IRS Pledges To Clear Backlog of Motor Fuel Excise Tax Refunds, Renewable Fuel Blending Credits


The Internal Revenue Services assured EMA last  week that the claim payment processing backlog for motor fuel excise tax refunds, and biodiesel blender, alternative fuel mixture and alternative fuel use credits will be resolved by January or February at the latest.

EMA and PPA have received numerous complaints from marketers over the past six months concerning the accumulation of unpaid IRS claims owed, often reaching into the hundreds of thousands of dollars.

Continuing to float the unpaid claims is creating unnecessary financial hardship for many marketers.

As a result, clearing up the claim backlog has been a top priority for EMA. EMA has been pressuring the IRS to clear up the backlog since it began last April. Unfortunately, the IRS has not been forthcoming about the extent of the backlog or plans to eliminate it.

In an effort to get definitive answers, EMA enlisted the help of the Senate Finance Committee to pressure the IRS to address the growing backlog.

This directly included coordination with the PPA to quantify the amount of outstanding claims in Pennsylvania Senator Pat Toomey who is a member of the Senate Finance Committee.

As a result, the IRS finally responded this week with a plan to quickly clear up the processing backlog. According to the IRS, the backlog is due to the disruption in normal work hours and loss of personnel caused by COVID-19.

The IRS said that motor fuel excise tax and renewable fuel credit claims filed electronically have been processed in a timely manner throughout the COVID-19 period.

However, paper filings requiring hand processing remain backlogged.

In order to clear up the backlog the IRS said it will introduce an electronic means of processing paper claims sometime in January or early February.

Once electronic processing of paper claims is initiated, the IRS expects overdue payments to be processed quickly and the backlog eliminated.

EMA will continue to work with the Senate Finance Committee to ensure that IRS follows through with expedited processing of paper claims and that marketers receive payment for overdue claims as quickly and efficiently as possible.

In the meantime, marketers are advised to file all new refund and credit claims electronically to ensure timely processing. Electronic filing directions are found in the instruction sections of all IRS claim forms.

Also, the IRS is required to pay interest on all electronic claims not processed within 20 days of receipt and on paper claims after 45 days. The rate paid is the federal short-term rate (set quarterly) plus three percent compounded daily. The IRS told EMA that checks for payment of backlogged claims will not include interest payments covering the processing delay period. Instead, those payments will follow in a separate check once the claim backlog is cleared.

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