tax liability. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so. More information about reliance is available. These FAQs were announced in IR-2024-184. Background The Inflation Reduction Act of 2022 added the new § 45Z income tax credit for clean fuel production, available beginning January 1, 2025 (Clean Fuel Production Credit). Section 45Z generally allows an income tax credit for the domestic production of clean transportation fuel, which is divided into two broad categories of fuel: sustainable aviation fuel (SAF) and non-SAF transportation fuel. A taxpayer cannot claim a Clean Fuel Production Credit unless the taxpayer is registered as a producer of clean fuel at the time of production. Notice 2024-49 provides guidance on the registration procedures for the Clean Fuel Production Credit, including how to apply for registration and what information a clean fuel producer must submit with its application. Producers apply for registration on Form 637, Application for Registration (For Certain Excise Tax Activities) PDF, under Activity Letter “CN” (producer of non-SAF transportation fuel) or Activity Letter “CA” (producer of SAF), or both, as appropriate. These FAQs address which entity must apply for registration pursuant to Notice 2024-49, including if the entity producing the clean fuel is a disregarded entity and how claim procedures will work when the registrant is a disregarded entity. Q1. Which entity must apply for registration for purposes of the Clean Fuel Production Credit pursuant to Notice 2024-49? (added July 10, 2024) A1. Each business unit that has, or is required to have, a separate employer identification number (EIN) and is a producer of clean fuel is treated as a separate person for registration purposes. Thus, two related business units, each of which has a separate EIN, are two persons, and each must separately apply for registration using Form 637 if they are each producers of clean fuel. Q2. Does a disregarded entity have to register pursuant to Notice 2024-49? (added July 10, 2024) A2. A disregarded entity for income tax purposes that is a producer of clean fuel is not treated as a disregarded entity for purposes of registration for the Clean Fuel Production Credit. Instead, such entity must separately apply for registration using Form 637 if it is a producer of clean fuel. Q3. May an entity that is not registered for purposes of the Clean Fuel Production Credit, but that owns a disregarded entity that is registered pursuant to Notice 2024-49, still claim the Clean Fuel Production Credit? (added July 10, 2024) A3. Yes. An owner of a disregarded entity that is registered for the Clean Fuel Production Credit pursuant to Notice 2024-49, but that is not itself registered, would be able to claim the Clean Fuel Production Credit using the registration number of the disregarded entity. IRS-FAQ
