API Takeaways Blog 2024

6 Trends From the 2024 API Excise Tax Forum

IGEN attended the American Petroleum Institute (API) Excise Tax Forum event last week. We enjoyed connecting with other industry professionals about tax compliance, their challenges, and emerging market trends. We created a list of six topics of conversation that seemed to trend throughout the event.

IGEN at API

1. The Buzz Around Sustainable Aviation Fuel (SAF)

Sustainability is more than a buzzword; it's a business necessity. Event attendees brought attention to Sustainability Aviation Fuel (SAF) and its impact on the tax landscape. Specifically, the IRS introduced credits for companies using SAF, making it an attractive option for businesses looking to reduce their environmental footprint while benefiting financially.

According to RSM, The Inflation Reduction Act of 2022 (IRA) introduced the SAF excise tax credit under sections 40B and 6426(k) of the Internal Revenue Code (Code). The credit applies to each gallon of SAF sold or used in a qualified fuel mixture between Dec. 31, 2022 and Jan. 1, 2025. The SAF credit is $1.25 per gallon of SAF within a qualified mixture sold or used during the year for SAF with a minimum reduction of 50% in GHG emissions. Additionally, there is a supplemental credit of one cent for each percent the GHG emissions reduction exceeds 50% up to a maximum credit of $1.75 per gallon.

Grasping how to claim these credits is essential for maximizing tax benefits. It's vital to understand the eligibility criteria, documentation requirements, and filing procedures to make it easier for businesses to leverage these incentives. Sustainability is not going away! We're sure to see more incentives for sustainable fuel sources, like SAF, in the future.

2. The Switch to Electronically Filing Form 720

We are shouting it from the rooftops! IGEN is now an IRS Form 720 Modernized E-File Provider!

Many attendees expressed that they wanted to electronically file their 720 form so they could access the federal refund quicker and easier. For those unfamiliar, IRS Form 720 is a quarterly federal tax return for excise tax. A modernized E-File provider allows clients to generate Form 720 and its supporting schedules in XML format, which can be uploaded to the IRS website for electronic filing. This process eliminates the need to mail or fax paper returns and provides faster confirmation of both filing and payment.

3. Succession Planning in the Tax Industry

We had mixed emotions for the tax experts who expressed that retirement was on the horizon at API. This has been an ongoing point of conversation over the last few years. The tax industry faces a significant challenge as many seasoned professionals are nearing retirement. Succession planning and knowledge sharing were topics at the event, emphasizing the need for organizations to prepare for this transition.

Succession planning involves identifying and grooming potential leaders to take over your role when you retire or implementing third-party tax software to automate processes to alleviate the burden of your departure. This process ensures a smooth transition and minimizes disruptions. Knowledge sharing is crucial for retaining institutional knowledge, and creating a structured knowledge transfer process can help preserve valuable insights and expertise.

4. The Complexity of Cross-Border Taxation

Surprisingly, this was a trending topic of conversation for excise tax professionals this year at API. Cross-border transactions add another layer of complexity to excise tax compliance (and many headaches). The event shed light on the challenges businesses face when dealing with cross-border transactions, particularly those involving Mexico.

Taxing at the rack level and moving goods across borders can create compliance issues, especially with all the intricacies that flow into fuel transactions. Different countries have varying tax regulations, which make understanding and complying with each jurisdiction's requirements essential.

Businesses are still figuring out how to mitigate risks associated with cross-border transactions and the best process for it.

5. The "All in This Together" Mentality

Much like the challenges with cross-border taxation and the retirement of industry experts, a recurring theme at the API event was that many businesses encountered similar obstacles. This shared experience fosters a supportive environment where companies can exchange experiences and solutions. Networking with other professionals and participating in industry discussions offered valuable insights and innovative solutions, aiding in developing best practices and new strategies for addressing common issues.

 

6. Introduction of Compliance Dashboard

The secret is out! IGEN launched the ComplyIQ Compliance Dashboard. We enjoyed talking with attendees about the benefits and challenges this software solves.

Keeping track of tax deadlines can be a logistical nightmare, especially during vacation seasons and other busy periods. The new Compliance Dashboard, which was on display at the IGEN booth, aims to simplify this process by offering a centralized tax filing and risk management platform.

Some of the feature favorites were:

  • Due-Date Tracking: Staying on top of every deadline with an intuitive compliance calendar and step-by-step task manager.
  • Escalating Alerts: Getting notifications straight to your inbox based on your risk tolerance for upcoming deadlines.
  • Performance Dashboard: Tracking your team’s performance to ensure critical tasks are met and the workload is manageable.

Want to learn more about ComplyIQ Compliance Dashboard? We would be thrilled to chat!

 

IGEN had another great year at the API Excise Tax Forum! Thanks to everyone who attended and shared their experiences, laughs, and challenges. We’ll hopefully see everyone, and some new faces, next year. Until then, see what other industry events we are attending here!

 

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    Bob Donnellan

    Bob Donnellan

    Motor Fuel Tax Subject Matter Expert

    This analysis is intended for informational purposes only and is not tax advice.  For tax advice, consult your tax adviser. See the full disclaimer here.