Reminder: Superfund Tax on Crude Oil Begins January 1, 2023
What the 16.4 Cents Per Barrel Tax Means for Downstream Energy Marketers and Tax-Exempt Purchasers
The Inflation Reduction Act of 2022 reimposes the long-expired Superfund excise tax on crude oil at the rate of 16.4 cents per barrel beginning January 1, 2023. EMA is receiving inquiries about how the Superfund tax will affect downstream energy marketers and tax-exempt purchasers (state and local governments, etc.).
First and foremost, refiners are the only parties liable for payment of the Superfund tax. It is important for energy marketers to understand that once crude is refined, the tax becomes a manufacturing cost refiners include in the price per gallon of finished product. No other party downstream of the refinery gate is liable for the Superfund tax because it is passed down as a cost not a tax.
Some suppliers break out the additional per gallon cost associated with the tax on supply invoices and identify it as the “Superfund Tax.” However, this practice is not legally required for downstream parties and often creates confusion for both energy marketers and tax-exempt purchasers. Therefore, to avoid confusion, energy marketers are advised not to break out the Superfund tax as a separate line item on invoices or supply contract bids because tax exempt purchasers will object to any charge identified as a “tax”. There are no downstream exemptions from the Superfund tax.
Finally, the Superfund tax is only imposed on the crude portion of blended product. As a result, downstream blenders of ethanol, biodiesel or any other non-crude renewable fuels are not liable for the tax. Finally, the Superfund tax is indexed annually to the rate of inflation and expires on December 31, 2032, unless extended by Congress.
Got Questions? Contact Mark S. Morgan, EMA Regulatory Counsel mmorgan@emamerica.org
Reminder! Don’t Forget to Complete Annual CDL Driver Drug and Alcohol Violation Clearinghouse Queries
Employers of CDL drivers are required to conduct an annual drug and alcohol violation query in the FMCSA Drug and Alcohol Clearinghouse for each CDL driver they employ. Employers are only required to make a “limited query” to check for drug and alcohol violations for these drivers. A “full query” is only required if a violation is found. The annual limited query is tracked on a rolling 12-month basis so there is no fixed deadline other than to make the query at least once within 365 days for each driver. For example, employers who conducted their last annual queries on January 1, 2021, must conduct the next round of annual queries for each driver no later than January 1, 2023.
Employers must obtain general consent from CDL drivers they employ before conducting limited queries in the Clearinghouse to view these drivers’ information (sample limited query consent form). Employers should log into the Clearinghouse and visit their “Query History” page (under “My Dashboard”) to see when annual queries are due. For instructions on conducting annual queries, download the FMCSA How to Conduct a Limited Query Job aid. Additional Information can be found in the EMA Drug and Alcohol Clearinghouse Compliance Bulletin.
Employers Must Switch to All Electronic Inquiries for Driver Preemployment Drug and Alcohol Violation Investigations Beginning January 6, 2023
The Federal Motor Carrier Safety Administration (FMCSA) requires prospective employers of CDL drivers to conduct background investigations before hiring a CDL driver. This process includes determining if the driver has violated U.S. Department of Transportation drug and alcohol regulations within the past three years. Currently, this inquiry requires prospective employers to conduct both electronic queries in the FMCSA Clearinghouse and manual inquiries with previous employers to satisfy federal preemployment driver drug and alcohol investigation requirements. Both manual and electronic inquiries are required because the Clearinghouse currently contains less than three years of electronic data on driver drug and alcohol history.
However, beginning January 6, 2023, the Clearinghouse will have accumulated three-years of data on driver history. This means prospective employers must begin conducting electronic pre-employment queries of the Clearinghouse to comply with the FMCSA drug and alcohol violation investigation. requirement. Manual preemployment inquiries will no longer satisfy FMCSA drug and alcohol inquiry requirements. Please see EMA Drug and Alcohol Compliance Bulletin for additional details. Additional Information can be found in the EMA Drug and Alcohol Clearinghouse Compliance Bulletin.
New $600 Federal Tax Credit for B20 Compatible Furnaces and Boilers Available to Homeowners Beginning January 1, 2023
The recently passed Inflation Reduction Act (IRA) includes a provision to incentivize the efficiency of heating oil equipment while increasing the amount of biodiesel blended into the fuel. Under the IRA, homeowners are eligible for tax credits of $600 for installation of new oil/biofuel blend-compatible heating appliances. The credit is available to homeowners on an annual basis and capped at $600 per year. Beginning January 1, 2023, heating oil dealers should make their customers aware of the new tax credit and explain how to apply for it.
In order to qualify for the $600 federal tax credit, the following conditions must be met:
Equipment Placed in Service After December 31, 2022
- Equipment must have 2021 Energy Star ratings (87 AFUE for oil boilers and 85 AFUE for furnaces) and be certified by the manufacturer to burn heating oil blended with a 20 percent biodiesel or renewable diesel fuel. This equipment is available now.
Equipment Placed in Service After December 31, 2026
- Equipment must have an AFUE of at least 90 percent and be certified for a 50 percent blend of biodiesel or renewable diesel fuel. This equipment will be made available in 2023.
Many new heating oil boilers and furnaces currently available from manufacturers should be compatible with 20% biodiesel blends and qualify for the $600 credit on new installations beginning January 1, 2023. Manufacturers are currently providing certification for B20 compatibility on new equipment.
Please check with your supplier to ensure their equipment is compliant and that certifications are available to provide to the homeowner. Homeowners may apply for the credit on IRS Form 5695 and file it with their 1040, 1040-SR or 1040-NR return. However, homeowners must wait for the IRS to issue an updated Form 5695 and guidance before filing for the credit. The IRS expects to publish the updated Form 5695 and guidance sometime in January.
EMA will provide the form and guidance once they become available from the IRS.
EMA Contact: Mark S. Morgan Regulatory Counsel mmorgan@emamerica.org
Federated Insurance: Risk Management Corner
Inclement Weather Driving
Driving is a dangerous task — it takes focus, awareness, knowledge, and patience to operate a vehicle safely. So when the weather takes a turn, events such as: snow, sleet, ice, rain, fog, wind, and extreme temperature fluctuations can contribute to potential disruptive moments on the road, and extra care is needed to continue driving safely.
For resources and tips on inclement weather driving, please click here. Please always feel free to contact your Federated regional representative or EMA’s National Account Executive Jon Medo at 800.533.0472 for any additional information or risk management questions. Federated is a Partner in EMA’s Board of Directors Council.
This article is for general information and risk prevention only and should not be considered legal or other expert advice. The recommendations herein may help reduce, but are not guaranteed to eliminate, any or all risk of loss. The information herein may be subject to, and is not a substitute for, any laws or regulations that may apply. Qualified counsel should be sought with questions specific to your circumstances. © 2022 Federated Mutual Insurance Company.